Document ID: chunk:federal_register_of_legislation:F2023L00738:body:0:p7
Version: federal_register_of_legislation:F2023L00738
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Risk Charge. APRA may require a private health insurer to apply to a fund, a specified treatment to reinsurance recoverables from non-APRA-authorised reinsurers supported by collateral, guarantee or letter of credit, rather than the treatment that would otherwise apply under this paragraph.

Adjustments and exclusions
35.         A private health insurer may apply to APRA to vary the application of the limits in Attachment A. In deciding whether to grant the application, APRA will have regard to the type of exposure, the term of the exposure, the ability for the institution to mitigate the Asset Concentration Risk Charge by other means and any other matters which APRA considers relevant. APRA may grant approval for such variation subject to conditions and may specify any period of time for such variation.
36.         APRA may, by notice in writing to a private health insurer, adjust or exclude a specific requirement in this Prudential Standard in relation to a private health insurer.

Attachment A – Asset exposure limits
     1. This attachment sets out the Asset Concentration Risk Charge limits for exposures to single assets, counterparties and groups of related counterparties.
Table 1: Reinsurance exposures
     Exposure – reinsurance counterparty or group of counterparties  AUD limit
(a)  Exposures to reinsurers with a counterparty grade of 1, 2 or 3  No limit
(b)  Exposures to reinsurers with a counterparty grade of 4          50% of capital base
(c)  Exposures to reinsurers with a counterparty grade of 5, 6 or 7  25% of capital base

Table 2: Non-reinsurance exposures
     Exposure – asset, counterparty or group of counterparties                          AUD limit
(a)  Governments with a counterparty grade 1 or 2[1]                                    No limit
(b)  Related parties that are APRA-regulated or part of an APRA-regulated group[2]      Greater of $22.5 million and 100% of capital base
(c)  Unrelated parties that are APRA-regulated or part of an APRA-regulated group[3]:
            (i)            Short-term exposures[4]

                                                                                        Greater of $22.5 million and 100% of capital base
            (ii)         Long-term exposures[5]                                         Greater of $11.2 million and 50% of capital base
                                                                                        Greater of $22.5 million and 100% of capital base

            (iii)       Total exposure
(d)  All other exposures                                                                25% of capital base

 [1]  This includes assets with a counterparty grade 1 or 2 that are guaranteed by the Commonwealth Government, Australian state and territory governments and foreign governments.
[2]  As defined in paragraph 15 of this Prudential Standard.
[3]  As defined in paragraph 15 of this Prudential Standard.
[4]  As defined in paragraph 16 of this Prudential Standard.
[5]  As defined in paragraph 16 of this Prudential Standard.