Document ID: chunk:federal_register_of_legislation:F2023L00317:body:0:p5
Version: federal_register_of_legislation:F2023L00317
Segment Type: other
Provision Reference: 
Character Range: 12066–15135

of the counterparty or the party on whom a potential claim is acquired).

   1.1.1.    Guarantees

This is the potential credit exposures arising from the issue of guarantees.

   1.1.2.    Credit derivatives - sold protection

This is the credit derivative exposures where protection is sold.

   1.1.3.    Standby letters of credit

This relates to the confirmation of letters of credit and issue of standby letters of credit serving as financial guarantees for loans, securities and any other financial liabilities.

   1.1.4.    Bill endorsements

This relates to the bills endorsed under bill endorsement lines (but are not accepted by, or have the prior endorsement of, an authorised deposit-taking institution (ADI)).

   1.1.5.    Other credit substitutes

This is the value of all other credit substitutes that does not appropriately fall under the above categories.

It is calculated automatically as item 1.1.6 less the sum of items 1.1.1 to 1.1.5.

   1.1.6.    Total Direct Credit Substitutes

This is the total of direct credit substitutes provided by the life company.

   1.2. Performance-related contingencies

Contingent liabilities that involve an irrevocable obligation to pay a third party in the event that a counterparty fails to fulfil or perform a contractual non-monetary obligation, such as delivery of goods by a specified date, etc (i.e. the risk of loss depends on a future event that is not directly related to the creditworthiness of the counterparty involved). Include:

       * issue of performance bond;

       * bid bonds;

       * warranties;

       * indemnities; and

       * standby letters of credit in relation to a non-monetary obligation of a counterparty under a particular transaction.

   1.3. Trade-related contingencies

Contingent liabilities arising from trade-related obligations that are secured against an underlying shipment of goods. Include:

       * documentary letters of credit issued;

       * acceptances on trade bills;

       * shipping guarantees issued; and

       * any other trade-related contingencies.

   1.4. Sale and repurchase agreements

This relates to arrangements whereby a life company sells a loan, security or other asset to another party with a commitment to repurchase the asset at an agreed price on an agreed future date.

   1.5. Assets sold with recourse

This relates to any asset sales (to the extent that such assets are not included on-balance sheet) by a life company where the holder of the asset is entitled to 'put' the asset back to the life company within an agreed period or under certain prescribed circumstances, e.g. deterioration in the value or credit quality of the asset concerned.

   1.6. Forward asset purchases

This relates to:

       * commitments to purchase at a future date and on pre-arranged terms; and

       * a loan, security or other asset from another party, including written put options on specified assets with the character of a credit enhancement.

Where a life company purchasing the asset has an