Document ID: chunk:federal_register_of_legislation:F2023L00206:body:0:p2
Version: federal_register_of_legislation:F2023L00206
Segment Type: other
Provision Reference: 
Character Range: 2933–5352

This Prudential Standard only applies to the business of an Eligible Foreign Life Insurance Company which is carried on through its Australian statutory funds but not otherwise.[2]
    5.             This Prudential Standard applies to life companies from 1 January 2013.

Interpretation
    6.             Terms that are defined in Prudential Standard LPS 001 Definitions appear in bold the first time they are used in this Prudential Standard.
Limit on investment performance guarantees

    7.             A life company must, at all times, ensure that the 'investment performance guarantee factor' of a statutory fund to which this Prudential Standard applies does not exceed 5 per cent.[3]
    8.             The investment performance guarantee factor of a statutory fund at a particular time is the proportion of the amount of the current policy liabilities of the fund at that time that represents the total cost, as at that time, of providing the investment performance guarantees included in policies referable to the fund.
    9.             For the purpose of paragraph 8, policy liabilities must be determined gross of reinsurance.

The cost of investment performance guarantees
    10.         The cost of investment performance guarantees must be determined as the increase in the fair value of the financial instrument element that is attributable to the presence of the investment performance guarantees. For this purpose the fair value of the financial instrument element (both with and without the investment performance guarantees) must be assessed in accordance with the relevant accounting standards.

Adjustments and exclusions
    11.         APRA may, by notice in writing to a life company, adjust or exclude a specific requirement in this Prudential Standard in relation to that life company.

Determinations made under previous prudential standards
    12.         An exercise of APRA's discretion (such as an approval, waiver or direction) under a previous version of this Prudential Standard continues to have effect as though exercised pursuant to a corresponding power (if any) exercisable by APRA under this Prudential Standard. Prudential Standard LPS 5.02 Cost of Investment Performance Guarantees may be regarded as a previous version of this Prudential Standard.

[1]  Refer to subsection 21(1) of the Act.
[2]  Refer to section 16ZD of the Act.
[3]  Refer to section 42 of the Act.