Document ID: chunk:federal_register_of_legislation:F2023L00633:body:0:p6
Version: federal_register_of_legislation:F2023L00633
Segment Type: other
Provision Reference: 
Character Range: 14205–17514

individual counterparties or groups of related counterparties resulting in adverse movements in the reporting insurer's capital base.

                                                              This must be determined in accordance with Prudential Standard GPS 117 Capital Adequacy: Asset Concentration Risk Charge.
Asset Risk Charge                                             The Asset Risk Charge is the minimum amount of capital required to be held against asset risks. The Asset Risk Charge relates to the risk of adverse movements in the value of a reporting insurer's capital base due to credit or market risks.

                                                              This must be determined in accordance with Prudential Standard GPS 114 Capital Adequacy: Asset Risk Charge (GPS 114).
Asset Risk Charge - aggregated risk charge component          A regulated institution must calculate the risk charge components, as defined in GPS 114, by considering the impact on the capital base of the regulated institution of a range of stresses. These risk charge components are then aggregated using the formula set out in GPS 114. The result of applying the formula is defined as the Asset Risk Charge - aggregated risk charge component.

Asset Risk Charge - impact of diversification                 The Asset Risk Charge - impact of diversification relates to the recognition of diversification benefits between the asset risk charge components as set out in GPS 114.

                                                              This item must be calculated as the sum of the risk charge components less the Asset Risk Charge - aggregated risk charge component.
Asset Risk Charge - tax benefit deduction                     This represents the tax benefits deducted from the Asset Risk Charge - aggregated risk charge component as determined in accordance with GPS 114. It comprises the tax benefits resulting from the Asset Risk Charge stresses, reduced to allow for the reduction in Asset Risk Charge due to the aggregation formula.

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Insurance Concentration Risk Charge  The Insurance Concentration Risk Charge is the minimum amount of capital required to be held against insurance concentration risks. The Insurance Concentration Risk Charge relates to the risk of an adverse movement in the reporting insurer's capital base due to a single large loss or series of losses.

                                     This must be determined in accordance with Prudential Standard GPS 116 Capital Adequacy: Insurance Concentration Risk Charge.

Insurance Risk Charge                The Insurance Risk Charge is the minimum amount of capital required to be held against insurance risks determined in accordance with Prudential Standard GPS 115 Capital Adequacy: Insurance Risk Charge (GPS 115). The Insurance Risk Charge relates to the risk that the value of net insurance liabilities determined in accordance with Prudential Standard GPS 340 Insurance Liability Valuation (GPS 340) is insufficient to cover associated net claim payments and associated claim expenses as they fall due.

                                     This must be calculated as the sum of:

                                          * Total OCL Insurance Risk Charge; and
                                          * Total