Document ID: chunk:federal_register_of_legislation:F2023L00639:body:0:p4
Version: federal_register_of_legislation:F2023L00639
Segment Type: other
Provision Reference: 
Character Range: 8408–11838

prescribed capital amount does not produce an appropriate outcome in respect of a fund, or if a private health insurer has used inappropriate judgement or estimation in calculating the prescribed capital amount for that fund.

                                                              Approved adjustments are to be reported separately in Reporting Standard HRS 111.0 Adjustments and Exclusions highlighting the description of the adjustment given, transitional status and amount of adjustment applied.

Aggregation benefit                                           The aggregation benefit makes an explicit allowance for diversification between asset and insurance risks in the calculation of the prescribed capital amount.

                                                              This must be determined in accordance with HPS 110.

                                                              This is distinct from the DCL aggregation benefit referenced in Prudential Standard HPS 115 Insurance Risk Charge (HPS 115).
Asset Concentration Risk Charge                               The Asset Concentration Risk Charge is the minimum amount of capital required to be held against asset concentration risks. The Asset Concentration Risk Charge relates to the risk resulting from investment concentrations in individual assets or large exposures to individual counterparties or groups of related counterparties resulting in adverse movements in the fund's capital base.

                                                              It is determined in accordance with Prudential Standard HPS 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 the capital base due to credit or market risks.

                                                              This amount is to be determined in accordance with Prudential Standard HPS 114 Asset Risk Charge (HPS 114).
Asset Risk Charge - aggregated risk charge component          A private health insurer must calculate, for each of its funds, the risk charge components, as defined in HPS 114, by considering the impact on the capital base of the fund of a range of stresses. These risk charge components are then aggregated using the formula set out in HPS 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 HPS 114.

                                                              This item must be calculated as the sum of the risk charge components less the Asset Risk Charge - aggregated risk charge component.

D

Deferred claims liability risk charge  The Deferred claims liability (DCL) risk charge relates to the risk that the value of the DCL will be greater than the value determined in accordance with Prudential Standard HPS 340 Insurance Liability Valuation (HPS 340).

                                       This amount is to be determined in accordance with HPS 115 and should correspond to the total calculated in Reporting Standard