Document ID: chunk:federal_register_of_legislation:F2023L00639:body:0:p6
Version: federal_register_of_legislation:F2023L00639
Segment Type: other
Provision Reference: 
Character Range: 14676–18382

accordance with HPS 115 and should correspond to the total calculated in HRS 115.0.

Operational Risk Charge                     The Operational Risk Charge is the minimum amount of capital required to be held against operational risks. The Operational Risk Charge relates to the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

                                            It is determined in accordance with Prudential Standard HPS 118 Capital Adequacy: Operational Risk Charge.

Other Insurance Liabilities Risk Charge     The risk charge for Other Insurance Liabilities relates to the risk that the value of other insurance liabilities will be greater than the value determined in accordance with HPS 340.

                                            This amount is to be determined in accordance with HPS 115.

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Premiums Liabilities Risk Charge  The risk charge for Premiums Liabilities relates to the risk that the value of premiums liabilities 12 months after the reporting date will be greater than the value determined in accordance with HPS 340.

                                  This amount is to be determined in accordance with HPS 115 and should correspond to the total calculated in HRS 115.0.

Prescribed capital amount         The prescribed capital amount is a derived item determined in accordance with HPS 110.

                                  It is calculated as the sum of:

                                         * Insurance Risk Charge;
                                         * Asset Risk Charge;
                                         * Asset Concentration Risk Charge;
                                         * Operational Risk Charge; and
                                         * adjustments to prescribed capital amount as approved by APRA;

                                  Less the sum of:

                                         * aggregation benefit; and
                                         * tax benefits

                                  The prescribed capital amount for a health benefits fund is subject to a minimum of $5 million, and will be automatically applied where the calculated sum of risk charge components is less than this amount.

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Risk charge components                   The risk charge components, as set out in HPS 114, are calculated by determining the fall in the capital base of the regulated institution in seven stress tests.

Risk Equalisation Risk Charge            The risk charge for Risk Equalisation relates to the risk that the value of the net risk equalisation transfers will be less favourable than the value determined in accordance with HPS 340.

                                         This amount is to be determined in accordance with HPS 115 and should correspond to the total calculated in HRS 115.0.
Tax benefits                             Tax benefits makes recognition for the future shareholder tax benefits arising from losses occurring within the Insurance Risk Charge and Asset Risk Charge.

                                         Tax benefits must be calculated as the sum of:

                                                * tax benefits from Asset Risk Charge; and
                                                * tax benefits from Insurance Risk Charge;

                                         Less:

                                                * tax benefits aggregation reduction.

                                         Tax benefits must only be recognised to the extent that tax legislation allows them to be absorbed by existing deferred tax liabilities.

Tax benefits from Asset Risk Charge      This