Document ID: chunk:federal_register_of_legislation:F2023L00569:body:0:p8
Version: federal_register_of_legislation:F2023L00569
Segment Type: other
Provision Reference: 
Character Range: 19504–22552

of any change.

     6.2.3.         Inter-region eliminations

The value of inter-region transactions, which are eliminated on consolidation, need to be reported under 'Inter-region elimination'. These transactions must be removed to eliminate double counting.

    6.3.           Measurement of assets

The measurement of assets is in accordance with the requirements in AASB 17, AASB 13 and other relevant Australian Accounting Standards. For Level 1 insurers, APRA requires that assets classified as assets backing insurance liabilities for statutory reporting purposes must be measured at fair value for regulatory reporting purposes as per the requirements of GPS 112.

Unlike for Level 1 insurers, APRA will accept the notion of assets backing insurance liabilities for the Level 2 group, provided these assets represent all assets controlled and managed by the group to support insurance liabilities. Investments backing general insurance liabilities must be measured at fair value.

    6.4.           Reporting Supplement

Level 2 groups are currently required to submit separate information to APRA as supporting documentation for completing the reporting tables. These reporting supplements will continue to be required to be submitted to the Level 2 group's APRA Responsible Supervisor.

      7.                 Allocation principles

General insurers are to apply the allocation principles (outlined below) to allocate AASB 17 numbers to APRA classes of business where it is not possible to clearly identify AASB 17 numbers and assign it to specific APRA classes of business.

     * Principle 1: To the extent that AASB 17 balance sheet and income statement items can be readily allocated to APRA classes of business, they must be so allocated. Otherwise, the items (including CSM and / or loss component) are to be allocated using allocation approaches. The allocation approaches are to reflect allocation drivers determined based on accounting and / or actuarial judgments. For example, an insurer may decide to determine annual premium income and / or expected claims to be the allocation drivers to allocate AASB 17 items using proportions and / or ratios.

     * Principle 2: A systematic and rational approach must be applied.

     * Principle 3: The approach must be consistent over time. However, an insurer may change the approach if it views that the approach is no longer appropriate based on accounting and / or actuarial judgements.

     * Principle 4: The aggregate of the allocated numbers across APRA classes of business must be consistent with AASB 17 numbers reported on a statutory basis.

     * Principle 5: A single allocation approach need not necessarily be applied.

Allocation approaches and allocation drivers must be clearly documented. This would support clarity and consistent application of the approaches and drivers for APRA classes of business reporting over time. Insurers must prepare a document outlining how they have applied the allocation principles to allocate AASB 17 items