Document ID: chunk:federal_register_of_legislation:F2023L00678:body:0:p7
Version: federal_register_of_legislation:F2023L00678
Segment Type: other
Provision Reference: 
Character Range: 18111–21339

and, where applicable, the reinsurance group, that participates in each layer of the regulated institution's reinsurance arrangements;

(c)          details of individual parameters by class of business which indicate the highest per risk gross loss and multi-class catastrophic gross event limit to which the class of business portfolio is exposed;

(d)          details of how the reinsurance arrangements will reduce the overall gross exposures detailed in (c) above to result in the net retention per risk, by class of business, and catastrophic event retention levels of the regulated institution (material classes only to be included);

(e)          details of the ICRC calculation (where not detailed in the regulated institution's ReMS), including details of modelling for catastrophe hazards, PML calculations and aggregate exposures (where applicable); and

(f)           details of any Limited Risk Transfer Arrangements, including those which have not been approved by APRA.[7]

Documentation of reinsurance arrangements
    32.         As part of its reinsurance management framework, a regulated institution must have processes to achieve legally binding reinsurance arrangements.

    33.         At a minimum, the regulated institution must comply with the 'inception date rule' detailed in paragraph 41 and the 'two month rule' specified in paragraph 42.

    34.         For any reinsurance contract entered into by a regulated institution incepting on or after 31 December 2008, the regulated institution must ensure that the reinsurance contract provides that[8]:

       (a)          the governing law of the reinsurance contract is Australian law; and

       (b)          any disputes that fall to be determined by a court are to be heard in an Australian court.

    This paragraph does not apply to a Category E insurer.

    35.         Failure to comply with paragraph 33 or 34 results in a deduction of relevant reinsurance assets from Common Equity Tier 1 Capital in accordance with Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital (GPS 112).

The reinsurance declaration
    36.         An insurer must make a reinsurance declaration annually. The reinsurance declaration is a declaration that the insurer has placed the reinsurance arrangements in accordance with the Reinsurance Statement and that the reinsurance arrangements in the current and previous Reinsurance Statements provided to APRA are legally binding. The reinsurance declaration must be based on the 'inception date rule' and the 'two month rule' detailed below under paragraphs 41 and 42, respectively. This declaration is not required to deal with the documentation of individual facultative arrangements undertaken.

    37.         The reinsurance declaration must be signed by both:

       (a)           the chief executive officer (by whatever name called)[9]; and

       (b)           the chief reinsurance officer (by whatever name called).

   Where the chief executive officer and the chief reinsurance officer are the same person, the reinsurance declaration must be signed by that person and another person to be agreed upon with APRA.

    38.         The reinsurance declaration