Document ID: chunk:federal_register_of_legislation:F2019L00648:body:0:p1
Version: federal_register_of_legislation:F2019L00648
Segment Type: other
Provision Reference: 
Character Range: 0–2973

Insurance (prudential standard) determination No. 8 of 2019

Prudential Standard GPS 120 Assets in Australia

Insurance Act 1973

I, Pat Brennan, delegate of APRA:

    (a) under subsection 32(4) of the Insurance Act 1973 (the Act) REVOKE Insurance (prudential standard) determination No. 9 of 2012, including Prudential Standard GPS 120 Assets in Australia made under that Determination; and

    (b) under subsection 32(1) of the Act DETERMINE Prudential Standard GPS 120 Assets in Australia, in the form set out in the Schedule, which applies to all general insurers.

This instrument takes effect on 1 July 2019.

Dated: 17 April 2019

[Signed]

Pat Brennan

Executive General Manager
Policy and Advice Division

Interpretation

In this Determination:

APRA means the Australian Prudential Regulation Authority.

general insurer has the meaning given in section 11 of the Act.

Schedule

Prudential Standard GPS 120 Assets in Australia comprises the 14 pages commencing on the following page.

Prudential Standard GPS 120

Assets in Australia

Objective and key requirements of this Prudential Standard
This Prudential Standard specifies certain assets that are excluded from being treated as 'assets in Australia' by a general insurer for the purposes of section 28 of the Insurance Act 1973.
Section 28 requires all general insurers to maintain assets in Australia (excluding goodwill and other amounts excluded by this Prudential Standard) of a value that equals or exceeds the total amount of the general insurer's liabilities in Australia (other than its pre-authorisation liabilities). This requirement is designed to ensure that the total value of assets held within the jurisdictional reach of APRA and the Australian courts is sufficient to meet a general insurer's liabilities in Australia for the purposes of subsection 116(3) of the Insurance Act 1973.
Prudential Standard GPS 110 Capital Adequacy also requires that a Category C insurer operating in Australia as a branch maintains assets in Australia that exceed its liabilities in Australia by an amount that is greater than its Prudential Capital Requirement.

The assets that this Prudential Standard excludes from being treated as 'assets in Australia' are those that may not be treated by a court as falling within the definition of 'assets in Australia', or that APRA considers may have doubtful or no value to policyholders in Australia in the event of a general insurer becoming insolvent.

Authority

     1. This Prudential Standard is made under section 32 of the Insurance Act 1973 (the Act) for the purposes of paragraph 28(a) of the Act.[1]

Application

2.             This Prudential Standard applies to all general insurers authorised under the Act (insurers).

3.             Paragraphs 11 to 23 apply to all insurers other than Category C insurers. Paragraphs 25 to 36 apply only to Category C insurers. The remaining paragraphs apply to all insurers.

4.