Document ID: chunk:federal_register_of_legislation:F2024L01053:reg:7:p1
Version: federal_register_of_legislation:F2024L01053
Segment Type: reg
Provision Reference: reg 7 (pt 1/3)
Character Range: 93702–96579

7      Below B-    Below B3  Below b-  Below C-  Below B-

 1.              Where investments are held via a trust that has itself been separately rated by a recognised rating agency, that rating may be applied to all the investments in the trust in lieu of the ratings of the individual trust assets, provided that the trust is treated as a single investment for asset concentration purposes and is not subject to 'look-through'. When a 'look-through' approach is adopted the underlying assets need to be individually rated. If the trust is separately rated, that overall trust rating cannot be applied to the individual underlying assets.
 2.              In the context of general insurance, for Level 2 insurance groups APRA may determine the counterparty grade of a non-APRA-authorised reinsurer that:
         1.           has no external credit rating; and
         2.           is a member of the Level 2 insurance group.
 3.              A general insurer, Level 2 insurance group, a life company or a private health insurer must, in general, use the same rating agency for determining all counterparty grades. A general insurer, Level 2 insurance group, life company or a private health insurer may depart from this general rule where there are good reasons for doing so, such as under the following circumstances:
         1.           where the rating agencies usually monitored by a general insurer, Level 2 insurance group, a life company or a private health insurer do not issue a solicited credit rating for a particular debt obligation and only one other rating agency issues a solicited credit rating for that debt obligation, a general insurer, Level 2 insurance group, life company or a private health insurer may use that solicited credit rating; or
         2.           where the rating agencies usually monitored by the general insurer, Level 2 insurance group, a life company or a private health insurer do not issue a solicited credit rating for a particular debt obligation, the credit ratings issued by all other rating agencies listed in Table 1 and Table 2 must be reviewed and the rule in paragraph 6 of this Attachment must be used to determine the rating agency used to determine the counterparty grade and therefore the credit spreads or default factors to be applied; or
         3.           the rule in paragraph 6 of this Attachment may also be applied where a general insurer, Level 2 insurance group, a life company or a private health insurer monitors multiple rating agencies that provide different solicited credit ratings for a particular debt obligation.
 4.              For the purposes of paragraph 5 of this Attachment the following rule applies: where a counterparty or debt obligation has solicited credit ratings from multiple rating agencies, the following guidelines must be followed in determining the counterparty grade: