Document ID: chunk:federal_register_of_legislation:F2023L00738:body:0:p3
Version: federal_register_of_legislation:F2023L00738
Segment Type: other
Provision Reference: 
Character Range: 5620–8696

used for assets under HPS 114, the same look-through basis must be used for the purposes of this Prudential Standard.

Definitions
13.         Two or more counterparties will form a 'group of related counterparties' if they are linked by:
       (a)          cross guarantees;

       (b)          common ownership or management;

       (c)          the ability of a counterparty to exercise control (defined in accordance with the Australian Accounting Standards) over the other(s), whether direct or indirect;

       (d)          financial interdependency such that the financial soundness of any of them may affect the financial soundness of the other(s); or

       (e)          other connections or relationships that exist between counterparties, that in the private health insurer's assessment, constitute exposure to the counterparties as a single risk.

14.         For the purpose of determining the asset concentration risk charge, liabilities ceded under reinsurance (reinsurance assets) are to be treated as an asset of the fund.
15.         For the purposes of the limits in respect of non-reinsurance exposures in Attachment A, exposures are classified depending on whether or not the counterparty is APRA-regulated or part of an APRA-regulated group. A counterparty meets this requirement if the specific counterparty or its ultimate parent is:
(a)          authorised by APRA under the Act as a private health insurer; or
(b)          authorised by APRA under the Insurance Act 1973 as a general insurer or authorised non-operating holding company (NOHC); or
(c)          authorised by APRA under the Banking Act 1959 as an authorised deposit-taking institution (ADI) or authorised NOHC of an ADI; or
(d)          registered by APRA under the Life Insurance Act 1995 as a life company or authorised NOHC of a life company.
16.         For the purposes of the limits in Table 2(c) of Attachment A, exposures are classified as either short-term or long-term. 'Short-term' means a residual maturity of less than or equal to one year. 'Long-term' means perpetual or a residual maturity of greater than one year.

Asset Concentration Risk Charge calculation
17.         The Asset Concentration Risk Charge for each exposure of a fund to a particular asset, counterparty or group of related counterparties is the amount by which this exposure exceeds the limits set out in Attachment A.  Separate treatment applies for reinsurance exposures and non-reinsurance exposures. A differing treatment also applies for collateral, guarantees and reinsurance recoverables due from non APRA-authorised reinsurers as set out in paragraphs 22 to 34.
18.         For non-reinsurance exposures to unrelated parties that are part of an APRA-regulated group (Table 2(c) of Attachment A), the Asset Concentration Risk Charge of a fund is calculated as the maximum amount after applying each of the sub-limits to the relevant exposures.
19.         In the case of reinsurance exposures (both on-balance and off-balance sheet) to a group of related counterparties, exposures of