Document ID: chunk:federal_register_of_legislation:F2024L01523:body:0:p8
Version: federal_register_of_legislation:F2024L01523
Segment Type: other
Provision Reference: 
Character Range: 20636–23590

Charge are the tax benefits resulting from scenarios modelled by the stress tests in HPS 114, reduced to allow for the reduction in Asset Risk Charge due to the asset risk aggregation formula. The tax benefits are therefore calculated as:
 1.          The tax benefits from the Insurance Risk Charge are the tax benefits resulting from losses in the Insurance Risk Charge in HPS 115.
 2.          Overall tax benefits are to be reduced to allow for aggregation between the Asset Risk Charge and Insurance Risk Charge. Tax benefit aggregation reduction is calculated as:
    where:
 1.           'TA' is the tax benefits from Asset Risk Charge in Paragraph 36;
 2.           'TI' is the tax benefits from Insurance Risk Charge in Paragraph 37; and
 3.           'correlation' is 20 per cent.
 1.          Tax benefits must only be recognised as a deduction from the prescribed capital amount if tax legislation allows them to be absorbed by the existing deferred tax liabilities. For this purpose, the deferred tax liabilities are those liabilities (if any) that remain after netting off the deferred tax assets and liabilities in the calculation of the deductions from Common Equity Tier 1 Capital in HPS 112.

APRA may adjust the Prescribed Capital Amount for calculating the prescribed capital amount
 1.          If APRA is of the view that the prescribed capital amount does not produce an appropriate outcome in respect of a particular fund, or a private health insurer has used inappropriate judgement or estimation in calculating the prescribed capital amount, APRA may, in writing, adjust any aspect of the prescribed capital amount calculation for that fund. If such an adjustment is applied to a fund under this paragraph, a private health insurer must comply with the adjusted calculation.

Supervisory adjustment
 1.          APRA recognises that any measure of the adequacy of a fund or private health insurer's capital involves judgement and estimation, including quantification of risks that may be difficult to quantify. If APRA is of the view that there are prudential reasons for doing so, APRA may, in writing, determine a supervisory adjustment to be included in the PCR of a fund or private health insurer.

Disclosure
 1.          To improve the understanding of its capital adequacy position by policy holders and other market participants, a private health insurer must publish, at least annually, the following items for the private health insurer:
         1.           the amount of Common Equity Tier 1 Capital;
         2.           the aggregate amount of any regulatory adjustments applied in the calculation of Common Equity Tier 1 Capital;
         3.           the amount of Additional Tier 1 Capital;
         4.           the aggregate amount of any regulatory adjustments applied in the calculation of Additional Tier 1 Capital;
         5.           the amount of Tier 2 Capital;
         6.            the aggregate