Document ID: chunk:federal_register_of_legislation:F2018L00243:body:0:p5
Version: federal_register_of_legislation:F2018L00243
Segment Type: other
Provision Reference: 
Character Range: 11315–14437

any other documentation or information relevant to the transaction (including a written description of any verbal understandings and/or undertakings that are material to the operation of the arrangement);[6]
(b)          details of the proposed accounting treatment and the effect of the proposed arrangement on the statement of financial position[7], capital base and prescribed capital amount of the life company over the full period of the arrangement;
(c)          an explanation of how the proposed arrangement meets the criteria in paragraph 8 of this Attachment and complies with the Act (for example sections 32 and 48 of the Act); and
(d)          a copy of any actuarial advice on the proposed arrangement.
6.             When seeking approval, the life company must demonstrate to APRA that it has formal written policies and procedures addressing the purpose, nature and use of the proposed Referable Reinsurance Arrangement. Specifically, the life company must, at a minimum, demonstrate that:
(a)          the purpose and effect of the Referable Reinsurance Arrangement is fully understood;
(b)          the associated risks have been identified and addressed;
(c)          appropriate internal approvals have been identified and implemented;
(d)          the Appointed Actuary has provided advice on the Referable Reinsurance Arrangement; and
(e)          all documentation has been scrutinised by suitably qualified and experienced persons.
7.             APRA will only approve a Referable Reinsurance Arrangement where it is satisfied that the following criteria are met:
(a)          the arrangement has a legitimate purpose and effect;
(b)          the arrangement is not likely to misrepresent, or is not designed to disguise a material risk to, the life company's current or continuing profitability, financial position, solvency or capital adequacy;
(c)          the financial costs and benefits of the arrangement, and the nature and potential quantum of any potential risks to policy owners, are reflected in the application for approval and the proposed accounting and disclosure arrangements;
(d)          there will be no inappropriate adverse effect on the life company's balance sheet and capital position in any one period or over the entire term of the arrangement, or in the event that any contingency provided for in the arrangement occurs;
(e)          the life company has reviewed the effect of the arrangement within the context of its overall risk management and control systems and its Internal Capital Adequacy Assessment Process; and
(f)           the arrangement will not overall adversely affect the interests of policy owners.
8.             For applications which are approved, APRA will consider the nature and purpose of the arrangement and deem the arrangement (or parts thereof where APRA requires the arrangement to be restructured as a condition of approval) to be either reinsurance or financing (as appropriate) for the purposes of:
(a)          the calculation of the life company's prescribed capital amount; and
(b)          reporting under reporting standards made