Document ID: chunk:federal_register_of_legislation:F2023L00583:front:0:p4
Version: federal_register_of_legislation:F2023L00583
Segment Type: other
Provision Reference: 
Character Range: 8277–11465

capital base respectively.

Derivative treatment

All items should be reported gross of impacts from derivatives. Report the fair value of open derivative positions under derivatives (liabilities) and derivatives (assets).

Assets subject to stress

Exclude from the calculation of Asset Risk Charge all components of assets that are either:

     * deducted from total assets for the purpose of determining the capital base; or
     * subject to the Asset Concentration Risk Charge.

Include investment income receivable with the asset that generated the income.

Asset stress scenario

Private health insurers are not required to report the components of impact on the fund's capital base for asset stress scenarios where it is determined that those scenarios would improve the capital base (i.e. result in a zero-risk charge component) as at the end of the relevant reporting period.

Private health insurers must report all asset stress scenarios that would give rise to a positive risk charge component.

Definitions

Terms highlighted in bold italics indicate that the definition is provided in these instructions.

A

Adjusted pre-stress amount                        This is the value of relevant items of the health benefits fund or general fund. Report amounts before the application of any designated asset stresses, net of the effect of any look-through adjustments and applying the fair value requirement outlined in Prudential Standard HPS 112 Capital Adequacy: Measurement of Capital (HPS 112) and HPS 114.
Aggregated risk charge component                  This is the aggregated result of applying the aggregation formula set out in HPS 114 to the capital base for each risk charge component. The formula allows for the likelihood of the asset risk stress scenarios occurring simultaneously.
Amounts payable on reinsurance contracts held     This is the value of amounts payable on reinsurance contracts held. This includes reinsurance premiums that are due to be paid, all unpaid instalment reinsurance premiums, reinsurer's portion of recoveries, and commissions due to reinsurers. This also includes deposits withheld from reinsurers.

(Items subject to Asset Risk Charge type)         For reinsurance contracts held, if there is a legal right of set-off within the underlying reinsurance contracts, report the amount after set-off against other amounts receivable from the reinsurer under that reinsurance contract. If the amount is a net receivable position from the reinsurer, report the amount under amounts receivable on reinsurance contracts held. If there is not a legal right of set-off, report the amount payable without set-off. Also refer to the definition of amounts receivable on reinsurance contracts held.

                                                  Amounts payable on reinsurance contracts held is netted against reinsurance contract assets or added to reinsurance contract liabilities under AASB 17.

                                                  This must exclude any amount already allowed in insurance liabilities determined under Prudential Standard HPS 340 Insurance Liability Valuation (HPS 340) to avoid double counting.