Document ID: chunk:federal_register_of_legislation:F2023L00699:body:0:p9
Version: federal_register_of_legislation:F2023L00699
Segment Type: other
Provision Reference: 
Character Range: 22511–25655

future reinsurance expense in the premiums liabilities valuation. This assumption must only be made when:
(a)          existing reinsurance arrangements are documented;
(b)          the estimated expected reinsurance recoveries relate to the same classes of business that are currently covered by the existing documented reinsurance arrangements; and
(c)          it is fully expected that the reinsurance will be replaced on similar terms when current arrangements expire.

Estimation undertaken on the combined claims experience of several classes of business
44.         The estimation of the value of reinsurance recoverables and expected reinsurance recoveries would normally be undertaken on the basis of each class of business written by the insurer. However, there are certain forms of reinsurance where reinsurance recoveries and expected reinsurance recoveries receivable depend on the combined claims experience of several or all classes of business underwritten by the insurer. In such instances, the estimation will be required to factor in all the individual results by class of business covered by the reinsurance arrangements.

Non-reinsurance recoveries
45.         Non-reinsurance recoveries are amounts that may be recovered under arrangements other than reinsurance arrangements, such as salvage, subrogation and sharing agreements. The treatment of non-reinsurance recoveries must be consistent with that required by reporting standards made under the Collection of Data Act.

Adjustments and exclusions
46.         APRA may, by notice in writing to an insurer, adjust or exclude a specific requirement in this Prudential Standard in relation to that insurer.

Previous exercise of discretion
47.         A regulated institution must contact APRA if it seeks to place reliance, for the purposes of complying with this Prudential Standard, on a previous exemption or other exercise of discretion made by APRA under a previous version of this Prudential Standard.

Attachment A – Level 2 insurance groups

Valuation of insurance liabilities
     1. A Level 2 insurance group may consist of Australian business only (insurers authorised by APRA) or may comprise both Australian and international business.
2.             Subject to paragraph 5 of this Attachment, a Level 2 insurance group must determine the value of its insurance liabilities in a manner consistent with that set out in this Attachment. The valuation must then be used for the purpose of:
(a)          calculating the Level 2 insurance group's prescribed capital amount in accordance with the capital standards; and
(b)          completing the Level 2 insurance group's accounts in accordance with reporting standards made under the Collection of Data Act.

Australian business
3.             In respect of Australian business, the insurance liability valuation for a Level 2 insurance group should be consistent with that for an insurer under this Prudential Standard subject to identified consolidated adjustments such as intra-group transactions and diversification. In the case of a Level 2 insurance group with only Australian business, the valuation of