Featured Product

    APRA Consults on Options to Revise the Prudential Standard LPS 117

    March 04, 2019

    APRA is consulting on revisions to LPS 117, which is the prudential standard on the asset concentration risk charge (ACRC) as part of the capital adequacy requirements. The consultation document (Attachment A) outlines the main areas where APRA is considering options for revising LPS 117, particularly in terms of the restrictions on exposures to offshore reinsurers to ensure that the risks are constrained within the APRA appetite. The comment period on the consultation ends on May 10, 2019. Based on the inputs received, APRA expects to release a discussion paper, accompanied by draft revised prudential standards, for consultation in the second half of 2019.

    The review considers, among other factors, aspects of LPS 117 that relate to the prudential requirements in relation to reinsurance arrangements. APRA is reviewing the following:

    • Asset concentration limits of LPS 117 relevant to exposures arising from reinsurance arrangements
    • The treatment of risk mitigants under LPS 117
    • Other issues, including investment risk-sharing and consequential amendments

    LPS 117 prescribes the method for calculating the asset concentration risk charge component of the prescribed capital amount for a life company. The purpose of the standard is to ensure a life company maintains adequate capital against the asset concentration risks associated with its activities. The review is being undertaken to ensure that the standard remains fit-for-purpose and in line with the objectives of the mandate of APRA. The review is being undertaken in the context of APRA’s observation of an increase in the use of offshore reinsurers, particularly in the group risk market, which can put at risk the ability of APRA to effectively supervise the Australian life insurance industry as a whole. 

     

    Related Links

    Comment Due Date: May 10, 2019

    Keywords: Asia Pacific, Australia, Insurance, LPS 117, Asset Concentration Risk Charge, Capital Adequacy, Offshore Reinsurer, APRA

    Related Articles
    News

    IAIS and SIF Publish Paper on Implementation of TCFD Recommendations

    IAIS and Sustainable Insurance Forum (SIF) published an issues paper on implementation of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

    February 27, 2020 WebPage Regulatory News
    News

    BCBS Meets to Advance Supervisory Initiatives and Basel Implementation

    BCBS met in Basel on February 26-27, 2020 to review risks impacting the banking system, advance a range of supervisory initiatives, and promote the implementation of Basel III.

    February 27, 2020 WebPage Regulatory News
    News

    EBA Publishes List of Institutions for Benchmarking Exercise in 2020

    EBA updated the list of institutions that have a reporting obligation for the EU supervisory benchmarking exercise in 2020.

    February 27, 2020 WebPage Regulatory News
    News

    BoE Launches Private Finance Agenda for Transition to Net Zero Economy

    The Governor of BoE, Mark Carney, launched the "COP26 Private Finance Agenda" to help private finance support the whole economy transition to net zero.

    February 27, 2020 WebPage Regulatory News
    News

    OSFI Consults on the 2020 LICAT Guideline for Life Insurers

    OSFI is consulting on the 2020 Life Insurance Capital Adequacy Test (LICAT) guideline for federally regulated life insurance companies and fraternal benefit societies.

    February 26, 2020 WebPage Regulatory News
    News

    BoE Publishes Notice on Collateral Referencing LIBOR for Use in SMF

    BoE published a market notice that forms part of the Documentation for the operations of BoE under the Sterling Monetary Framework (SMF).

    February 26, 2020 WebPage Regulatory News
    News

    US Agencies Correct Error in Capital Simplification Rule for Banks

    US Agencies (FDIC, FED, and OCC) published a notice in the Federal Register to correct an erroneous amendatory instruction in the final regulatory capital rule that was published in November 2019.

    February 26, 2020 WebPage Regulatory News
    News

    BaFin Publishes Submission Deadlines Under Solvency II

    BaFin published quarterly and annual submission deadlines on the Solvency II reporting page on its website.

    February 25, 2020 WebPage Regulatory News
    News

    RBNZ to Address Cyber Risk Through Risk Management Guidance

    RBNZ announced that it is strengthening its efforts to enhance resilience of the financial system from cyber threats, including developing risk management guidance and promoting information-sharing in collaboration with industry and other public organizations.

    February 25, 2020 WebPage Regulatory News
    News

    ISDA Consults Again on Implementing Pre-Cessation Derivative Fallbacks

    ISDA launched a new consultation on the implementation of pre-cessation fallbacks for derivatives.

    February 25, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4745