Financial Sector (Collection of Data) (reporting standard) determination No. 10 of 2009
Reporting standard LRS 330.0 Summary of Revenue and Expenses
Financial Sector (Collection of Data) Act 2001
I, John Roy Trowbridge, a delegate of APRA, under paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 (the Act) and subsection 33(3) of the Acts Interpretation Act 1901:
·        REVOKE Reporting Standard LRS 330.0 Summary of Revenue and Expenses made by Financial Sector (Collection of Data) (reporting standard) determination No. 25 of 2007 (the old standard); and
 
·        DETERMINE Reporting Standard LRS 330.0 Summary of Revenue and Expenses in the form set out in the Schedule (the new standard), which applies to the financial sector entities to the extent provided in paragraph 2 of the reporting standard.
 
Under section 15 of the Act, I DECLARE that the new standard shall begin to apply to those financial sector entities, and the old standard shall cease to apply, on the later of 1 October 2009 and the date of registration of this instrument on the Federal Register of Legislative Instruments.
 
 
 
Dated   17 July 2009
 
[Signed]
 
John Trowbridge
Member
 
Interpretation
In this Determination
APRA means the Australian Prudential Regulation Authority.
Federal Register of Legislative Instruments means the register established under section 20 of the Legislative Instruments Act 2003.
 
Schedule     
Reporting Standard LRS 330.0 Summary of Revenue and Expenses comprises 12 pages commencing on the following page.

Reporting Standard LRS 330.0
Summary of Revenue and Expenses
Objective of this reporting standard
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001. It requires all registered life insurance companies which are not friendly societies to report to APRA, in general, on a quarterly and an annual basis in relation to a summary of revenue and expenses.
This reporting standard outlines the overall requirements for the provision of relevant information to APRA. It should be read in conjunction with Form LRF 330.0 Summary of Revenue and Expenses, and the associated instructions (both of which are attached and form part of this reporting standard).
 
Purpose
1.             Information collected in Form LRF 330.0 Summary of Revenue and Expenses (LRF 330.0) is used by APRA for the purpose of prudential supervision, including assessing compliance with prudential standards where appropriate. It may also be used by the Reserve Bank of Australia, the Australian Bureau of Statistics and the Australian Securities and Investments Commission.
Application and commencement
2.             This reporting standard applies to all life insurance companies which are not friendly societies and which are registered under the Life Insurance Act 1995 (Life Insurance Act) for reporting periods commencing on or after 1 October 2009.
Information required
3.             A life company which is not a friendly society must provide APRA with the information required by Form LRF 330.0 for each reporting period.
Note: The instructions for Form LRF 330.0 explain in more detail the information that is required.
4.             The information required to be provided to APRA under this reporting standard is not intended to form part of the financial statements or the annual returns, within the meaning of section 124 of the Life Insurance Act, given by the life company to APRA.
Method of submission
5.             The information required by this reporting standard must be given to APRA either:
(a)     in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application; or
(b)     by completing Form LRF 330.0 on paper and mailing the completed form to APRA
Note: The ‘Direct to APRA’ application software and paper forms may be obtained from APRA.
Reporting periods and due dates
6.             Subject to paragraph 7, a life company which is not a friendly society must provide the information required by this reporting standard:
 
(a)     in unaudited form - in respect of each quarter based on the financial year
         of the life company; and
(b)     in audited form - in respect of each financial year of the life company.
Note 1: This means that this form will be submitted five times for a full financial year.
Note 2: The annual audited form must be submitted in conjunction with the annual auditor’s report, as required under Prudential Standard LPS 310 Audit and Actuarial Requirements.
7.             APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular life company which is not a friendly society, to require it to provide the information required by this reporting standard more frequently, or less frequently, having regard to:
(a)           the particular circumstances of the life company;
(b)          the extent to which the information is required for the purposes of the prudential supervision of the life company; and
(c)           the requirements of the Reserve Bank of Australia or the Australian Bureau of Statistics or the Australian Securities and Investments Commission.
8.             The quarterly information required by this reporting standard in unaudited form must be provided to APRA within 20 business days after the end of the reporting period to which the information relates. The annual information required by this reporting standard in audited form must be provided to APRA within four months after the end of the reporting period to which the information relates.
9.             APRA may grant a life company which is not a friendly society an extension of a due date in writing, in which case the new due date for the provision of the information will be the date on the notice of extension.
Quality control
10.         The information provided by a life company which is not a friendly society under this reporting standard must be the product of processes and controls that have been reviewed and tested by the auditor of the life company.
11.         All information provided by a life company which is not a friendly society under this reporting standard must be subject to processes and controls developed by the life company for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the life company to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
12.         Actuarial valuations and calculations included in, or used in the preparation of, the information provided to APRA must be in accordance with the prudential standards in force for the reporting period. However, life companies may use reasonable estimates when preparing information that will not be audited (i.e. for the first four submissions of information for a full financial year). The instructions to Form LRF 330.0 include general principles on the use of estimates.
Authorisation
13.         If the officer of a life company provides the information required by this reporting standard:
(a)           using Direct to APRA (D2A), the officer must digitally authorise, submit the data to APRA and receive a D2A receipt number for the information to be considered given to APRA. APRA will issue ‘digital certificates’ to officers of the life company who have authority to transmit the data to APRA; or
(b)          on paper, the relevant completed form must be signed on the front page by the principal executive officer or chief financial officer of the life company.
Note: Information in draft returns saved at APRA using D2A will not be considered to be provided to APRA for the purposes of the life company's obligations under this reporting standard.
 
Transitional
 
14.         A life company must report in relation to a reporting period ending prior to 1 October 2009 in accordance with the reporting standard that this reporting standard replaces rather than under this reporting standard.
Interpretation
15.         In this reporting standard:
business days means ordinary business days, exclusive of Saturdays, Sundays or public holidays;
principal executive officer means the principal executive officer of the life company for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the entity;
reporting period means a reporting period under paragraph 6 or, if applicable, paragraph 7.
16.         A reference to a prudential standard means the prudential standard made under section 230A of the Life Insurance Act mentioned in the reference, as amended from time to time. If the prudential standard has been revoked and replaced, the reference shall be taken to be to the prudential standard that has replaced it.
 
 

Reporting Form LRF 330.0
Summary of Revenue and Expenses
Instruction Guide
Introduction
Form LRF 330.0 Summary of Revenue and Expenses (LRF 330.0) provides APRA with the necessary information on revenue, expenses and tax to undertake an assessment of a life insurance company’s profitability for different product groups, and to enable APRA to compile relevant industry benchmarks and comparisons.
This Instruction Guide is designed to assist reporting entities in the completion of Form LRF 330.0. The Instruction Guide provides:
·               general directions and notes regarding preparation and lodgement; and
·               instructions relating to specific items.
General directions and notes
Reporting levels
LRF 330.0 must be completed by life companies other than friendly societies (and they are referred to herein as ‘Life Insurers’).
The form is to be completed for each statutory fund.
LRF 330.0 contains two sections:
1.             All Statutory Fund Products; and
2.             Totals by Class of Business.
Within section 1, reporting items are to be completed for each APRA product group (as defined below).
Unit of measurement
LRF 330.0 is to be prepared in thousands of Australian dollars (AUD). Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates.
Definitions
Definitions for data reporting items required by this form have been provided where appropriate in the instructions under the section headed ‘Instructions for specific items’.
Also see Instructions for Forms LRF 310.1 Statement of Financial Performance (SF and SF Eliminations) (LRF 310.1) and LRF 310.2 Statement of Financial Performance (SF Total, SHF, SH Elim, Entity) (LRF 310.2) for further explanation of particular items where reference is made.
Reporting period
Life Insurers are required to report the information in the reporting form on a quarterly and annual basis.
·               The quarterly information is to be completed in respect of the year to date period up to the end of each quarter based on the financial year of the Life Insurer, not the calendar year.
·               The annual information is to be completed in respect of the financial year of the Life Insurer.
·               The financial information required in this form is to be reported for the year to date period up to the close of business on the last day of the reporting period.
Basis of preparation
In completing this form, unless specifically stated otherwise, Life Insurers are to follow the basis that is used for the preparation of the annual financial statements in accordance with the Australian accounting standards, specifically in regard to the:
·               interpretation/definition of specific revenue and expense items;
·               appropriate measurement basis of items of revenue and expense; and
·               netting of items of revenue and expense (profit and loss).
Actuarial valuations and calculations included in, or used in the preparation of, the form must be in accordance with prudential standards. APRA recognises that for some periods life insurance companies may not carry out full accounting, actuarial valuation and audit procedures or do so in sufficient time to report on the return (for quarterly returns).  Where this applies, some estimation could be applied reasonably at the current quarter to determine an approximation to the results that would be obtained if full detailed valuations had been carried out.
APRA expects that all life companies will utilise their best endeavours to ensure that any estimations are a good and reasonable basis of approximation.  The estimation process needs to be sufficiently rigorous in order to be acceptable and at a minimum should be of a standard that would be considered appropriate for use in reporting to management and the Board of directors.
If additional clarification is required for specific revenue or expense items in this form, reference should be made to the section ‘Instructions for specific items’, which is provided as a guide.
The amounts of revenue and expense reported in this form are to be consistent with those shown in LRF 310.1. For the purposes of reporting under this form, contracts are to be classified in accordance with Prudential Standard LPS 350 Contract Classification for the Purpose of Regulatory Reporting to APRA (LPS 350).
APRA Product Group
For consistency of reporting across the range of forms applicable to Life Insurers, APRA adopts a single set of product groupings for Life Insurers. The following table contains a list of APRA product groups applicable to life companies other than friendly societies. (Where required, a separate set of product groupings is adopted for friendly societies.)
Ref.
Product Group
Notes
Category

Life companies other than friendly societies

L1
Conventional Participating (Par)
Includes Whole of Life policies and Endowment policies.
Par

L2
Participating Investment Account
As defined in Section 14 of the Life Insurance Act 1995. Exclude non-participating investment account policies (refer L8, below).
Par

L3
Annuity with Longevity Risk
Annuities providing periodic payments that are dependent on the continuance of human life.
Non-par

L4
Individual Lump Sum Risk
Lump sum risk policies issued on an individual (retail) basis. Includes non-participating conventional policies.
Non-par

L5
Individual Disability Income Insurance
Disability Income Insurance policies issued to individuals.
Non-par

L6
Group Lump Sum Risk
Lump sum risk policies issued on a group (wholesale) basis.
Non-par

L7
Group Disability Income Insurance
Disability Income Insurance policies issued on a group basis.
Non-par

L8
Non-par Investment Policy
Include non-participating investment account and investment linked policies.
Non-par

L9
Annuity without Longevity Risk
Annuities providing periodic payments that are NOT dependent on the continuance of human life.
Non-par

L10
Other
Include all other products not specifically categorised above – obtain APRA’s agreement to use.
(Either can be reported)

L11
Policy Owners’ Retained Profits
Retained profits allocated to participating policy owners generally, but not yet vested as specific amounts to particular policies.
Par

L12
Shareholders’ Capital & Retained Profits
Shareholders’ capital plus retained profits allocated to shareholders.
Capital

Rather than requiring a Related Product Group (as defined in APRA prudential standards) of a Life Insurer’s business to be allocated across APRA product groups, APRA will permit it to be contained wholly within one APRA Product Group.
Instructions for specific items
Also see Instructions to LRF 310.1 and LRF 310.2 for additional explanation of particular items where reference is made.
To facilitate comparison between this form and LRF 310.1, the item numbers used in this form are based on those adopted in LRF 310.1.
Section 1 All Statutory Fund Products
This section is to be completed for each class of business, as specified in the drop-down box list:
·               Australia – Superannuation
·               Australia – Ordinary
·               Overseas – All business
The expressions ‘ordinary business’ and ‘superannuation business’ are defined in the Life Insurance Act 1995.
Column 1 Insurance Policy Revenue, net of reinsurance
This column is as per Item 1 in Instructions to LRF 310.1 and LRF 310.2.
This reporting item is therefore expected to apply in full to life insurance contracts (i.e. APRA Product Groups L1 to L7), apart from Par Invest Account (L2). Par Invest Account (L2) has been deemed life insurance contracts under Prudential Standard LPS 350 Contract Classification for the Purpose of Regulatory Reporting to APRA. Under AASB 1038 Life Insurance Contracts the contracts must be split into life insurance and life investment components in accordance with Section 5 (Premiums and Claims splitting). Only premium-related fees for such contracts should be included in insurance policy receipts.
Column 2 Fees for Management Services Rendered
This column is as per Item 2 in Instructions to LRF 310.1 and LRF 310.2.
This reporting item is expected to apply only to life investment contracts (i.e. APRA Product Groups L8 & L9).
Column 3 Investment Revenue
This column is as per Item 3 in Instructions to LRF 310.1 and LRF 310.2.
Change in Fair Value should be included here; likewise the imputed (self-paid) rent for owner-occupied property should be included as investment revenue.
Column 4 Other Revenue
This column is as per Item 4 in Instructions to LRF 310.1 and LRF 310.2.
Column 5 Total Revenue [derived item]
This column is as per Item 5 in Instructions to LRF 310.1 and LRF 310.2.
It is calculated by the form automatically, as the sum of columns 1 to 4.
Column 6 Insurance Policy Expense, net of reinsurance
This column is as per Item 6 in Instructions to LRF 310.1 and LRF 310.2.
This column should exclude (from Claims) the withdrawals of deposit components that are included in Par Invest Account (L2) contracts.
Column 7 Operating Expenses
This column is as per Item 7 in Instructions to LRF 310.1 and LRF 310.2.
Column 8 Movement in Net Policy Liabilities
This column is as per Item 8 in Instructions to LRF 310.1 and LRF 310.2.
Column 9 Adjustment to Movement in Net Policy Liabilities – Policy Revenue
This column is as per Item 9 in Instructions to LRF 310.1 and LRF 310.2.
Column 10 Adjustment to Movement in Net Policy Liabilities – Policy Expense
This item is as per Item 10 in Instructions to LRF 310.1 and LRF 310.2.
Column 11 Effective Movement in Net Policy Liabilities
This column corresponds to Item 11 on the form LRF 310.1, however in this form the figures need to be input (in LRF 310.1 the item is derived). The reason for the difference is that LRF 330.0 does not specifically identify all the components of ‘Effective Movement in Net Policy Liabilities’ at the APRA Product Group level.
Column 12 Change in Policy Owner Retained Profits
This item is as per Item 12 in Instructions to LRF 310.1 and LRF 310.2.
Change in Policy Owner Retained Profits applies only to participating business (APRA Product Groups 1 and 2, and any Par business reported under group L10).
Column 13 Other Expenses
This item is as per Item 13 in Instructions to LRF 310.1 and LRF 310.2.
Column 14 Total Expenses
This item is as per Item 14 in Instructions to LRF 310.1 and LRF 310.2.
The number entered should equal the sum of columns 6, 7, 11, 12 and 13.
Column 15 Profit/(Loss) before Income Tax
This item is as per Item 15 in Instructions to LRF 310.1 and LRF 310.2.
The number entered should equal column 5 ‘total revenue’ less column 14 ‘total expenses’.
Column 16 Tax
This item is as per Item 16 in Instructions to LRF 310.1 and LRF 310.2.
Column 17 Profit/(Loss) after Income Tax [derived item]
This item is as per Item 17 in Instructions to LRF 310.1 and LRF 310.2.
This item represents the profit (or loss) result after tax, for each APRA Product Group. As Item 18 on LRF 310.1 (Increase/Decrease in Unallocated Benefit Fund Reserve) is only expected to be applicable for Friendly Societies (who are not required to complete this form), the result at Item 17 therefore represents ‘profit (or loss) after tax’ attributable to shareholders, for each APRA Product Group.
Section 2 Totals by Class of Business
No value is required to be entered in this section. Items in this section are derived fields that sum up revenue and expenses by class of business.