Financial Sector (Collection of Data) (reporting standard) determination No. 86 of 2006
Reporting Standard GRS 400.0 (2007) Statement of Risk by Country
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 GRS 400.0 (2005) Statement of Risk by Country which is in force as at the date of this determination (the old standard); and
 
·        DETERMINE Reporting Standard GRS 400.0 (2007) Statement of Risk by Country in the form set out in the Schedule (the new standard), which applies to the financial sector entities referred to in paragraph 2 of the new standard.
 
Under section 15 of the Act, I DECLARE that the new standard shall begin to apply, and the old standard shall cease to apply, on the later of 1 January 2007 and the date of registration on the Federal Register of Legislative Instruments.
 
Dated    15       December 2006
 
[signed]
………………………
John Trowbridge
Member
Interpretation
In this Determination
APRA means the Australian Prudential Regulation Authority.
Schedule
 
Reporting Standard GRS 400.0 (2007) Statement of Risk by Country comprises 14 pages commencing on the next page.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Reporting Standard GRS 400.0 (2007)
 
Statement of Risk by Country
 
 
Objective of this reporting standard
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act).  It requires general insurers (insurers), including foreign general insurers (foreign insurers) operating in Australia through branch operations, to report to APRA, generally on an annual basis, financial exposure by country or region.
This reporting standard outlines the overall requirements for the provision of this information to APRA.  It should be read in conjunction with Form GRF 400.0 Statement of Risk by Country (Form GRF 400.0) and the instructions to that form (which are attached and form part of this reporting standard).
 
Purpose
1.             Data collected in Form GRF 400.0 is used by APRA for the purpose of prudential supervision of insurers.
Application and commencement
2.             This reporting standard applies to all insurers on and from 1 January 2007.
Information required
3.             An insurer must provide APRA with the information required by Form GRF 400.0 for each reporting period.
Forms and method of submission
4.             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 manually completing Form GRF 400.0 on paper and mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales.
 
Where the information is submitted by means of an agent to whom the insurer has outsourced the function of providing the information on the insurer’s behalf, the agent may only provide the information in accordance with subparagraph 4(b) if the agent has contacted APRA and advised that the agent cannot submit the information in electronic form under subparagraph 4(a).
           
Note: the Direct to APRA application software and paper forms may be obtained from APRA. 
Reporting periods and due dates
5.             Subject to paragraph 6, an insurer must provide the information required by this reporting standard in respect of each financial year (within the meaning of the Corporations Act 2001) of the insurer. 
Note: APRA proposes to determine exemptions, under section 7 of the Insurance Act 1973 (Insurance Act), from the obligations under Part IV Division 4 of the Insurance Act in respect of the auditing of information provided under this reporting standard.
6.             APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular insurer to require it to provide the information:
(a)           more frequently (if, having regard to the particular circumstances of the insurer, APRA considers it necessary or desirable to obtain information more frequently for the purposes of the prudential supervision of the insurer); or
(b)          less frequently (if, having regard to the particular circumstances of the insurer and the extent to which it requires prudential supervision, APRA considers it unnecessary to require the insurer to provide the information as frequently as provided by paragraph 5).
7.             The information required by paragraph 3 of this reporting standard must be provided to APRA 4 months after the end of the reporting period to which the information relates.
8.             APRA may grant an insurer 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.
Authorisation
9.             The information provided by an insurer under this reporting standard must be subject to processes and controls developed by the insurer for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the insurer to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
10.         If the officer of an insurer provides the information required by this reporting standard:
(a)           under subparagraph 4(a), the officer must digitally sign, authorise and encrypt the information (for which purpose APRA’s certificate authority will issue digital certificates, for use with the ‘Direct to APRA’ application, to officers of the insurer who have authority from the insurer to transmit data to APRA); or
(b)          under subparagraph 4(b), the completed form must be signed in accordance with paragraph 12.
11.         If an insurer provides the information required by this reporting standard through an agent under either subparagraph 4(a) or (b), the agent will not be required to sign or authorise the information.  However, the insurer must:
(a)           obtain from the agent a paper copy of the completed form as provided to APRA (whether it was provided under subparagraph 4(a) or (b)); and
(b)          cause the paper copy to be signed in accordance with paragraph 12; and
(c)           lodge the signed paper copy with APRA by mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales, by the relevant due date (unless APRA, in writing, waives the requirement to lodge the signed paper copy with APRA by varying this reporting standard in relation to the insurer).
Note: APRA may, for example, determine to waive the requirement under subparagraph 11(c) where an insurer has undertaken to retain the signed copy of the completed form for an agreed period of time.
12.         If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either:
(a)           the Principal Executive Officer of the insurer; or
(b)          the Chief Financial Officer of the insurer (whatever his or her official title may be).
Minor alterations to forms and instructions
13.         APRA may make minor variations to:
(a)           a form that is part of this reporting standard, and the instructions to such a form, to correct technical, programming or logical errors, inconsistencies or anomalies; or
(b)          the instructions to a form, to clarify their application to the form
without changing any substantive requirement in the form or instructions.
14.         If APRA makes such a variation it must notify insurers in writing.
Transition
 
15.         An insurer must report in relation to a reporting period ending prior to 1 January 2007 in accordance with the reporting standard that this reporting standard replaced.
Interpretation
16.         In this reporting standard:
approved auditor means an auditor who has been approved by APRA under section 40 of the Insurance Act;
foreign insurer means a foreign general insurer within the meaning of the Insurance Act;
Note: A reference to a ‘branch’ or ‘branch operation’ is a reference to the Australian operations of a foreign insurer.
Insurance Act means the Insurance Act 1973;
insurer means a general insurer within the meaning of the Insurance Act;
Note: In the forms and instructions, a reference to an ‘authorised insurer’, ‘authorised insurance entity’ or ‘licensed insurer’ is a reference to an insurer, and a reference to an ‘authorised reinsurance entity’ is a reference to an insurer whose business consists only of undertaking liability by way of reinsurance.
Principal Executive Officer means the principal executive officer of the insurer for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the insurer;
reporting period means a period mentioned in paragraph 5 or, if applicable, paragraph 6.
17.         A reference to a prudential standard means the prudential standard, made under section 32 of the 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 GRF 400.0
Statement of Risk by Country
Instruction Guide
Introduction
This form provides selected information of business written by authorised general insurers outside Australia; namely:
·               premium revenue;
·               reinsurance expense;
·               claims expense;
·               reinsurance recoveries;
·               investment income;
·               premium liabilities;
·               outstanding claims provision;
·               borrowings/loan capital;
·               expected reinsurance recoveries; and
·               investments.
This form only needs to be completed where the insurer has business operations outside of Australia (i.e. where they have items of income, expense, assets, liabilities or capital outside of Australia as defined in this instructions set).
Audit requirements
The information provided under the form is not required to be audited and has been exempted from the definition of ‘yearly statutory accounts’.
Reporting entities
Forms are to be completed for the following reporting entities where appropriate:
1.             Branch operations of a foreign parent insurer (reference to licensed insurer in the form means total operations of the branch, excluding the parent operations);
2.             Authorised insurance entities, including mutual entities (reference to licensed insurer in the form means total operations of the licensed entity); and
3.             Authorised reinsurance entities (reference to licensed insurer in the form means total operations of the licensed entity).
Basis of preparation
In completing this form, unless otherwise specifically stated, insurers are recommended to adopt the measurement and recognition requirements as required by the prudential reporting framework, as appropriate (i.e. outstanding claims provision and premium liabilities).
Unit of measurement
This form is to be presented in Australian currency, rounded to thousands of dollars, with no decimal place.
Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’.
The general requirements of AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’ for translation are:
1.             Foreign currency monetary items[1] outstanding at the reporting date must be translated at the spot rate[2] at the reporting date.
2.             Foreign currency non-monetary items[3] that are measured at historical cost in a foreign currency must be translated using the exchange rate at the date of the transaction.
3.             Foreign currency non-monetary items that are measured at fair value will be translated at the exchange rate at the date when fair value was determined.
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 ‘Financial Instruments: Recognition and Measurement’.  However, those foreign currency derivatives that are not within the scope of AASB 139 ‘Financial Instruments: Recognition and Measurement’ (eg some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’.
For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post acquisition changes in equity are required to be translated on the date of the movement.
As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.
Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.
The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss.
4.             Translation of financial reports of foreign operations.
A foreign operation is defined in AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’ as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.
·               Exchange differences relating to foreign currency monetary items that form part of the net investment of an entity in a foreign operation, must be recognised as a separate component of equity.
·               Translation of financial reports should otherwise follow the requirements in AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’.
Reporting period
Insurers are required to report the information in the reporting form on an annual basis.
·               The annual information is to be completed in respect of the financial year of the insurer.
·               The financial information requested in this form is to be reported as at the last day of the reporting period on a financial year to date basis of the insurer.
Reporting lag
This form must be lodged for each of the reporting units within the number of business days after the end of the quarter as set out in Reporting Standard GRS 400.0 Statement of Risk by Country.
Specific instructions
The appropriate information is to be reported by country or geographic region specified on the form. This is to be reported according to where the items of income/expense are on risk, assets are invested, and liabilities are located. Enter the relevant details for each country as appropriate.
1.             Premium Revenue - Direct & Inwards reinsurance
This is the premium revenue as required by the APRA forms (refer to instructions GRF 310.1 Premium Revenue and Reinsurance Expense).  It is to be reported in respect of total direct business and inwards reinsurance business.
Premium revenue is not to be reported in accordance with AASB 1023 ‘General Insurance Contracts’ (i.e. earned and unearned components).
2.             Reinsurance expense - Direct & Inwards reinsurance
This is the reinsurance expense as required by the APRA forms (refer to instructions GRF 310.1 Premium Revenue and Reinsurance Expense).  It is to be reported in respect of total direct business and inwards reinsurance business.
Reinsurance expense is not to be reported in accordance with AASB 1023 ‘General Insurance Contracts’ (i.e. it is not to be amortised in accordance with the pattern of reinsurance service received).
3.             Claims Expense - Direct & Inwards reinsurance

3.1        Relating to current and prior years
Represents claims expense in relation to claim payments made in the current year and movements in the Outstanding Claims Provision (i.e. relating to current and prior years) as recognised in GRF 310.0 Statement of Financial Performance.
3.2        Relating to future years
Represents claims expense in relation to movements in the premium liabilities (i.e. relating to future years) as recognised in GRF 310.0 Statement of Financial Performance.
4.             Reinsurance recoveries revenue

4.1        Relating to current and prior years
Report the reinsurance recoveries that relate to claim payments made and movements in the Outstanding Claims Provision as recognised in GRF 310.0 Statement of Financial Performance.
4.2        Relating to future years
Report movement in the value of expected reinsurance recoveries that are recognised in relation to the recognition of premium liabilities as recognised in GRF 310.0 Statement of Financial Performance.
5.             Investment Income
Include investment income as recognised in GRF 310.0 Statement of Financial Performance.
6.             Amounts recoverable on reinsurance contracts and outstanding claims
Report the value of amounts recoverable on reinsurance contracts and outstanding claims.  The total amount must reconcile with total net amount recoverable on reinsurance contracts net of provision for doubtful debts reported as current and non-current assets in GRF 300.0 Statement of Financial Position.
7.             Expected reinsurance recoveries
The term “Expected reinsurance recoveries” is used to describe the expected value of reinsurance recoveries in respect of Premium Liabilities.  The total amount must reconcile with expected reinsurance recoveries on Premium Liabilities reported as current and non-current assets in GRF 300.0 Statement of Financial Position.
8.             Other reinsurance assets
Report the value of all other reinsurance assets (refer to instructions for GRF 300.0 Statement of Financial Position).
9.             Investments
Report the value of the investments.  The total amount must reconcile with investments integral to insurance operations (related to GRF 140 series of forms) reported as current and non-current assets in GRF 300.0 Statement of Financial Position.
10.        Other investments
Report investments that do not constitute investments integral to insurance operations attributable to the respective countries listed.  The total amount must reconcile with other investments as reported in GRF 300.0 Statement of Financial Position.
11.        All Other assets
Report the value of other assets (other than those listed above) attributable to the respective countries listed in the form. The value of “Other Assets” must represent the remaining total assets of the reporting insurer.
12.        Total Assets
Represent the total assets of the reporting insurer.  This must reconcile with the total assets as reported in GRF 300.0 Statement of Financial Position.
13.        Premium Liabilities
The amount reported is to be measured in accordance with GPS 310 Audit and Actuarial Reporting and Valuation.  The total amount must reconcile with the total amount reported as current and non-current Premium Liabilities as reported in GRF 300.0 Statement of Financial Position.
14.        Outstanding Claims Provision
The amount reported is to be measured in accordance with GPS 310 Audit and Actuarial Reporting and Valuation.  The total amount must reconcile with the total amount reported as current and non-current Outstanding Claims Provision in GRF 300.0 Statement of Financial Position.
15.        Borrowings/loan capital
Report the carrying value of any amount borrowed.
16.        Other
Report the value of other liabilities (other than those listed above). The value of “Other Liabilities” must represent the remaining total liabilities of the reporting insurer.
17.        Total Liabilities
Represent the total liabilities of the reporting insurer. This must reconcile with the total liabilities as reported in GRF 300.0 Statement of Financial Position.

[1]           Monetary items are defined to mean units of currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency.
[2]           Spot rate means the exchange rate for immediate delivery.
[3]           Examples of non-monetary items include amounts prepaid for goods and services (e.g. prepaid rent); goodwill; intangible assets; physical assets; and provisions that are to be settled by the delivery of a non-monetary asset.