Regulatory AlertsLPS 117 Capital Adequacy: Asset Concentration Risk Charge
The Australian Prudential Regulation Authority issued Prudential Standard LPS 117 to require all life insurers to maintain adequate capital against asset concentration risks. The standard establishes a specific charge calculated by comparing individual asset and counterparty exposures against prescribed limits, with modified valuation methods for reinsurance assets. It further details the treatment of collateral and guarantees as risk mitigants and mandates robust internal controls within the insurer's capital adequacy assessment process.
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