Regulatory AlertsGPS 114 Capital Adequacy: Asset Risk Charge
The Australian Prudential Regulation Authority issued Prudential Standard GPS 114 to require general insurers and Level 2 insurance groups to maintain adequate capital against asset risks. The standard mandates the calculation of an Asset Risk Charge based on seven specific stress tests covering real interest rates, inflation, currency, equity, property, credit spreads, and default. These requirements apply to all regulated institutions from 1 July 2023 and form a core component of the Standard Method for determining prescribed capital amounts.
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