Life Insurance Applications (LIA) Practice Questions - Life Insurance Applications (LIA) - Actuaries Institute Fellowship Program Exam

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Under APRA Prudential Standard LPS 110 (Capital Adequacy), what is the regulatory capital requirement that an Australian life company must meet, and at what level is it applied?

The capital base must exceed the Prescribed Capital Amount, and the requirement applies to each statutory fund and to the company as a whole Common Equity Tier 1 capital must exceed total policyholder liabilities for the company as a whole only Annual premium income must exceed the maximum death benefit sum insured in each statutory fund A cash settlement reserve must be held equal to the previous year's reinsurance recoveries

Correct Answer:

The capital base must exceed the Prescribed Capital Amount, and the requirement applies to each statutory fund and to the company as a whole

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