NobleOak in breach of standards, says APRA

On Friday, the Australian Prudential Regulation Authority (APRA) confirmed that it has notified NobleOak that the life insurer is in breach of its prudential and reporting obligations in relation to capital.

The prudential regulator said it had written to NobleOak’s board to formally advise that it has breached Prudential Standard LPS 117 Capital Adequacy: Asset Concentration Risk Charge (LPS 117) and Reporting Standard LRS 117.0 Asset Concentration Risk Charge (LRS 117.0).

These breaches, it explained, relate to the measurement and reporting of NobleOak’s reinsurance exposures and the associated asset concentration risk, which have resulted in a breach of capital requirements.

“NobleOak’s non-compliance poses no immediate risk to members and policyholders. It is not connected to any recent financial market movements or developments,” APRA noted.

In response to APRA, NobleOak has advised the regulator of its plan for remediating the breach of LPS 117 requirements by 1 July 2023.

APRA indicated that it is satisfied that this plan is credible and said that it would monitor the execution of the plan closely over the coming months.

“APRA will examine NobleOak’s processes for compliance with its prudential and reporting obligations in the context of its broader risk governance framework to establish the underlying causes of the breaches,” the regulator added.

“APRA will also take action as needed to hold those responsible for the breach to account.”

NobleOak acknowledged the notification from APRA in a statement to the ASX on Friday. The company noted that it is already undertaking actions to manage the way it operates its reinsurance arrangements as previously disclosed in its half-year financial report.

“NobleOak believes the combined impact of these actions will effectively mitigate the issues raised by APRA and satisfy its regulatory reporting obligations by 30 June 2023,” it said.

“NobleOak has longstanding relationships with its diversified panel of APRA-regulated reinsurers and is working collaboratively with these reinsurers and APRA.”

Additionally, the company said that it was reviewing its control environment and accountability and pledged to remedy any deficiencies identified.

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.