3.2 Changes to presentation and disclosure
Changes to presentation and disclosure
For presentation in the consolidated statement of financial position, the Group aggregates insurance and reinsurance contracts issued and reinsurance contracts held, respectively and presents separately:
- Groups Of insurance and reinsurance contracts issued that are assets;
- Groups Of insurance and reinsurance contracts issued that are liabilities;
- Groups of reinsurance contracts held that are assets; and
- Groups Of reinsurance contracts held that are liabilities.
The groups referred to above are those established at initial recognition in accordance with the IFRS 17 requirements.
The line-item descriptions in consolidated statement of profit or loss and consolidated other comprehensive income have been changed significantly compared with previous year. Earlier, the Group reported the following line items:
- Gross premiums written
- Reinsurance share of premiums
- Reinsurance share of ceded business premiums
- Net premiums
- Net transfer to unearned premium reserve
- Net premiums earned
- Commission earned
- Commission paid
- Gross underwriting income
- Gross claims paid
- Changes in technical reserves
- Reinsurance share of insurance claims and loss adjustments
- Net claims incurred
Instead, IFRS 17 requires separate presentation of:
- Insurance revenue
- Insurance service expenses
- Allocation of reinsurance premiums
- Amounts recoverable from reinsurance for incurred claims
- Insurance finance income or expenses
- Income or expenses from reinsurance contracts held
The Group provides qualitative and quantitative information about:
- Amounts recognised in its financial statements from insurance contracts
- Significant judgements and changes in those judgements, when applying the standard.
Transition
Changes in accounting policies resulting from the adoption of IFRS 17 have been applied using a full retrospective approach to the extent practicable. Under the full retrospective approach, at 1 January 2022 the Group:
- Identified, recognised and measured each portfolio of insurance and reinsurance contracts as if IFRS 17 had always been applied;
- identified, recognised and measured any assets for insurance acquisition cash flows as if IFRS 17 had always been applied;
- Derecognised previously reported balances that would not have existed if IFRS 17 had always been applied. These included some deferred acquisition costs for insurance contracts, intangible assets related to insurance contracts (previously referred to as ‘value of business acquired’), insurance receivables and payables, and provisions for levies that are attributable to existing insurance contracts. Under IFRS 17, they are included in the measurement of the insurance contracts; and
- Recognised any resulting net difference in equity.
The Group has applied the transition provisions in IFRS 17 and has not disclosed the impact of the
adoption of IFRS 17 on each consolidated financial information line item and Earning Per Share. The effects of adopting IFRS 17 on the consolidated financial statements at 1 January 2022 are presented in the consolidated statement of changes in equity.
Insurance and reinsurance contracts classification
The Group issues insurance contracts in the normal course of business, under which it accepts significant insurance risk from its policyholders. As a general guideline, the Group determines whether it has significant insurance risk, by comparing benefits payable after an insured event with benefits payable if the insured event did not occur, Insurance contracts can also transfer financial risk.
Insurance and reinsurance contracts accounting treatment
Separating components from insurance and reinsurance contracts
The Group assesses its insurance and reinsurance products to determine whether they contain distinct components which must be accounted for under another IFRS instead of under IFRS 17. After separating any distinct components, the Group applies IFRS 17 to all remaining components of the (host) insurance contract. Currently, the Group’s products do not include any distinct components that require separation.
Some reinsurance contracts issued contain profit commission arrangements. Under these arrangements, there is a minimum guaranteed amount that the policyholder will always receive — either in the form of profit commission, or as claims, or another contractual payment irrespective of the insured event happening. The minimum guaranteed amounts have been assessed to be highly interrelated with the insurance component of the reinsurance contracts and are, therefore, non-distinct investment components which are not accounted for separately. However, receipts and payments of these investment components are recognised outside of profit or loss.
