Notes to the Financial Statements
• amounts related to the loss component; • amounts of transaction-based taxes collected in a fiduciary capacity; and • insurance acquisition expenses; • changes in the risk adjustment for non- financial risk, excluding: • changes included in insurance finance income (expenses); • changes that relate to future coverage (which adjust the CSM); and • amounts allocated to the loss component; • amounts of the CSM recognised in profit or loss for the services provided in the period; and • experience adjustments arising from premiums received in the period that relate to past and current service and related cash flows such as insurance acquisition cash flows and premium- based taxes. • Insurance acquisition cash flows recovery is determined by allocating the portion of premiums related to the recovery of those cash flows on the basis of the passage of time over the expected coverage of a group of contracts.
The amounts of loss component allocation in the first two bullets above reduce the respective components of insurance revenue and are reflected in insurance service expenses. Decreases in the FCF in subsequent periods reduce the remaining loss component and reinstate the CSM after the loss component is reduced to zero. Increases in the FCF relating to future service in subsequent periods increase the loss component.
Reinsurance contracts held - Loss-recovery component
A loss-recovery component is established or adjusted within the asset for remaining coverage for reinsurance contracts held for the amount of income recognised in profit or loss when the Group recognises a loss on initial recognition of an onerous group of underlying insurance contracts or on addition of onerous underlying insurance contracts to that group. Subsequently, the loss-recovery component is adjusted to reflect changes in the loss component of an onerous group of underlying insurance contracts discussed in the Onerous contracts – Loss component section above. The loss-recovery component is further adjusted, if required, to ensure that it does not exceed the portion of the carrying amount of the loss component of the onerous group of underlying insurance contracts that the Group expects to recover from the group of reinsurance contracts held. The loss-recovery component determines the amounts that are presented as a reduction of incurred claims recovery from reinsurance contracts held and are consequently excluded from the reinsurance expenses determination.
Insurance service expenses
Insurance service expenses include the following: • incurred claims and benefits; • other incurred directly attributable insurance service expenses; • amortisation of insurance acquisition cash flows; • changes that relate to past service (that is, changes in the FCF relating to the LIC); and • changes that relate to future service (that is, losses/ reversals on onerous groups of contracts from changes in the loss components). Amortisation of insurance acquisition cash flows is reflected in insurance service expenses in the same amount as insurance acquisition cash flows recovery reflected within insurance revenue as described above. Other expenses not meeting the above categories are included in other operating expenses in the consolidated statement of profit or loss.
5.1.5 Amounts recognised in comprehensive income
5.1.5.1 Insurance service result from insurance contract issued
Insurance revenue
As the Group provides services under the group of insurance contracts, it reduces the LRC and recognises insurance revenue. The amount of insurance revenue recognised in the reporting period depicts the transfer of promised services at an amount that reflects the portion of consideration the Group expects to be entitled to in exchange for those services. Insurance revenue comprises the following: • Amounts relating to the changes in the LRC: • insurance claims and expenses incurred in the period measured at the amounts expected at the beginning of the period, excluding:
5.1.5.2 Insurance service result from reinsurance contract held
Net income/(expense) from reinsurance contract held
The Group presents financial performance of groups of reinsurance contracts held on a net basis in net income (expenses) from reinsurance contracts held, comprising the following amounts:
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ClearView Annual Report 2024
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