Notes to the Financial Statements
• the effect of changes in interest rates and other financial assumptions. The Group includes all insurance finance income or expenses for the period in profit or loss.
• reinsurance expenses; • incurred claims recovery; • other incurred directly attributable insurance service expenses; • effect of changes in risk of reinsurer non- performance; • changes that relate to future service (that is, changes in the FCF that do not adjust the CSM for the group of underlying insurance contracts); and • changes relating to past service (that is, adjustments to recoveries of incurred claims). Reinsurance expenses are recognised similarly to insurance revenue. The amount of reinsurance expenses recognised in the reporting period depicts the transfer of received services at an amount that reflects the portion of ceding premiums the Group expects to pay in exchange for those services. Reinsurance expenses comprise the following amounts relating to changes in the remaining coverage: • insurance claims and other expenses recovery in the period measured at the amounts expected to be incurred at the beginning of the period; • changes in the risk adjustment for non-financial risk, excluding: • changes included in finance income (expenses) from reinsurance contracts held; and • changes that relate to future coverage (which adjust the CSM); • amounts of the CSM recognised in profit or loss for the services received in the period; and • ceded premium experience adjustments relating to past and current service. Ceding commissions that are not contingent on claims of the underlying contracts issued reduce ceding premiums and are accounted for as part of reinsurance expenses.
5.1.5.4 Basis of expense apportionment
All expenses of the life insurance business incurred by ClearView Life and charged to the statement of profit and loss and other comprehensive income have been apportioned in accordance with Part 6, Division 2 of the Life Act. These expenses are related to non- participating business as ClearView Life only writes this
category of business. The basis is as follows: • Expenses relating specifically to either the
shareholder’s fund or a particular statutory fund are allocated directly to the respective funds. Such expenses are apportioned between policy acquisition costs and policy maintenance costs with reference to the objective when each expense is incurred and the outcome achieved; • Other expenses are subject to apportionment under section 80 of the Life Act and are allocated between the funds in proportion to the activities to which they relate. They are apportioned between policy acquisition costs and policy maintenance costs in relation to their nature as either acquisition or maintenance activities. Activities are based on direct measures such as time, head count and business volumes; and • Life investment contracts are held within statutory funds No.2 and No.4. Life insurance contracts are held within statutory fund No.1. The allocation of expenses between the primary life investment or life insurance contracts is inherent in the allocation to the statutory funds, as described above. The apportionment basis is in line with the principles set in the Life Insurance Prudential Standard valuation standard (Prudential Standard LPS340 Valuation of Policy Liabilities).
5.1.5.3 Insurance finance income or expenses
5.1.6 Transition approaches
Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising from: • the effect of the time value of money and changes in the time value of money; and • the effect of financial risk and changes in financial risk. For contracts measured under the GMM, the main amounts within insurance finance income or expenses are: • interest accreted on the FCF, the CSM and the AIACF; and
The Group has adopted AASB 17 retrospectively, applying alternative transition methods where the full retrospective approach was impracticable. The full retrospective approach was applied to the insurance contracts in force at the transition date that were originated less than three years prior to transition. The modified retrospective approach was applied to the insurance contracts that were originated more than three years prior to transition. The fair value approach was applied to a group of older legacy non-advice based business regardless of the origination years of the policies within the group.
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ClearView Wealth Limited
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