Notes to the Financial Statements
LifeSolutions and ClearChoice groups of underlying contracts where it is impractical to source required input data; and • The fair value approach was applied to the reinsurance contracts held backing non-advice and legacy groups of underlying contracts.
The transition approach was determined at a group of insurance contracts level and affected the approach to calculating the CSM on initial adoption of AASB 17: • full retrospective approach - the CSM at inception is based on initial assumptions when groups of contracts were incepted and rolled forward to the date of transition as if AASB 17 had always been applied; • modified retrospective approach - the CSM at inception is calculated based on assumptions at transition using some simplifications and taking into account the actual pre-transition FCF; and • fair value approach - the pre-transition FCF and experience are not considered. The Group has determined that it would be impracticable to apply the full retrospective approach where any of the following conditions existed: • The effects of the full retrospective application were not determinable; • The full retrospective application required assumptions that would have been made in an earlier period; • The full retrospective application required significant estimates of amounts, and it was impossible to distinguish objectively between information about those estimates that provided evidence of circumstances that (i) existed on the date at which those amounts were to be recognised, measured or disclosed; and (ii) would have been available when the consolidated financial statements for that prior period were authorised for issue, and other information. For AIACF, the transition approaches follow the approaches applied to the underlying contracts, which were the following: • The fully retrospective approach was applied to recent stepped premium business for LifeSolutions and ClearChoice groups of underlying contracts; • The modified retrospective approach was applied to the older stepped premium LifeSolutions groups of underlying contracts; and • The fair value approach was applied to non-advice and legacy groups. For reinsurance contracts held, the transition approaches were applied as following: • The fully retrospective approach was applied to the reinsurance contracts held backing recent LifeSolutions and ClearChoice groups of underlying contracts where required input data is available; • The modified retrospective approach was applied to the reinsurance contracts held backing older
5.1.6.1 Fully retrospective approach
The Group has determined that reasonable and supportable information was available for all contracts in force at the transition date that were issued within three years prior to the transition. Accordingly, the Group has recognised and measured each group of insurance contracts in this category as if AASB 17 had always applied; derecognised any existing balances that would not exist had AASB 17 always applied; and recognised any resulting net difference in equity.
5.1.6.2 Modified retrospective approach
After making reasonable efforts to gather necessary historical information, the Group has determined that for certain groups of contracts, such information was not available or not available in a form that would enable it to be used without undue cost and effort. It was therefore impracticable to apply the full retrospective approach, and either the modified retrospective approach or the fair value approach has been used for these groups. The Group has determined to apply the modified retrospective approach to all groups of contracts in force as at transition and originated more than three years prior to the transition date, where the full retrospective approach has not been applied as it was impracticable. The exception is a group of older legacy non-advice based business where the fair value approach is applied for all cohorts. The key simplifications used for the modified retrospective approach include: • Combining historical groups of contracts into one group for all FY19 and earlier cohorts; • Using transition date information to identify groups of contracts, including onerous contract assessment; • Using combination of historical actual cash flows and projected future cash flows to estimate a group of contracts’ total future cash flows from initial recognition; • Determining the discount rates to be used at initial recognition based on a weighted average of observable yield curves; and
130
ClearView Annual Report 2024
Powered by FlippingBook