14Life Insurance Contracts Disclosure – Explanation of Recognised Amounts

14                 Life Insurance Contracts Disclosure – Explanation of Recognised Amounts

14.1 A life insurer shall disclose information that identifies and explains the amounts in its financial statements arising from life insurance contracts.

14.1.1 To comply with paragraph 14.1, a life insurer shall disclose:

(a) its accounting policies for life insurance contracts and related assets, liabilities, income and expense;

(b) the recognised assets, liabilities, income, expense and cash flows arising from life insurance contracts.  Furthermore, if the life insurer is a cedant, it shall disclose:

(i) gains and losses recognised in profit or loss at the time of buying reinsurance; and

(ii) if the cedant defers and amortises gains and losses arising at the time of buying reinsurance, the amortisation for the period and the amounts remaining unamortised at the beginning and end of the period;

(c) the process used to determine the assumptions that have the greatest effect on the measurement of the recognised amounts described in (b).  When practicable, a life insurer shall also give quantified disclosure of those assumptions;

(d) the effect of changes in assumptions used to measure life insurance assets and life insurance liabilities, showing separately the effect of each change that has a material effect on the financial statements; and

(e) reconciliations of changes in life insurance liabilities and reinsurance assets.

14.1.2 When applying paragraph 14.1.1(b) and disclosing recognised income arising from life insurance contracts, life insurers would normally disclose income from direct and reinsurance business.  In accordance with the principles embodied in this Standard, with the exception of premium revenue recognised in accordance with paragraph 5.1, all revenues are recognised and disclosed before the effects of any transfers to or from life insurance liabilities.  Disclosure of the effects of transfers to and from life insurance liabilities is required by paragraph 14.1.1(e).

14.1.3 In accordance with the principles embodied in this Standard, with the exception of claims expense recognised in accordance with paragraph 5.1, all expenses are recognised and disclosed before the effects of any transfers to or from life insurance liabilities.  Disclosure of the effects of transfers to and from life insurance liabilities is required by paragraph 14.1.1(e).

14.1.4 To disclose and explain the expenses arising from life insurance contracts, life insurers would normally disclose:

(a) outwards reinsurance expense;

(b) operating expenses:

(i) claims expense;

(ii) policy acquisition expenses, separated into material components including commission;