16In Appendix B, paragraphs B18-B20 are amended to read as follows:

16 In Appendix B, paragraphs B18-B20 are amended to read as follows:

B18 The following are examples of contracts that are insurance contracts, if the transfer of insurance risk is significant:

(g) credit insurance that provides for specified payments to be made to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due under the original or modified terms of a debt instrument. These contracts could have various legal forms, such as that of a guarantee, some types of letter of credit, a credit derivative default contract or an insurance contract. However, although these contracts meet the definition of an insurance contract, they also meet the definition of a financial guarantee contract in AASB 9 and are within the scope of AASB 1321 and AASB 9, not this Standard (see paragraph 4(d)). Nevertheless, if an issuer of financial guarantee contracts has previously asserted explicitly that it regards such contracts as insurance contracts and has used accounting applicable to insurance contracts, the issuer may elect to apply either AASB 1321 and AASB 9 or AASB 1023 to such financial guarantee contracts;

________________________________________________

1 When an entity applies AASB 7, the reference to AASB 132 is replaced by a reference to AASB 7.

(h) …

B19 The following are examples of items that are not insurance contracts:

(e) derivatives that expose one party to financial risk but not insurance risk, because they require that party to make payment based solely on changes in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (see AASB 9);

(f) a credit-related guarantee (or letter of credit, credit derivative default contract or credit insurance contract) that requires payments even if the holder has not incurred a loss on the failure of the debtor to make payments when due (see AASB 9);

(g) …

B20 If the contracts described in paragraph B19 create financial assets or financial liabilities, they are within the scope of AASB 9. Among other things, this means …

Amendments to AASB 5 Amendments to AASB 5

Amendments to AASB 5