Appendix A

Defined terms

This appendix is an integral part of AASB 4.

<table cellspacing="0" cellpadding="0" style="width:487.35pt; border-collapse:collapse"><tbody><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">cedant</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>The </span><span style="font-weight:bold">policyholder</span><span> under a </span><span style="font-weight:bold">reinsurance contract</span><span>.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">deposit component</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>A contractual component that is not accounted for as a derivative under AASB</span><span> </span><span>9 and would be within the scope of AASB</span><span> </span><span>9 if it were a separate instrument.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">direct insurance contract</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>An </span><span style="font-weight:bold">insurance contract</span><span> that is not a </span><span style="font-weight:bold">reinsurance contract</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">discretionary participation feature</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>A contractual right to receive, as a supplement to </span><span style="font-weight:bold">guaranteed benefits</span><span>, additional benefits:</span></p><p class="NumPlain1"><span>(a)</span><span style="width:14.4pt; text-indent:0pt; display:inline-block"> </span><span>that are likely to be a significant portion of the total contractual benefits;</span></p><p class="NumPlain1"><span>(b)</span><span style="width:13.84pt; text-indent:0pt; display:inline-block"> </span><span>whose amount or timing is contractually at the discretion of the issuer; and</span></p><p class="NumPlain1"><span>(c)</span><span style="width:14.4pt; text-indent:0pt; display:inline-block"> </span><span>that are contractually based on:</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold"></span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NumPlain2"><span>(i)</span><span style="width:16.06pt; text-indent:0pt; display:inline-block"> </span><span>the performance of a specified pool of contracts or a specified type of contract;</span></p><p class="NumPlain2"><span>(ii) </span><span style="width:10.78pt; text-indent:0pt; display:inline-block"></span><span>realised and/or unrealised investment returns on a specified pool of assets held by the issuer; or</span></p><p class="NumPlain2"><span>(iii) </span><span style="width:8pt; text-indent:0pt; display:inline-block"></span><span>the</span><span> profit or loss of the company, fund or other entity that issues the contract.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">fair value</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-style:italic">Fair value</span><span> is t</span><span>he price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurem</span><span>ent date.</span><span> </span><span>(See AASB</span><span> </span><span>13.)</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">financial guarantee contract</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>A contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due </span><span>in</span><span> accordance with the original or modified terms of a debt instrument.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">f</span><span style="font-weight:bold">inancial risk</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>The risk of a possible future change </span><span>in</span><span> 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 </span><span>in</span><span> the case of a non-financial variable that the variable is not specific to a party to the contract.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">guaranteed benefits</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>Payments or other benefits to which a particular </span><span style="font-weight:bold">policyholder</span><span> or investor has an unconditional right that is not subject to the contractual discretion of the issuer.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">guaranteed element</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>An obligation to pay </span><span style="font-weight:bold">guaranteed benefits</span><span>, included </span><span>in</span><span> a contract that contains a </span><span style="font-weight:bold">discretionary participation feature.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">insurance asset</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>An </span><span style="font-weight:bold">insurer’s</span><span> net contractual rights under an </span><span style="font-weight:bold">insurance contract.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">insurance contract</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>A contract under which one party (the</span><span style="font-weight:bold"> insurer</span><span>) accepts significant </span><span style="font-weight:bold">insurance risk</span><span> from another party (the </span><span style="font-weight:bold">policyholder</span><span>) by agreeing to compensate the </span><span style="font-weight:bold">policyholder</span><span> if a specified uncertain future event (the </span><span style="font-weight:bold">insured event</span><span>) adversely affects the </span><span style="font-weight:bold">policyholder</span><span>.</span><span> </span><span>(See Appendix B for guidance on this definition.)</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">insurance liability</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>An </span><span style="font-weight:bold">insurer’s</span><span> net contractual obligations under an </span><span style="font-weight:bold">insurance contract</span><span>.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">insurance risk</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>Risk, other than </span><span style="font-weight:bold">financial risk</span><span>, transferred from the holder of a contract to the issuer.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">insured event</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>An uncertain future event that is covered by an </span><span style="font-weight:bold">insurance contract</span><span> and creates </span><span style="font-weight:bold">insurance risk</span><span>.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">insurer</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>The party that has an obligation under an </span><span style="font-weight:bold">insurance contract</span><span> to compensate a </span><span style="font-weight:bold">policyholder</span><span> if an </span><span style="font-weight:bold">insured event</span><span> occurs.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">liability adequacy test</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>An assessment of whether the carrying amount of an </span><span style="font-weight:bold">insurance liability</span><span> needs to be increased (or the carrying amount of related deferred acquisition costs or related intangible assets decreased), based on a review of future cash flows.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">policyholder</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>A party that has a right to compensation under an </span><span style="font-weight:bold">insurance contract</span><span> if an </span><span style="font-weight:bold">insured event</span><span> occurs.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">reinsurance assets</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>A </span><span style="font-weight:bold">cedant’s</span><span> net contractual rights under a </span><span style="font-weight:bold">reinsurance contract</span><span>.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">reinsurance contract</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>An </span><span style="font-weight:bold">insurance contract</span><span> issued by one </span><span style="font-weight:bold">insurer</span><span> (the </span><span style="font-weight:bold">reinsurer</span><span>) to compensate another </span><span style="font-weight:bold">insurer</span><span> (the </span><span style="font-weight:bold">cedant</span><span>) for losses on one or more contracts issued by the </span><span style="font-weight:bold">cedant</span><span>.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">reinsurer</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>The party that has an obligation under a </span><span style="font-weight:bold">reinsurance contract</span><span> to compensate a </span><span style="font-weight:bold">cedant</span><span> if an </span><span style="font-weight:bold">insured event</span><span> occurs.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">unbundle</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>Account for the components of a contract as if they were separate contracts.</span></p></td></tr><tr><td colspan="2" style="width:260.1pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><h2 id="navPoint_40" style="margin-top:12pt"><span>Additional Australian Defined Terms</span></h2></td><td style="width:205.65pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-top:12pt"><span></span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span style="font-weight:bold">general insurance contract</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>An</span><span style="font-style:italic"> </span><span style="font-weight:bold">insurance contract</span><span style="font-weight:bold; font-style:italic"> </span><span>that is not a </span><span style="font-weight:bold">life insurance contract</span><span style="font-style:italic">.</span></p></td></tr><tr><td style="width:108pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="AusBold1" style="margin-left:0pt; text-indent:0pt"><span>life insurance contract</span></p></td><td colspan="2" style="width:357.75pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1"><span>An </span><span style="font-weight:bold">insurance contract</span><span style="font-style:italic">, </span><span>or a financial instrument with a </span><span style="font-weight:bold">discretionary participation feature</span><span>,</span><span style="font-style:italic"> </span><span>regulated under the</span><span style="font-style:italic"> Life Insurance Act 1995</span><span>, and similar contracts issued by entities operating outside Australia.</span><span></span></p></td></tr><tr style="height:0pt"><td style="width:118.8pt"></td><td style="width:152.1pt"></td><td style="width:216.45pt"></td></tr></tbody></table>