NOTES TO FINANCIAL STATEMENTS NOTES TO F I NANC I AL STATEMENTS 3.1.1.1. Changes to classification and measurement (continued) • Measurement of the asset for remaining coverage (reflecting reinsurance premiums paid for reinsurance held) is adjusted to includea loss-recovery component to reflect the expected recovery of onerous contract losses where such contracts reinsure onerous direct contracts. 3.1.1.2. Changes to presentation and disclosure For presentation in the statement of financial position, the Company aggregates insurance issued and reinsurance contracts held, respectively and presents separately: • Portfolios of insurance contracts issued that are assets, • Portfolios of insurance contracts issued that are liabilities, • Portfolios of reinsurance contracts held that are assets, and • Portfolios of reinsurance contracts held that are liabilities. The portfolios referred to above are those established at initial recognition in accordance with the IFRS 17 requirements. The line item descriptions in the statement of profit or loss and other comprehensive income have been changed significantly compared with last year. Previously, the Company reported the following line items: • Gross premiums written, • Changes in unearned premiums, • Reinsurers’ share of insurance premiums, • Reinsurers’ share in unearned premiums, • Net premiums, • Changes in unearned commission, and • Changes in deferred acquisition costs. Instead, IFRS 17 requires separate presentation of: • Insurance revenue, • Insurance service expenses, • Net expenses from reinsurance contracts held, • Insurance finance income or expenses, and • Income or expenses from reinsurance contracts held. The Company provides disaggregated qualitative and quantitative information about: • Amounts recognised in its financial statements from insurance contracts. • Significant judgements, and changes in those judgements, when applying the standard. 3.1.1.3. Transition On transition date, 1 January 2022, the Company: • Has identified, recognised and measured each group of insurance contracts as if IFRS 17 had always applied. • Derecognised any existing balances that would not exist had IFRS 17 always applied. • Recognised any resulting net difference in retained deficit. 3.1.2. IFRS 9 Financial Instruments IFRS 9 replaces IAS 39, Financial instruments - recognition and measurement. It provides three principal classification categories for financial assets: measure at amortized cost; fair value through other comprehensive income or fair value through profit and loss. The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. The Company has assessed the business model to the portfolio of financial assets held and determined that financial assets are managed and evaluated based upon their fair value performance and held for trading and thereby measured at fair value through profit or loss as financial assets are neither held to collect contractual cash flows nor held both to collect contractual cash flows and to sell financial assets. The Company therefore recognizes financial assets at fair value through profit or loss with subsequent measurement at fair value through profit or loss with any change in the fair value reported in investment income in the statement of profit or loss and other comprehensive income. This is no different from how the company measured their financial assets under IAS 39 96
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