Chapter 5 - Aggregation
Hello, I have 2 questions about the text in the Battle acts:
- Under the reinsurance part, it says on acquisition of a group of contracts, the acquirer reassesses the groups to identify the groups - I thought we could not reassess groups unless there was derecognition or modification of contract?
- About the transition and aggregation, I'm not sure I understand the difference between the Modified Retrospective Approach and the Fair Value Approach. In the modified retrospective we can include contracts that are issued more than 1 year apart only if we don't have reasonable information and Fair Value you are permitted to include contracts issued more than 1 year no matter if you have information or not, and in addition you can divide the groups into contracts issued within a year or less , but only if you have supportable information. Is that what it means? I also find the last bullet point a bit confusing in the wording. Is there something missing?
Thank you for clarifying!
Comments
For your first question, this is specifically referring to an acquisition of an insurer's liabilities not for day to day operations per say. (I guess you could say acquiring an insurer's liabilities is kind of a derecognition and then recognition again)
Your interpretation is correct for the difference between the modified retrospective approach and the fair value approach. For the last sentence, it is more clear if we delve into greater detail for IFRS27 transitions (chapter 12) but it is not required. Tbh I wouldn't bother too much with the difference between both these methods