ECIC IR 2023

ANNUAL Financial Statements for the year ended 31 March 2023

E

D

H

S

I

L I

N

B

2

0

A

0

T

S

1

E

E X P O R T C R E

L T D

O C

A S

C

R I

D I

F

T

A

I

N

H

S

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U

U

R

O

A

S

N

F

C

O

E

N

C

O

O

I

R

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P

A

O

R

Accounting Policies

Insurance service expenses The main components of insurance profits recognised in insurance service expenses are: c the actual incurred claims and claims handling expense cash flows; c expected future losses on onerous groups of contracts; c the changes in liability for incurred claims relating to past service; and c the amortisation of insurance acquisition cash flows. The expense cash flows refer only to expenses which are directly attributable to fulfilling the insurance contracts. Non-attributable expenses will be recognised separately in profit or loss. The combined impact of insurance revenue and insurance service expenses will be presented as the insurance service result in profit or loss. Income or expenses from reinsurance contracts The Corporation will present income or expenses from a group of reinsurance contracts held, other than insurance finance income or expenses, as a single amount. Insurance finance income and expense The Corporation recognises all insurance finance income or expenses for the reporting period in profit or loss. The Corporation has therefore elected not to disaggregate insurance finance income or expenses between profit or loss and other comprehensive income. The changes in the risk adjustment for non-financial risk have been disaggregated between the insurance service result and insurance finance income and expenses. 4. Transition The IFRS 17 Standard is applicable to annual periods beginning on or after 1 January 2023. However, the requirement for comparative information means that the IFRS 17 transition statement of financial position will be required at 01 April 2022. When determining the insurance liabilities at transition, the IFRS 17 Standard should be applied retrospectively as if it had always applied unless it is “impracticable” to do so based on the requirements in IAS 8: Accounting policies, Changes in Accounting Estimates and Errors. This retrospective approach is referred to as the full retrospective approach (FRA). Where it is impracticable to apply IFRS 17 retrospectively, various simplifications are permitted when adopting the modified retrospective approach (MRA) or fair value approach (FVA) provided that certain criteria have been met. The FVA has to be applied if there is no reasonable and supportable information to apply the MRA. The transition approach will be determined at a group of insurance contracts level. It is impracticable to adopt the FRA for groups of contracts at the date of transition if: c the approach cannot be applied retrospectively after a reasonable effort was made by businesses to demonstrate that it will not be possible to collect the required information or create information where the required data is unavailable; or c hindsight is needed to determine the estimates at prior periods, i.e. the measurement of the fulfilment cash flows and CSM should apply management’s estimates at that point in time, with only the information that would have been available at that point in time.

5. Summary of impact of IFRS 17 on the Corporation Below is a summary of expected material changes from IFRS 17 implementation:

c Provision for incurred claims will be recognised net of salvages. Currently, salvages are only recognised based on signed salvage restructuring agreement and the asset is only recognised for the salvages receivable within the next twelve months, for amounts receivable beyond that period a contingent asset is disclosed as a claim in favour of the Corporation but not recognised in the statement of financial position. The IBNRs which were raised in the 2022 and 2023 financial years (IFRS 4) were recognised on a gross basis and a salvage asset was not recognised for these provisions. Under IFRS 17, the Corporation will now recognise potential salvages relating to these provisions and salvages which are currently disclosed as contingent.

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