ECIC IR 2023

ANNUAL Financial Statements for the year ended 31 March 2023

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Accounting Policies

that have as its primary purpose the provision of services for a fixed fee. ECIC products do not have any such components that need to be separated out and they do not have participation features or investment components.

3.3 Aggregation of insurance contracts In broad terms ECIC sees it business in two main business lines and four sub-business lines: c Guarantee business: Investment Insurance, Performance Bond Insurance, c Trade Credit business: Investment Guarantee – Commercial loans, Export Credit

These lines of business are also split between medium to long term (tenor 2 years and longer) and short term cover (tenor less than 2 years). However, the risk profile and underlying project/investment specifics of each project or investment/ transaction is unique. Each project or investment/transaction might include a number of insurance policies/contracts, for example various banks lending to one project where each bank has a separate ECIC insurance policy. The standard states that contracts may need to be combined and accounted for as a whole, in order to report their substance, if they have similar risks and are managed together and as a set achieve, or are designed to achieve, an overall commercial effect. For all related contracts for a single project/investment/transaction the recognition and measurement requirements are applied at a project/investment/transaction level per sub-business line. The caveat to this is that such grouping of contracts is prohibited by the standard if the contracts are issued more than one year apart. Also, it is unlikely that a contract will be onerous while the other contracts within that aggregated portfolio is not. However, if it is the case the contract deemed onerous will be grouped separately. Should it be the case that one of the contracts within the identified portfolio reflects a different risk profile or is administered differently, that policy will also be grouped separately. 3.4 Measurement of insurance contracts The Corporation measures insurance contracts by performing year-to-date estimates of the carrying amount of the insurance liabilities. The valuation method is referred to the General Measurement Model (GMM) or Building Blocks Approach (BBA) and ECIC will be applying it for all contracts. ECIC will not be applying the simplified Premium Allocation Approach (PAA) measurement method. IFRS 17 is not expected to have a significant impact on the initial recognition date of insurance contracts issued and reinsurance contracts held. The contract boundaries for annual renewable policies will under IFRS 17 stretch over the full term of the policy rather than just one year. The measurement of a group of insurance contracts (including the contractual service margin) with cash flows in more than one currency, will be denominated in a single currency based on the dominant currency in which expected cash flows are generated. Recognition The Corporation recognises insurance contracts issued or reinsurance contracts held from the beginning of the coverage period, or if earlier, the date when the first payment from the policyholder is due or actually received for insurance contracts issued. The earliest recognition date for the Corporation is on the effective date, unless contract is onerous from the start at initial recognition. Contract boundaries For all products, the period of obligation is the full term of the policy, because ECIC does not have the unilateral ability to reassess and reprice the contracts and hence present enforceable obligations for the full term of the policy. For all reinsurance contracts, the period of obligation is the full term of the policy, because the reinsurer does not have the unilateral ability to reassess and reprice the contracts and hence present enforceable obligations for the full term of the policy. Cash flows outside of the boundary of the insurance contract relate to future insurance contracts and are recognised when those contracts meet the recognition criteria. Initial measurement On initial recognition, the Corporation will measure a group of insurance contracts as the total of the: c fulfilment cash flows; and c contractual service margin (CSM).

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