L 237/908
EN
Official Journal of the European Union
26.9.2023
B119A To apply paragraph B119, the period of investment-return service or investment-related service ends at or before the date that all amounts due to current policyholders relating to those services have been paid, without considering payments to future policyholders included in the fulfilment cash flows applying paragraph B68.
B119B Insurance contracts without direct participation features may provide an investment-return service if, and only if:
(a) an investment component exists, or the policyholder has a right to withdraw an amount;
(b) the entity expects the investment component or amount the policyholder has a right to withdraw to include an investment return (an investment return could be below zero, for example, in a negative interest rate environment); and
(c) the entity expects to perform investment activity to generate that investment return.
Reinsurance contracts held—recognition of recovery of losses on underlying insurance contracts (para­ graphs 66A – 66B) B119C Paragraph 66A applies if, and only if, the reinsurance contract held is entered into before or at the same time as the onerous underlying insurance contracts are recognised.
B119D To apply paragraph 66A, an entity shall determine the adjustment to the contractual service margin of a group of reinsurance contracts held and the resulting income by multiplying:
(a) the loss recognised on the underlying insurance contracts; and
(b) the percentage of claims on the underlying insurance contracts the entity expects to recover from the group of reinsurance contracts held.
B119E Applying paragraphs 14–22, an entity might include in an onerous group of insurance contracts both onerous insurance contracts covered by a group of reinsurance contracts held and onerous insurance contracts not covered by the group of reinsurance contracts held.
To apply paragraphs 66(c)(i)–(ii) and paragraph 66A in such cases, the entity shall apply a systematic and rational method of allocation to determine the portion of losses recognised on the group of insurance contracts that relates to insurance contracts covered by the group of reinsurance contracts held.
B119F After an entity has established a loss-recovery component applying paragraph 66B, the entity shall adjust the loss- recovery component to reflect changes in the loss component of an onerous group of underlying insurance contracts (see paragraphs 50–52).
The carrying amount of the loss-recovery component shall not exceed the portion of the carrying amount of the loss component of the onerous group of underlying insurance contracts that the entity expects to recover from the group of reinsurance contracts held.
INSURANCE REVENUE (PARAGRAPHS 83 AND 85)
B120
The total insurance revenue for a group of insurance contracts is the consideration for the contracts, ie the amount of premiums paid to the entity:
(a) adjusted for a financing effect; and
(b) excluding any investment components.