Document ID: chunk:federal_register_of_legislation:F2023C00382:front:0:p6
Version: federal_register_of_legislation:F2023C00382
Segment Type: other
Provision Reference: 
Character Range: 13883–16772

apply AASB 9 to determine whether there is an embedded derivative to be separated and, if there is, how to account for that derivative.
(b) separate from a host insurance contract an investment component if, and only if, that investment component is distinct (see paragraphs B31–B32). The entity shall apply AASB 9 to account for the separated investment component unless it is an investment contract with discretionary participation features within the scope of AASB 17 (see paragraph 3(c)).
12 After applying paragraph 11 to separate any cash flows related to embedded derivatives and distinct investment components, an entity shall separate from the host insurance contract any promise to transfer to a policyholder distinct goods or services other than insurance contract services, applying paragraph 7 of AASB 15. The entity shall account for such promises applying AASB 15. In applying paragraph 7 of AASB 15 to separate the promise, the entity shall apply paragraphs B33–B35 of AASB 17 and, on initial recognition, shall:
(a) apply AASB 15 to attribute the cash inflows between the insurance component and any promises to provide distinct goods or services other than insurance contract services; and
(b) attribute the cash outflows between the insurance component and any promised goods or services other than insurance contract services, accounted for applying AASB 15 so that:
(i) cash outflows that relate directly to each component are attributed to that component; and
(ii) any remaining cash outflows are attributed on a systematic and rational basis, reflecting the cash outflows the entity would expect to arise if that component were a separate contract.
13 After applying paragraphs 11–12, an entity shall apply AASB 17 to all remaining components of the host insurance contract. Hereafter, all references in AASB 17 to embedded derivatives refer to derivatives that have not been separated from the host insurance contract and all references to investment components refer to investment components that have not been separated from the host insurance contract (except those references in paragraphs B31–B32).

Level of aggregation of insurance contracts
14 An entity shall identify portfolios of insurance contracts. A portfolio comprises contracts subject to similar risks and managed together. Contracts within a product line would be expected to have similar risks and hence would be expected to be in the same portfolio if they are managed together. Contracts in different product lines (for example single premium fixed annuities compared with regular term life assurance) would not be expected to have similar risks and hence would be expected to be in different portfolios.
15 Paragraphs 16–24 apply to insurance contracts issued. The requirements for the level of aggregation of reinsurance contracts held are set out in paragraph 61.
16 An entity shall divide a