EBA · 2013_329 Final Q&A

Reconciliation of assets and liabilities in reinsurance and insurance contracts

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
99, para. 2
Topic
Supervisory reporting - FINREP (incl. FB&NPE)
Submitted by
Industry association
Submitted
2013-10-04
Answered
2014-03-07
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

A bank has an insurance sub-group with unit-link insurance plans (aka ULIP. ULIPs give the holder the ability to invest in financial instruments and be hold the insurance contract) and traditional life insurance contracts. The insurance sub-group is fully consolidated in the Group (IFRS scope) but not consolidated in the Financial Group (Finrep scope). Shall instructions in ITS Annex V §105, §106 for template 17.1 row 270 and template 17.3 row 170 be interpreted: · Strict: only to be used for insurance contracts, or · Wide: to be used for both insurance contracts and investment contracts (i.e. ULIPs)

Background

A bank has an insurance sub-group with unit-link insurance plans (aka ULIP. ULIPs give the holder the ability to invest in financial instruments and be hold the insurance contract) and traditional life insurance contracts. The insurance sub-group is fully consolidated in the Group (IFRS scope) but not consolidated in the Financial Group (Finrep scope).

Answer

For the reporting of assets and liabilities in insurance and reinsurance contracts, the definitions in IFRS 4 shall be applied. In addition, the treatment of embedded derivatives, as described in IAS 39, shall be taken into account as well. The Application Guidance of IAS 39 (especially, AG33 (g) and (h)) touches upon this issue. Therefore, after the assessment of the contract against the provisions in IFRS 4 and IAS 39, and if the investment contracts entered in the framework of the unit-link insurance plans must be accounted for as part of the insurance contract, they shall be reported under rows 270 and 170 of F17.01 and F17.03, respectively. If this is not the case, the investment contracts shall be reported in the lines of F17.01 and F17.03 which best describe its content.

Original source: European Banking Authority, Q&A ID 2013_329

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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