Page 76 - Continental Reinsurance 2022 Annual Report
P. 76
74 Statement of Significant Accounting Policies
2.3 Basis of consolidation The preparation of consolidated financial statements in
conformity with IFRS requires the use of certain critical
The consolidated financial statements comprise the accounting estimates. It also requires management to
financial statements of the Group and its subsidiaries as exercise its judgement in the process of applying the
at 31 December 2022. Control is achieved when the Group’s accounting policies. Changes in assumptions
Group is exposed, or has rights, to variable returns from may have a significant impact on the financial
its involvement with the investee and has the ability to statements in the period the assumptions changed.
affect those returns through its power over the investee. Management believes that the underlying assumptions
are appropriate and that the Group’s consolidated
Specifically, the Group controls an investee if and only if financial statements therefore present the financial
the Group has: position and results fairly. The areas involving a higher
•Power over the investee (i.e. existing rights that give it degree of judgement or complexity, or areas where
the current ability to direct the relevant activities of the assumptions and estimates are significant to the
investee) consolidated financial statements are disclosed below:
•Exposure, or rights, to variable returns from its
involvement with the investee, and 2.4 Significant accounting judgements, estimates and
• The ability to use its power over the investee to affect its assumptions
returns.
Judgements
When the Group has less than a majority of the voting or In the process of applying the Group’s accounting
similar rights of an investee, the Group considers all policies, management has made the following
relevant facts and circumstances in assessing whether it judgement, which has the most significant effect on the
has power over an investee, including: amounts recognised in the consolidated financial
statements:
• The contractual arrangement with the other vote holders
of the investee, Operating lease commitments — Group as lessor
The Group has entered into commercial property leases
• Rights arising from other contractual arrangements, and on its investment property portfolio. The Group has
• The Group’s voting rights and potential voting rights. determined, based on an evaluation of the terms and
conditions of the arrangements, that it retains all the
The Group re-assesses whether or not it controls an significant risks and rewards of ownership of these
investee if facts and circumstances indicate that there properties and, therefore, accounts for the contracts as
are changes to one or more of the three elements of operating leases.
control. Consolidation of a subsidiary begins when the
Group obtains control over the subsidiary and ceases Estimates and assumptions
when the Group loses control of the subsidiary. Assets, The key assumptions concerning the future and other
liabilities, income and expenses of a subsidiary acquired key sources of estimation uncertainty at the reporting
or disposed of during the year are included in the date, that have a significant risk of causing a material
consolidated statement of profit or loss and other adjustment to the carrying amounts of assets and
comprehensive income from the date the Group gains liabilities within the next financial year, are described
control until the date the Group ceases to control the below. The Group based its assumptions and estimates
subsidiary. on parameters available when the consolidated financial
statements were prepared. Existing circumstances and
Profit or loss on each component of other assumptions about future developments, however, may
comprehensive income (OCI) are attributed to the change due to market changes or circumstances arising
equity holders of the parent of the Group and to the beyond the control of the Group. Such changes are
non-controlling interests, even if this results in the non- reflected in the assumptions when they occur.
controlling interests having a deficit balance. When
necessary, adjustments are made to the financial Fair value of level 3 financial instruments
statements of subsidiaries to bring their accounting Investments in unquoted equity securities that are
policies into line with the Group’s accounting policies. classified as available for sale financial instrument and
All intra-group assets and liabilities, equity, income, measured at fair value in line with the accounting
expenses and cash flows relating to transactions policies as set out in the statement of significant
between members of the Group are eliminated in full on accounting policies.
consolidation.
