Page 82 - Continental Reinsurance 2022 Annual Report
P. 82
80 Statement of Significant Accounting Policies
from the offsetting effects from the application of of a foreign operation, the component of other
discounting (positive effect) and risk adjustment for comprehensive income relating to that particular
non-financial risk for the Group's loss reserves (negative foreign operation is recognised in profit or loss.
effect). Overall, we expect a slight decrease in
shareholders' equity for non-life business with transition 2.8 Insurance contracts
to IFRS 17. The effect of onerous groups of contracts is Insurance contracts are those contracts when the Group
not expected to be material for the Group financial (the insurer) has accepted significant insurance risk from
statements. another party (the policyholders) by agreeing to
compensate the policyholders if a specified uncertain
d Definition of Accounting Estimates Amendments to future event (the insured event) adversely affects the
IAS 8 effective 1 January 2023 policyholders. As a general guideline, the Group
The amendment to IAS 8 Accounting Policies, Changes determines whether it has significant insurance risk, by
in Accounting Estimates and Errors clarifies how comparing benefits paid with benefits payable if the
companies should distinguish changes in accounting insured event did not occur.
policies from changes in accounting estimates. The Insurance contracts defined in IFRS 4 may also transfer
distinction is important, because changes in accounting financial risk.
estimates are applied prospectively to future
transactions and other future events, whereas changes Recognition and measurement
in accounting policies are generally applied The Group's Insurance contracts are classified into three
retrospectively to past transactions and other past broad categories, depending on the duration of the risk
events as well as the current period. and the type of risk insured, namely Individual Life,
Group Life and General insurance.
2.7 Foreign currency translation
a. Individual life
a Functional and presentation currency These contracts insure mainly against death. The
Items included in the consolidated financial statements reserve is calculated by determining an Unexpired
of the Group are measured using the currency of the Premiums Reserve (UPR) and an Outstanding Claims
primary economic environment in which the entity Reserve (OCR). The UPR represents the unexpired
operates (‘the functional currency’). portion of premiums received for cover within the year,
assuming an allowance for expenses. The OCR
The consolidated financial statements are presented in represents the claims reserve for claims that were
thousands. Naira is the Group's presentation and also received, but not yet paid, or which may have emerged
the parent company’s functional currency. but have not been received due to delayed reporting.
b Transactions and balances b. Group life
Foreign currency transactions are transactions These contracts insure companies against death of staff.
denominated, or that require settlement, in a foreign These contracts are short-term in nature and are
currency and these are translated into the functional typically renewed annually. For these contracts, gross
currency spot rate prevailing at the dates of the premiums are recognised as revenue when due.
transactions.
Monetary assets and liabilities denominated in foreign c. General insurance
currencies are retranslated at the functional currency These contracts provide Fire, Accident, Marine, Liability
spot rate of exchange prevailing at the reporting date. and Energy insurance. For these contracts, gross
Foreign exchange gains and losses resulting from the premiums are recognised as revenue when due.
retranslation and settlement of these items are
recognised in profit or loss. 2.9.1 Revenue recognition
Revenue is recognised to the extent that it is probable
c Group companies that the economic benefits will flow to the Group and
On consolidation, the assets and liabilities of foreign the revenue can be reliably measured, regardless of
operations are translated into naira at the rate of when the payment is being made. Revenue is measured
exchange prevailing at the reporting date and their at the fair value of the consideration received or
income statements are translated at exchange rates receivable, taking into account contractually defined
prevailing at the dates of the transactions. The exchange terms of payment and excluding taxes or duty.
differences arising on translation for consolidation are
recognised in other comprehensive income. On disposal
