Page 86 - Continental Reinsurance 2022 Annual Report
P. 86
84 Statement of Significant Accounting Policies
a Financial assets at fair value through profit or loss ii) those that the Group upon initial recognition
This category comprises two sub-categories: financial designates as available-for-sale; or
assets classified as held for trading, and financial assets
designated by the Group as at fair value through profit iii) those for which the holder may not recover
or loss upon initial recognition. substantially all of its initial investment, other than
because of credit deterioration.
The Group had no assets classified as held-for-trading
at the end of the year. Loans and receivables are initially recognised at fair
value – which is the cash consideration to originate or
The Group designates certain financial assets upon purchase the loan including any transaction costs – and
initial recognition at fair value through profit or loss measured subsequently at amortised cost using the
(fair value option). This designation cannot effective interest rate method. Loans and receivables
subsequently be changed. According to IAS 39, the are reported in the statement of financial position as
fair value option is only applied when any of the loans and receivables.
following conditions are met: Receivables arising from insurance contracts are also
classified in this category and are reviewed for
• the application of the fair value option reduces or impairment as part of the impairment review of loans
eliminates an accounting mismatch that would and receivables.
otherwise arise; or
c Held-to-maturity financial assets
• the financial assets are part of a portfolio of financial Held-to-maturity investments are non-derivative
instruments which is risk managed and reported to financial assets with fixed or determinable payments
senior management on a fair value basis; or and fixed maturities that the Group’s management
has the positive intention and ability to hold to
• the financial assets consists of debt host and an maturity, other than:
embedded derivative that must be separated. • those that the Group upon initial recognition
designates as at fair value through profit or loss;
Financial assets at fair value through profit or loss • those that the Group designates as available-for-
The fair value option is applied to the externally sale; and
managed portfolios that are part of a portfolio. The • those that meet the definition of loans and
performance of the managed fund is evaluated on a receivables.
fair value basis in accordance with an investment
strategy and information on this is provided to the key These are initially recognised at fair value including
management personnel. direct and incremental transaction costs and measured
subsequently at amortised cost, using the effective
Financial assets for which the fair value option is interest method.
applied are recognised in the statement of financial
position as Interest on held-to-maturity investments is included in
‘Financial assets designated at fair value’. Fair value profit or loss and reported as ‘Interest and similar
changes relating to financial assets designated at fair income’. In the case of an impairment, the impairment
value through profit or loss are recognised in ‘Net loss is been reported as a deduction from the carrying
gains on financial instruments designated at fair value value of the investment and recognised in profit or loss
through profit or loss’. as ‘impairment of financial assets’. Held-to-maturity
investments include sovereign, sub-national and
b Loans and receivables corporate bonds.
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are d Available-for-sale financial assets
not quoted in an active market, other than: Available-for-sale (AFS) investments are financial
assets that are intended to be held for an indefinite
i) those that the Group intends to sell immediately or in period of time, which may be sold in response to needs
the short-term, which are classified as held-for- for liquidity or changes in interest rates, exchange rates
trading, and those that the entity upon initial or equity prices or that are not classified as loans and
recognition designates as at fair value through profit receivables, held-to-maturity investments or financial
or loss; assets at fair value through profit or loss.
