Page 93 - Continental Reinsurance 2022 Annual Report

Statement of Significant Accounting Policies
The liability recognised in the statement of financial
position in respect of defined benefit pension plans is
the present value of the defined benefit obligation at
the reporting date less the fair value of plan assets,
together with adjustments for unrecognised actuarial
gains or losses and past service costs. The defined
benefit obligation is calculated annually by
independent actuaries using the projected unit credit
method.
Re-measurements arising from actuarial gains and
losses, are recognized immediately in the statement of
financial position with a corresponding debit or credit
to retained earnings through OCI in periods in which
they occur. Remeasurements are not reclassified to
profit or loss in subsequent periods.
The Group has a Gratuity Scheme for its employees
managed by Trustees. The scheme is non-
contributory and employees qualify for benefits after
five years service. Provision for gratuity is made when
it is determined that there is a shortfall in the assets
funding liabilities.
Past service costs are recognised in profit or loss on the
earlier of:
• The date of the plan amendment or curtailment, and
• The date that the Group recognises restructuring-
related costs.
Net interest is calculated by applying the discount rate
to the net defined benefit liability or asset. The Group
recognises the following changes in the net defined
benefit obligation under ‘cost of sales ‘administration
expenses’ and ‘selling and distribution expenses’ in
consolidated statement of profit or loss (by function):
• Service costs comprising current service costs, past-
service costs, gains and losses on curtailments and
non-routine settlements
• Net interest expense or income.
2.23 Provisions
Provisions are liabilities that are uncertain in amount
and timing.
Provision are recognised when the Group has a
present legal or constructive obligation as a result of
past events and it is more likely than not that an
outflow of resources will be required to settle the
obligation and the amount can be reliably estimated.
Where the Group expects some or all of a provision to
be reimbursed, the reimbursement is recognised as a
separate asset, but only when the reimbursement is
virtually certain. The expense relating to any provision
is presented in the profit or loss net of any
reimbursement. If the effect of the time value of
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money is material, provisions are discounted using a
current pre-tax rate that reflects, where appropriate,
the risks specific to the liability. Where discounting is
used, the increase in the provision due to the passage
of time is recognised as a finance cost.
Where there is a number of similar obligations, the
likelihood that an outflow will be required in
settlement is determined by considering the class of
obligations as a whole. A provision is recognised even
if the likelihood of an outflow with respect to any one
item included in the same class of obligations
2.24 Equity
Ordinary share capital
The Company has issued ordinary shares that are
classified as equity instruments. Incremental external
costs that are directly attributable to the issue of these
shares are recognised in equity, net of tax.
Dividends on ordinary share capital
Proposed dividends are recognised as a liability in the
period in which they are declared and approved by the
Company’s shareholders at the Annual General
Meeting.
Dividends for the year that are declared after the
reporting date are dealt with as event after reporting
date.
Dividends proposed but not yet declared are disclosed
in the financial statements in accordance with the
requirements of the Company and Allied Matters Act.
2.25 Contingency reserves
Contingency reserves are done in accordance with the
provisions of the Insurance Act, CAP II7 LFN 2004:
a. For general business the contingency reserve is credited
with the higher of an amount not less than 3% of the
total premium or 20% of the net profits until the
reserves reaches the greater of the minimum paid up
capital or 50% of net premium.
b. For life business the contingency reserve is credited
with the higher of an amount equal to 1% of the gross
premium or 10% of the profits.
2.26 Comparatives
Except when a standard or an interpretation permits or
requires otherwise, all amounts are reported or
disclosed with comparative information.
2.27 Operating segments
Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating
decision -maker is the person or group that allocates
resources to and assesses the performance of the
operating segments of an entity. The Group has
determined the Group's executive as its chief operating
decision maker.