Letter on the IFRS Interpretations Committee’s tentative agenda decision on Transfer of Insurance Coverage under a Group of Annuity Contracts (IFRS 17)
The Chair
23 May 2022 ESMA32-51-907
Bruce Mackenzie
Chair IFRS Interpretation Committee Columbus Building 7 Westferry
Circus Canary Wharf, London E14 4HD United Kingdom
The IFRS
Interpretations Committee’s tentative agenda decision on Transfer of
Insurance Coverage under a Group of Annuity Contracts (IFRS 17)
Dear Mr Mackenzie,
The European Securities and
Markets Authority (ESMA) is an independent EU Authority that enhances
the protection of investors and promotes stable and well-functioning
financial markets in the European Union (EU). ESMA achieves this aim
by building a single rule book for EU financial markets and ensuring
its consistent application across the EU.
ESMA strongly
supports the work of the IFRS Interpretations Committee (IFRS IC) to
promote the consistent application of IFRS and continuous improvement
of financial reporting quality.
ESMA therefore appreciates the
opportunity to respond to the IFRS IC’s tentative agenda decision on
Transfer of Insurance Coverage under a Group of Annuity Contracts
(IFRS 17).
The IFRS IC discussed a question about how an
entity determines, for a group of annuity contracts, the amount of
the contractual service margin to recognise in profit or loss in a
period because of the transfer of insurance coverage for survival in
that period.
ESMA agrees with the IFRS IC’s tentative agenda
decision that in applying IFRS 17 to determine the quantity of the
benefits of insurance coverage for survival provided under each
annuity contract, a method based on the amount of the annuity payment
the policyholder is able to validly claim (Method 1) meets the
principle in paragraph B119 of IFRS 17 of reflecting the insurance
coverage provided in each period, while a method based on the present
value of expected future annuity payments (Method 2) does not meet
this principle.
We consider that this decision would provide
the necessary clarity and improve the consistent application of
principles and requirements of IFRS 17.
ESMA • 201-203 rue de
Bercy • CS 80910 • 75589 Paris Cedex 12 • France • Tel. +33 (0) 1 58
36 43 21 • www. esma. europa. eu
In case you have any questions
or comments regarding this letter, I suggest you contact Evert van
Walsum, Department (Evert. [email protected] europa. eu).
Investors Issuers Head and the of Yours sincerely, Verena Ross
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