Defined Terms
cedant
The policyholder under a reinsurance contract.
deposit component
A contractual component that is not accounted for as a derivative under IAS 39 and would be within the scope of IAS 39 if it were a separate instrument.
direct insurance contract
An insurance contract that is not a reinsurance contract.
discretionary participation feature
A contractual right to receive, as a supplement to guaranteed benefits, additional benefits:
- that are likely to be a significant portion of the total contractual benefits;
- whose amount or timing is contractually at the discretion of the issuer; and
- that are contractually based on:
- the performance of a specified pool of contracts or a specified type of contract;
- realised and/or unrealised investment returns on a specified pool of assets held by the issuer; or
- the profit or loss of the company, fund or other entity that issues the contract.
fair value
The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
financial risk
The risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract.
guaranteed benefits
Payments or other benefits to which a particular policyholder or investor has an unconditional right that is not subject to the contractual discretion of the issuer.
guaranteed element
An obligation to pay guaranteed benefits, included in a contract that contains a discretionary participation feature.
insurance asset
An insurer’s net contractual rights under an insurance contract.
insurance contract
A contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.
(See Appendix B for guidance on this definition.)
insurance liability
An insurer’s net contractual obligations under an insurance contract.
insurance risk
Risk, other than financial risk, transferred from the holder of a contract to the issuer.
insured event
An uncertain future event that is covered by an insurance contract and creates insurance risk.
insurer
The party that has an obligation under an insurance contract to compensate a policyholder if an insured event occurs.
liability adequacy test
An assessment of whether the carrying amount of an insurance liability needs to be increased (or the carrying amount of related deferred acquisition costs or related intangible assets decreased), based on a review of future cash flows.
policyholder
A party that has a right to compensation under an insurance contract if an insured event occurs. reinsurance assets A cedant’s net contractual rights under a reinsurance contract.
reinsurance contract
An insurance contract issued by one insurer (the reinsurer) to compensate another insurer (the cedant) for losses on one or more contracts issued by the cedant.
reinsurer
The party that has an obligation under a reinsurance contract to compensate a cedant if an insured event occurs.
unbundle
Account for the components of a contract as if they were separate contracts.