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IFRS 17Workpapers (Step 4 of 5)

Workpaper template

Step 4 of 5
WorkpaperIFRS 17 — Insurance ContractsL2 · L3

Portfolios, profitability groups and annual cohorts: grouping of contracts and loss of an onerous group at initial recognition

6 missions10 sections to document60 min
Prepared by
AI-assisted draft
Reviewed by
Not reviewed — human review required
Status
Published

Objective of the workpaper

Record the contracts of the portfolio (risks, management), their issue dates and the profitability expected at initial recognition. Then classify the group, check the rule of a maximum gap of one year between the contracts of a cohort, compute the loss of the onerous group, record it and write the conclusion. The fulfilment cash flows of the group are case data.

10 sections · 17 blocks · 1 calculation · 1 entry

  • IFRS 17 §22

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

6 instances from the cases: the calculations and entries below are run by the calculation engine.

File and entity
Portfolios, profitability groups, annual cohorts, recognition and contract boundary, and the loss of an onerous group
Case tasks documented here
  • Classify each of the three sets of motor contracts into its profitability group.
  • Compute the loss of the onerous group at initial recognition.
  • Record the loss of the onerous group.
  • Which home contracts may be in the same group? May H1 and H4 be?
1

Facts and data

Inputs

  • Contracts of the portfolio: products, risks covered, common management

    TextRequired

    MOTOR_CONTRACTS_WITH_SIMILAR_RISKS_AND_ONE_TEAM

  • Profitability expected at initial recognition and sensitivity analysis

    Text

    ACTUARIAL_NOTE_NET_OUTFLOW_FOR_THE_YOUNG_DRIVERS_SET

  • Issue dates of the contracts of the group

    Text

  • Floor of the loss (zero)

    Number

    0

  • Fulfilment cash flows of the group (net outflow)

    Number

    36,000

2

Supporting documents

Evidence

  • Documents obtained and referenced (contracts, actuarial profitability note, issue dates)

    EvidenceRequired

3

Analysis of the grouping of contracts

Analysis

IFRS 17 §22

  • Points examined: portfolios, groups, cohorts, recognition and contract boundary

    ChecklistRequired

    • Portfolio: contracts exposed to similar risks and managed together
    • Minimum division into three groups: onerous at inception, no significant possibility of becoming onerous, remaining
    • No contract of a group issued more than one year apart
    • Recognition date of the group: the earliest of three dates
    • Contract boundary set by the substantive rights and obligations
4

Calculations

Calculations

IFRS 17 §22

  • Loss at initial recognition (the higher of zero and the fulfilment cash flows)

    Calculation

    36,000

    Floor of the loss (zero) ; Fulfilment cash flows of the group (net outflow)

5

Illustrative entries

Entries

  • Entry of the loss of the onerous group

    Entry

    AccountDebitCredit
    Loss on onerous group36,000
    Insurance contract liability36,000
6

Judgments: classification of the group and annual cohorts

Judgment

IFRS 17 §22

  • Profitability group

    JudgmentRequired

    Group onerous at initial recognition

    Group onerous at initial recognition / Group with no significant possibility of becoming onerous / Remaining group / Not applicable

    Professional judgment: "significant possibility" is assessed on the profitability data of the case; no numerical threshold is imposed here.

  • Rationale: expected profitability, sensitivity to the assumptions, comparison with the other contracts of the portfolio

    Text

    FULFILMENT_CASH_FLOWS_ARE_A_NET_OUTFLOW_AT_INITIAL_RECOGNITION

  • Annual cohorts

    JudgmentRequired

    Not applicable

    Contracts that may be in the same group: less than one year apart / Separate groups required: more than one year apart / Not applicable

    Professional judgment: the one-year rule comes from IFRS 17; the exemption from annual cohorts is an exception specific to the European Union, never an option of the standards issued by the IASB.

  • Rationale: issue dates compared two by two and any exemption specific to the European Union invoked

    Text

7

Items to document for the notes

Disclosure

IFRS 17 §22

  • Information to prepare on the grouping

    Checklist

    • Composition of the portfolios and of the groups
    • Loss recognised on the onerous groups
    • Any use of the European Union exemption from annual cohorts
8

Effect on the financial statements

FS impact

  • Effect derived from the entries

    Table

9

Conclusion

Conclusion

  • Supported conclusion on the portfolio, the profitability group, the annual cohort and the loss recognised at inception

    ConclusionRequired

10

Normative references

References

  • Normative references cited in this workpaper

    References

11

Checks and financial statement impact

  • Contracts of the portfolio describedPass
  • Profitability group judged and supportedPass
  • Annual cohort judged and supportedPass
  • Loss entry balancedPass
Assets
0
Liabilities
36,000
Profit or loss
-36,000
OCI
0
Equity
-36,000