Onerous groups after inception

Learning objectives

• Explain how the loss component is established, allocated and reversed after initial recognition.L3
• Calculate the reversal of the loss component from a given favourable change.L4

Normative references

• IFRS 17 §48A group becomes onerous (or more onerous) on subsequent measurement when unfavourable changes in the fulfilment cash flows relating to future service (and, for contracts with direct participation features, a decrease in the entity's share of the fair value of the underlying items) exceed the carrying amount of the margin; the excess is a loss recognised in profit or loss.
• IFRS 17 §49The entity establishes or increases a loss component of the liability for remaining coverage to depict the losses under paras. 47 and 48; this component determines the amounts presented as reversals of losses, which are excluded from insurance revenue (its subsequent allocation is dealt with in paras. 50 to 52).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• How does the loss component of the liability for remaining coverage of an onerous group work after initial recognition?L3