Page 173 - IC46 addendum

Indian Accounting Standards

when combined, they do not transfer
insurance risk. Therefore, it is not
appropriate to separate this contract
into two ‘insurance’ components.

If the amount payable on death were
not adjusted in full for the time value
of money, or were adjusted in some
other way, the contract might
transfer insurance risk. If that
insurance risk is significant, the
contract is an insurance contract.

1.28 A contract meets the definition If the entities present individual or

of an insurance contract. It separate financial statements, they

was issued by one entity in a treat the contract as an insurance

group (for example a captive contract in those individual or

insurer) to another entity in separate financial statements (see

the same group. Ind AS 27 Consolidated and

Separate Financial Statements).

The transaction is eliminated from
the group’s consolidated financial
statements.

If the intragroup contract is reinsured
with a third party that is not part of
the group, the reinsurance contract
is treated as a direct insurance
contract in the consolidated financial
statements because the intragroup
contract is eliminated on
consolidation.

1.29 An agreement that entity A The contract is an insurance

will compensate entity B for contract if it transfers significant

losses on one or more insurance risk from entity B to

contracts issued by entity B entity A, even if some or all of the

that do not transfer significant individual contracts do not transfer

insurance risk. significant insurance risk to entity B.

The contract is a reinsurance

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