The April 2016, Issue 53 of KPMG ISG’s IFRS Newsletter: Insurance highlights the April IASB meeting, at which the Board responded to feedback about its Exposure Draft, Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4), by broadening the qualifying criteria for deferring IFRS 9 and introducing additional relevant disclosures. The Board also reached decisions about the overlay approach.
Temporary Exemption – Qualifying Criteria. The Board revised the qualifying criteria for a temporary exemption to include activity predominantly related to insurance, which would include issuing investment contracts that are measured at fair value through profit or loss and other liabilities related to insurance activity, but with an increased threshold.
Temporary Exemption – Disclosures. The Board confirmed certain disclosures and amended others to help users of financial statements compare entities that do and do not use the temporary exemption without creating excess costs for preparers. Also, an entity's disclosures would refer to IFRS 9 information that is not provided in the consolidated financial statements but is publicly available for the relevant period in the financial statements of a subsidiary.
Overlay Approach. The Board clarified that qualifying financial assets could include financial assets related to surplus assets that an entity holds for regulatory or capital requirements. It also confirmed other aspects of the overlay approach proposed in the Exposure Draft, and amended aspects of the proposal related to presenting the overlay adjustment in the statement of comprehensive income to improve comparability among entities.
Next Steps. The Board will discuss the remaining technical issues in May. The final amendments to IFRS 4 are expected to be published in September 2016.