2022-23 SGI CANADA Annual Report
The Corporation does not recognize right-of-use assets and lease liabilities for leases of low value assets and
short-term leases. The Corporation recognizes the lease payments associated with these leases as an expense on a
straight-line basis over the lease term.
Provisions and contingent liabilities
Provisions are recognized when the Corporation has a present legal or constructive obligation as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation.
Contingent liabilities are disclosed if there is a possible future obligation as a result of a past event, or if there is
a present obligation as a result of a past event but either a payment is not probable or the amount cannot be
reasonably estimated.
Structured settlements
In the normal course of claim adjudication, the Corporation settles certain long-term claim losses through the
purchase of annuities under structured settlement arrangements with life insurance companies. As the Corporation
does not retain any interest in the related insurance contract and obtains a legal release from the claimant, any gain
or loss on the purchase of the annuity is recognized in the Consolidated Statement of Operations at the date of the
purchase and the related claim liabilities are de-recognized. However, the Corporation remains exposed to the credit
risk that the life insurance companies may fail to fulfil their obligations.
Comprehensive income
Comprehensive income consists of net income and OCI. OCI includes net actuarial gains (losses) on the employee
defined benefit pension plan and service recognition plans. These items of OCI are not reclassified subsequently
to net income.
Future accounting policy change
The following future change to accounting standards will have applicability to the Corporation:
IFRS 17 - Insurance Contracts
In May 2017, the IASB issued IFRS 17 to establish a global standard which provides guidance on the recognition,
measurement, presentation and disclosure of insurance contracts. Amendments to IFRS 17 were issued in
June 2020. IFRS 17 replaces existing accounting under IFRS 4. IFRS 17 is effective beginning on April 1, 2023 with a
transition date of April 1, 2022 and will be applied retrospectively.
The Corporation is still evaluating the quantitative impacts of IFRS 17. Upon transition on April 1, 2022 changes
to equity will be driven primarily by changes in the discount rate and risk adjustment applied to the liabilities for
incurred claims, changes to the method in how acquisition costs are accounted for and the recognition of onerous
contracts in the liability for remaining coverage when facts and circumstances indicate a loss at initial recognition of
contract.
While the Corporation continues to finalize its application of this standard, its assessment of the qualitative
implications of this standard are as follows:
.
Scope: IFRS 17 introduces scope exemptions for specific types of contracts. The Corporation does not expect
significant change in the scope of insurance contracts between IFRS 4 and IFRS 17.
Level of aggregation: IFRS 17 requires groups of contracts to be aggregated and measured based on contracts
subject to similar risks and managed together, profitability, and contracts issued not more than one year apart.
The Corporation determines contracts subject to similar risks and managed together based on product lines.
48 2022-23 SGI CANADA Annual ReportView entire presentation