IFRS 17 Adoption & Financial Impact Overview
Definitions and Notes
AIA
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Throughout the entire presentation, IFRS 9 impacts are included when referring to IFRS 17 figures, and IAS 39 impacts are included when referring to IFRS 4 figures.
In the context of our reportable segments, Hong Kong refers to operations in the Hong Kong Special Administrative Region (SAR) and the Macau SAR; Singapore refers to operations in Singapore and Brunei;
and Other Markets refers to operations in Australia, Cambodia, India, Indonesia, Myanmar, New Zealand, the Philippines, South Korea, Sri Lanka, Taiwan (China) and Vietnam.
VONB includes the results from our 49 per cent shareholding in Tata AIA Life Insurance Company Limited (Tata AIA Life). VONB does not include any contribution from our 24.99 per cent shareholding in China
Post Life Insurance Co., Ltd. (China Post Life). The IFRS results of Tata AIA Life and China Post Life are accounted for using the equity method in Other Markets and Group Corporate Centre, respectively. For
clarity, TWPI does not include any contribution from Tata AIA Life and China Post Life.
Both the results of Tata AIA Life and China Post Life are reported on a one-quarter-lag basis. The results of Tata AIA Life are accounted for the six-month period ended 31 March 2022 and the twelve-month
period ended 30 September 2022 in AIA's consolidated results for the six-month period ended 30 June 2022 and the twelve-month period ended 31 December 2022 respectively. The results of China Post Life
are accounted for using the period from the completion of the investment on 11 January 2022 to 31 March 2022 in AIA's consolidated results for the six months ended 30 June 2022, and from 11 January 2022
to 30 September 2022 in AIA's consolidated results for the year ended 31 December 2022.
The financial information from 2019 onwards is presented after the change in AIA's IFRS accounting treatment for the recognition and measurement of insurance contract liabilities of other participating business
with distinct portfolios. The financial information from 2018 and before is presented before the above-mentioned changes.
The Group enhanced the presentation to further split and allocate the underlying assets held by consolidated investment funds to the respective fund segments of the asset-backing liabilities, except for the
consolidated investment funds comprising third-party unit holders' interests in the consolidated investment funds.
All figures are presented in actual reporting currency (US dollar) unless otherwise stated.
AIA has a presence in 18 markets - wholly-owned branches and subsidiaries in Mainland China, Hong Kong SAR, Thailand, Singapore, Malaysia, Australia, Cambodia, Indonesia, Myanmar, New Zealand, the
Philippines, South Korea, Sri Lanka, Taiwan (China), Vietnam, Brunei, Macau SAR and a 49% joint venture in India. In addition, AIA has a 24.99% shareholding in China Post Life.
Amortised cost is a type of recognition and measurement of financial assets under IFRS 9, primarily including debt securities, loans and deposits, receivables and cash and cash equivalents. These financial
assets are initially recognised at fair value plus transaction costs. Subsequently, they are carried at amortised cost using the effective interest method less any impairment losses. Interest revenue from debt
securities measured at amortised cost is recognised in investment return in the consolidated income statement using the effective interest method.
Best estimate liabilities (BEL) represent the present value of best estimate future cash flows discounted at the IFRS 17 discount rates.
Comprehensive equity is defined as shareholders' equity plus net CSM.
Contractual service margin (CSM) is a component of the carrying amount of the asset or liability under IFRS 17 for a group of insurance contracts representing the unearned profit the Group will recognise as it
provides insurance contract services under the insurance contracts in the group. The balance is on discounted basis, presented after allowing for reinsurance unless otherwise stated. Please refer to note 2.3.6
to the FY22 consolidated financial information for details.
Deferred acquisition costs (DAC) are expenses of an insurer under IFRS 4 which are incurred in connection with the acquisition of new insurance contracts or the renewal of existing insurance contracts. They
include commissions and other variable sales inducements and the direct costs of issuing the policy, such as underwriting and other policy issue expenses. These costs are deferred and expensed to the
consolidated income statement on a systematic basis over the life of the policy.
EV Equity is the total of embedded value, goodwill and other intangible assets attributable to shareholders of the Company, after allowing for taxes.
Expected credit losses is a forward-looking model under IFRS 9, replacing the incurred loss model in IAS 39. The new impairment model applies to financial assets measured at amortised cost, debt securities
at fair value through other comprehensive income, trade receivables and lease receivables. It represents the weighted average of credit losses with the respective risks of a default occurring as the weights.
Please refer to note 11 to the FY22 consolidated financial information for details.
Fair value through other comprehensive income (FVOCI) represents a type of recognition and measurement of financial assets and liabilities under IFRS 9 where changes in fair value are recognised in other
comprehensive income. Please refer to note 2.5.1 to the FY22 consolidated financial information for details.
Fair value through profit or loss (FVTPL) represents a type of recognition and measurement of financial assets under IFRS 9 where changes in fair value are recognised in profit or loss as part of net investment
result. Please refer to note 2.5.1 to the FY22 consolidated financial information for details.
Free surplus is the excess of the market value of AIA's assets over the sum of the statutory liabilities, required capital and adjustment for certain assets not eligible for regulatory capital purposes.
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