-
- Financial notes
- 39. Accounting policies
- 39.3. Net income from insurance business and finance income and costs recognised in other comprehensive income
39.3. Net income from insurance business and finance income and costs recognised in other comprehensive income
| NET INCOME FROM INSURANCE BUSINESS AND FINANCE INCOME AND COSTS RECOGNISED IN OTHER COMPREHENSIVE INCOME FROM INSURANCE BUSINESS | 2023 | 2022 |
| Changes in the period recognised in the income statement and in other comprehensive income, of which: | 680 | 788 |
| 1. Net income from insurance business (Income statement) | 711 | 779 |
| Insurance revenue (net of reinsurance)1 | 1,241 | 1,172 |
| Change in liability for remaining coverage (LRC) | 1,210 | 1,145 |
| The amount of the contractual service margin recognised in profit or loss because of the transfer of insurance contract services in the period (amortisation of contractual margin) | 760 | 786 |
| Change in risk adjustment for non-financial risk | 41 | 44 |
| Anticipated claims and other insurance service costs during the period | 421 | 309 |
| other amounts, for example, experience adjustments for premium receipts other than those that relate to future service | (12) | 6 |
| Allocation of the portion of the premiums that relate to the recovery of insurance acquisition cash flows | 31 | 27 |
| Cost of insurance activities (net of reinsurance)2 | (389) | (325) |
| Incurred claims (excluding investment components) and other incurred insurance service expenses | (365) | (283) |
| Amortisation of insurance acquisition cash flows | (31) | (27) |
| Changes that relate to future service, i.e. losses on onerous groups of contracts and reversals of such losses | (15) | (24) |
| Changes that relate to past service, i.e. changes in fulfilment cash flows relating to the liability for incurred claims | 22 | 9 |
| Investment components excluded from insurance revenue and insurance service expenses (net of reinsurance)3 | (187) | 47 |
| Change in fair value of underlying items for contracts with direct participation features | (93) | 88 |
| Interest accrued (discount) | (94) | (41) |
| Net income from reinsurance business, of which:4 | (47) | (29) |
| Interest accrued | (3) | (3) |
| Change in fair value of underlying assets for contracts with direct participation features5 | 93 | (86) |
| 2. Finance income and costs from insurance business recognised in other comprehensive income, including from6: | (31) | 9 |
| insurance activities (net of reinsurance) | (33) | 9 |
| reinsurance activities | 2 | – |
1Insurance revenue include only revenue from gross business. The item arises from the decomposition of the premium for individual components of cost and profit into:
a) amortisation of the contractual service margin,
adjustment for non-financial risk (additional security add-on),
c) anticipated claims and costs (the portion of the premium that is allocated to the payment of claims and benefits and costs),
d) acquisition costs (the portion of the premium that is allocated to acquisition costs),
e) e. other, e.g. experience-related adjustments (discrepancies between the expected premium and the premium actually earned).
2Costs from insurance activities only include costs from gross business. The item comprises the following components:
a) Claims incurred and costs - the value of claims and costs incurred during the period (in the case of claims, claims incurred during the period are reported under this heading, regardless of whether they have been paid or remain in the loss reserve);
b) Acquisition costs incurred - an item that mirrors the item “Allocation of the portion of the premiums that relate to the recovery of insurance acquisition cash flows”; the impact of acquisition costs on the result is included in the amortisation of the contract service margin;
c) Changes related to the future service – losses (and their reversal) if a particular group of contracts is onerous, e.g. expected premiums will be lower than expected claims (losses are recognised in the income statement from a one-off basis and gains are deferred through gradual amortisation of the margin);
d) Changes related to the past service (result on the loss reserve) – the difference between the estimate of the loss reserve for the opening balance and its realisation in the reporting period.
3This item includes insurance finance income and expenses recognised in the income statement. The item mainly includes two components: changes on the discounting of reserves and, in the case of contracts with direct participation features, the net investment income on the underlying assets.
4Net income from reinsurance business – reflects the net income from outward reinsurance
5Change in fair value of underlying assets for contracts with direct participation features – result on units in investment funds and investment certificates (contracts with direct participation features)
6 Finance income and expenses recognised in other comprehensive income reflect the impact of changes in interest rates and other financial assumptions
a) amortisation of the contractual service margin,
adjustment for non-financial risk (additional security add-on),
c) anticipated claims and costs (the portion of the premium that is allocated to the payment of claims and benefits and costs),
d) acquisition costs (the portion of the premium that is allocated to acquisition costs),
e) e. other, e.g. experience-related adjustments (discrepancies between the expected premium and the premium actually earned).
2Costs from insurance activities only include costs from gross business. The item comprises the following components:
a) Claims incurred and costs - the value of claims and costs incurred during the period (in the case of claims, claims incurred during the period are reported under this heading, regardless of whether they have been paid or remain in the loss reserve);
b) Acquisition costs incurred - an item that mirrors the item “Allocation of the portion of the premiums that relate to the recovery of insurance acquisition cash flows”; the impact of acquisition costs on the result is included in the amortisation of the contract service margin;
c) Changes related to the future service – losses (and their reversal) if a particular group of contracts is onerous, e.g. expected premiums will be lower than expected claims (losses are recognised in the income statement from a one-off basis and gains are deferred through gradual amortisation of the margin);
d) Changes related to the past service (result on the loss reserve) – the difference between the estimate of the loss reserve for the opening balance and its realisation in the reporting period.
3This item includes insurance finance income and expenses recognised in the income statement. The item mainly includes two components: changes on the discounting of reserves and, in the case of contracts with direct participation features, the net investment income on the underlying assets.
4Net income from reinsurance business – reflects the net income from outward reinsurance
5Change in fair value of underlying assets for contracts with direct participation features – result on units in investment funds and investment certificates (contracts with direct participation features)
6 Finance income and expenses recognised in other comprehensive income reflect the impact of changes in interest rates and other financial assumptions