| 2.27 | To comply with Section 19 Business Combinations and Goodwill of FRS 102, an insurer shall, at the acquisition date, measure at fair value the insurance liabilities assumed and insurance assets acquired in a business combination. However, an insurer is permitted, but not required, to use an expanded presentation that splits the fair value of acquired insurance contracts into two components: |
| (a) | a liability measured in accordance with the insurer's accounting policies for insurance contracts that it issues; and |
| (b) | an intangible asset, representing the difference between (i) the fair value of the contractual insurance rights acquired and insurance obligations assumed and (ii) the amount described in (a). As an exception to Section 18 Intangible Assets other than Goodwill of FRS 102, the subsequent measurement of this asset shall be consistent with the measurement of the related insurance liability. |
| 2.28 | An insurer acquiring a portfolio of insurance contracts may use the expanded presentation described in paragraph 2.27. |
| 2.29 | The intangible assets described in paragraphs 2.27 and 2.28 are excluded from the scope of Sections 18 and 27 Impairment of Assets of FRS 102. However, Sections 18 and 27 of FRS 102 apply to customer lists and customer relationships reflecting the expectation of future contracts that are not part of the contractual insurance rights and contractual insurance obligations that existed at the date of a business combination or portfolio transfer, when recognised separately. |
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