| 2.30 | Some insurance contracts contain a discretionary participation feature as well as a guaranteed element. The issuer of such a contract: |
| (a) | may, but need not, recognise the guaranteed element separately from the discretionary participation feature. If the issuer does not recognise them separately, it shall classify the whole contract as a liability. If the issuer classifies them separately, it shall classify the guaranteed element as a liability; |
| (b) | shall, if it recognises the discretionary participation feature separately from the guaranteed element, classify that feature as either a liability or a separate component of equity (where this is permitted by the Regulations). The issuer may split that feature into liability and equity components and shall use a consistent accounting policy for that split. The issuer shall not classify that feature as an intermediate category that is neither liability nor equity; |
| (c) | may recognise all premiums received as revenue without separating any portion that relates to the equity component. The resulting changes in the guaranteed element and in the portion of the discretionary participation feature classified as a liability shall be recognised in profit or loss. If part or all of the discretionary participation feature is classified in equity, a portion of profit or loss may be attributable to that feature (in the same way that a portion may be attributable to non-controlling interests). Where legislation permits the discretionary participation feature to be classified as a component of equity, the issuer shall recognise the portion of profit or loss attributable to any equity component as an allocation of profit or loss, not as expense or income (see Section 5 Statement of Comprehensive Income and Income Statement of FRS 102); |
| (d) | shall, if it has made an accounting policy choice in accordance with FRS 102 to apply the recognition and measurement provisions of either IAS 39 or IFRS 9, and the contract contains an embedded derivative within the scope of IAS 39 or IFRS 9, apply IAS 39 or IFRS 9 to that embedded derivative; and |
| (e) | shall, in all respects not described in paragraphs 2.13 to 2.19 and 2.30(a) to (d), continue its existing accounting policies for such contracts, unless it changes those accounting policies in a way that complies with paragraphs 2.2 to 2.11. |
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