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<strong>CIC</strong> INSURANCE GROUP LIMITEDNotes to the Financial Statements continuedFor the year ended 31 December 20111 ACCOUNTING POLICIES (Continued)Adoption of new and revised International Financial Reporting Standards (IFRSs) (Continued)(b)New and revised IFRSs in issue but not yet effectiveThe group has not applied the following new and revised IFRSs that have been issued but are not yet effective:Amendments to IFRS 7 Disclosures – Transfers of Financial Assets 1IFRS 9 Financial Instruments 2IFRS 10 Consolidated Financial Statements 2IFRS 11 Joint Arrangements 2IFRS 12 Disclosure of Interests in Other Entities 2IFRS 13 Fair Value Measurement 2Amendments to IAS 1 Presentation of Items of Other Comprehensive Income 3Amendments to IAS 12 Deferred Tax – Recovery of Underlying Assets 4IAS 19 (as revised in 2011) Employee Benefits 2IAS 27 (as revised in 2011) Separate Financial Statements 2IAS 28 (as revised in 2011) Investments in Associates and Joint Ventures 21Effective for annual periods beginning on or after 1 July 2011.2Effective for annual periods beginning on or after 1 January 2013.3Effective for annual periods beginning on or after 1 July 2012.4Effective for annual periods beginning on or after 1 January 2012.The amendments to IFRS 7 increase the disclosure requirements for transactions involving transfers of financialassets. These amendments are intended to provide greater transparency around risk exposures when a financialasset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments alsorequire disclosures where transfers of financial assets are not evenly distributed throughout the period.The directors do not anticipate that these amendments to IFRS 7 will have a significant effect on the group’sdisclosures regarding transfers of trade receivables previously affected (see note 25.2). However, if the groupenters into other types of transfers of financial assets in the future, disclosures regarding those transfers may beaffected.IFRS 9 issued in November 2009 introduces new requirements for the classification and measurement of financialassets. IFRS 9 amended in October 2010 includes the requirements for the classification and measurement offinancial liabilities and for derecognition.Key requirements of IFRS 9 are described as follows:IFRS 9 requires all recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognitionand Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investmentsthat are held within a business model whose objective is to collect the contractual cash flows, and that havecontractual cash flows that are solely payments of principal and interest on the principal outstanding are generallymeasured at amortised cost at the end of subsequent accounting periods. All other debt investments and equityinvestments are measured at their fair values at the end of subsequent accounting periods.PAGE 322011 ANNUAL REPORT & FINANCIAL STATEMENTS
<strong>CIC</strong> INSURANCE GROUP LIMITEDNotes to the Financial Statements continuedFor the year ended 31 December 20111 ACCOUNTING POLICIES (Continued)Adoption of new and revised International Financial Reporting Standards (IFRSs) (Continued)(b)New and revised IFRSs in issue but not yet effective (Continued)The most significant effect of IFRS 9 regarding the classification and measurement of financial liabilities relates tothe accounting for changes in the fair value of a financial liability (designated as at fair value through profit or loss)attributable to changes in the credit risk of that liability. Specifically, under IFRS 9, for financial liabilities that aredesignated as at fair value through profit or loss, the amount of change in the fair value of the financial liability thatis attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless therecognition of the effects of changes in the liability’s credit risk in other comprehensive income would create orenlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit riskare not subsequently reclassified to profit or loss. Previously, under IAS 39, the entire amount of the change in thefair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss.IFRS 9 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted.The directors anticipate that IFRS 9 will be adopted in the group’s consolidated financial statements for the annualperiod beginning 1 January 2013 and that the application of IFRS 9 may have significant impact on amountsreported in respect of the group’s financial assets and financial liabilities. However, it is not practicable to providea reasonable estimate of that effect until a detailed review has been completed.In May 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures wasissued, including IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS 28 (as revised in 2011).Key requirements of these five Standards are described below:IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with consolidatedfinancial statements. SIC-12 Consolidation – Special Purpose Entities has been withdrawn upon the issuance ofIFRS 10. Under IFRS 10, there is only one basis for consolidation, that is control. In addition, IFRS 10 includesa new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, tovariable returns from its involvement with the investee, and (c) the ability to use its power over the investee toaffect the amount of the investor’s returns. Extensive guidance has been added in IFRS 10 to deal with complexscenarios.IFRS 11 replaces IAS 31 Interests in Joint Ventures. IFRS 11 deals with how a joint arrangement of which two ormore parties have joint control should be classified. SIC-13 Jointly Controlled Entities – Non-monetary Contributionsby Venturers has been withdrawn upon the issuance of IFRS 11. Under IFRS 11, joint arrangements are classifiedas joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements.In contrast, under IAS 31, there are three types of joint arrangements: jointly controlled entities, jointly controlledassets and jointly controlled operations.In addition, joint ventures under IFRS 11 are required to be accounted for using the equity method of accounting,whereas jointly controlled entities under IAS 31 can be accounted for using the equity method of accounting orproportionate accounting.2011 ANNUAL REPORT & FINANCIAL STATEMENTS PAGE 33
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