# IFRS 17 Insurance Contracts Memo: [Product, portfolio or cohort]

> Technical accounting memo for one insurance portfolio or one annual
> cohort: scope and contract boundary, level of aggregation,
> measurement model choice (general model, premium allocation approach
> or variable fee approach), fulfilment cash flows, risk adjustment,
> contractual service margin (CSM), onerous contracts, reinsurance
> held, presentation, transition and disclosure, with a US GAAP
> comparison to the long-duration targeted improvements (LDTI) in FASB
> ASC Topic 944. Structure aligned with IFRS 17 Insurance Contracts
> (issued May 2017, amended June 2020 and December 2021, effective for
> annual periods beginning on or after 2023-01-01), cited by paragraph
> number only. Replace every `[bracketed]` value and every row marked
> *Example*. This is a document format, not accounting, actuarial,
> audit, tax, legal or financial advice; check the current official
> text and a qualified professional.

<!--
Guidance: How to use this template
- Purpose: record, for one portfolio or cohort, every IFRS 17
  judgement that drives the numbers, with the facts, the alternatives
  considered, the conclusion and the effect, so an auditor, a regulator
  or a new reporting actuary can reach the same answer from the memo.
- Write one memo per portfolio (or per new product, material
  reinsurance treaty or transition population). Group-wide policy
  choices belong in the Accounting Policy Manual
  (`finance/accounting-policy-manual`); this memo applies them.
- Cite paragraph numbers, never copy or paraphrase standard text. Your
  reader has the standard; the memo adds the facts and the reasoning.
- The worked example uses the fictional Fenwold Life Assurance plc
  (IFRS reporter, functional currency GBP, figures in GBP thousand,
  calendar year) and its fictional "Term Protect" level-term life
  product, 2027 annual cohort. Every number is recomputed in the memo.
- Related templates: Technical Accounting Memo
  (`finance/technical-accounting-memo`), Solvency and Financial
  Condition Report (`finance/solvency-financial-condition-report`),
  ORSA Report (`finance/orsa-report`), Risk Appetite Statement
  (`finance/risk-appetite-statement`), Financial Statement Disclosure
  Checklist (`finance/financial-statement-disclosure-checklist`) and
  Insurance ACORD Solution Design
  (`industry/insurance-acord-solution-design`) for the policy data
  that feeds the cash-flow models.
-->

## Document control

<!-- Guidance: Identify the portfolio, the cohort and the reporting framework precisely. A memo that does not name the cohort cannot be traced to the ledger. -->

| Field | Value |
|---|---|
| Document ID | [IF17-YYYY-NNN] *Example:* IF17-2027-003 |
| Portfolio and cohort | [Portfolio, annual cohort] *Example:* Term Protect level-term life, UK, 2027 cohort |
| Reporting entity | [Legal entity] *Example:* Fenwold Life Assurance plc, consolidated into Fenwold Group |
| Framework | [IFRS 17 as issued by the IASB / as adopted in the jurisdiction] *Example:* UK-adopted international accounting standards; US GAAP comparison in section 13 for the US parent reporting package |
| Currency and units | [GBP thousand unless stated] |
| First reporting period affected | [Period] *Example:* FY2027 |
| Version | [0.1] |
| Status | [Draft / In review / Final] |
| Owner | [@insurance-accounting-lead] |
| Approvers/reviewers | [@chief-actuary], [@group-financial-controller], [@cfo] |
| Last updated | YYYY-MM-DD |
| Classification | [Confidential] |
| Auditor shared | [Yes / No, date] |

### Approvals

| Role | Name | Decision | Date |
|---|---|---|---|
| Preparer, insurance accounting | [@name] | [Prepared] | YYYY-MM-DD |
| Reviewer, actuarial function | [@name] | [Agree / Return] | YYYY-MM-DD |
| Group financial controller | [@name] | [Approve / Return] | YYYY-MM-DD |
| Chief financial officer | [@name] | [Approve / Return] | YYYY-MM-DD |

### Revision history

| Version | Date | Author | Change summary |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@name] | First draft from product terms and pricing basis |
| 0.5 | YYYY-MM-DD | [@name] | *Example:* Coverage unit basis agreed with actuarial function |
| 1.0 | YYYY-MM-DD | [@name] | *Example:* Approved, shared with the external auditor |

## Contents

<!-- Guidance: Keep this list aligned with the headings when you add or remove sections. -->

1. [Summary and conclusion](#1-summary-and-conclusion)
2. [Contract facts and documents reviewed](#2-contract-facts-and-documents-reviewed)
3. [Scope, separation of components and contract boundary](#3-scope-separation-of-components-and-contract-boundary)
4. [Level of aggregation](#4-level-of-aggregation)
5. [Measurement model choice](#5-measurement-model-choice)
6. [Fulfilment cash flows and discount rates](#6-fulfilment-cash-flows-and-discount-rates)
7. [Risk adjustment for non-financial risk](#7-risk-adjustment-for-non-financial-risk)
8. [Contractual service margin and coverage units](#8-contractual-service-margin-and-coverage-units)
9. [Onerous contracts and reinsurance held](#9-onerous-contracts-and-reinsurance-held)
10. [Presentation and insurance service result](#10-presentation-and-insurance-service-result)
11. [Transition](#11-transition)
12. [Disclosure](#12-disclosure)
13. [US GAAP comparison: ASC 944 and LDTI](#13-us-gaap-comparison-asc-944-and-ldti)
14. [Controls, data and systems](#14-controls-data-and-systems)
15. [Glossary and references](#15-glossary-and-references)
16. [Standard and licence note](#standard-and-licence-note)

## 1. Summary and conclusion

<!-- Guidance: Write this last. State the model, the CSM at initial recognition, the coverage unit basis, the main judgement and the first-year effect in five to eight lines. A reviewer should be able to stop here. -->

State the conclusion first, then the judgements behind it. Quantify the
effect on the first reporting period and say which judgements are
close calls, with a pointer to the section that sets out the
alternative view. Auditors and supervisors read this section first and
return to it after reading the rest.

*Example:* The 2027 cohort of Term Protect contracts issued by Fenwold
Life Assurance plc falls into two groups: GRP-TP-2027-A, with no
significant possibility of becoming onerous, and a small onerous group
GRP-TP-2027-B (loss GBP 150k, GBP 90k net of reinsurance, section 9).
Group A is measured under the general model
because the coverage period is up to 25 years and the premium
allocation approach eligibility test fails. At initial recognition the
present value of future cash inflows is GBP 12,000k, outflows are
GBP 9,800k and the risk adjustment is GBP 600k, so the CSM is
GBP 1,600k. In FY2027 the CSM accretes GBP 56k of interest at the
locked-in rate, absorbs an adverse lapse-assumption change of GBP 120k
and releases GBP 365.7k to profit or loss on a sum-assured coverage
unit basis, closing at GBP 1,170.3k. The insurance service result of
group A for the year is GBP 450.7k. The main judgement is the coverage unit basis
(section 8).

| Item | Conclusion | Section |
|---|---|---|
| In scope of IFRS 17 | [Yes / No] *Example:* Yes, significant insurance risk transferred | 3 |
| Groups | [N] *Example:* 2 groups: A with no significant possibility of becoming onerous, B onerous at initial recognition | 4 |
| Measurement model | [GMM / PAA / VFA] *Example:* General model | 5 |
| CSM at initial recognition | [Amount] *Example:* GBP 1,600k (group A) | 8 |
| Coverage unit basis | [Basis] *Example:* Sum assured in force, undiscounted | 8 |
| Risk adjustment technique and confidence level | [Technique, level] *Example:* Cost of capital, equivalent to the 75th percentile | 7 |
| FY insurance service result | [Amount] *Example:* GBP 450.7k (group A); group B loss GBP 90k net of reinsurance | 9, 10 |

## 2. Contract facts and documents reviewed

<!-- Guidance: List the documents you read and the facts that matter for each judgement. Facts first, analysis later. Common pitfall: working from the pricing note alone and missing policy conditions, such as premium review clauses, that change the contract boundary. -->

Read the policy wording, the product specification, the pricing basis,
the reinsurance treaty and any distribution agreement that pays
commission or shares profit. Ask the product owner whether any
practice exists outside the wording, such as discretionary payments or
premium holidays, and record the answer with the name of the person who
confirmed it.

| Ref | Document | Date | Source |
|---|---|---|---|
| DOC-001 *(Example)* | Term Protect policy conditions, version 4 | 2026-11-02 | Product governance |
| DOC-002 *(Example)* | Pricing basis and profit test, 2027 launch | 2026-10-15 | Pricing actuary |
| DOC-003 *(Example)* | Quota share treaty QS-2027-01 with a fictional reinsurer, 40% cession | 2027-01-01 | Reinsurance team |
| DOC-004 *(Example)* | Broker commission agreement, indemnity commission | 2026-12-01 | Distribution |

| Fact | Value | Relevance |
|---|---|---|
| Benefit | [Description] *Example:* Level sum assured on death within the term | Scope, coverage units |
| Term | [Range] *Example:* 10 to 25 years | Contract boundary, model choice |
| Premium | [Basis] *Example:* Level monthly premium, guaranteed for the term | Contract boundary |
| Surrender value | [Yes / No] *Example:* None | Investment component |
| Commission | [Basis] *Example:* Up-front indemnity commission, clawed back on lapse in first 4 years | Acquisition cash flows |

## 3. Scope, separation of components and contract boundary

<!-- Guidance: Confirm significant insurance risk, separate any distinct components and set the contract boundary. Common pitfall: treating a premium review right as ending the boundary when the insurer cannot reprice the individual risk. -->

Confirm that each contract transfers significant insurance risk
(paragraph 3 and paragraphs B7 to B25) and note any scope exclusions
considered (paragraphs 7 and 8A). Then assess whether embedded
derivatives, distinct investment components or distinct goods and
services must be separated (paragraphs 10 to 13). Record the
conclusion and the evidence for each candidate component.

Set the contract boundary using paragraph 34 and paragraphs B61
to B71. Ask: when does the insurer gain the practical ability to
reassess the risk of the particular policyholder, or of the portfolio,
and set a price that fully reflects it? Cash flows after that point
are outside the boundary.

| Question | Answer | Paragraph |
|---|---|---|
| Significant insurance risk in at least one scenario with commercial substance? | *Example:* Yes, death benefit far exceeds premiums paid | 3, B7 to B25 |
| Distinct investment component? | *Example:* No, no surrender or maturity value | 11(b), B31 to B32 |
| Embedded derivative to separate? | *Example:* No | 11(a) |
| Distinct goods or services? | *Example:* No, the helpline is incidental | 12 |
| Contract boundary end | *Example:* End of the policy term; premiums are guaranteed and cannot be repriced | 34, B61 to B71 |

## 4. Level of aggregation

<!-- Guidance: Show how contracts are grouped: portfolio, profitability group and annual cohort. Common pitfall: grouping contracts issued more than one year apart, which paragraph 22 prohibits. -->

Identify the portfolio (contracts with similar risks managed together,
paragraph 14). Within it, divide contracts at initial recognition into
the three profitability groups in paragraph 16 and never combine
contracts issued more than one year apart (paragraph 22). Explain the
evidence used to assess onerousness at initial recognition (paragraph
17 allows a set of contracts to be assessed together when reasonable
and supportable information shows they fall in the same group).

If a jurisdiction-specific exemption from annual cohorts applies, such
as the optional exemption in the EU-adopted version of IFRS 17 for
certain intergenerationally mutualised contracts, state that the
exemption is a carve-out and that the group does not then comply with
IFRS 17 as issued by the IASB.

| Group ID | Portfolio | Cohort | Profitability group | Evidence |
|---|---|---|---|---|
| GRP-TP-2027-A *(Example)* | Term Protect UK | 2027 | No significant possibility of becoming onerous | Profit test margin above 10% in all priced cells, sensitivity to lapses within appetite |
| GRP-TP-2027-B *(Example)* | Term Protect UK | 2027 | Onerous at initial recognition | Promotional pricing for a fictional affinity scheme, see section 9 |
| GRP-TP-2027-C *(Example)* | Term Protect UK | 2027 | Remaining | No contracts in FY2027 |

## 5. Measurement model choice

<!-- Guidance: Show why the chosen model applies and why the others do not. Common pitfall: assuming the premium allocation approach is available for any short-tailed product without testing paragraph 53(a). -->

Three models are available. The general model (GMM, paragraphs 32 to
52) is the default. The premium allocation approach (PAA, paragraphs 53
to 59) is an optional simplification for the liability for remaining
coverage, available when the coverage period of each contract is one
year or less, or when the entity reasonably expects the result not to
differ materially from the general model (paragraphs 53 and 54). The
variable fee approach (VFA, paragraph 45 and paragraphs B101 to B118)
is required for contracts with direct participation features and is
assessed at inception only.

```mermaid
flowchart TD
  A["Contract in scope of IFRS 17"] --> B{"Direct participation features?<br/>B101 conditions met"}
  B -- Yes --> V["Variable fee approach"]
  B -- No --> C{"Each contract has coverage<br/>of one year or less?"}
  C -- Yes --> P["PAA available, policy choice"]
  C -- No --> D{"PAA expected to give a result<br/>not materially different?"}
  D -- Yes --> P
  D -- No --> G["General model"]
```

| Test | Result | Evidence |
|---|---|---|
| Direct participation features (B101 conditions) | *Example:* Not met, no underlying items | Policy conditions DOC-001 |
| Coverage period one year or less | *Example:* Not met, 10 to 25 years | Product specification |
| PAA not materially different | *Example:* Not met, discounting and lapse profile drive material differences | Actuarial comparison, run 2026-12-05 |
| Conclusion | *Example:* General model | |

## 6. Fulfilment cash flows and discount rates

<!-- Guidance: Describe the cash flows inside the boundary, the assumptions and the discount rate approach. Common pitfall: including cash flows the standard excludes, such as investment returns or income tax not chargeable to the policyholder (paragraph B66). -->

Fulfilment cash flows combine an unbiased, probability-weighted
estimate of future cash flows (paragraph 33), discounting for the time
value of money and financial risk (paragraph 36) and the risk
adjustment (paragraph 37, section 7). List each cash flow inside the
boundary (paragraph B65) and confirm that excluded items are left out
(paragraph B66). Allocate insurance acquisition cash flows to groups
on a systematic and rational basis (paragraph 28A onwards).

State the discount rate approach: bottom-up (risk-free curve plus an
illiquidity premium) or top-down (reference portfolio yield less
credit risk), with reference to paragraphs 36 and B72 to B85. Record
the locked-in rate used for CSM accretion for each cohort.

| Component | Present value at initial recognition (GBP k) | Assumption source |
|---|---|---|
| Premiums (inflow) *(Example)* | 12,000 | Policy data, lapse basis 2027 |
| Death claims *(Example)* | (7,800) | Mortality basis, fictional industry table adjusted for experience |
| Acquisition cash flows *(Example)* | (1,100) | Commission agreement DOC-004 |
| Maintenance expenses *(Example)* | (900) | Expense study 2026 |
| Net present value of future cash flows *(Example)* | 2,200 | Net inflow |
| Discount basis *(Example)* | Bottom-up, risk-free plus illiquidity premium, locked-in weighted rate 3.5% | Market data 2027-01 to 2027-12 |

## 7. Risk adjustment for non-financial risk

<!-- Guidance: Explain the technique, the risks covered and the confidence level that must be disclosed. Common pitfall: using a technique that cannot be translated to a confidence level, which paragraph 119 still requires. -->

The risk adjustment reflects the compensation the entity requires for
bearing uncertainty about the amount and timing of cash flows from
non-financial risk (paragraph 37, paragraphs B86 to B92). State the
technique (confidence level, cost of capital or another approach), the
risks covered (mortality, lapse, expense), the diversification level
assumed and the confidence level the result corresponds to, which
paragraph 119 requires to be disclosed.

If you disaggregate the change in the risk adjustment between the
insurance service result and insurance finance income or expenses
(paragraph 81), state the policy choice.

| Item | Value |
|---|---|
| Technique *(Example)* | Cost of capital, 6% per year on a one-year 99.5% non-financial risk capital projection |
| Risks covered *(Example)* | Mortality, lapse, expense |
| Diversification *(Example)* | Entity level, allocated to groups pro rata to stand-alone amounts |
| Risk adjustment at initial recognition *(Example)* | GBP 600k |
| Equivalent confidence level (paragraph 119) *(Example)* | 75th percentile |
| Disaggregation (paragraph 81) *(Example)* | Not disaggregated, whole change in insurance service result |

## 8. Contractual service margin and coverage units

<!-- Guidance: Show the CSM at initial recognition, the roll-forward and the coverage unit basis. Common pitfall: releasing the CSM before adjusting it for changes relating to future service, which reverses the order in paragraph 44. -->

At initial recognition the CSM equals the net inflow of the fulfilment
cash flows, so that no gain arises (paragraph 38). Subsequently, for
contracts without direct participation features, adjust the CSM in the
order in paragraph 44: new contracts, interest accreted at the
locked-in rate, changes in fulfilment cash flows relating to future
service (paragraphs B96 to B100), currency effects and then the release
for services provided in the period, measured with coverage units
(paragraph B119).

Choose coverage units that reflect the quantity of benefits and the
expected duration of coverage. Justify the basis, show the units per
period and say whether units are discounted.

### 8.1 CSM at initial recognition

| Line | GBP k |
|---|---|
| Present value of future cash outflows *(Example)* | 9,800 |
| Present value of future cash inflows *(Example)* | (12,000) |
| Risk adjustment *(Example)* | 600 |
| Fulfilment cash flows *(Example)* | (1,600) |
| CSM at initial recognition *(Example)* | 1,600 |

### 8.2 Coverage units

*Example:* The basis is sum assured in force at the start of each year,
undiscounted, scaled so that year 1 equals 100.

| Year | 2027 | 2028 | 2029 | 2030 | 2031 | Total |
|---|---|---|---|---|---|---|
| Coverage units *(Example)* | 100 | 92 | 84 | 76 | 68 | 420 |

The *Example* shows a five-year horizon for readability; a real
25-year cohort shows every year to the end of the boundary.

### 8.3 CSM roll-forward FY2027

| Line | GBP k | Paragraph |
|---|---|---|
| Opening CSM (new group) *(Example)* | 1,600.0 | 44(a) |
| Interest accreted at locked-in rate 3.5% *(Example)* | 56.0 | 44(b) |
| Change in estimates relating to future service: higher lapse assumption *(Example)* | (120.0) | 44(c), B96 |
| CSM before release *(Example)* | 1,536.0 | |
| Release: 1,536.0 x 100 / 420 *(Example)* | (365.7) | 44(e), B119 |
| Closing CSM *(Example)* | 1,170.3 | |

## 9. Onerous contracts and reinsurance held

<!-- Guidance: Show the loss component for onerous groups and the treatment of reinsurance held. Common pitfall: forgetting the loss-recovery component on reinsurance held when the underlying group is onerous (paragraphs 66A and 66B). -->

A group is onerous when the fulfilment cash flows are a net outflow at
initial recognition (paragraph 47). Recognise the loss in profit or
loss, establish a loss component of the liability for remaining
coverage and allocate later changes systematically (paragraphs 48 to
52).

Reinsurance contracts held are measured as separate groups with the
modifications in paragraphs 60 to 70A: the CSM can be a net cost or a
net gain, and a loss-recovery component offsets losses on onerous
underlying groups to the extent the treaty covers them.

| Item | Value |
|---|---|
| Onerous group *(Example)* | GRP-TP-2027-B |
| Fulfilment cash flows at initial recognition *(Example)* | Net outflow GBP 150k |
| Loss recognised and loss component *(Example)* | GBP 150k |
| Reinsurance treaty *(Example)* | QS-2027-01, 40% quota share, entered before the underlying contracts |
| Loss-recovery component (paragraph 66A) *(Example)* | 40% x 150 = GBP 60k |
| Net effect on profit or loss *(Example)* | GBP 90k loss |

## 10. Presentation and insurance service result

<!-- Guidance: Show how insurance revenue and insurance service expenses are built and reconcile to the CSM release. Common pitfall: presenting premiums received as revenue, which paragraph 83 and paragraphs B120 to B125 do not allow under the general model. -->

Insurance revenue under the general model reflects the services
provided in the period: expected claims and expenses released, the
change in the risk adjustment, the CSM release and the recovery of
acquisition cash flows (paragraphs 83 and B120 to B125). Insurance
service expenses comprise incurred claims and expenses, amortisation of
acquisition cash flows and losses on onerous groups (paragraph 84).
Insurance finance income or expenses are presented separately
(paragraphs 87 to 92), with the policy choice on disaggregation
through other comprehensive income stated (paragraphs 88 and 89).

The *Example* below covers GRP-TP-2027-A only.

| Line FY2027 | GBP k |
|---|---|
| Expected claims released *(Example)* | 1,700.0 |
| Expected maintenance expenses released *(Example)* | 190.0 |
| Change in risk adjustment for risk expired *(Example)* | 140.0 |
| CSM release (section 8.3) *(Example)* | 365.7 |
| Recovery of acquisition cash flows, time basis over the five-year illustrative horizon, 1,100 / 5 *(Example)* | 220.0 |
| Insurance revenue *(Example)* | 2,615.7 |
| Actual claims incurred *(Example)* | (1,760.0) |
| Actual maintenance expenses *(Example)* | (185.0) |
| Amortisation of acquisition cash flows *(Example)* | (220.0) |
| Insurance service expenses *(Example)* | (2,165.0) |
| Insurance service result *(Example)* | 450.7 |

Cross-check: CSM release 365.7 plus risk adjustment release 140.0, less
the claims experience variance 60.0, plus the expense experience
variance 5.0, equals 450.7.

From reporting periods beginning on or after 2027-01-01, IFRS 18
Presentation and Disclosure in Financial Statements changes the
structure of the statement of profit or loss; see the IFRS 18
Transition Plan (`finance/ifrs-18-transition-plan`) for how insurance
lines map to the operating and investing categories.

## 11. Transition

<!-- Guidance: For groups in force at the transition date, record the approach per group and the evidence for impracticability. Common pitfall: moving to the fair value approach without documenting why the full retrospective approach is impracticable (paragraph C5). -->

Apply IFRS 17 retrospectively unless impracticable (paragraph C3). If
impracticable for a group, choose the modified retrospective approach
(paragraphs C6 to C19A) or the fair value approach (paragraphs C20 to
C24). Record the approach for each group, the evidence for
impracticability and the transition-date CSM. Paragraphs 114 to 116
require the transition disclosures to continue until the affected
groups run off. The December 2021 amendment permits a classification
overlay for comparative financial assets (paragraphs C28A to C28E).

For entities adopting later (first-time adopters, or acquisitions of
in-force books), restate the approach for the relevant date.

| Group | Approach | Reason | CSM at transition (GBP k) |
|---|---|---|---|
| GRP-TP-2016 to 2020 *(Example)* | Fair value | Pre-2021 cash-flow data not retained at policy level | Fair value 2,400 less fulfilment cash flows 1,900 = 500 |
| GRP-TP-2021 *(Example)* | Full retrospective | Full data available | [Amount] |

## 12. Disclosure

<!-- Guidance: List the disclosures this portfolio feeds and who prepares each. Common pitfall: forgetting the maturity analysis of the expected CSM release (paragraph 109) and the confidence level (paragraph 119). -->

Disclosures follow the objective in paragraph 93 and include
reconciliations of the liability for remaining coverage and incurred
claims (paragraphs 100 to 105), analysis by measurement component
(paragraph 101), new business effects (paragraph 107), expected CSM
recognition (paragraph 109), significant judgements (paragraph 117),
the risk adjustment confidence level (paragraph 119), and the nature
and extent of risks (paragraphs 121 to 132).

| Disclosure | Paragraph | Owner | Source |
|---|---|---|---|
| LRC and LIC reconciliation | 100, 103 | [@name] | Sub-ledger roll-forward |
| Measurement component reconciliation | 101, 104 | [@name] | Actuarial model output |
| New business effect | 107 | [@name] | New business run |
| Expected CSM release by time band | 109 | [@name] | Coverage unit projection |
| Significant judgements | 117 | [@name] | This memo |
| Confidence level | 119 | [@name] | Section 7 |
| Sensitivity analysis | 128 | [@name] | Sensitivity runs |

Use the Financial Statement Disclosure Checklist
(`finance/financial-statement-disclosure-checklist`) to track
completeness across the annual report.

## 13. US GAAP comparison: ASC 944 and LDTI

<!-- Guidance: For dual reporters, compare the main measurement differences for this product. Common pitfall: assuming the IFRS 17 CSM has a US GAAP equivalent; LDTI has no CSM. -->

FASB ASU 2018-12, Targeted Improvements to the Accounting for
Long-Duration Contracts, as deferred by ASU 2019-09 and ASU 2020-11,
is effective for SEC filers other than eligible smaller reporting
companies for fiscal years beginning after 2022-12-15, and for all
other entities for fiscal years beginning after 2024-12-15 (interim
periods within fiscal years beginning after 2025-12-15). Record the
differences for this product so the group can reconcile the two sets of
numbers.

| Topic | IFRS 17 | ASC 944 with LDTI |
|---|---|---|
| Unearned profit | CSM, released by coverage units | No CSM; net premium ratio approach for the liability for future policy benefits |
| Assumption updates | Future service changes adjust the CSM | Cash-flow assumptions reviewed at least annually, retrospective catch-up through net income |
| Discount rate | Current rates, locked-in for CSM accretion | Upper-medium grade (low credit risk) fixed-income yield, updated each reporting date through OCI |
| Risk margin | Explicit risk adjustment | No explicit margin for traditional contracts |
| Acquisition costs | Included in fulfilment cash flows | Deferred acquisition costs amortised on a constant level basis |
| Market risk benefits | Within fulfilment cash flows | Separate category measured at fair value |

## 14. Controls, data and systems

<!-- Guidance: List the key controls over models, assumptions and data. Common pitfall: no reconciliation between policy administration data and model point files. -->

Name the models, the assumption governance forum and the key controls.
Link each control to the risk it mitigates. Use the Model Development
Document (`finance/model-development-document`) for the actuarial model
and the Month-End Close Checklist (`finance/month-end-close-checklist`)
for the ledger postings.

| Control ID | Control | Frequency | Owner |
|---|---|---|---|
| CTL-IF17-001 *(Example)* | Reconcile policy count and sum assured from policy administration to model points | Quarterly | [@actuarial-data-lead] |
| CTL-IF17-002 *(Example)* | Assumption committee approves mortality, lapse and expense bases | Annual | [@chief-actuary] |
| CTL-IF17-003 *(Example)* | Independent recalculation of CSM roll-forward for top 5 groups | Quarterly | [@insurance-accounting-lead] |
| CTL-IF17-004 *(Example)* | Review of locked-in discount rate per cohort | At cohort close | [@treasury-actuary] |

## 15. Glossary and references

<!-- Guidance: Define the terms the memo uses and list the sources. Keep references to name, version and paragraph. -->

### 15.1 Glossary

| Term | Meaning in this memo |
|---|---|
| CSM | Contractual service margin: unearned profit recognised as services are provided |
| Fulfilment cash flows | Discounted, probability-weighted future cash flows plus the risk adjustment |
| LRC | Liability for remaining coverage |
| LIC | Liability for incurred claims |
| Coverage units | Measure of the quantity of service in each period, used to release the CSM |
| Loss component | Part of the LRC that tracks losses on onerous groups |
| GMM, PAA, VFA | General model, premium allocation approach, variable fee approach |
| LDTI | Long-duration targeted improvements, ASU 2018-12 |

### 15.2 References

| Reference | Version or date | Use |
|---|---|---|
| IFRS 17 Insurance Contracts (IFRS Foundation) | Issued May 2017, amended June 2020 and December 2021, effective 2023-01-01. Official text: IFRS Foundation, free registered access or licensed copy: https://www.ifrs.org/issued-standards/list-of-standards/ifrs-17-insurance-contracts/ | Paragraph references |
| FASB ASU 2018-12, ASU 2019-09, ASU 2020-11 (ASC 944) | Effective dates as stated in section 13. Official text: FASB, https://www.fasb.org/standards | US GAAP comparison |
| IFRS 18 Presentation and Disclosure in Financial Statements | Effective 2027-01-01 | Presentation structure |
| Accounting Policy Manual (`finance/accounting-policy-manual`) | This collection | Group policy choices |
| Technical Accounting Memo (`finance/technical-accounting-memo`) | This collection | Generic memo format |

## Standard and licence note

Structure aligned with IFRS 17 Insurance Contracts (IFRS Foundation)
and FASB ASC Topic 944 as amended by ASU 2018-12. Standards are cited
by name and paragraph number only; no text, definitions or examples from
the IFRS Foundation or FASB are reproduced, and IFRS is a trademark of
the IFRS Foundation used nominatively. Paragraph numbers were checked
against a compiled national adoption of IFRS 17 with identical
numbering. Obtain the current standards for the normative requirements
and check later amendments and effective dates. Fenwold Life Assurance
plc, its products, treaties and every figure are fictional and
original. This template is original text written for this collection
and is not accounting, actuarial or legal advice; check the current
official text and a qualified professional. Template licence: MIT.