Polish Accounting Standards and the differences between PAS and IFRS in respect of financial reporting of PZU were presented in detail in the annual separate financial statements of Powszechny Zakład Ubezpieczeń Spółka 2013, in accordance with PAS, approved by Management Board on 11 March 2014, on which the certified auditor issued an unqualified opinion on the same date (“Separate financial statements of PZU for 2013”).
The separate financial statements of PZU for 2013 are available on the PZU website www.pzu.pl, under “Investor Relations” section.
5.5.2 PZU Życie
PZU Życie accounting policy in accordance with PAS is convergent with PZU PAS policy (excluding accounting policies regarding insurance contracts and investment contracts).
In accordance with IFRS, the accounting policies regarding insurance contracts and investment contracts of PZU Życie have been presented in section 3, 4.4 and 4.6, in parts describing life insurance.
The key differences between PAS and IFRS as regards accounting for insurance contracts and investment contracts of PZU Życie comprise:
- classification of insurance contracts in accordance with instructions included in IFRS 4 regarding classification of products as insurance contracts under IFRS 4 or investment contracts valued in accordance with IAS 39. In accordance with IFRS 4, a contract is an insurance contract only when it could cause an insurer to pay significant additional benefits in any scenario, excluding scenarios lacking commercial substance (i.e. having have no discernible effect on the economics of the transaction), therefore when significant insurance risk is transferred under the contract. Determination whether significant financial risk is transferred under a given contract requires an analysis of the cash flows associated with a given product in different scenarios and estimation of the likelihood of its occurrence;
- only with respect to the figures for 2012 - the technical interest rate used for determination of technical provisions. In accordance with IFRS 4, if the insurer already measures its insurance contracts with sufficient prudence, it should not introduce additional prudence in subsequent reporting periods. In accordance with Polish Accounting Standards, technical interest rates are decreased for some types of insurance due to maximum technical interest rates being announced by the Polish Financial Supervision Authority, which results in an increase in technical interest rates under PAS as compared with the same provisions under IFRS.
The impact of the aforesaid differences between PAS and IFRS has been presented in a segment reporting note in separate columns.