A reporting entity should disclose its accounting policy for life settlement contracts (including the classification of related cash flows).
clarifies that the specific disclosure requirements for life settlement contracts do not eliminate disclosure requirements in other topics, including those relating to fair value (see LI 12.8.1
Regardless of the method elected to account for life settlement contracts, a reporting entity should disclose the following, based on the remaining life expectancy for each of the first five succeeding years from the date of the statement of financial position and thereafter, as well as in the aggregate:
- The number of life settlement contracts
- The carrying value of the life settlement contracts
- The face value (death benefits) of the life insurance policies underlying the contracts
If the fair value method is used, the entity must also disclose the reasons for significant changes in the disclosure items referenced above.
Disclosures for life settlement contracts accounted for under the investment method
A reporting entity that has investments for life settlement contracts accounted for under the investment method should disclose, as of the date of the most recent statement of financial position presented, the life insurance premiums anticipated to be paid for each of the five succeeding fiscal years to keep the life settlement contracts in force.
If the reporting entity becomes aware of new or updated information that causes it to change its expectations on the timing of the realization of proceeds from the investments in these types of contracts, it should disclose the nature of the information and the related effect on the timing of the realization of proceeds. Similarly, the reporting entity should disclose significant changes to the number or carrying value of life settlement contracts or the face value of the life insurance contracts underlying the contracts.
Disclosures for life settlement contracts accounted for under the fair value method
A reporting entity that has investments in life settlement contracts accounted for under the fair value method should disclose the methods and significant assumptions used to estimate the fair value, including any mortality assumptions.
The entity should disclose the reasons for changes in its expectation of the timing of the realization of the investments in life settlement contracts.
For each reporting period presented in the income statement, a reporting entity should also disclose:
- The gains or losses recognized during the period on investments sold during the period
- The unrealized gains or losses recognized during the period on investments that are still held at the date of the statement of financial position