Furthermore, the IASB tentatively decided that the boundary of these contracts should be defined as the point at which the contract holder no longer has a contractual right to receive benefits arising from a discretionary participating feature.
The FASB tentatively decided to include these investment contracts in the scope of standards on financial instruments.
Risk adjustment techniques
The boards discussed further which techniques should be available to measure the risk adjustment for insurance contracts (in a measurement approach that includes such an adjustment).
The boards directed the staff to develop draft guidance that describes how techniques for measuring risk adjustments, for example approaches using confidence intervals, conditional tail expectations or cost of capital, would satisfy the proposed objective and characteristics of the risk adjustment.
The boards will continue their discussion of this project at their joint meeting on 14 - 17 June.
Sweep issues for Joint Arrangements - Clarification of the partial use of fair value at the group level for an investment in an associate
At its meeting in February, the Board decided that one of the annual improvements that it was finalising would be better dealt with, not as an annual improvement, but instead by amending IAS 28 Investments in Associates as part of the Joint Arrangements project. That amendment confirmed that an entity could continue to use fair value to measure part of an investment in an associate held by a subsidiary, if that subsidiary used the scope exception in IAS 28 to measure its investment at fair value through profit or loss. The exception would, in making the change, be recharacterised as a measurement exemption.
At this meeting the Board tentatively decided that the measurement exception could be applied even if the investment held by the qualifying subsidiary (which would be a venture capital organisation or mutual fund, unit trust or similar entity including an investment-linked insurance fund) was not an associate of that subsidiary.