IFRS 17 — Reinsurance Contract Held (CSM Asset)
Recording the CSM for a reinsurance contract held by the cedant.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Reinsurance Contract Asset (CSM) | Asset (+) | 8,000.00 | - |
| Reinsurance Premium Ceded (Net of CSM) | Expense (-) | - | 8,000.00 |
💡 Accountant's Note
Under IFRS 17, reinsurance contracts held by the cedant are measured separately and can have a CSM asset (when the expected net cost of the reinsurance is less than the premium paid — i.e., the reinsurance is 'good value').
Practitioner & Systems Framework
💻 ERP Architecture
Reinsurance contracts held are measured under a separate IFRS 17 calculation — they cannot be offset against the underlying insurance contracts. The cedant's IFRS 17 model measures each reinsurance treaty as a separate group of contracts, computing the expected reinsurance recoveries net of ceded premiums to derive the CSM (asset) or loss component. This typically requires extension of the IFRS 17 model to handle inward and outward reinsurance simultaneously with appropriate treaty linkage.
⚠️ Audit Flags
Auditors verify that reinsurance contracts held are grouped appropriately and measured independently from the underlying direct contracts. The timing of CSM recognition for reinsurance held must match the recognition of losses on the underlying onerous contracts (for loss-recovery component). Auditors also assess the credit quality of reinsurers, as IFRS 17 requires an adjustment for non-performance risk of the reinsurer, which reduces the reinsurance CSM asset.
📄 Required Documentation
Signed reinsurance treaty, IFRS 17 reinsurance measurement model output, non-performance risk adjustment calculation (reinsurer credit rating and default probability), and reconciliation of reinsurance CSM to the gross insurance CSM.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.