ALBERTA MUNICIPAL INSURANCE EXCHANGE

Notes to the Financial Statements

Year ended December 31, 2022, with comparative information for 2021

3. Significant accounting policies (continued):

(e) Future changes in accounting policies (continued):

(i) IFRS 17 Insurance Contracts ("IFRS 17") (continued):

• Presentation and disclosure: IFRS 17 introduces changes to the way in which the Exchange will present and disclose financial results. Insurance contract liabilities presented in the statement of financial position will consist of premiums receivable, onerous loss component (if applicable), discounted and risk adjusted claim liabilities, and other related liabilities. Reinsurance contract assets will be separately presented in the statement of financial position and will include amounts expected to be recovered from reinsurers and an allocation of the reinsurance premiums paid. The reclassification of amounts on the statement of financial position are expected to result in a reduction in assets and liabilities of the Exchange. The statement of comprehensive income will no longer include premiums written, instead it will include an insurance service result comprising insurance revenue and insurance service expenses. Insurance finance income or expense will be presented within investment result. There will be significant insurance contract roll-forward schedules, discount rates as well as some changes to the claims development table to reconcile to the liabilities for incurred claims.

(ii) IFRS 9 Financial Instruments ("IFRS 9"):

IFRS 9 is generally effective for annual periods beginning on or after January 1, 2018. In September 2016, the IASB issued amendments to IFRS 4, which provides optional relief to eligible insurers in respect of IFRS 9. The options permit (a) entities whose predominant activity is issuing insurance contracts within the scope of IFRS 17 a temporary exemption to defer the implementation of IFRS 9, or alternatively (b) give entities issuing insurance contracts the option to remove from comprehensive income the incremental volatility caused by changes in the measurement of specified financial assets upon application of IFRS 9. Entities that apply either of the options will be required to adopt IFRS 9 on January 1, 2023, which aligns with the effective date of IFRS 17.

The Exchange determined its predominant activity was issuing insurance contracts, and deferred the implementation of IFRS 9 to January 1, 2023.

Although the Exchange is still in the process of assessing the potential impact of IFRS 9, it does not expect this standard will have a significant impact on its results of operations or financial position as the Exchange's business model is to manage investments based on their performance measured at fair value as opposed to realizing principal and interest payments.