Assets and liabilities underthe insurance business

The breakdown of the balances linked to the insurance business is as follows:

• 17.1

  Available-for-sale financial assets

• The breakdown of the balances of this section is as follows:

  Breakdown of available-for-sale financial assets (Millions of euros)
  	31-12-2019	31-12-2018	01-01-2018 *
  Equity instruments	0	0	0
  Debt securities **	58,763	51,345	49,394
  Spanish government debt securities	49,977	44,262	42,811
  Foreign government debt securities	5,732	4,043	3,306
  Issued by credit institutions	2,629	2,411	2,596
  Other foreign issuers	425	629	681
  Total	58,763	51,345	49,394
  Debt securities
  Of which: gross unrealised gains	13,362	8,069	8,026
  Of which: gross unrealised losses

  (*) See Note 1.4 - Comparison of information.

  The breakdown of the changes under this section is as follows:

  Changes in debt securities (Millions of euros)
  	2019	2018	2017
  Opening balance	51,345	49,394	47,576
  Plus:
  Additions due to business combinations		17
  Acquisitions	15,388	16,678	24,543
  Gains/(losses) recognised with adjustments to equity (Note 24.2)	3,710	28	(859)
  Less:
  Sales * and redemptions	(11,383)	(14,117)	(21,699)
  Implicit accrued interest	(297)	(655)	(167)
  CLOSING BALANCE	58,763	51,345	49,394

  (*) In 2019 there have been fixed income portfolio sales with a nominal amount of EUR 656 million and a profit of EUR 56 million.

• 17.2

  Assets under insurance and reinsurance contracts

• The breakdown of the changes under this section is as follows:

  This balance sheet heading mainly covers mathematical provisions relating to Berkshire Hathaway Life Insurance Company of Nebraska, assumed as a result of the reinsurance agreement signed in 2012 by VidaCaixa to mitigate longevity risk associated with its life annuities savings portfolio.

  Changes in assets under insurance or reinsurance contracts (Millions of euros)
  	2019	2018	2017
  Opening balance	225	276	391
  Provision	174	225	276
  Amounts used	(225)	(276)	(391)
  FINAL BALANCE	174	225	276

• 17.3

  Liabilities under insurance contracts

• The breakdown of the changes under this section is as follows:

  Changes in liabilities under insurance contracts (Millions of euros)
  	2019	2018	2017
  Opening balance	61,519	50,998	46,946
  1st application IFRS 9 (Note 1)		8,241
  Adjusted opening balance	61,519	59,239	46,946
  Additions due to business combinations			2,058
  Provision	70,807	61,519	48,940
  Amounts used	(61,519)	(59,239)	(46,946)
  FINAL BALANCE	70,807	61,519	50,998
  Of which: Unearned premiums and unexpired risks	4	4	4
  Of which: Life insurance – risk	506	525	422
  Of which: Life insurance – saving	57,324	51,247	41,640
  Of which: Life insurance – other	12,248	9,053	8,241
  Of which: Claims	687	668	664
  Of which: Provisions for bonuses and rebates	38	22	26
  Of which: Technical provisions	0	0	0

  As a result of the analysis on the sufficiency of liabilities, the following amounts corresponding to unrealised gains of the financial assets under the insurance business are reclassified from "Equity – Accumulated other comprehensive income" to "Liabilities under the insurance business":

  Tacit accounting adjustment (Millions of euros)
  	31-12-2019	31-12-2018	31-12-2017
  Gains/(losses) reclassified as "Liabilities under the insurance business"	3,263	2,056	2,140

  The following table shows the key cases at the close of the financial year for calculating the mathematical provisions of insurance in Spain and Portugal:

  Actuarial assumptions for measuring provisions
  	Taules biomètriques	Average technical interest rate
  Life annuities - PVI	According to the different types, the tables GR-80, GR-80 less two years, GR-95 and GK-95 are used. From 21/12/2012, according to the type, the tables PASEM 2010 Unisex (sector mix), GR-95 Unisex (company mix, savings portfolio), PER2000P Unisex (company mix, savings portfolio) or PER2000P Women (from 70 years) are used.	2.08%
  Life annuities - Pension 2000	According to different types, the tables GR-70, GR-80, GK-80, GR-95 and GK-95 are used. From 21/12/2012 the GR-95 Unisex (company mix, savings portfolio) tables are used.	6.84%
  GBPs/ISPs	According to different types, the tables GR-80, GR-80 less two, GR-70, GR-95 and PER2000P are used. From 21/12/2012, according to the type, the PER2000P Unisex or PASEM2010 Unisex tables are used.	0.07%
  Group insurance	Policies opened before 01/01/2009 use the GKM-80/GKF-80 tables. Policies opened between 01/01/2009 and 20/12/2012 use the INE 2004-2005 tables. Policies opened from 21/12/2012 use the PASEM 2010 Unisex (sector mix) tables.	Floating
  PPA (Insured Pension Plan)	According to the types, the tables GR-80 less two years, GR-95 and GK-95 are used. For the new production from 21/12/2012 the tables PASEM 2010 Unisex (sector mix) are used.	2.58%
  Unit Link	According to different types, the tables GK-80, GK-95 and INE 2005 are used. From 21/12/2012 the PASEM 2010 Unisex (sector mix) tables are used.	-

• 17.4

  Select information on financial assets under the insurance business

• In addition to applying the temporary exemption from IFRS 9 to insurance companies controlled by the Group, the disclosure requirements of which are shown below, and in Notes 3 and 40.1, the aforementioned deferral has also been applied to SegurCaixa Adeslas (affiliated company of the Group). The impact on the value of financial instruments associated with the application of IFRS 9 in this company is not deemed significant, due to the low credit risk of the counterparties of its financial instruments.

  The following table shows the fair value at the end of the year, differentiating between assets with cash flows that would solely represent payments of principal and interest (SPPI) in accordance with IFRS 9, and those managed by their fair value (non-SPPI):

  Compliance with SPPI Test (Millions of euros)
  	SPPI*	Non - SPPI**	Total
  Financial assets not held for trading and not managed by their fair value	58,763		58,763
  Financial assets held for trading or managed by their fair value	Not applicable	Not applicable

  Amount of the change in the fair value during 2019 (Millions of euros)
  	SPPI*	Non - SPPI**	Total
  Financial assets not held for trading and not managed by their fair value	7,418		7,418
  Financial assets held for trading or managed by their fair value	Not applicable	Not applicable

  (*) The insurance companies use a combination of financial instruments in the financial immunisation strategies to cover the risks to which their activities are exposed. For these purposes, in the investment operations of the Group's insurance business, different fixed-income securities include financial swaps which, in accordance with the sector practice and the applicable monitoring criteria, are recognised jointly, whether it is in "Available-for-sale financial assets" or in the amortised cost portfolio, and the fair value is shown in the top table.

  These financial swaps individually assessed only taking into account their legal form will not pass the SPPI test considered in IFRS 9. Following on from this, within the framework of the project to implement IFRS 9 which is ongoing in the insurance companies, the Group has analysed the different accounting alternatives considered in the regulatory framework (including hedge accounting) jointly with the main changes that will be introduced by IFRS 17 Insurance Contracts in the assessment of technical provisions; the ultimate aim of all the foregoing is to avoid asymmetries in the income statement and assets of the Group.

  As regards the fixed-income instruments, the insurance companies have not estimated as 'material' the expected loss which, in the first application of IFRS 9, would be recorded under reserves.

  (**) The change of the balance of assets that have not passed the SPPI test is explained by maturities occurring at the end of the year, as well as the adaptation of the financial instruments portfolio to the probable flows of the liabilities.