BCZ2.9 In finalising IFRS 4 Insurance Contracts [The Board completed its insurance project with the issuance of IFRS 17. IFRS 17, issued in May 2017, replaced IFRS 4. IFRS 17 did not change the scope requirements relating to financial guarantee contracts.] in early 2004, the IASB reached the following conclusions:

(a) Financial guarantee contracts can have various legal forms, such as that of a guarantee, some types of letter of credit, a credit default contract or an insurance contract. However, although this difference in legal form may in some cases reflect differences in substance, the accounting for these instruments should not depend on their legal form.

(b) If a financial guarantee contract is not an insurance contract, as defined in IFRS 4, it should be within the scope of IAS 39. This was the case before the IASB finalised IFRS 4.

(c) As required before the IASB finalised IFRS 4, if a financial guarantee contract was entered into or retained on transferring to another party financial assets or financial liabilities within the scope of IAS 39, the issuer should apply IAS 39 to that contract even if it is an insurance contract, as defined in IFRS 4.