The video by Karen Grote, Senior Director at WTW, presents the significant changes introduced by the International Financial Reporting Standard 17 (IFRS 17), mainly focusing on discounting and asset-liability mismatches. It explains how IFRS 17 requires future cash flows to be recorded at their present value and highlights the importance of the discount rate in measuring insurance liabilities. The script outlines two main approaches for determining the discount rate: the bottom-up approach and the top down approach. Additionally, it discusses strategies for managing asset-liability mismatches, such as duration matching, hedging techniques, and investing in illiquid assets. Finally, it mentions the option to recognize the impact of changes in other comprehensive income (OCI) to manage volatility in profit and loss.
Contributors: Karen Grote, FSA, MAAA; Razi Hasnain, ASA ACIA; Darryl Wagner, FSA, MAAA; Jon Forster ASA, MAAA