Description: The implementation of the IFRS 17 insurance accounting standard has brought significant changes to the financial reporting landscape of insurance companies. With new disclosure requirements and altered profit analysis, understanding and interpreting future profitability have become a topic of concern for the industry. While stability remains a key objective for insurance companies, the earning patterns might become more volatile especially when the contractual service margin (CSM) is exhausted, and a loss component (LC) needs to be established. Reinsurance, a common risk mitigation tool, can play a pivotal role in managing earnings volatility and minimizing losses for onerous measurement units. In this article, we propose a new key performance indicator (KPI) called “loss recoverability” to assess the performance of reinsurance treaties in achieving these objectives. We explain how this KPI can be utilized in multiple scenarios to evaluate the effectiveness of reinsurance strategies and pursue stability in earning patterns.

Description: This article highlights some key implications for onerous contracts under IFRS 17.

Description: This article lays conceptual foundations associated with projecting investment-related discretionary elements of various life insurance and annuity products. It outlines potential implementation approaches that may be appropriate when calculations are performed in a risk-neutral setting. The article concludes that crediting rates in risk-neutral models can be projected as in real-world models, except that the modeled provision for expected credit losses should be modified to equal real-world expected losses initially, but over the projection reflect management’s evolving expectation, moving ultimately to risk neutral expected losses.

Description: Update on IFRS 17 including news, how IFRS 17 is impacting companies financials, comparisons to LDTI, and KPIs.

Description: Latest development in IFRS 17 including a first look at companies disclosures and financial impacts, as well as a discussion of some of the run time issues that companies face.

Description: Market consistent valuations require path-dependent discounting for scenarios. IFRS 17's requirement to discount best-estimate cashflows using locked-in rates could give non-sensical results in many instances. This article describes a technique for calibrating each of the scenario's cashflows so that they can be discounted with other discount factors or curves without distorting the value of underlying options and guarantees.