iasb insurance contractsiasb insurance contracts june 2013 ... · if observable market data exists,...

IASB Insurance ContractsIASB Insurance ContractsIASB Insurance Contracts June 2013 Exposure Draft

Review

IASB Insurance Contracts June 2013 Exposure Draft

ReviewReviewReviewTaipei 25 September 2013Taipei 25 September 2013Taipei, 25 September 2013

Presented by Simon Walpole, FIA, MA

Taipei, 25 September 2013

Presented by Simon Walpole, FIA, MA

Deloitte

Executive Producer Michael Lockerman, FSA, MAAA

Deloitte

Executive Producer Michael Lockerman, FSA, MAAA , ,PricewaterhouseCoopers

, ,PricewaterhouseCoopers

A dAgenda

Overview of the BBA and PAA models

Summary of discount rates within the BBA modely

Questions in the ED – what the IASB wants to knowknow

Presentation

Disclosures Disclosures

2 22

Overview of the modelsOverview of the models

3 33

Measurement Model BackgroundMeasurement Model Background

Measurement model based on the following principle:

Measurement model principlesg p p

• Insurance contracts create a bundle of cash flows that work together to create a package of cash inflows and outflows

Measurement model proposed for all types of insurance (and reinsurance) contracts Measurement model proposed for all types of insurance (and reinsurance) contracts

Model is a current assessment of insurer’s rights and obligations under contract

Model has three building blocks

A modified approach for short-duration contracts

Difference between IASB and FASB Guidance

IASB: The Premium Allocation Approach is permitted as a simplification to the Building Blocks Approach. The 2013 IASB ED is revised to permit entities to apply the approach if it would produce measurements that are a reasonable approximation to those that would be produced when applying the requirements of the main approach, or the coverage period is within one year or less;q pp , g p y ;

FASB: The premium allocation approach is a separate model and should be applied for all contracts meeting specified criteria, same as the 2012 FASB ED.

4 44

M t d l i IFRS 4 Ph IIMeasurement model in IFRS 4 Phase IIOverview of Building Block Approach “BBA”

• One model for all insurance contracts.

E li it i t f

Unearned profits recognised over life of contract

Contractual service margin

• Explicit margins as part of liability. Day 1 loss in income statement, no day 1 gain.

• Combination of rights and

Reflect compensation for uncertainty. Quantifies the value difference between certain and

Risk adjustment• Combination of rights and

obligations (considers cash inflows and outflows).

• Optional simplified model for

uncertain liability.

Discounting future cash flows using “top-down” or “bottom-up” approach to reflect characteristics of the

Discountingp ppre-claim liabilities based on the unearned premium. Applies to short duration contracts (period of cover <= 1 year) or where a reasonable

to reflect characteristics of the liabilities

Best estimate cash flows –explicit, unbiased and probability weighted estimate of fulfilment

Best estimate of fulfilment cash flowswhere a reasonable

approximation.weighted estimate of fulfilment cash flows

fulfilment cash flows

5 5

5

Building Block Approach: Day One Liability (IASB)

RA

CSM

Balance Sheet Liability

Acquisition Costs

RA

+ miums

ted

Cas

h w

s

y

Cash

+

Prem

Und

isco

unt

Flo

w

RA

CSM

Discounted C

Flows+

Blocks

2NETCash

InflowsCash

Outflows

D

Nets to Zero

-

Building

1 & NET

-

6 6

Building block 1: Cash flows estimateBuilding block 1: Cash flows estimateA current, unbiased and probability weighted estimate of

the contractual cash flows Current — re-assessed at each reporting period

Incorporate, in an unbiased way, all available information about the amount and timing of all cash flowsof all cash flows

Probability weighted cash flows — Stochastic modeling may be required

If observable market data exists, incorporate in the model to the extent possible

Non-market variables utilize entity-specific cash flows

7 77

Building block 2: Discount rate

Discount rate based on characteristics of the insurance liability:- Currency - Duration - Liquidity

Adjusts first building block for time value of money

Use an asset based discount rate ONLY if the amount, timing or uncertainty of the cash flows depend on performance of assets, e.g. participating contracts Discount rate is a market consistent interest rate based on a “risk free rate” plus an

f f (“illiquidity premium based on the characteristics of liability cash flows (“bottom-up” approach).

• Top-down approach: starting from expected asset returns for a reference portfolio, the entity then removes factors that are not relevant to the insurance contracts (such as market riskthen removes factors that are not relevant to the insurance contracts (such as market risk premiums for assets included in the reference portfolio) and adjusts for differences between timing of cash flows between the assets and the cash flows of the insurance contracts.

No further guidance on how to calculate the illiquidity premiumDi l di t t i t f illi idit d iti iti Disclosures on discount rate, impact of illiquidity and sensitivities Discounting for cash flows is not required for contracts with duration of 1 year or less

(duration is determined at issue)

8 88

Building block 3: Margins – Risk adjustmentBuilding block 3: Margins Risk adjustment

An adjustment to reflect uncertainty in the estimate of fulfillment cash flows Explicitly reported as a component of the insurance contract liability, defined as:

“The compensation that an entity requires for bearing the uncertainty about the amount and timing of the cash flows that arise as the entity fulfills the insuranceamount and timing of the cash flows that arise as the entity fulfills the insurance contract.”

Re-measured at each reporting period; Estimated at portfolio level

Reflects the degree of diversification benefit that the entity considers when determining g y gthe compensation it requires for bearing that uncertainty

Reflects both favorable and unfavorable outcomes in a way that reflects the entity’s degree of risk aversion

No specific technique required under the IASB guidance. Required confidence level disclosure.

9 99

Building block 3: Margins –Building block 3: Margins Contractual Service MarginA margin to eliminate any gain at inception of the contract A contractual service margin (known previously as the ‘residual margin’) arises when:

PV of future cash inflows > PV of future cash outflows + risk adjustment

Estimated at level of portfolio of insurance contracts with same inception date and Estimated at level of portfolio of insurance contracts, with same inception date and similar coverage duration Calculated at initial recognition and amortized in subsequent valuations. In subsequent

measurement, changes in the estimates of future cash flows should be reflected in the , gcontractual service margin adjustment

The pattern for recognizing the contractual service margin over the coverage period shall be on a systematic basis that reflects the remaining transfer of services that are provided under the contract

Cannot be negative, as a loss must be recognized immediately through income

Interest accretion required using discount rate locked-in at inception

10 1010

Building block 3: Margins – Composite MarginsBuilding block 3: Margins Composite Margins

A composite margin arises when:

A margin to eliminate any gain at inception of the contract

p g

• PV of future cash inflows > PV of future cash outflows

Estimated at portfolio level of insurance contracts, with same inception date and similar coverage durationcoverage duration

Interest accretion required

No prescribed approach for recognizing the composite margin. Initial margin should be recognized as revenue in net income over the coverage and settlement periods as therecognized as revenue in net income over the coverage and settlement periods as the entity satisfies its performance obligation

11 1111

Premium Allocation Approach (PAA)Premium Allocation Approach (PAA) Application• An entity may simplify the measurement of the liability for the remaining coverage using

h i ll i h ifthe premium-allocation approach if

Doing so would produce a measurement that is a reasonable approximation to that which would be produced when applying the building block approach;

The coverage period at initial recognition is approximately one year or less.

Onerous contract test• When an entity uses the simplified approach, it shall recognize an onerous contractWhen an entity uses the simplified approach, it shall recognize an onerous contract

liability (the difference between the liability and the fulfillment cash flow), if, at initial recognition or subsequently, the portfolio of the contracts containing the contract is onerous.

12 1212

PPA subsequent measurementPPA subsequent measurementMeasurement

The pre-claims liability at initial recognition is the premium received at initial recognition, less the directly attributable acquisition costs and plus any onerous liability.

Premium is recognized over the coverage period in like with timing of g g p gincurred claims, usually in a straight line.

Consistent with the BBA, a current market discount rate would be used in discounting the pre-claims liability (but not necessary of claims are paid indiscounting the pre claims liability (but not necessary of claims are paid in one year).

• Lock in SOCI to contract inception rate

• Unlock SOFP rate in subsequent measurements• Unlock SOFP rate in subsequent measurements

13 1313

IASB Measurement ModelPAA BBA

BB3

PAA BBA

CSMCSM

ACLi bilit f

AC

RA

RA

BB3

PAA

BB2

RA

RA

BBAUPR

RARARA

Liability for remaining coverage

BB1

BB2

=

≈

BB1 BB1

RA

BB1

BB2BB2

BB1BB1

BB2

RA

Liability for incurred claims

UPR

BB1

BB2=

=

LEGENDDay 0 Coverage Period End of Coverage

ACAcquisition Costs

BBBuilding Block

PAAPremium Allocation Approach

RARisk Adjustment

UPRUnearned Premium Reserve, or PAA Pre-Claims Liability

Building Block

BBABuilding Block Approach

Risk Adjustment

CSM*Contractual Service Margin

* CSM can be unlocked for favorable and unfavorable changes, resulting in a CSM that can increase and decrease.

14 14

Summary of discount Summary of discount rates within the BBA rates within the BBA modelmodel

15 1515

Discount rate componentsDiscount rate components Basic BBA rate

• Curve not a flat rateCurve, not a flat rate• Market data for durations where this is a market• Long term averages where there is no market• Liquidity does not mean policyholder optionality to the IASB

A t d d t h fl Asset dependent cash flows• Use a rate that reflects the dependency, possibly a single rate

Mirrored assets (IASB)• No rate, just mirror the balance for the mirrored portionNo rate, just mirror the balance for the mirrored portion• BBA discount rate for the fixed cash flows• May also have asset dependent cash flows

Subsequent measurementL k i BBA t h it i d f th SOCI b t h it f th SOFP• Lock in BBA rate where it is used for the SOCI but change it for the SOFP

• Discount rates in SOCI are updated for changes in asset dependent cash flows so that there is no net impact for FASB

Mirrored products subsequent measurement• Change the asset dependent rate gets updated in both the SOCI and SOFP• BBA rates are treated the same as the regular model

16 1616

Different treatmentsDifferent treatmentsCash flows Day 1 Day 2 updates

Fixed Market for risk free rate or credit rate

Every valuation period for SOFP / lock-in SOCI

Liquidity/unexpected defaults and long term rates

Update for the SOFP but may not change that much

Asset dependent Same as the asset Every valuation period forAsset dependent Same as the asset Every valuation period for SOFP / lock-in SOCI

Mirrored Mirror: Balance sheet for Just like the assets areMirrored Mirror: Balance sheet for asset

Just like the assets are updated

Indirect: Use asset rate Run through both SOPF and SOCI

Fixed: same as above Same as above

17 1717

Di t R t Ch t i tiDiscount Rates CharacteristicsRisk Asset LiabilityRisk Asset LiabilityCurrency Yes YesContract Features Yes YesDefault Yes NoExpense Yes NoI fl i Y YInflation Yes YesLiquidity Yes YesSovereign Yes YesSovereign Yes YesTax Yes NoTiming Yes YesgUncertainty Yes Yes

18 1818

Interest Rate ApproachesInterest Rate Approaches

Bottom UpBottom Up• Start with risk free rate

Add li idit i t• Add liquidity premium, etc.

Top Down• Start with observed yields

• Remove default premium etc• Remove default premium, etc.

19 1919

Interest Rate ApproachesInterest Rate Approaches

Rate / Adjustment Top Down Bottom UpBond Gross Yield 10%Bond Gross Yield 10%Tax @ 30% ‐3%Default ‐2%

Discount Rate 5% 5%Liquidity 2%Risk Free Rate 3%

20 2020

PresentationPresentation

21 2121

M t d l i IFRS 4 Ph IIMeasurement model in IFRS 4 Phase IILinkage to presentation

Profit or loss

Release of contractualservice margin

Update for current estimates

Contractual service margin Profit or loss

ge in

fl

ows

Update for current estimates

Risk adjustment

g

dat

e fo

r ch

ang

mat

es o

f cas

h f

Unwind at locked in rate

Discounting

Other Comprehensive

Income

Up

des

tim

Update current market rates

Discounting

Best estimate of fulfilment cash Income

Experience adjustments

fulfilment cash flows

22 22

22

I t t t t tiIncome statement presentationInsurance contract revenue

• No longer summarised margin approach (as in 2010 Exposure Draft)

• “Earned premium” approach to insurance revenue with non-distinct investment components excluded

Th h d t ff t th fi l ti lt• The change does not affect the final operating result

23 23

23

P i E d P iPresentation – Earned Premium

IASB developed ‘earned premium’ method for determining and presenting premiums

Expected claims for the year

Aims to be a measure similar to ‘revenue’ presented by other industries Earned

premiums

Release of risk

dj t tModel tries to allocate premiums to reporting periods based on expected pattern of claims / benefits

Calculation closely linked to pattern

premiumsadjustment

Calculation closely linked to pattern of release of CSM margin Release of

CSM

Universal lobbying against this proposal on a “cost versus benefit” grounds

24 24

24

P t ti E d P i E lPresentation – Earned Premium Example

The table below contains the IASB’s example illustration of the earned premium p papproachExpected cash flows and margin release pattern

Assumes no experience variances.

Premiums = expected claims / benefits +

change in risk adjustment + release + adjustment + release of contractual service

margin

Earned premium presentation

+

Incurred claims /benefits

=

benefits recognised when

incurred

25 25

25

D t il d i t t t id tiDetailed income statement considerations

• IASB produced indicative income statement format.

• Premium revenue under Phase II will reflect

IASB view of income statement format

Premium revenue under Phase II will reflect “Premiums earned”

• Need to consider availability of data in right level of detail to populatee e o deta to popu ate

• Currently collect incurred claims and expenses and investment income data

• Under Phase II data challenges likely for premium revenue, interest on insurance liabilities and the effect of discounting

• Likely to be actuarially driven; however it is unclear what level of granularity of data will be required in these areas, especially for premium revenue

26 26

26

Presentation examplePresentation example

27 2727

Illustrative exampleIllustrative example

10 year level premium endowment

Death benefit = the endowment amount

Stated account values for each year

Assume flat BBA discount rate = 2% and actual earned rate = 5% Assume flat BBA discount rate = 2% and actual earned rate = 5%

$1,000 deferred acquisition cost

Year Premium Face SurBen ExpPrem ExpDB ExpSB ExpExpYear Premium Face SurBen ExpPrem ExpDB ExpSB ExpExp1 1,250 10,000 - 1,250 100 - 1,050 2 1,250 10,000 500 1,151 138 27 45 3 1,250 10,000 1,000 1,066 170 42 42 4 1,250 10,000 1,500 992 198 46 39 5 1,250 10,000 2,000 929 223 43 36 6 1,250 10,000 2,500 874 245 51 34 7 1 250 10 000 3 500 818 262 66 317 1,250 10,000 3,500 818 262 66 31 8 1,250 10,000 5,000 762 274 87 29 9 1,250 10,000 7,000 705 282 113 27

10 1,250 10,000 10,000 650 286 4,915 25

28 2828

Traditional P&L and B/STraditional P&L and B/SYear 1 2 3 4 5 6 7 8 9 10Premium 1250 1,151 1,066 992 929 874 818 762 705 650 Premium 1250 1,151 1,066 992 929 874 818 762 705 650 Investment income 10 61 107 149 189 227 263 296 327 355

Total Revenue 1,260 1,212 1,172 1,141 1,118 1,101 1,081 1,058 1,033 1,005

Benefits 100 165 212 245 266 295 328 361 395 5,201 Change in benefit reserve 752 657 585 532 494 452 405 353 299 (4,530) Change in DAC (879) 114 108 103 99 97 94 91 88 85 Expenses 1,050 45 42 39 36 34 31 29 27 25

Total Expenses 1,023 982 947 919 896 878 858 834 809 780

Net income 237 230 225 223 222 222 223 223 224 225

Invested assets 110 1,111 2,029 2,887 3,702 4,474 5,196 5,864 6,475 2,254 DAC 879 765 657 554 455 358 264 173 85 (0)DAC 879 765 657 554 455 358 264 173 85 (0) Total assets 989 1,876 2,687 3,441 4,157 4,832 5,460 6,036 6,559 2,254

Reserves 752 1,409 1,995 2,527 3,021 3,473 3,878 4,231 4,530 - Total liabilities 752 1,409 1,995 2,527 3,021 3,473 3,878 4,231 4,530 -

Equity 237 467 692 915 1,137 1,359 1,582 1,806 2,030 2,254

29 2929

New presentation – B/S or SOFPNew presentation B/S or SOFPExisting GAAPYear 1 2 3 4 5 6 7 8 9 10Invested assets 110 1,111 2,029 2,887 3,702 4,474 5,196 5,864 6,475 2,254Invested assets 110 1,111 2,029 2,887 3,702 4,474 5,196 5,864 6,475 2,254 DAC 879 765 657 554 455 358 264 173 85 (0) Total assets 989 1,876 2,687 3,441 4,157 4,832 5,460 6,036 6,559 2,254

Reserves 752 1,409 1,995 2,527 3,021 3,473 3,878 4,231 4,530 - Total liabilities 752 1,409 1,995 2,527 3,021 3,473 3,878 4,231 4,530 -

Equity 237 467 692 915 1,137 1,359 1,582 1,806 2,030 2,254

New presentationNew presentationYear 1 2 3 4 5 6 7 8 9 10Invested assets 110 1,111 2,029 2,887 3,702 4,474 5,196 5,864 6,475 2,254 Insurance contract assets 726 - - - - - - - - -

Total assets 836 1,111 2,029 2,887 3,702 4,474 5,196 5,864 6,475 2,254

Insurance contract liabilities - 222 1,059 1,807 2,488 3,099 3,636 4,094 4,473 - RM 264 222 181 143 105 70 39 15 0 0 CSM 459 412 364 315 265 214 162 109 55 0

T l li bili i 24 8 6 1 604 2 26 2 8 8 3 383 3 83 4 218 4 28 0Total liabilities 724 856 1,604 2,265 2,858 3,383 3,837 4,218 4,528 0

Equity 112 255 425 622 844 1,091 1,359 1,646 1,946 2,254

30 3030

New presentation – P&L or SOCINew presentation P&L or SOCI

Premium is not used directlyy

Only the portion of premium used for expected benefits and expensesbenefits and expenses

Acquisition expenses are amortized in a manner similar to the CSM but only for the purposes ofsimilar to the CSM but only for the purposes of the SOCI

The 1 000 acquisition costs are spread as follows:• The 1,000 acquisition costs are spread as follows:

Year 1 2 3 4 5 6 7 8 9 10DAC Amortization 91 93 95 97 99 101 103 105 107 109DAC Amortization 91 93 95 97 99 101 103 105 107 109

31 3131

New presentation – P&L or SOCINew presentation P&L or SOCI

New presentationNew presentationYear 1 2 3 4 5 6 7 8 9 10Change in CSM and RM (excl interest) 106 104 101 99 96 94 89 81 71 56 Expected Claims and Expense 241 304 349 380 401 430 462 495 529 5,334

Revenue 348 408 450 479 497 524 551 577 600 5,391

Actual Claims and Maint Expense 241 304 349 380 401 430 462 495 529 5,334

Expenses 241 304 349 380 401 430 462 495 529 5,334

Underwriting Result 106 104 101 99 96 94 89 81 71 56

Investment Income 10 61 107 149 189 227 263 296 327 355 Interest expense 4 22 38 51 63 74 83 91 98 103

Investment Profit 6 39 69 98 126 153 180 205 229 252

Net Profit 112 142 170 197 222 247 268 286 300 308

OCI - - - - - - - - - -

C h i P fit 112 142 170 197 222 247 268 286 300 308Comprehensive Profit 112 142 170 197 222 247 268 286 300 308

32 3232

Remove deposit elementsRemove deposit elements

Need to remove all deposit or “returnable” pamounts from the income statement (“SOCI”)

Year 1: surrender value = 0Year 1: surrender value 0 • therefore no returnable amount within the death

benefitbenefit

Year 5: surrender value = 2,000 • therefore 20% of the death benefit needs to be• therefore 20% of the death benefit needs to be

removed from the SOCI

All surrender benefits are removed as well All surrender benefits are removed as well

33 3333

Remove deposit elementsRemove deposit elementsOriginalYear 1 2 3 4 5 6 7 8 9 10Ch i CSM d RM ( l i t t) 106 104 101 99 96 94 89 81 71 56Change in CSM and RM (excl interest) 106 104 101 99 96 94 89 81 71 56 Expected Claims and Expense 241 304 349 380 401 430 462 495 529 5,334

Revenue 348 408 450 479 497 524 551 577 600 5,391

Actual Claims and Maint Expense 241 304 349 380 401 430 462 495 529 5 334Actual Claims and Maint Expense 241 304 349 380 401 430 462 495 529 5,334

Expenses 241 304 349 380 401 430 462 495 529 5,334


Remove deposit elementsYear 1 2 3 4 5 6 7 8 9 10Change in CSM and RM (excl interest) 106 104 101 99 96 94 89 81 71 56 Expected Claims and Expense 241 270 290 304 313 318 304 271 218 134 p p

Revenue 348 373 392 403 409 412 393 352 290 190

Actual Claims and Maint Expense 241 270 290 304 313 318 304 271 218 134

Expenses 241 270 290 304 313 318 304 271 218 134 p


34 3434

OCI impactOCI impact

Remove the impact of interest rate changes from the SOCI

At the end of year 3, rates increase from 5%, 2% to 6%, 3%

Liability decreases from 1,059 to 829• This amount hits the SOFP but is removed from the SOCI

• Following assumes assets are not affected (as if they were 1 year investments)investments)

• For analysis on interaction see the most recent financial reporter

Interest rate change impacts on the Risk adjustment g p jvaries on the nature of the risk adjustment calculation

35 3535

OCI impactOCI impactBefore rate changeYear 1 2 3 4 5 6 7 8 9 10Net Profit 112 142 170 197 222 247 268 286 300 308 OCI - - - - - - - - - -

Comprehensive Profit 112 142 170 197 222 247 268 286 300 308

I t t li biliti 222 1 0 9 1 80 2 488 3 099 3 636 4 094 4 4 3Insurance contract liabilities - 222 1,059 1,807 2,488 3,099 3,636 4,094 4,473 - RM 264 222 181 143 105 70 39 15 0 0 CSM 459 412 364 315 265 214 162 109 55 0

Total liabilities 724 856 1,604 2,265 2,858 3,383 3,837 4,218 4,528 0

After rate changeYear 1 2 3 4 5 6 7 8 9 10Net Profit 112 142 176 230 265 299 330 358 382 399 OCI - - 229 (13) (21) (27) (34) (40) (45) (50) ( ) ( ) ( ) ( ) ( ) ( ) ( )

Comprehensive Profit 112 142 405 217 244 272 296 318 337 350

Insurance contract liabilities - 222 829 1,591 2,292 2,931 3,501 4,000 4,424 - RM 264 222 176 139 103 69 38 15 0 0 CSM 459 412 364 315 265 214 162 109 55 0

Total liabilities 724 856 1,370 2,046 2,661 3,214 3,702 4,123 4,479 0

36 3636

DisclosuresDisclosures

37 3737

Di lDisclosuresSummary of requirements

Amounts

• Detailed roll forward schedules and reconciliations.• Reconciliation of sources of profit.• Contracts written in the period.• Relationship between interest and investment return.

Significant judgements

• Processes to estimate inputs to methods.• Effect of changes in methods and inputs.• Confidence level for determining risk adjustment.• Yield curve(s) used to discount cash flows• Yield curve(s) used to discount cash flows.

Nature and extent of risks

• Nature and extent of risks.• Insurance risk on gross/net basis.• Concentrations of insurance risk and claims development.• Quantitative disclosures about non-insurance risks.

38 38

38

Di lDisclosuresExplanation of recognized amounts

ili iReconciliation 1:An annual reconciliation of the liabilities and reinsurance movements from one period to the next. It should split out the carrying value of contracts that are in an asset position and those in a liability position.

h li bili i ( i ) i i ld b h f li bili i i d h i d li bili iThe liabilities (reinsurance) position would be the sum of liabilities incurred over the period, liabilities outstanding and liability movement recognized in the P&L accounts

Reconciliation 2:C t i th t f

Reconciliation 2 (Mirroring)T t l t b i ll t d d Capturing the movement of:

• Expected present value of future cash flows• Risk adjustments• Contractual service margin

A i iti t ll t d t th i d

Total amounts being allocated under this approach

• Acquisition costs allocated to the periodThis applies only to non-mirroring business

ili i Reconciliation 3:For each of the above reconciliations you should show:• Premiums received and incurred

Cl i id

For all reconciliations separate out returns linked to interest

rates assumed and investment

39 39

39

• Claim paid• Changes or purchases of blocks of business• Other data feeding into P&L

rates assumed and investment returns earned

Di lDisclosuresSignificant judgment

The discloses should at a minimum capture detail on the methods and inputs used for calculating:

• The Risk adjustment

• Discount rates

• The pattern of recognition for the CSM

• Investment components that are not separated out

• Any changes to the methods and assumptions

• The yield curve / curves used to derive the liabilitiesy

40 40

Di lDisclosuresNature and extent of risks

• Exposures to risk and how they arise

• Regulatory environment

• Management of liquidity riskM i l i • Policies and processes

in place to manage the risks

environment• Minimum capital

requirements

• Maximum claims payable on demand

• Analysis of liquidity profile

A t l E t d

profile

• Risks disclosed net and gross of risk mitigation

• Sensitivity analysis to hi hli h i

• Actual vs Expected claims development

Insurance contracts

highlight impact on P&L

• Concentrations

• Credit exposures, including quality of reinsurance

Market risks

41 41

reinsurance

Questions posed by theQuestions posed by theQuestions posed by the IASBQuestions posed by the IASBIASBIASB

42 4242

Wh i ?What is next?•Comments by 25 October 2013Comments by 25 October 2013

•IASB will re-deliberate in 2014

•Invitation to comment will focus on smaller number of questions

Adjusting the contractual service

marginMirroring approach Transition

margin

OCI solutionPresentation of revenue

d Focus of IASB

and expensesf

questions

Cost and benefit of the revised proposal

Clarity of drafting

43 43

14

Society of Actuaries researchSociety of Actuaries research

Earnings Emergence for Earnings Emergence for g gInsurance Contracts Under

Possible Future International

g gInsurance Contracts Under

Possible Future InternationalPossible Future International Accounting Standards

Possible Future International Accounting Standards

2013 Update2013 UpdateppPresented by Tom Herget, FSA, MAAA, CERA

Taipei, 25 September, 2013

Presented by Tom Herget, FSA, MAAA, CERA

Taipei, 25 September, 2013

ContentsContents

Project OverviewProject Overview

Product Results

2 22

Project OverviewProject Overview

Requested by the American Academy of q y yActuaries to help them respond to the IASB

Sponsored by the SOA’s Financial ReportingSponsored by the SOA s Financial Reporting Section

Providing education to SOA members and Providing education to SOA members and candidates

C l t d id O t b 2013 Completed mid-October 2013

Twelve products’ earnings emergence

Report to be available on SOA website

3 33

The Actuarial Task Forces (ATF’s)The Actuarial Task Forces (ATF s)

AFLAC ManulifeAFLAC

ARC

Manulife

MetLife

Deloitte (Chicago)

Deloitte (Hartford)

Milliman

New York LifeDeloitte (Hartford)

Ernst & Young

New York Life

PolySystems

KPMG/GGY Axis Towers Watson

4 44

Project Manager Ernst & YoungProject Manager Ernst & Young

Rodrigo CareagaRodrigo Careaga

Mark Freedman & Tara Hansen

Keith Bucich, Mustafa Dinani, Asad Khalid & Bruce Rosner

5 55

SOA SupportSOA Support

From headquarters: Ronora Stryker & Jan Schuh Project Oversight Group (POG) Members:

• Tom Herget, chairR B ll• Rowen Bell

• Rod Bubke• John DieckJohn Dieck• Steve Easson• William Hines• Burt Jay• Craig Reynolds

Henr Siegel• Henry Siegel• Steve Strommen• Randy Tillis

6 66

Randy Tillis

Products StudiedProducts Studied

Term Life Par Whole Life Universal Life (UL) Universal Life with Secondary Guarantees (ULSG) Single Premium Immediate Annuity (SPIA)

V i bl U i l Lif (VUL) Variable Universal Life (VUL) Variable Annuity (VA)

Si l P i D f d A it (SPDA) Single Premium Deferred Annuity (SPDA) Fixed Indexed Annuity (FIA) Cancer Cancer Long Term Care (LTC) Medicare Supplement

7 77

Medicare Supplement

DeliverablesDeliverables

New business onlyNew business only

IFRS balance sheet and profit emergence

US GAAP (today’s US GAAP) balance sheet and profit emergencep g

Alternative scenarios

Ob ti Observations

8 88

TimetableTimetable

October 2011 ATF’s recruited

November 2011 Project Manager selected

August 2012 Products and Variations selected

Late 2012 and early 2013 ATF’s run cash flows statutory and US Late 2012 and early 2013 ATF s run cash flows, statutory and US GAAP

Wait, wait and wait

June 2013 Read Re-exposure draft

July 2013 Develop Instructions

A t 2013 ATF’ d l l ti August 2013 ATF’s do calculations

September 2013 ATF’s, Project Manager and POG inspect every digit in resultsg

October 2013 Issue final report – available at http://www.soa.org/Research/Research-Projects/Life-Insurance/research 2013 earnings emerge ins aspx

9 99

Insurance/research-2013-earnings-emerge-ins.aspx

Key Assumption – Risk Adjustment –Used Cost of Capital

10 1010

Key Assumption – Cost of Capital calibration

Cost of Capital based on Solvency II Standard Formula

• Shocks are calibrated using a Value-at-Risk (VaR) measure, with a 99 5% confidence level (over one year period)a 99.5% confidence level (over one year period)

• The 6% CoC rate represents the shareholder cost to provide funds to cover required capital at a confidence level of 99.5%

Difficult to relate to U.S. RBC ; risk factors are different under these two approachestwo approaches

• EC explicitly captures lapse risk.. RBC does not

• Calibration levels are likely to be different between RBC and EC

• Diversification levels could be different too

11 1111

Key Assumption – Discount RatesKey Assumption Discount Rates Assumed a flat yield curve

Discount rate based on the top-down approach • Gross investment market yield (5.5%)

Risk free rate – 4%

Credit spreads – 1.5%

• Less expected defaults (60 bps)• Less expected defaults (60 bps)

• Less unexpected defaults (10 bps)

• Discount rate – 4.8%

• For contracts with discretionary participation features (e.g. UL, SPDA), there is a presumption that a portion of the unexpected defaults are shared with the policyholder through adjustments todefaults are shared with the policyholder through adjustments to the credited rate (unexpected defaults assumed to be 5 bps)

Base contract cash flows for VA and VUL discounted

12 1212

Base contract cash flows for VA and VUL discounted at risk free rate

Key Assumptions – OtherKey Assumptions Other

Invested Assets – is the same for US GAAP and IFRS• Based on statutory reserves plus target surplus

• Assets not explicitly modeled

Earnings presented include interest on invested assets (statutory reserves plus target capital)

E d i t t t 4 9% ( t f d f lt ) f ll b Earned interest rate – 4.9% (net of defaults) for all base line projections

Product profitability checked for reasonableness using Product profitability – checked for reasonableness using Statutory Internal Rate of Return (IRR)

All results are pre-tax All results are pre-tax

Base studies – actual experience equals expected

13 1313

Product Results – SPIAProduct Results SPIA

Key featuresy Single premium paid at issue

Life contingent benefit payments Life contingent benefit payments

Lifetime guaranteed benefit

Target ROI = 8% Target ROI 8%

14 1414

SPIAFulfillment Cash Flows - Baseline

Liability Cash Flows

100,000

120,000

80,000

100,000

40,000

60,000 Maintenance Expenses

Annuity Benefits

20,000

,Acquisition Expenses

Commission - First Year / Trail

Premium Income

(20,000)

0

Premium Income

15 1515

( )0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

SPIAReserve Comparison - Baseline

Net GAAP Liability vs. IASB

80,000

90,000

60,000

70,000

40,000

50,000 Contractual service margin

Risk adjustment

20,000

30,000

PV of fulfilment cashflows

Current GAAP Liability

0

10,000

16 1616

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

SPIA Change in Reserves - Baseline

Change in Reserve - Net GAAP Liability vs. IASB

80,000

90,000

60,000

70,000

30,000

40,000

50,000

GAAP

IASB

10,000

20,000

30,000

(10,000)

0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

17 1717

SPIA Pre-tax Income Emergence - Baseline

US GAAP vs. IASB Pre-Tax Income

2,500

2,000

1 000

1,500

GAAP

IASB

500

1,000

0

500

18 1818

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

SPIA interest rate shock sensitivity testy

In year 5, credit spreads increase 200In year 5, credit spreads increase 200 basis points

100 d t illi idit 100 t t d 100 are due to illiquidity, 100 to expected default

Asset discount rate goes from 4.9 to 6.9%

Liability discount rate goes from 4 8% to Liability discount rate goes from 4.8% to 5.8%

Look at impacts on OCI

19 1919

SPIA Interest Rate Shock - Sensitivity

IASB OCI

2 000

3,000

1,000

2,000

(1,000)

0

Liability OCI balance

Asset OCI balance

Net OCI balance

(3,000)

(2,000)

(4,000)

( )

20 2020

(5,000)0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

SPIA – Key ObservationsSPIA Key Observations

Total liability under IASB is similar to US GAAP yliability. Difference likely due to:• Use of PADs under US GAAP

• Development approach for discount rate

Profit emergence driver is different under US Profit emergence driver is different under US GAAP and the proposed IASB standard:

R l f PAD d US GAAP l f• Release of PAD under US GAAP vs. release of margins under IASB

OCI impact on liabilities and assets is different under the interest rate shock scenario

21 2121

Product Results – SPDAProduct Results SPDA

Key featuresy Single premium paid at issue

Death benefit = Fund value

Surrender benefit = Fund value - surrender charge

Guaranteed credited rate = 1%

Trailer commission (% fund value) paid in year 12 Trailer commission (% fund value) paid in year 12

Target ROI = 15%

• Key assumptions High lapses after surrender charge period expires

Assumed 100% lapse in year 20

Annuitization deemed immaterial (and not modeled)

22 2222

SPDAFulfillment Cash Flows BaselineFulfillment Cash Flows - Baseline


80,000

100,000

40 000

60,000

Free partial withdrawals

20,000

40,000 Surrender claims

Death claims

Commissions

Expenses

(20,000)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

p

Premium

(60,000)

(40,000)

23 2323

(80,000)

SPDA Reserve Comparison BaselineReserve Comparison - Baseline


90,000

100,000

60 000

70,000

80,000

40,000

50,000

60,000 IASB CSM

IASB Risk Adjustment

IASB PV

20,000

30,000

IASB PV Cashflows

GAAP Net Liability

(10,000)

-

10,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

24 2424

( )

SPDA Change in Reserves - Baseline

Change in Reserve - Net GAAP Liability vs. IASB

80,000

100,000

40,000

60,000

0

20,000 GAAP

IASB PV Cashflows

(40 000)

(20,000)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

(60,000)

(40,000)

25 2525

(80,000)

SPDARisk Adjustment & CSM - BaselineRisk Adjustment & CSM - Baseline

Risk Adjustment vs. CSM

1,800

2,000

1,400

1,600

800

1,000

1,200

IASB Risk Adjustment

400

600

800

IASB CSM

0

200

400

26 26

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

SPDA Profit / Loss Emergence - Baseline


800

1,000

600

800

200

400 GAAP

IASB

0

200

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

(200)

27 2727

(400)

SPDA interest shock sensitivitySPDA interest shock sensitivity

In year five, credit spreads increase by100In year five, credit spreads increase by100 basis points; no change in defaults

All th i i d t All the increase is passed on to policyholder

The discount rate increases by 100 bps

Result: present value of cash flows Result: present value of cash flows increases slightly

28 2828

SPDAReserve Comparison Interest Shock SensitivityReserve Comparison – Interest Shock Sensitivity

Baseline vs. Sensitivity IASB Reserve

90,000

100,000

70,000

80,000

40,000

50,000

60,000

baseline

sensitivity

20,000

30,000

,

0

10,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

29 29

SPDA interest shock sensitivity – P/L & OCI

Under this ED, all asset-dependent cash flows , prun through P/L

Assume surrenders and withdrawals are asset-Assume surrenders and withdrawals are assetdependent (85% of cash flows)

Assume death benefits and expenses are not Assume death benefits and expenses are not asset-dependent (15% of cash flows)

I i t d d t t f Increase in asset-dependent component of liability directly decreases income, but additional

t bli h d i 5 i l d i f treserve established in year 5 is released in future years, resulting in higher income

30 3030

SPDAProfit / Loss Interest Shock SensitivityProfit / Loss – Interest Shock Sensitivity

Baseline vs. Sensitivity IASB Pre Tax Income

600

700

400

500

200

300 baseline

sensitivity

100

200

(100)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

31 31

SPDAAccumulated OCI Interest shock SensitivityAccumulated OCI – Interest shock Sensitivity

AOCI – Assets vs. Liabilities

1,000

2,000

(1,000)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

(3,000)

(2,000) liability

assets

(5,000)

(4,000)

(7 000)

(6,000)

(5,000)

32 32

(7,000)

SPDA interest shock sensitivity – extreme case OCI

Instead of 15%, assume 100% of liabiity, ycashflows are non-asset dependent

So the entire impact of increase in interest ratesSo the entire impact of increase in interest rates goes through OCI

33 3333

SPDAAOCI (alternative) Credit Spreads SensitivityAOCI (alternative) – Credit Spreads Sensitivity

AOCI (alternative) – Assets vs. Liabilities

4 000

6,000

2,000

4,000

(2,000)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 liability

assets

(4,000)

(8,000)

(6,000)

34 34

SPDAKey Observations

Total liability under IFRS is very similar to US o a ab y u de S s e y s a o USGAAP net liability (Reserves less DAC)

Slower profit emergence pattern under IFRS likely due to slow release of Risk Adjustmenty j

Losses under US GAAP in year 12 due to d f bl t il i i Lnon-deferrable trailer commissions. Loss

avoided under IFRS.

35 3535

Product Results – Universal LifeProduct Results Universal Life

Key featuresy Level premium product

Minimum crediting guarantee = 2% Minimum crediting guarantee 2%

No secondary guarantees

Target ROI = 8.5% Target ROI 8.5%

• Key assumptions• Key assumptions Assumed 100% lapse in year 30

36 3636

Universal Life Fulfillment Cash Flows - BaselineFulfillment Cash Flows - Baseline


4,000,000

2,000,000

3,000,000

Premium

Death Benefits

-

1,000,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Death Benefits

Surrender Benefits

Commissions and E

(2 000 000)

(1,000,000)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Expenses

Total Liability Cash Flows

(3,000,000)

(2,000,000)

37 37

(4,000,000)

Universal Life Reserve Comparison - BaselineReserve Comparison - Baseline


20,000,000

15,000,000

10,000,000

CSM

Risk Adjustment

PV Cash Flows5,000,000

PV Cash Flows

Net GAAP Liability

-0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

38 38

(5,000,000)

Universal Life Change in Reserves - BaselineChange in Reserves - Baseline

Change in Reserves - Net GAAP Liability vs. IASB

2,500,000

3,000,000

1,500,000

2,000,000

1,000,000

1,500,000

CSM

Risk Adjustment

PV Cash Flows

N t GAAP Li bilit

-

500,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Net GAAP Liability

(1 000 000)

(500,000)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

39 39

(1,000,000)

Universal Life Risk Adjustment and CSM- BaselineRisk Adjustment and CSM- Baseline

Risk Adjustment vs. CSM

1,200,000

800,000

1,000,000

600,000 Risk Adjustment

CSM

200,000

400,000

(200 000)

-0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

40 40

(200,000)

Universal Life Pre-tax Income Emergence - BaselinePre-tax Income Emergence - Baseline


350,000

400,000

250 000

300,000

200,000

250,000

IASB

100,000

150,000 US GAAP

-

50,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

41 41

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Universal Life Change in Reserve - Mortality Shock SensitivityChange in Reserve - Mortality Shock Sensitivity

Experience vs. Experience & Valuation Mortality Shock Scenarios

2,500,000

3,000,000

2,000,000CSM - Experience and Valuaiton Shock

1,000,000

1,500,000Risk Adjustment -Experience and Valuation Shock

PV of Cash Flows -Experience and Valuation

0

500,000

Experience and Valuation Shock

Change in reserve -Experience Only Shock

-500,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

42 42

-1,000,000

Universal Life Pre Tax Income - Mortality Shock SensitivityPre Tax Income - Mortality Shock Sensitivity

Baseline vs. Mortality Shock Scenarios

350 000

400,000

300,000

350,000

Baseline

200,000

250,000 Experience Mortality Shock

Experience and

100,000

150,000

Experience and Valuation Mortality Shock

-

50,000

43 43

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Universal Life Pre Tax Income Reinsurance SensitivityPre Tax Income – Reinsurance Sensitivity

Baseline vs. Reinsurance Scenarios

400,000

450,000

300,000

350,000 YRT - Break Even

Baseline

200,000

250,000 YRT - Reinsurance Gain

YRT - Reinsurance Loss

100,000

150,000

-

50,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

44 44

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Universal Life Key ObservationsKey Observations

Net GAAP Liability is larger than IASB reservey g

Profit emergence drivers are different under US GAAP and the proposed standard:and the proposed standard:

• Level % of profit margins vs. implicit and explicit marginsg

• It appears that the CSM release accelerate profit emergence under IASBg

Unlocking the CSM for changes in valuation assumptions will partially mitigate volatilityassumptions will partially mitigate volatility

Extensive field testing must be conducted to understand business implications from reinsurance

45 45

understand business implications from reinsurance

The views expressed in this presentation are those of the presenter, not necessarily those of the IASB or IFRS Foundation.

International Financial Reporting Standards

ED Insurance Contracts What we’ve heard so far

As at 1 September 2013

© IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

1

Exposure Draft Insurance Contracts: IASB seeks feedback on targeted aspects


2

Measurement proposals

Changes in estimates relating to expected

contract profit for providing coverage recognised over

remaining period (unlocking)

Measurement and presentation exception

when no economic mismatch is possible

(mirroring)

Presentation proposals

Align to presentation of revenue required for other

types of contracts with customers

Interest expense is amortised cost-based in

profit or loss, current value-based on balance sheet

(OCI proposals)

Approach to transition

Apply Standard retrospectively if

practicable, or with specified simplifications if

not practicable

3

Better reflection of

the economics of the contracts, simplifications

where appropriate

Costs of greater operational

complexity for preparers and

of understanding more complex information for

users

Balancing benefits against complexity

Timetable

© 2013 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

4

20 June 2013

Revised Exposure

Draft

25 Oct 2013

Comment letter

deadline

H1 2014 Board

debates issues

Early 2015

Issue IFRS

Effective date

Approx 3 years after Standard finalised

Outreach aims

• Balance outreach between – Biggest insurance markets – Smaller markets that are expected to grow – Markets with which we have had less interaction

• To educate constituents about the proposals and correct misconceptions

• To debate issues and gather views

Outreach: So far….

• 69 meetings from 28 May 2013 to 31 August 2013…


6

Investors and analysts, 34%

Preparers, 27%

Regulators, 9%

Standard setters, 10%

Groups of practitioners /

preparers / actuaries,

12%

Type of respondent

Africa, 3%

Asia, 19%

Europe, 48%

North America, 23%

Oceania, 5%

South America, 2%

Geography of respondent

Future highlights

Discussion forums in:

• Europe: Italy, Germany, Switzerland, Sweden, UK

• Asia: China, India, Korea, Japan

• Americas: Canada, US, Mexico and Brazil

• Australia


7

What we’ve heard: unlocking

• General agreement with proposals, though some think proposals inappropriately smooth underwriting results and decrease transparency

• Some suggest that changes in risk adjustment relating to future coverage should also adjust the margin

• Some suggest losses recognised in P&L after the margin is eliminated should be reversed before rebuilding the margin

• Uncertainty about which cash flows should adjust the contractual service margin

• Some preparers are concerned about need to track information and unit of account

• Industry propose alternative model that would adjust the margin for other changes in value (see mirroring)


8

What we’ve heard: mirroring • “Mirroring, on the face of it, looks like a really good idea.” • But:

– Concern that part of the liability would not be at current market-consistent value

– Concern about complexity of splitting different types of cash flows – Arises from doubt about what we want them to do – Concerns about the need to identify all listed cash flows

– Concern about interaction between unlocking and mirroring – eg does mirroring apply to cash flows related to asset management

fees? Or do changes in estimates of asset management fees unlock the margin?

• Questions about how widely or narrowly the proposals apply

• Industry (mainly Europe) proposes alternative proposal for participating contracts with wider scope and a different objective


9

What we’ve heard: revenue • Increasing acceptance of conceptual merits and some support for same

presentation approach for all insurance contracts

• Agreement that proposals increase comparability with other transactions, but: – Some believe that unique nature of insurance justifies a different

presentation – Some users note that both revenue and summarised margin information

is useful – Specialist users think the summarised margin information is most

relevant

• Vehement disagreement with proposals from some preparers, including disagreement about disaggregating deposits

• Doubt about whether insurance contract revenue would provide useful information

• All users agree that revenue should exclude deposit components


10

What we’ve heard: OCI • Acceptance that both amortised cost and current value view provide

useful information

• Concerns about: – Need for tracking and granularity of the tracked information – Splitting cash flows for non-mirrored investment-based insurance

contracts – Applicability to non-life insurance contracts – Interaction between inflation assumptions and discount rates

• Concern about accounting mismatches, strongly expressed in some jurisdictions, leading to:

– Call for an option to present all changes in profit and loss – Suggestion that mismatches should be eliminated by adjusting

accounting for all assets backing insurance contracts

• Users emphasised that information on effects of the changes of discount rates should be clear (eg sensitivities, changes in the period)


11

What we’ve heard: transition

• Widespread agreement that proposals are an improvement from 2010 proposals

• Need for information about assumptions used and the remaining margin that was determined in this way

• Concern than insurers will have to implement IFRS 9 and the insurance contracts standard at different times

• Some concerns raised about operational implications in emerging and newly-emergent economies


12

What we’ve heard – other issues

• General – Definition of a portfolio, unit of account – Convergence concerns, especially from US-domiciled

insurers with IFRS subsidiaries – Contract boundary


13

14

For more information…

Stay up to date

• Visit our website: – www.ifrs.org – go.ifrs.org/insurance_contracts

• Sign up for our email alert

Ask questions or share your views

• Email us: [email protected]

• Comment on our proposals: go.ifrs.org/Exposure-Drafts

Resources on IASB website • IASB Update

• Project podcasts and webcasts

• Snapshot

• Feedback statement

• Investor resources

• High level summary of project

14


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