ifrs 17 update · presidential town hall may 15, 2019. ... contracts are onerous at initial...

IFRS 17 Update

William Hines, Micheline Dionne, Derek Wright and David Finnis

Presidential Town Hall

May 15, 2019

IFRS 17 & TRG UpdateStatus of amendments and timeline to exposure

William Hines, Chair of IAA Insurance Accounting Committee

3

IFRS 17 Post Issue Consideration

Actuarial Support for the Implementation of IFRS 17 — 3 April 2019

Final IFRS17

- May 2017

TRG

February 2018-

April 2019

IASB

Discussion

Oct. 2018 –

April 2019

▪ Four meetings

▪ 22 issues brought by staff

▪ 25 issues identified

▪ Decisions on all with some

changes to be exposed

• Remit of TRG was to consider multiple interpretations of IFRS 17

• Agenda set by IASB staff based on issues submitted for consideration

• 127 issues submitted

• 22 issues brought forward for discussion by TRG

• Summary of discussion of each TRG meeting was sent to the IASB

• TRG members requested discussion of implementation issues

• Staff collected list of issues between meetings and sent them to the IASB

Transition Resource Group

• No further meetings planned

• But… TRG not disbanded

Presentation Title - 01 Month 2018 5

Future of TRG

• Many stakeholders sent in issues to consider for amendment

• IASB staff identified 25 issues that they considered might be discussed by

IASB (October 2018)

• IASB discussed all the issues over several months

• To consider amending IFRS 17, the IASB set out two criteria:

– The amendments would not result in significant loss of useful information for users

of financial statements

– The amendments should not unduly disrupt implementation processes that are

already under way or risk undue delays to the effective date of the standard


IASB Consideration of IFRS 17 Issues

• To permit an entity to apply IFRS 17 or IFRS 9 to certain loans that transfer

significant insurance risk (Item 1)

• Deferral of insurance acquisition cash flows relating to renewals outside the

contract boundary (Item 3)

• CSM coverage period in the general model to include when an entity provides

investment return services (Item 7)

• To extend the scope of the variable fee approach (VFA) risk mitigation

exception to include financial risk mitigation through reinsurance contracts

(Item 8)


Changes Proposed

• The accounting for reinsurance contracts held when underlying insurance

contracts are onerous at initial recognition (Item 12)

• Separate presentation of insurance contract assets and liabilities in the

statement of financial (Item 15) position by portfolios of insurance contracts

rather than groups of insurance contracts

• To delay the effective date of IFRS 17 to 2022 (Item 20)

• To extend the temporary exemption from applying IFRS 9 to 2022 for entities

whose activities are predominantly connected with insurance (this is a change

to IFRS 4) (Item 22)


Changes Proposed (2)

• The transition requirements in IFRS 17 for liabilities that relate to the

settlement of claims that were incurred before an insurance contract was

acquired (Item 24)


Changes Proposed (3)

10

Timeline to Approval


Exposure Draft

Mid-2019

Exposure

period

expected to be

limited

Final standard

Early 2020

Questions ?


ISAP 4 2nd Exposure Draft


Status of the Exposure Draft and timeline to adoption

Micheline Dionne, Chair of the IAA ISAP 4 Task Force

13

Progress made – ISAP 4 Exposure drafts


Final IFRS17

- May 2017

1st Exposure

Draft of ISAP 4

– February

2018

2nd Exposure

Draft of ISAP 4

– February

2019

▪ Exposure period ended June

30th, 2018

▪ Comments from 21

organizations or individuals

▪ Exposure period up to

April 30th, 2019

▪ Numerous changes made to:❑ Improve clarity

❑ Avoid repeats of IFRS 17

or ISAP 1

❑ Fill gaps identified by

commenters

❑ But none fundamental

• Responses from 13 organizations, 3 confirming having no further comments

• Q1: Is guidance clear and unambiguous? 8 responses

– 4 YES, 3 YES with comments, 1 with comments

• Q2: Is guidance sufficient and appropriate ? 8 responses

– 4 YES, 2 YES with comment, 3 with various degrees of comments

• General comments: 6 responses – Overall appreciation for the work done on

first exposure Draft

14

General Comments Received


• Comments from 9 organizations

• Introduction: 2 comments (12 in 2018)

• Section 1: 4 comments (8 in 2018)

• Section 2: 57 comments on 29 paragraphs (251 in 2018)

– Most of the paragraphs had 2 or less comments (29 comments on 25 paragraphs)

• Section 3: 1 comment (9 in 2018)

• Glossary: 6 related comments (5 in 2018)

15

Specific Comments Received


Section 2 – Paragraphs with most comments were:

• 2.6.13 Risk adjustments: 10 comments (30 in 2018) interpretation of TRG,

wording suggestions

• 2.6.9 Discount rates: 7 comments (24 in 2018) additions, complete deletion

and wording suggestions

• 2.6.1 General Approach for selection of assumptions: 6 comments (17 in

2018) wording suggestions and a specific deletion

• 2.6.3 Insurance risks: 5 comments (22 in 2018) suggested additions or

deletions

16

Specific Comments Received


17



Review of 2nd

Exposure draft

comments – 2

to 4 months

Fatal Flaw – 1

month

exposure

▪ Impact of IFRS 17 changes

on ISAP 4 to be addressed

later

IAA Council

approval in Tokyo

(Nov 2019) or

Brussels (May

2020)

Tamsin Abbey United Kingdom

Robert Buchanan Australia

Micheline Dionne (Chair) Canada

Marius du Toit South Africa

Luc Farmer ASC Liaison

Marika Guralnik Estonia

Jim Milholland United States

Yoshio Nakamura Japan

Francis Ruygt Netherlands

Derek Wright United Kingdom

Matthias Zerbst Germany

18

Current Membership of ISAP 4 TF


Questions ?


IAN 100 Exposure Draft


Status of the Exposure Draft and timeline to adoption

Derek Wright & Dave Finnis, Co-Chairs of the Education & Practice sub-committee of the Insurance Accounting Committee

21

Progress made – IAN 100 Exposure draft


Final IFRS17

- May 2017

1st Exposure

Draft of IAN

100 – January

2019

▪ Exposure period ended April

26, 2019

• Responses from 22 member organisations, 1 accounting firm and 1 Individual

• 3 organisations provided a red-lined version as well as completing the

comment template

• Over 1000 comments received -

• Chapters with most comments – Discount rates, CSM, Presentation

22

Comments Received


• Question 1 - Is the IAN clear and unambiguous? If not how should it be

changed?

• Most thought it was but some suggestions for improvement provided

• Question 2 - Is the IAN sufficient and appropriate in dealing with the Chapter

headings? If not, how should it be changed?

• Nearly all respondents said yes; a couple of suggested changes

23

Comments Received for the 5 specific questions


• Question 3 - Is the IAN at the right level of detail? If not, how should it be

changed?

• A number of helpful comments suggesting improvements

• Question 4 - Where guidance is still ambivalent (awaiting further interpretation

of IFRS 17) is there preferred guidance?

• A number of helpful comments suggesting improvements

• Question 5 - Are there any other matters that should be included in this IAN?

• Most said no. A few suggested additional topics.

24

Comments Received for the 5 specific questions


25



Review of

Exposure draft

comments – 4

to 5 months

Review next

version by / in

Tokyo meeting

▪ Impact of revised ED

of IFRS 17 on IAN 100

also to be addressed l

Consideration

needed as to

whether a further

exposure

required


Chapter Leads

Introductions – Dave Finnis C& Derek Wright

1 Classification of contracts - Kurt

Lambrechts

2 Estimates of Cash flows - Henry Siegel

3 Discount Rates - Ernst Visser

4 Risk Adjustment - Burt Jay

5 Unit of Account - Brendan Counsell

6 CSM - Brendan Counsell

7 PAA – Gareth Kennedy

8 Contracts with Participating Features and

other Variable Cash Flows . Henry Siegel

9 Reinsurance - Simon Curtis

10 Fair Value - Jim Milholland

11 Business Combinations - Jim Milholland

12 Transition - Doug van Dam

13 Embedded Derivatives - Derek Wright

14 Contract Modification - Grant Robertson

15 Measurement, Presentation Disclosure

of Revenue – Brendan Counsell

Questions ?


ifrs 17 update · presidential town hall may 15, 2019. ... contracts are onerous at initial...

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