IFRS 17 presentation

IFRS 17 Insurance contracts

IFRS 17 is a comprehensive accounting standard for insurance contracts and replaces IFRS 4 and is effective from 1 January 2023

The standard establishes new principles for the recognition, measurement, presentation, and disclosure of insurance and reinsurance contracts

• The new standard aims to:
• • Ensure consistent accounting for all insurance contracts
  • Increase transparency in financial reports
  • Improve alignment with accounting across different industries
• The key principles are:
• • Best estimate of expected future cash flows discounted for time value of money
  • Allowance for risk associated with those cashflows
  • No recognition of profit until services provided
  • Timely recognition of expected losses on onerous contracts

IFRS 9 Financial instruments

IFRS 9 is a new accounting standard covering the classification and measurement of financial assets after initial recognition and replaces IAS 39

The standard includes requirements:

• Recognition and measurement
• Impairment derecognition
• General hedge accounting

IFRS 9 requires entities to recognise credit losses long before a default occurs, in contrast to IAS 39 which permitted the recognition of losses post a default event.

The adoption date is consistent with IFRS 17, due to interrelationships between the two standards

IFRS 17 income statement (management view) - key line items

Net insurance contract revenues

Net insurance contract claims

Other insurance service expenses

Insurance service result

Investment income, other non insurance income and expenses

Operating profit

Finance income / expenses from insurance contracts, fair value movements and impairments

Restructuring and one-off costs

Finance costs

Profit before tax

Replaces net earned premium and includes elements of other income

Replaces underwriting result and includes some other income and becomes the numerator for KPIs

New elements capture changes in fair value of assets and movements of discounting on liabilities in one place