Disclosures suggest wide variation in IFRS 17 impact on shareholders’ equity

Written by Adam Cadle

12/05/2023

The impact of transition to IFRS 17 on shareholders’ equity is far more pronounced in the life insurance segment, according to AM Best, whereas for non-life insurers the impact is considerably narrower and biased to the upside.

AM Best said the range of outcomes is wide for the life segment and biased to the downside, although a reduction on transition is far from automatic.

“Life movements in shareholders’ equity on transition to IFRS 17 are heavily influenced by the profile of profit over the duration of an insurer’s policies under IFRS 4, the relationship of that profile to the new profile under IFRS 17, and finally the overall maturity of the policies on an insurer’s balance sheet,” it added. “All three of these factors can vary considerably in the life segment.”

For non-life business, AM Best said the narrower range of outcomes is due to the extension of discounting and the removal of implicit margins being mostly, but usually not completely, offset by creating an explicit risk adjustment.

There are no related documents to show at this time.

Portfolio optimisation in today’s challenging market environment

Adam Cadle speaks to Dr Laura Ryan, Head of Research at Ardea Investment Management, about the firm’s insurance asset allocation optimisation tool and the reasons for developing it

The role ETFs can play in the ESG journey for insurers

Justin Wheeler, Head of UK iShares Asset Owner Distribution at BlackRock, and Mark Guirey, Head of EMEA Insurance Segment and UK Asset Owner Client Coverage at MSCI, discuss the drivers behind growth in this area, market reactions to COVID-19, and the role of indexing