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IFRS 17
Die neuen Regelungen für die Versicherungsindustrie
Berlin, 7. September 2017
Page 2
Ihre Referenten
Heiko Stüber
7. September 2017 16. IFRS Kongress in Berlin
ERGO Group AGHead Group Controlling und
Group Accounting
Dr. ThomasKagermeier
Ernst & Young GmbHGlobal Lead Insurance Financial
Accounting Advisory Services
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Agenda
Wie sehen dieFinanicalStatementszukünftig aus?
Heraus-forderungen in derImplementierung
Wie sieht dieFinance Abteilungder Zukunft aus?
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IFRS 17
7. September 2017 16. IFRS Kongress in Berlin
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“For 15 years my actuaries told methey understood our data. I can tell
you now, they did not”CEO of Global Insurer
“For MCEV and SII it’s up to us ifwe take 6 weeks to group model
points. In an IFRS 17 process thatwill reduce significantly”
Chief Actuary of a Global Insurer
“If my MCEV or Solvency numberis out by 5% I lose some face. If wehave the same error in IFRS 17, I’ll
lose my job”Chief Actuary of a Global Group
7. September 2017 16. IFRS Kongress in Berlin
Was bedeutet “IFRS 17 reality” für das Versicherungsgeschäft
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Was bedeutet “IFRS 17 reality” für das Versicherungsgeschäft?
ü New processes required to calculate CSMü CSM roll forward will need to be understood and
explainedü Estimating CSM on transition will be a critical
element impacting future profitAccounting
for CSMPerformance
Reporting
Internalaccounting
systems
Discounting
Disclosures
Best estimates– Removal of
reservemargins
Mainimpacts
ü Question on whether to align withSolvency II
ü Additional process work to determine timevalue of money
ü Need to explain to stakeholders(More significant for long tailed liabilityinsurers)
ü New processes and information to be recorded willinvolve substantial system updates
ü For multinational groups may help with consistency
ü Reporting on new basis – need to understandperformance drivers
ü Disaggregating changes – need to explain it tostakeholders
ü Moving to best estimates maymake results more volatile
ü Increased chances of showing aloss during a year
ü Significantly more information needs to beprovided
ü Additional processes and data are requiredto gather the disclosure information
7. September 2017 16. IFRS Kongress in Berlin
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Agenda
Wie sehen dieFinanicalStatementszukünftig aus?
Heraus-forderungen in derImplementierung
Wie sieht dieFinance Abteilungder Zukunft aus?
1 2 3
7. September 2017 16. IFRS Kongress in Berlin
IFRS 17
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Wie verändert sich das Balance Sheet?
IFRS 17IFRS 4
Assets
Reinsurance contract assets
Insurance contract assets
Assets
Reinsurance contract assets
Deferred acquisition costs
Value of business acquired
Premiums receivable
Policy loans
Key Changes for liabilities
► Groups of insurance (orreinsurance) contracts that are inan asset position presentedseparately from groups ofinsurance (or reinsurance)contracts that are in a liabilityposition
► Acquisition cost cash flows,premiums receivable andunearned premiums are includedin the measurement of insuranceliabilities
Liabilities
Insurance contracts liabilities
Unearned premiums
Claims payable
Liabilities
Insurance contracts liabilities
Reinsurance contracts liabilities
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Statement of Comprehensive Income –Vollständig neues Bild
Insurance revenue X
Insurance service expenses (X)
Insurance service result X
Investment income X
Insurance finance expenses (X)
Finance result X
Other profit and loss items X
Corporate tax (X)
Profit after tax X
Other comprehensive income (X)
Total comprehensive income X
Statement of Comprehensive Income Release in contractual service margin
Change in risk adjustment
Expected claims (in fulfilment cash flows)
Expected expenses (in fulfilment cash flows)
Allocating premium relating to the recovery ofdirectly attributable acquisition costs
Excluding investment components
Expe
cted
Actual claims incurred
Actual expenses incurred
Allocating premium relating to the recovery ofdirectly attributable acquisition costs
Onerous contracts
Excluding investment components
Act
ual
Calculated using locked-in rates (if the OCI option isselected)
Effect of discount rate changes on BEL (if the OCIoption is selected)
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Wesentliche Veränderungen in der Erfolgsrechnung:Ein Vergleich
IFRS 17IFRS 4
Insurance revenue
Insurance services expense
Incurred claims and expense
Acquisition costs
Gain/loss from reinsurance
Insurance service result
Investment income
Insurance finance expense
Net financial result
Profit or loss
Discount rate changes on insuranceliability (optional)
Total comprehensive income
Net earned premiums
Interest, dividend and otherinvestment income
Incurred claims and benefits
Change in provisions
Profit or loss
Key Changes
► Insurance contract revenueexcludes investment components
► Revenue and expense arerecognised as earned or incurred
► Insurance finance expense isexcluded from insurance serviceresult and is presented (i) fully inP/L or (ii) in P/L and OCI,depending on accounting policy
► Written premiums disclosed in thenotes
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Disclosures – Vielzahl von neuen Angaben gefordert
► Purpose:► Information concerning the amount, the future development and uncertainties of cash
flows resulting from the insurance contracts► Qualitative and quantitative information concerning:
► Balance sheet and P/L items► Significant estimations and their changes► Type and extent of risks, including sensitivity analysis
► Adequate aggregation level► Contract type, product group► Geography► Reportable segment, as defined in IFRS 8
► Transition to income and expenses in P/L and to assets and liabilities in balance sheet intabular format
► Information concerning reinsurance assets
Inge
nera
l
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Disclosures – Overview
Type and extent of risks
Risk appetite
Risk management
Regulatory law
In general Other risks
Risk exposure
Risk concentrations
Maturity analysis
Sensitivity analysisconcerning market risksSensitivity analysis
Risk concentrations
Claims settlement
Insurance risks
Risk exposure
Development of B/Sitems during business
year
Used valuation methods andinputs
Interest curve fordiscounting
Balance sheet and P/L items
Transition of booked premiumsto insurance revenues
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Unsere Thesen
Die vom IASB verfolgten Ziele des IASB an höhere Transparanz und Vergleichbarkeitwerden - wenn überhaupt - erst nach Jahren erreicht
1
Die neue Struktur und Aufteilung im BS / p&l ist grundsätzlich besser geeignet als diebisherige Aufteilung der Erfolgskomponenten eines Versicherungsgeschäfts
2
Das total income in 2022 wird intern und extern schwer zu erläutern sein3
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Agenda
Wie sehen dieFinanicalStatementszukünftig aus?
Heraus-forderungen inder Implemen-tierung
Wie sieht dieFinance Abteilungder Zukunft aus?
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IFRS 17
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Top challenges in der Umsetzung
Past
Spend vs. value –IFRS 17 minimum vs.
efficient financefunction
Purpose
Planning, Budgeting, Forecasting and MI
Master Data Management
Governance Risk Compliance
Source Systems (Policy, Claims,Reinsurance Assets) IFRS17 engine
Incl. accounting rules
Operational Data Store
Allocations ConsolidationGL /Ledgers
Actuarial and Risk models
Reporting, Analytics and Visualisation, Disclosure
Avs.E
1 Past
Understanding andexplaining commercial
impacts (incl. tax)
Commercialimpacts
2 Past
Transition strategy -How to approach
transition incl.understanding impact onfuture profits, dividends
and new products
Transition
3 Past
Developing an ‘IFRS 17engine‘ for the
Contractual ServiceMargin and accounting
rules
IFRS17 engine
4 Past
Unit of account strategyfor determining CSM andperforming onerouscontract test
Unit of account
5 Past
Data- modelling,storage, governance,
control, etc.
Data Management
6
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12 kritische Themen für die Umsetzung
Actuarial model/ integrated solution
Definition& scope00
Level ofaggregation03
Measurement04
Initial / subsequentmeasurement05
Reinsurance07
Onerous contract06
Disclosure09Measurement model
Expected cash flows
Discount rate
Time value of optionsand guarantees
Risk adjustment fornon-financial risk
Contractual servicemargin (CSM)
Attributable expense
Recognition02
Transition08
Investorstory12
Presentation11
Separation01IFRS 9/ 17interactions10
Act
uari
alm
odel
/in
tegr
ated
solu
tion
Festlegung der AccountingPolicy
Messung und aktuarelle Methoden Transition, Ausweis und Darstellung
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Wo steht die Versicherungsindustrie in der Umsetzung?
1 Peers included in comparative analysis: Axa, AIG, Allianz, BNP, Generali, HSBC, Munich Re, NN Group, Prudential, Zurich2 ‘–’ Budget is unknown or not yet determined
Comparative Analysis1 A B D E F G I H L M
IFR
S17
1. Implementation program status Y Y Y N Y Y Y N Y N
2. External advisor appointed Y Y Y N N Y N Y N N
3. Expected impact M H H H H H H H H H
4. Estimated budget2 $25m $60m $150m - - $300m $100m - $300m -
$25m-$500mbudget range
1/2have appointed an
external advisor
90%+expect the impact to be
significant (High)
70%have initiated theirIFRS 17 program
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Unsere Thesen
IFRS 17 sind keine Accounting-Projekte; der weitaus größere Aufwand besteht in derAnpassung der aktuariellen Modelle und der IT-Datenstrukturen
1
2021 klingt weit weg, aber für die meisten Unternehmen ist die Zeit zur Umsetzungeher knapp gemessen
2
Es gibt keine “billigen” IFRS 17 Projekte trotz Solveny II-Grundlagen3
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Agenda
Wie sehen dieFinanicalStatementszukünftig aus?
Heraus-forderungen in derImplementierung
Wie sieht dieFinanceAbteilung derZukunft aus?
1 2 3
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IFRS 17
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Neues Setup innerhalb Finance notwendig?Wer hat zukünftig welche Rolle?Zusammenspiel von Finance, Actuariat und Risk muss neu geklärt werden für effiziente Abläufe und Konsistenz inden Ergebnissen
Heute
Uneinheitliche Entscheidungen
Inkonsistente und nicht verlinkteDaten
Silo-bezogende Systeme
Manuelle Überleitungen /Abgleiche
Finance
Actuarial
Risk
Keine übergreifenden Standards
Verschiedene Interpretation desjeweiligen operating model
Zeitnahe Entscheidungen
Integrierte und gemeinsamgenutzte Daten
EntscheidungsgetriebeneAbläufe
Gemeinsam genutzteAnwendungen
Workflow basierte Strukturen
Cross-funktonale Integreation
Zukünftig
Notwendig: Engere Verbindung der drei Bereiche und der operative Geschäftseinheiten zur Erfüllung der zukünftigen Anforderungen
1
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Auswirkungen auf Daten & SystemeKomplex und teuer
High to Medium complexity across Data and Systems
Master Data Management
Governance Risk Compliance / Workflow
SourceSystems
(Policy, Claims,Reinsurance,
Assets) IFRS17engine
Operational Data Store
Planning, Budgeting, Forecasting and MI
AccountingRules engine Allocations ConsolidationLedgers
Actuarial andRisk models
Reporting, Analytics and Visualisation, Disclosure
High severity and complexity of change, significant additionalinvestmentMedium severity and complexity of change, limited additionalinvestmentLow severity and complexity of change, leverage currentchange/transformation initiatives
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Unsere Thesen
Auch wenn TOM nicht explizit Bestandteil der IFRS Projekte ist, werden bestehendeAbläufe und Strukturen im Unternehmen wesentlich verändert werden müssen
1
Im konzernweiten Setup wird es trotz Kostendruck und Konistenzwunsch weiterwesentliche dezentrale Applikationen und Systeme geben
2
Konsistenz im internen und externen Reporting wird die zentrale Herausforderung sein3
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Zentrale und gut strukturierteProjekt-Strukturen und Verfahrenreduzieren das Umsetzungsrisiko
Benötigt werden Spezialisten fürden fachlichen Input, aber auchfür Prozessabläufe undDatenstrukturen
So weit so gut:Erste Erfahrungen aus den IFRS 17 Projekten
Der Standard selbst ist bereitskomplex – die Implementierungweitaus komplizierter und diespätere Realität noch mehr!
IFRS17 ist mehr als ein Accounting-Change – es hat wesentlichenAuswirkungen auf die gesamteOrganisation (front-, middle- andback-office)
Die Definition und Verfügbarkeitder notwendigen Daten für dasinterne und externe Reportingdarf nicht unterschätzt werden
Der größte Zeitanteil in den Projektenentfällt auf end-to-end Veränderungenfür Daten, Systeme & Prozesse – ITdarf nicht zum Engpassfaktor werden
Enge Zusammenarbeit und Abstimmung der definiertenProjektverantwortlichen für Accounting, Aktuarielle Themen(financial & business models), IT-Systeme und dem Projektleiter istein notwendiges Element für die erfolgreiche Umsetzung Language &
Culture
Communication
Scoping &Planning
1 2 3
4 5 6
7
7. September 2017 16. IFRS Kongress in Berlin
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