Moody's Corporation · NYSE:MCO
Moody's — Moody's Analytics — IFRS 17 Implementation webinar (June 2019)
32 slides from Moody's's conference presentation, Jun 25, 2019
Slide 1: IFRS 17 Implementation: Best Practices and Opportunities
IFRS 17 Implementation: Best Practices and Opportunities Jun 25, 2019
Slide 2: Moody's Analytics helps clients measure, understand, and mitigate risk
Moody’s Analytics helps our global clients measure, understand, and mitigate risk – beyond ratings Independent provider of credit rating Leading provider of data, software, opinions and related information for research related professional services nearly 100 years. for financial risk management. IF
Slide 3: Moody's Analytics: A Trusted Advisor to the Global Insurance Market
Moody’s Analytics A Trusted Advisor to the Global Insurance Market 350+ 400+ 30+ Countries Professionals Customers » Actuaries (100+) » Insurers » Africa » Accountants » Re-Insurers » Americas » Economists » Life, P&C, Composite » Asia Pacific » Software Engineers » Asset Managers » Europe » Product
Slide 4: Today's Presenters
Today’s Presenters Moderator: Trevor Howes Director, Actuary Moody’s Analytics Speakers: Daniel Willmann Senior Manager, Financial Accounting Advisory Services Ernst & Young LLP Srinivasan Iyer Senior Director, Solutions Specialist Moody’s Analytics IFRS 17 Implementation 4
Slide 5: Agenda
Agenda 1. Overview of IFRS 17 2. Implementation Challenges Facing P&C Insurers 3. IFRS 17 Implementation and Solution Approach IFRS 17 Implementation 5
Slide 6: Overview of IFRS 17
1 Overview of IFRS 17
Slide 7: IFRS 17 - Insurance Contracts
IFRS 17 - Insurance Contracts Expected release of Expected effective date of IASB Publishes IFRS 17 – Exposure Draft of IFRS 17 for public Insurance Contracts Amendments to IFRS 17 reporting Nov 2018 Jan 2021 May 2017 Jun 2019 Jan 2022 IASB announces proposal Expected transition date to to defer IFR
Slide 8: Poll: What is the current status of your IFRS 17 preparation?
Poll: What is the current status of your IFRS 17 preparation? 1. Early Stages – Getting familiar with the standard and requirements 2. Planning Stage – Initial Impact analysis is complete. Starting with technical solution design 3. Solution Selection – Reaching out to Vendors 4. Solution Selection -
Slide 9: IFRS 17 Liability Measurement by Contract Group
IFRS 17 Liability Measurement by Contract Group Total Liability Liability for Liability for » For past service » For future service (claims already Incurred Claims + Remaining Coverage (claims yet to be incurred) (LIC) (LRC) incurred) IFRS 17 Implementation 9
Slide 10: IFRS 17 Liability Measurement by Contract Group
IFRS 17 Liability Measurement by Contract Group Total Liability Liability for Liability for » For past service » For future service (claims already Incurred Claims + Remaining Coverage (claims yet to be incurred) (LIC) (LRC) incurred) Fulfillment Cash Flows (FCF) FCF = unbiased estimate of future ca
Slide 11: IFRS 17 Liability Measurement by Contract Group
IFRS 17 Liability Measurement by Contract Group Total Liability Liability for Liability for » For past service » For future service (claims already Incurred Claims + Remaining Coverage (claims yet to be incurred) (LIC) (LRC) incurred) General Measurement Premium Allocation Approach OR Approach (if e
Slide 12: The Challenge of Supporting IFRS 17
The Challenge of Supporting IFRS 17 A comprehensive and fundamental change in financial reporting New levels of data aggregation New definition of revenue New Methodology New approach to financial statements for Contract Liabilities Increased number and detail of disclosures New statement assembly p
Slide 13: Implementation Challenges Facing P&C Insurers
2 Implementation Challenges Facing P&C Insurers
Slide 14: IFRS 17 Grouping Requirements and Data Challenges
IFRS 17 Grouping Requirements and Data Challenges ► Level of aggregation ► IFRS 17 requires contracts to be organized into Portfolios, Cohorts, and Groups. ► Requires policy admin, general ledger, or other source system to be capable of XYZ (i.e. portfolio, cohort, and group) for each contract. This
Slide 15: IFRS 17 Grouping Requirements and Data Challenges
IFRS 17 Grouping Requirements and Data Challenges ► Investment component ► IFRS 17 requires insurers to separately record investment components (e.g. no claims bonuses, experience refunds etc.) ► Challenge relates to systems not adequately tracking the information needed in order to identify, measur
Slide 16: Accounting Policy and Methodology choices
Accounting Policy and Methodology choices ► Measurement options ► PAA is not a requirement, it is a policy option. For those insurers with contracts that meet the criteria to apply PAA, should consider all relevant benefits and costs before deciding on the measurement model to apply. ► Is modelling
Slide 17: Accounting Policy and Methodology choices (continued)
Accounting Policy and Methodology choices (continued) ► Gross up of assets and liabilities ► IFRS 17 originally required insurance contract assets to be separated from insurance contract liabilities, assessed at the group level. ► During the December 2018 IASB meeting, it was proposed that IFRS 17 b
Slide 18: Subledger and GL implications
Subledger and GL implications ► General Ledger vs. Sub-ledger • Balance sheet ► IFRS 17 requires more data to populate financial statement disclosures which include more Assets tabular reconciliations of the insurance liabilities compared to the requirements of IFRS 4. Reinsurance contract assets ►
Slide 19: Poll: Most challenging aspect of IFRS17 implementation?
Poll: What in your assessment is the most challenging aspect of IFRS17 implementation? 1. Grouping and Aggregation 2. Measurement and Methodology 3. Sub-ledger and Integration with General Ledger 4. Generating the Financial Statements and Disclosures 5. Automation of the end-to-end IFRS17 process 6.
Slide 20: IFRS 17 Implementation
3 IFRS 17 Implementation
Slide 21: Recap of Core Requirements
Recap of Core Requirements Grouping and Aggregation PAA Eligibility and Onerosity Testing • Develop complete list of all data items needed for • Ability to run GMM and PAA models for eligibility grouping, measurement and disclosures testing – alternately take in GMM PvCF as input • Provide option to
Slide 22: Key Concerns with IFRS 17 implementation
Key Concerns with IFRS 17 implementation Evolving nature of the standard 1 Grouping, methodology, accounting, disclosures and transition Data is the “new oil”; but its difficult to find 2 Availability of appropriate data poses a critical risk on implementation and transition Cost of Compliance 3 Min
Slide 23: Moody's approach to IFRS17
Moody’s approach to IFRS17 Vendor maintained cloud software with clear integration points and workflows Policy WORKFLOW & CONTROLS Premium General Claims Ledger Expense Data Grouping IFRS 17 Financial definitions IFRS 17 Postings & Consolidation and Calculation Payments and Pre- Sub-ledger Disclosur
Slide 24: Application Homepage
Application Homepage Landing page with one click links to all modules IFRS 17 Implementation 24
Slide 25: Data Dashboard
Data Dashboard Setup of all critical reference/support data elements Supporting Data » Business Hierarchy » Portfolios » Cashflow Types » Cashflow Mapping » Product Types » Runs IFRS 17 Implementation 25
Slide 26: Data Import
Data Import Import data using UI, API’s, ETL or Batch load IFRS 17 Implementation 26
Slide 27: Accounting Process
Accounting Process Manage all activities related to Accounting process Accounting Dashboard » Chart of Accounts » Exchange Rates » Posting Rules » Transaction Scope » Processes (Accounting) Accounting Engine » Reports » Transactions » Journal Types » Journal Entries » Trial Balance IFRS 17 Implement
Slide 28: Comprehensive set of Reports
Comprehensive set of Reports Actuarial Results Accounting/Postings Disclosures/Statements Control/Audit Logs IFRS 17 Implementation 30
Slide 29: Our Approach
Our Approach Design a solution that helps streamline IFRS 17 compliance Core Implementation Capabilities Approach Controlled environment to Robust Accounting Focus on Configuration – manage the end-to-end Not Customization process Engine Single Platform for multiple End User friendly UI built Use Ca
Slide 30: Questions and answers
Questions and answers Q. A. IFRS 17 Implementation 32
Slide 31: Presenter contact details
Trevor Howes Daniel Willmann Srinivasan Iyer [email protected] [email protected] [email protected] +1.416.250.2584 +1.416.932.5318 +1.212.553.5930 Jun 25, 2019
Slide 32: Moody's legal disclaimer
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings an
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