IFRS Peer Analysis and MetLife PerspectivesIFRS 17-specific costs are reduced as the program...

IFRS 17 Peer Analysis and Insurance Industry Perspective

August 2017

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Table of contents

Overview− Introduction− Key findings− Peer characteristics

Page 3

Key themes− Strategic use− Impact assessment− Data and modeling− Lobbying efforts− IFRS 9− Cost and resourcing− Roadmap

Page 7

Appendix A – Company information Page 18

Appendix B – Country variations Page 29

Overview


IntroductionThe information on companies was gathered via personal interviews with partners from our global member firms, who are familiar with the decisions and considerations of these companies. The companies represent a cross-section of the global insurance industry in order to provide information based on both similar and different business characteristics from company to company.The companies include:

Nine companies for whom IFRS is the primary basis of reporting and three companies for which it is not

Six multi-line insurers and six life insurers.

Seven of the companies have revenues over $50 billion and seven have assets > $500 billion

Purpose of report

This report was prepared with the following objectives:

Provide a qualitative review of twelve global insurers, each on their own IFRS 17 journey

Help inform companies as they make decisions about their cost options and roadmap

Present industry perspectives across several dimensions of the IFRS 17 implementation

North American Multi-Line Insurer Global Multi-Line InsurerGlobal Multi-Line InsurerGlobal Multi-Line InsurerEuropean Headquartered Life InsurerNorth American Life InsurerGlobal Life Insurer

Asian Life InsurerGlobal Multi-Line InsurerNorth American Life InsurerAsian Life Insurer

Global Multi-Line Life Insurer

Revenue< $50 b > $50 b

Asse

ts<

$500

b>

$500

b


Key findings— One global insurer in our survey is further ahead than the rest of the companies having started

work, above and beyond monitoring and lobbying, on their IFRS analysis going back to 2014— Cost estimates are still evolving. This report provides a current state where such estimates are

highly dependent on the following factors:— If the implementation is being done for strategic reasons (because it is the primary means of

communication to investors) rather than for primarily compliance reasons (which still needs a view of tax, dividend capacity and regulators in the impacted countries), the cost is much higher (> US$100 million)

— If the implementation program is linked with or integral to a broader transformation program, the IFRS 17-specific costs are reduced as the program leverages the broader capabilities

— If IFRS 17 implementation activities are delayed, cost estimates increase as more external support is expected to be needed to complete the implementation under required timeframes

— If already in place, centralized modeling and data approaches and common modeling platforms are expected to reduce implementation costs and ongoing operational costs

— Roadmaps for implementation follow a common pattern and are highly dependent on mandatory filing dates

— There is some variation in decisions around impact assessments and timing, number of dry-runs (iterative testing and adjustments) and desired parallel runs (runs performed on a real-time basis) ahead of each option date

— Roughly half of the companies have closely integrated IFRS 17 implementation with IFRS 9 implementation – the other half are executing separately but with a coordinated approach between the projects

— Many European and Asian peers are lobbying regulators significantly. The most sophisticated are suggesting specific technical solutions to particular issues


Company characteristicsAsian Life Insurer (1)

Revenue: < $50 billionAssets: < $500 billion

Asia Pacific, Australasia IFRS is primary basisOther measures include: EV

Global Multi-Line Insurer (2)

Revenue: > $50 billionAssets: > $500 billion

North America, Europe, Africa, Australasia

IFRS is primary basisOther measures include: EV and Solvency II



North and South America, Europe, Australasia




North and South America,Europe, Africa, Australasia


North American Multi-Line Insurer (5)

Revenue: < $50 billionAssets: > $500 billion

North America, Europe,Australasia

IFRS is not the primary basisOther measures include: EV and Solvency II



North America, Europe, Australasia

IFRS is not the primary basisOther measures include: EV and Solvency II

European Headquartered Life Insurer (7)


Europe, Asia, North America IFRS is primary basisOther measures include: EV and Solvency II


Revenue: > $50 billionAssets: < $500 billion

North America, Europe, Asia IFRS is primary basisOther measures include: EV and Solvency II

North American Life Insurer (9)


North America, Asia IFRS is primary basisOther measures include: EV

North American Life Insurer (10)


North America, Asia, Europe IFRS is primary basisOther measures include: EV

Asian Life Insurer (11)


Australasia IFRS is primary basisOther measures include: EV

Global Life Insurer (12)


North and South America, Europe, Australasia

IFRS is not the primary basisOther measures include: EV and Solvency II in selected countries

Please note: we have used identifiers #1 through #12 throughout the report.

Key themes


Key themes: Strategic use

Strategic Use67%

Compliance Focused

33%

Strategic use

IFRS75%

US GAAP25%

Primary basis of reporting

Key findings Only three companies are treating their IFRS 17 implementation as primarily a compliance exercise as

most companies plan to use IFRS for strategic decision-making Companies who are required to use IFRS as their primary basis of reporting are inclined to use it for

strategic purposes while companies who are not required to use IFRS as a primary basis of reporting regard IFRS 17 as a compliance exercise. However, some Japanese companies may be evaluating cost and benefits of reporting on an IFRS basis

Australian companies have a financial incentive for early adoption of IFRS 17 related to tax benefits Some companies are using IFRS as an impetus for other initiatives, particularly actuarial

modernization and finance transformation, which is increasing their cost estimates Some companies are resisting IFRS 17 and have not planned on how to deal with it pending

clarification that it will indeed be mandatory, e.g., some UK companies have been focused on lobbyingand have recently started thinking about a back-up plan if IFRS 17 will be mandatory against their objections

Almost all companies are concerned about how IFRS would limit their dividend paying capacity Each country’s tax code will interact differently with IFRS 17; it is complex and companies are not as

focused on this aspect as they are on the dividend question. It could significantly impact their tax bases and payments especially in Asia. However, the taxing authorities have generally not yet decided how to handle the changes, particularly with respect to transition


Key themes: Impact Assessment (“IA”)

Company 1

Company 2

Company 3

Company 6

Company 8

Company 9

Company 10

2016 2017 2018

Company 4

Company 5

Company 7

Company 11

Full ApproachPilot

Full Approach

Full Approach

Full Approach

Pilot

Pilot

Pilot 2015

Pilot

Pilot

Pilot Full Approach

Top Down Approach

Top Down Approach

Top Down Approach

Various pre-studies

Various impact studies

Business impact

Company 12 Pilot

Notes:1. Pilot means limited countries, BUs or products are included in the IA. It could also mean that only selected areas of

impact are included across multiple countries, BUs or products2. Full Approach means that the IA includes most of the following components: Financial Impact, Financial Architecture,

Operations, Methodology, Roadmap, Budget/Cost and Education3. Top Down approach means a more global or comprehensive approach but not as much depth or detail as a full approach

Key findings The first major step most companies take is to perform some sort of an impact assessment. Most companies are still in

the middle of their IAs at the time of this report Most companies will have their impact assessment completed by year end 2017 It usually takes three to six months to complete a full-blown IA However, some companies have started with pilots covering either certain aspects of these areas or are starting with

certain BUs or countries to focus implementation efforts Certain companies using BUs or countries as pilots may extrapolate their results to the broader group and use them to

represent their largest BUs – others may use the IA to inform their approach and proceed directly to implementation


Key themes: Data and modeling

Common Global Platform 17%

Not Common Platform 66%

Common Regional

Platform 17%

Current State

Centralized 25%

Decentralized75%

Current State

Centralized 50%

Decentralized50%

Future State

Common Global Platform 42%

Not Common Platform 33%

Common Regional

Platform 25%

Future State

Modeling Operations (Centralized vs. Decentralized)

Modeling Platform (Common vs. Not Common)

Note: • Centralization could be global or regional and varies by company. For more details, please see the appendix • Company analysis has both current state view and future state view based on latest information available

Key findings— Most companies are currently decentralized with modeling being done locally; most plan to leverage SII / EV

models. Some companies are either in initial discussions, or have begun to implement a centralized (either regionally or globally) or consistent group-wide modeling and data storage design. Some companies have a centralized modeling approach for smaller countries whereas others are decentralized

— Some companies have a central data management tool in place— Most companies are planning on approaching CSM modeling on a centralized basis or consistent group-wide— Some companies have a single modeling platform for life business while others use different software for

different reporting bases and/or countries. The most commonly used software packages for business are Prophet, Moses, and Axis

— For non-life business modeling is mostly centralized but platforms used vary by country


Key themes: Lobbying approaches

Key findings Who is being lobbied?

Regulators Local tax authorities IASB European Financial Reporting Advisory Group (EFRAG) European Commission

Who is doing the lobbying? Individual companies Local accounting and actuarial associations Actuarial task force and working groups CFO Forum Insurance Europe Hub Group US lobbying and Europe lobbying forums

What are companies lobbying about? (Topics have changed over time) Level of aggregation and the three bucket approach - was revised in final version of standard Mutualization - both how does it relate to mutual entities and how it relates to for profit entities writing

par business Scope of the Variable Fee Approach (VFA) especially near misses in Belgium and Switzerland and in

many Asian countries Definition of coverage units to release the CSM Operation of fair value approach on transition Need for annual cohorts on fully mutualized business Hedging of par business outside VFA and of business under the GMM Reinsurance issued Proportional business - do you need to reflect business not yet written by the cedant Reinsurance held Non applicability to VFA Mismatching on proportional business Use of locked in discount rates to unwind CSM Need for restatement of comparatives Balance sheet presentation - showing assets and liabilities separately

0 1 2 3 4 5 6 7

Industry GroupsCFO Forum

Local RegulatorsLobbying Alone

No Active LobbyingGlobal Regulators

Lobbying efforts

Number of Companies


Key themes: Lobbying approaches (cont.)

Key findings (continued) Lobbying currently has three main targets and areas of focus:

IASB, through the Transition Resource Group, to see whether implementation guidance may ameliorate some of the Standard’s requirements

National standard setters, who in certain countries put standards through an endorsement process before local adoption and will influence when the standard is adopted locally and whether it will be adopted without modification

Prudential standard setters and tax authorities, to avoid undesirable knock-on or second order effects

Companies in the UK feel that IFRS adds no value at significant cost to their business, and have continued to lobby aggressively against the Standard

Other companies are investigating whether changes in jurisdictions or spin-offs could potentially reduce the likelihood that they will need to implement widely for their BUs / countries

Most other companies have been lobbying on very specific components of the Standard which could have significant impacts to how their business is presented under IFRS (e.g., unit of account)

Some reinsurance companies avoid lobbying efforts in order to align with their clients

0 1 2 3 4 5 6 7

Industry GroupsCFO Forum

Local RegulatorsLobbying Alone

No Active LobbyingGlobal Regulators

Lobbying efforts

Number of Companies


Key themes: IFRS 9

Key findings Most companies are aligning their IFRS 17 efforts-to-date with IFRS 9 Some companies are fully integrating IFRS 9 with IFRS 17 Companies that are already on Fair Value Through Profit and Loss (FVTPL) are not as concerned

about volatility Some companies are using more complex options for IFRS 9

Not aligned36%

Aligned64%

IFRS 9/17 Dates alignmentNot

integrated40%

Integrated60%

IFRS 9/17 Program integration


Key themes: Cost and resourcing

Key findings Costs were not available for all the companies in this paper. For those that provided costs, they are

subject to change as the companies complete their Impact Assessments

Companies are also looking at combining the IFRS initiative with cost cutting initiatives Companies are moving towards having a shared service center and using regional hubs, especially

for smaller countries with little-to-no scale Some companies are considering using temporary resources or external consultants for

implementation of certain tasks, e.g., modeling, validations, testing Thinking around use of internal vs. external resourcing will evolve in the next twelve months

050

100150200250300350400450

Global lifeInsurer (1)


Global Multi-line Insurer (6)

European LifeInsurer (7)

Global Multi-line Insurer (8)

North AmericanLife Insurer (9)

Asian LifeInsurer (11)

IFRS 17 implementation cost comparison

Internal Extermal

Costs less than US$50M Costs between US$50M & US$150M

Costs greater than US$150M

― Usually smaller and less complex companies

― Larger companies where funding from other initiatives is kept separately

― Larger and more complex companies with most of these characteristics:― Centralized Modeling― Common Modeling

Platform― Integration with

finance initiatives, Data, CFG

― Integration between Finance and Actuarial Functions

― Leveraging SII and EV models

― More centralized and integrated process falls in the lower end of the range

― Larger and more complex companies, which are less centralized and have less integrated processes

― Companies who plan to use IFRS for strategic decisions

― Companies using the IFRS program as impetus for other initiatives with those add-on costs also included


Key themes: Roadmap

Legend:Impact Assessment Implementation Dry Runs / Rollout Parallel Runs Business As Usual (BAU)

Company 1

Company 2

Company 3

Company 6

Company 8

Company 9

Company 10

2016 2017 2018 2019 2020 2021Pilot

Full Approach

PilotFull Approach

Full ApproachPilot

Company 4

Company 5

Company 7

Pilot No Information

Pilot No Information

PilotFull Approach

Pilot

No Information

Company 11 PilotFull Approach

Pilots, Full Approach or Top Down Approach

Most implementations are commonly implemented in waves

Iterative process typically resulting in adjustments and reruns

Producing results in real-time, may or may not be in full production

Producing results in full production mode and in real-time

Pre studies

Company 12Pilot Full Approach

Cash flow generationAll other implementation


Key themes: Roadmap (cont.)Key findings

Most companies are in the initial stages of the process and are either performing or have just completed an impact assessment

Implementing a solution and updating models is expected to commence in 2018 Most companies are expecting or planning to perform dry runs during 2020 so that they can be

ready for adoption by 2021. Two companies are targeting earlier dates so that they can be in parallel runs or BAU by 2020

Challenge for many companies is to prepare a fully integrated roadmap which fully reflects the depth of work to be performed including the key dependencies on other initiatives. This can be achieved in two steps:

1. Start with a high-level view of key variables in order to create a target architecture

2. Develop the roadmap and keep the roadmap live

1. Strategic objectives driving implementation? (e.g. treat as compliance and make the easiest-to-implement choices while ensuring we maximize dividend-paying ability of all countries and minimize tax burden)

2. Cost – how much do we want to spend on and over what time period? Can this project be used as part of ongoing cost efficiencies? How to split time and cost between internal and external resources? Timing of Implementation? Trade off between project costs and operational costs? How quickly do we want to start the project and at what speed? How quickly or slowly to BAU? Dry runs – how many and how extensively? Parallel runs – should time be built in for real-time runs?

3. TOM – what is our targeted end-state – people, process, data, technology and education?

4. Technical strategy of maximizing CSM on transition and the big question is which models to use and how should we approach the modified retrospective calculation (how many years back) vs. Fair Value approach?

5. Resource approach: Company – availability of company resources, Full-Time vs Part-Time, staff augmentation Type – Finance, Actuarial, Programmers, IT, PMO, HR, Others? End-state – central vs local, centers of excellence External parties – consultants, contractors, offshoring Education approach for IFRS 17

6. Roadmap and scoping Top down, 100% vs 80/20 rule or less, geographies How to use pilots or phasing for implementation – by product type, region, countries, resource availability? Consecutive vs. simultaneous phasing of activities?

7. Stakeholder management – what is the strategy around BU leaders, Senior Management, Regional CFOs and Board communications?

Questions to consider

Limitations and risks in implementations

1. Learning curve is difficult and requires considerable time, should not be under-estimated

2. Quality, granularity, and consistency of underlying data will be an issue

3. Controls have been a challenge where there is extensive use of manual solutions

4. Change management will be necessary throughout the organization


Key Themes

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Euro

pean

Life

In

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9 –

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Life

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orth

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eric

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11 -

Asia

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12 –

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Insu

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Stra

tegi

c Used for strategic decisions

IFRS is group basis of reporting

Mod

elin

g

Centralized Modeling

Common Modeling Platform

Centralized CSM Modeling

Inte

grat

ion

Integration with Finance transformation

Leverage EV / SII

Integration with IFRS9

Integration with Finance Data Warehouse

Integration with Actuarial Data Warehouse

Res

ourc

ing

Use of Regional Hubs

Use of Global Hubs

Oth

er

Impact AssessmentComponent Inclusion

Impact Assessment BU / Country Coverage

Lobbying

Cost (US$ millions) 120-140 175 65-

130 <390 195 144 8-16

Peer summary Used for strategic decisions Compliance focused

Example

Notes:1. A blank square indicates the information was not readily available2. All responses indicate anticipated future state

Appendix A

Company information


Key themes: Strategic useCompany 1, Asian Life Insurer Using IFRS for strategic decisions IFRS is primary basis of reporting. IFRS 17 is being

used as the catalyst to align local and group reporting

Company plans to use IFRS implementation as a lever for change. In addition, company is evaluating choices under IFRS17 to optimize tax position and dividend capacity

Company 2, Global Multi-Line Insurer Using IFRS for strategic decisions. Taking a cost

conscious approach to implementation IFRS is primary basis of reporting. Will have

consistent basis of IFRS reporting measures. US business will also have to report under US GAAP, PBR and other metrics. Looking at ways to get out of reporting US GAAP as it is a cost burden to report on both IFRS and US GAAP

Concerned about dividend capacity

Company 3, Global Multi-Line Insurer Not approaching as strategically as others. No

Strategy currently defined IFRS is primary basis of reporting Concerned about dividend capacity and volatility;

Not using to optimize capital or dividend back to shareholder

Company 4, Global Multi-Line Insurer Using IFRS for strategic decisions IFRS is primary basis of reporting

Company 5, North American Multi-Line Insurer Currently seeing IFRS as a compliance exercise IFRS not a primary basis of reporting for most of life

business. US GAAP is the primary basis of reporting overall

May be used as a platform for change and catalyst to seek executive approval for Finance and Actuarial transformation

Company 6, Global Multi-Line Insurer Sees IFRS 17 as a compliance exercise IFRS not primary basis of reporting. Uses U.S.

GAAP as a primary basis of reporting UK BU using IFRS as an impetus to get additional

projects done Countries are looking at IFRS if it would limit their

dividend paying capacity in their assessment

Company 7, European Headquartered Life Insurer Currently no strategy on how to deal with IFRS 17

for their European businesses IFRS is primary basis of reporting and IFRS 17

changes profile of earnings. They were looking at Brexit as a potential reason to avoid having to be compliant with IFRS and were working with the UK government to try and use US GAAP instead

They have a finance modernization project under way and they may look at how IFRS will fit into that

Company 8, Global Multi-Line Insurer Using IFRS for strategic decisions. Against IFRS 17

but has a plan for IFRS 17 as a backup. More compliance minded outside of domiciliary country

IFRS is the primary basis of reporting. Using IFRS as an impetus to get other initiatives done

Company 9, North American Life Insurer Using IFRS for strategic decisions. Treated this

change strategically from the beginning. Driver of change is control of models and higher quality

IFRS is the primary basis of reporting

Company 10, North American Life Insurer Seeing this as a compliance exercise. They are

embracing IFRS 17. However, they have a huge problem with the system e.g. Can't change ledger as the ledger has been highly customized

IFRS is the primary basis of reporting

Company 11, Asian Life Insurer Use IFRS strategically from earnings improvements

measure vs. measure of decision-making. EV may be used for decision making after IFRS adoption. Don’t see value in IFRS as it doesn’t provide much improvement in reporting

IFRS is primary basis of reporting. Already use FV accounting

There is significant impact on tax due to DAC write-off. Significant financial incentive for early adoption

Company 12, Global Life Insurer IFRS is not the primary basis of reporting so the

implementation is largely compliance focused except where significant dividend and/or tax impacts

A major portion of the business by volume of profits is not in countries requiring IFRS as the regulatory basis of reporting


Key themes: Impact Assessment (“IA”)Company 1, Asian Life Insurer Their Pilot IA (6/17) includes group and countries.

The IA includes a Gap Analysis, High level plan and Cost Estimate. Only assessed high level operational impact and high level costing

The detailed IA (7/17 – 12/17) Includes Financial impact, Operational impact, Roadmap and Education

Company 2, Global Multi-Line Insurer Their Pilot pre-study (2014) includes Roadmap and

Technology and goes through 2021 (refreshed every quarter). Closing oriented approach vs transaction oriented approach which has a cost difference. They have done less work on financial impact than others but they have performed the more detailed financial impacts on a localized vs centralized basis

The Pilot IA (2015-2016) was expanded to product classifications and to develop a top down budget

The detailed IA (2017) includes Financial Assessment/Impact, Methodology and technical decisions, Education, bottom up budget and detailed Roadmap. They are performing an assessment on product specifications, and systems/technology to come up with the target architecture

Company 3, Global Multi-Line Insurer The Pilot IA (7/17 – 8/17) is a quick fast track

assessment and is being performed in their domiciliary country and the US to report to the Board of Directors in August. It incudes volatility experienced under IFRS 9 and 17 in the same analysis and is more focused on financial versus operational impacts. Their strategic reason for the pilot is to assess the financial and operational impacts in their more strategic countries

Full IA (9/17 – 6/18) is for full Financial and Operational Roadmap. Aim is to achieve operational design architecture and implementation plan

Company 4, Global Multi-Line Insurer Their Pilot (7/17 – 11/17) includes Financial Impact,

Operations, Roadmap, Budget, Methodology and Education for 5 or 6 selected BUs and they will extrapolate results for whole group. Performing light IA for IFRS 17 with more complex options for IFRS 9

Company 5, North American Multi-Line Insurer They are close to starting a Pilot IA (8/17 – NA)

with the main focus on formulating methodology and product classifications across different jurisdictions. Their domiciliary country and Korea may be pilot countries (as a result of Brexit, they will move their UK business into UK GAAP – so that buys some time)

Company 6, Global Multi-Line Insurer Their Pilot (8/17 – 12/17) includes gap analysis

and roadmap for operations, including identifying key methodology decisions and understanding cash flows, being done on 5 countries covering the UK, North America and Asia, and includes IFRS 9 in the pilot. They will develop a manual for non-pilot countries. Countries would evaluate if IFRS would limit their dividend paying capacity

Detailed IA (1/18 – 3/18) includes Financial Impact, Operations, Roadmap, Budget, Methodology and Education and is focused on implementation plan

Company 7, European Headquartered Life Insurer Pilot IA (2015) was focused on looking at how

particular product types behave under IFRS 17, rather than an at an overall basis. They haven’t done anything in the US yet, but have focused on certain technical aspects in UK products and Asia. No comprehensive enterprise wide analysis done yet

Detailed IA (6/17 – 12/17) is under way

Company 8, Global Multi-Line Insurer IA (9/17 – 12/17) includes Financial Impact,

Operations, Roadmap, Budget, Methodology and Education and is focused on 3 largest territories. They haven’t decided on extrapolation. They have only recently released their RFP for IA, late compared to others

Company 9, North American Life Insurer Their IA (1/15 – 12/16) is a top down approach,

looking at impact on cash flows at a high level


Key themes: Impact Assessment (“IA”) (cont.)Company 10, North American Life Insurer Their IA (2015) is a top down approach – looking as

impact on cash flows at a high level and focused on 11 methodology/technical decisions

Company 11, Asian Life Insurer Phase 1 (9/2016) included preliminary financial

impact and field testing Phase 2 (7/17 – 8/17) includes gap analysis,

business impact analysis, project plan/roadmap and cost analysis. Plan to get budget this year and focus on implementation next year

Phase 3 (8/17 – 12/17) looks at financial impact and refines estimates. Focus is on getting information needed to announce what IFRS means to them

Company 12, Global Life Insurer The IA timing for the pilot is 2/17 – 9/17. This is a

pilot approach where prototype calculations are made for the 3 largest and/or more complex IFRS countries

The work includes a gap analysis on data and models as well as financial impacts for the prototype countries


Key themes: Data and modelingCompany 1, Asian Life Insurer Globally centralized model which took 6 years to

implement. Data is loaded locally and models are run centrally in a common Prophet modeling platform. They expect the CSM tool which is expected to be centralized

They have an actuarial data warehouse (with policy level data) accessible by corporate office (SAP Insurance Analyzer and Aptitude). However, the data is missing elements required for IFRS 17. They plan to centralize data storage pulls cash flows from Prophet and export it to a central calculation engine, e.g. SAP Insurance Analyzer or Aptitude

Planning to leverage existing cash flow generation and EV models as a starting point

Part of the broader Finance Transformation and spending more time and money to bring Finance and Actuarial together

Company 2, Global Multi-Line Insurer Decentralized modeling in different platforms. The

finance structure and tools vary from country to country. The models are run locally using cloud based models. While they have a common Moses modeling platform for EV, the other models vary by country. They need the CSM tool which is expected to be centralized and built rather than purchased

Data management tool is used to gather data centrally before going to the ledger. They are investing in an actuarial database which will be rolled out using this program. They are using closing oriented approach which can close IFRS numbers to go to market. In between they will use other metrics. 80% of the data inputs are centrally defined

Planning to leverage EV and SII models and understand linking of IFRS 17 and SII. From a systems perspectives they would automate SII reporting first then use for IFRS 17 reporting

IFRS effort is combined with the Finance initiative and a cost takeout goal of 20%

Company 3, Global Multi-Line Insurer Decentralized modeling with different platforms for

each country (and within country as well). They would like CSM tool to be centralized

Results database at country level can be accessed by group

Leverage SII and EV models – more EV model Not linked to bigger initiatives but may have to in

US

Company 4, Global Multi-Line Insurer Decentralized model with modeling done in

Prophet and Moses. However, Asia is regionally centralized (small countries). Plan to roll out implementation of its own proprietary tool globally which will be housed locally with IFRS being transitioned to the new tool. They need a CSM tool which is expected to be centralized

Not part of broader transformation, also not mature

Company 5, North American Multi-Line Insurer Decentralized modeling and models not on

common platform. Moving towards centralized modeling and use of common platform for Life and PC business

They are evaluating CSM options available and Pro/Cons (centralized vs decentralized)

Company 6, Global Multi-Line Insurer Centralized modeling approach implemented

globally. They use Moses everywhere except the US, which uses Axis. They are undergoing a model conversion expected to be done in 3-4 years. They need a CSM tool which is expected to be centralized

They hope to leverage EVM and SII models. They are leveraging EVM as a starting point

Company 7, European Headquartered Life Insurer Decentralized modeling with Moses used in the

UK, Prophet in Asia and MG ALFA and other in the US. They need CSM tool which is expected to be centralized

They currently have multiple systems and platforms without any data warehousing or anything

They haven’t articulated whether they will leverage Solvency II or EV models


Key themes: Data and modeling (cont.)Company 8, Global Multi-Line Insurer Decentralized modeling in general with no

common platform (Prophet is used in most cases) with no plans to centralize right now; however, they have centralized some of the processing. They plan to build one process for IFRS. They need the CSM tool which is expected to be centralized

Data output is centralized. They are building a data warehouse for Actuarial reporting (build for SII and IFRS). Cash flows are shared into global shared services for as many countries as possible, but there is a stop gap process until these are migrated

Plans to leverage EV and SII models IFRS is part of a broader finance transformation Implementation of any centralized model was a lift

and shift without improvements

Company 9, North American Life Insurer Decentralized modeling in a common platform

(with some exceptions). Actuarial reserving models are in the Cloud. Planning to have North American operations to be all IFRS compliant on Axis with the goal to standardize reserves on Axis everywhere (except for VA and segment funds which is on Atlas now and planning to move to Path wise)

Plan to standardize all data, model and model technology for reserving. Plan to have global database of assumptions for reserving

IFRS is part of broader transformation with the ultimate goal of Centralization using a single central cloud location where reserving models reside within a Global Data Warehouse for reserves; Core Actuarial functions will be performed locally which will include reviewing results, explaining results and tracking down questions as well as experience monitoring; Global Assumption Setting will be performed by a Central team that agrees on assumptions, Automated assumption change will occur with the only intervention being judgment

They plan to have everything automated with a Ledger based source of earnings

Company 10, North American Life Insurer Decentralized modeling with Axis becoming the

main modeling platform in North America and Asia

Data is not harmonized with no central pool or data warehouse for output data. However, the UK business is more advanced and is going into a central data warehouse model

Not leveraging any other measure or model currently

Not part of broader transformation They have a problem with the system e.g. they

can't change the Oracle ledger as it has been highly customized, so they’ll need a separate IFRS solution

Company 11, Asian Life Insurer Centralized modeling on a common Prophet

modeling platform. They have a central modeling team who is responsible for build, change and running models

They use a central company data warehouse which has been in place for years

Plan to leverage EV or other functionality for IFRS

No big finance transformation or other initiatives except streamlining processes to improve efficiencies

Company 12, Global Life Insurer Moving from Decentralized to Centralized

modeling using a common platform – Prophet (non US) (7/17 - 9/18). For US platforms, the timeline is longer


Key themes: Lobbying approachesCompany 1, Asian Life Insurer How are they lobbying?

Lobbying alone and in industry groups Who is being lobbied?

Lobbying currently done with local regulators, local accounting and actuarial associations, local tax authorities and IASB

What topics? Lobbying for tax elements in their region, timing

of IFRS, changes to capital regulatory regimes to align with IFRS, and discount rates

Other comments: Very insistent on what they want & hitting hard Supportive of change

Company 2, Global Multi-Line Insurer How are they lobbying?

Lobbying in own name and with industry groups such as the CFO Forum (industry groups), Insurance Europe and Hub Group

Who is being lobbied? IASB, EFRAG, European Commission, local

actuarial association What topics?

Currently focused on reducing burden of Unit of Account and identification of onerous contracts, and to minimize inconsistencies with Solvency II (e.g. discount rate and risk adjustment principles)

Other comments: Very insistent on what they want & hitting hard Supportive of change


Lobbying with CFO Forum (industry groups), US lobbying and Europe lobbying forums

What topics? Lobbying for allowance for accounting for

hedging instruments


Not actively lobbying as IFRS 17 is not their primary basis of reporting

Company 7, European Headquartered Life Insurer How are they lobbying?

Lobbying alone and as part of industry groups Other comments:

Against IFRS metric as it creates an uneven playing field against European countries.

Changes profile of earnings as it is a primary reporting metric. UK companies have an issue because it penalizes them, it is volatile while other European countries look better


Lobbying efforts are mostly solo vs. with other industry groups

Who is being lobbied? Lobbying with the IASB

Other comments: Against IFRS as a reporting basis similar to other

UK companies

Company 9, North American Life Insurer How are they lobbying?

Lobbying with industry groups with Global companies

Wat topics? Lobbying for timing, unit of account and discount

rates Other comments:

Not much support from home-based counterparts

Company 10, North American Life Insurer How are they lobbying?

Not lobbying much

Company 11, Asian Life Insurer How are they lobbying?

Lobbying with regulators, actuarial task forces and working groups

What topics? Lobbying for discount rate, tax and regulatory

required capital

Company 12, Global Life Insurer How are they lobbying?

Lobbying with various industry groups Who is being lobbied?

Lobbying currently with local regulators What topics?

Efforts have largely focused on education and advocating for consistency of treatment

Other comments: Further consideration could be given to larger

IFRS countries subject to significance of impact on the overall results and/or dividending and taxing positions


Key themes: IFRS 9Company 1, Asian Life Insurer Dates are aligned between IFRS 9 and 17 IFRS 9 and 17 will be integrated Not expected to be complex or hard to integrate

because of capabilities being built Planning to consolidate IFRS 17 program with

IFRS 9 and CECL

Company 2, Global Multi-Line Insurer Dates are aligned between IFRS 9 and 17 IFRS 9 and 17 initiatives are coordinated and

they are approaching them together Concerned about volatility and dividends Performing on-off tests and sample calculations

for IFRS 17 and 9 (understanding Net income & volatility)

More complex options for IFRS 9 being considered

Company 3, Global Multi-Line Insurer Dates are aligned between IFRS 9 and 17 IFRS 9 and 17 initiatives are coordinated and

they are concerned about volatility and dividend capacity

Primary focus is on banking activities Started IFRS 9 early because the bank needs to

be done by 2018. Impact assessment for IFRS 9 was done in mid-2016. In implementation mode currently for IFRS 9

Company 4, Global Multi-Line Insurer Dates are not aligned between IFRS 9 and 17 IFRS 9 and 17 not planned to be integrated

Company 5, North American Multi-Line Insurer Dates are not aligned between IFRS 9 and 17 They would do IFRS 9 and 17 together and

integrate them as well as IFRS 9 and CECL

Company 6, Global Multi-Line Insurer Dates are aligned between IFRS 9 and 17 IFRS 9 and 17 will be integrated Trying to integrate IFRS 9 and CECL

Company 7, European Headquartered Life Insurer Dates are not aligned between IFRS 9 and 17 IFRS 9 and 17 not planned to be integrated Using FV methodology. When they do

implement, it will be done with IFRS 9, but IFRS 9 will have a relatively small impact as their investments are already being valued at fair value. Implementation of IFRS 9 won’t be significant problem

Company 8, Global Multi-Line Insurer Dates are aligned between IFRS 9 and 17 IFRS 9 and 17 not planned to be integrated.

Being dealt with separately. Implementation not a major issue

Company 10, North American Life Insurer Dates are aligned between IFRS 9 and 17 IFRS 9 and 17 not planned to be integrated

Company 11, Asian Life Insurer Dates are aligned between IFRS 9 and 17. They

have a banking arm so need to adopt IFRS 9 in 2018

IFRS 9 and 17 not currently integrated Already have FV on assets so integration won’t be hard

Company 12, Global Life Insurer The company understands the important

relationship between IFRS 17 and 9 Incorporated both IFRS 17 and IFRS 9 in the

overall IFRS plans and expects that it will be integrated as part of the larger project

Not much initial concern raised about volatility but concerned about dividend capacity.

Regions still do not have full window into potential volatility on their results, so this concern could heighten


Key themes: Cost and resourcingCompany 1, Asian Life Insurer Total Cost = US$ 120m – US$ 140m Includes Internal, external professional services and

external IT infrastructure (Internal = 30%, External 70%)

Currently have an Actuarial hub in one Asian country and IT service center. May use resources from countries as part of group (spreads out knowledge, handles centralization)

Concern generally around resource scarcity. A training program for employees is part of the IFRS17 program

Company 2, Global Multi-Line Insurer Total Cost = US$ 175m (IA to Dry runs, Now

through Q1 2021) Includes Internal, external professional services and

external IT infrastructure (Internal = 60%, External 40%). Only IFRS related activities in IFRS budget

Looking to combine with 20% reduction of Finance cost

Driving change through central solutions. The change is acting as a catalyst for greater

regionalization and use of shared services Assumes IFRS 17 can be introduced without

changing feeder systems

Company 3, Global Multi-Line Insurer No budget assigned yet. To be evaluated after IA

Company 4, Global Multi-Line Insurer No budget approved beyond impact assessment Has a shared service center

Company 5, North American Multi-Line Insurer Have some initial budget They are planning to using external support for IA.

They don't have bodies to implement IFRS 9 and 17

Company 6, Global Multi-Line Insurer Total = $65m to $130m Includes external professional services plus IT lite

solutions Developing Asia hub in Singapore for reporting.

Having regional office to have resource to standardize process

Company 7, European Headquartered Life Insurer Total = less than $390m Includes internal, external professional services plus

IT solutions

The idea behind coming up with such a large cost is that there will be a large data component for them along with 70 odd systems which they will have to make IFRS compliant. No significant cost estimates have been made (have assumed similar cost as SII)

Have an Asia hub. Improves quality of feed and runs final bits of models for SII in the regional hub

Company 8, Global Multi-Line Insurer Total Cost = less than $650m Includes internal, external professional services

plus IT solutions Budget is inflated due to additional projects

allocated for IFRS (should actually be about $195m for IFRS only activities)

Offshore teams in two lower cost countries. Moving to shared service model with standard process

Company 9, North American Life Insurer Total Cost = $144m Have been achieving $12m to $16m cost savings

annually. View that IFRS program will be largely self funded

Company 11, Asian Life Insurer Total Cost = US$ 8m – US$ 16m Includes Internal, external professional services

and external IT infrastructure (Internal = 50%, External 50%)

Extremely low cost is a function two factors:1. Extensive investment made in centralizing

actuarial modeling2. Current reporting basis is most closely

aligned with IFRS 17

Company 12, Global Life Insurer Cash Flow Generation centralization program

provides some natural synergies with IFRS needs particularly around data acquisition and reporting. Usefulness will depend on timing and extent of work to be completed for IFRS countries

Detailed impact assessment has not yet taken place which would help to define the timing, roadmap and the staffing model for purposes of a budget estimate

Some thoughts on regional modeling hubs, which could play an important role in any cost estimate


Key themes: Roadmap – Company detailsCompany 1, Asian Life InsurerPhase 1 (June 2017) – Pilot Impact Assessment Includes group and countries: Gap Analysis, High

level plan, Cost Estimate, Phase 2 (7/17 – 12/17) – Detailed IA Includes Financial impact, Operational Impact,

Roadmap, EducationPhase 3 (7/17 – 6/18) – Conceptual Design Plan to mobilize IA to local BUs Product inventory/classification, Policies writtenPhase 4 (7/18 – 12/20) – Implementation (including dry runs and parallel runs) 2 years of comparatives are planned as a

governance exercise Includes dry runs and parallel runs Stage implementation from pilot, wave 1 (largest

countries) and wave 2 (smaller countries)Phase 5 (2021) – BAUOther Observations Aiming to be ready by 2020

Company 2, Global Multi-Line InsurerPhase 0 (2014) – Pre-studiesPhase 0 continued (2015-2016) - Planning Expanded to include roadmap, target architecture

and top down budgetPhase 1 (2017) – Implementation Includes central solutions to replicate existing

reporting bases, development of target picture and methodology guides

Phase 2 (2018) – Implementation Actuarial Manual / Accounting PolicyPhase 3 (2019) – Dry Runs and Parallel Runs P&L testing / Integration testing /dry runs/parallel

runsPhase 4 (2020-2021) – BAU

Company 3, Global Multi-Line InsurerPhase 1 (7/17 – 8/17) – Pilot Impact Assessment Fast track assessment and no financial impact;

Assessment in home country and USPhase 2 (9/17 – 6/18) – Full IA for all countries Full Financial and Operational RoadmapPhase 3 (7/18 – 12/19) – Implementation Don't know currently how they will approach

implementation and timing is aspirationalPhase 4 (2020) – Dry Runs Will have a lull in time after the fast track

assessment. Won’t start implementation until year-end numbers are done. Planning under a couple of scenarios. Focused on US, UK and European home country

Phase 5 (2021) – BAU

Company 4, Global Multi-Line InsurerPhase 1 (7/17 – 11/17) – Pilot Impact Assessment Includes Financial Impact, Operations,

Roadmap, Budget, Methodology and Education

Company 5, North American Multi-Line InsurerPhase 1 (7/17 – N/A) – Pilot Impact Assessment Main focus is to formulate methodology and

product classification across different jurisdictions

Company 6, Global Multi-Line InsurerPhase 1 (8/17 – 12/17) – Pilot Impact Assessment Includes gap analysis, roadmap for operations,Phase 2 (1/18 – 3/18) – Detailed IA/Implementation Plan Includes Financial Impact, Operations,

Roadmap, Budget, Methodology and Education Focused on implementation planPhase 3 (4/18 - 6/2020) – Implementation Phase 4 (7/2020-12/2020) – Dry runsPhase 5 (2021) – BAU


Key themes: Roadmap – Company details (cont.)Company 7, European Headquartered Life InsurerPhase 1 (2016) – Pilot Impact Assessment Focused on looking at how particular product types

behave under IFRS 17, rather than on an overall basis

Phase 2 (6/17 – 12/17) – Detailed Impact AssessmentPhase 3 (1/18 – 6/2020) – ImplementationPhase 4 (7/2020-12/2020) – Dry runsPhase 5 (2021) – BAU

Company 8, Global Multi-Line InsurerPhase 1 (9/17 – 12/17) – Impact Assessment Includes Financial Impact, Operations, Roadmap,

Budget, Methodology and EducationPhase 2 (1/18 – 7/19) – Implementation (Build Solution)Phase 3 (8/19 – 12/2020) –Dry RunsPhase 4 (2021) – BAU

Company 9, North American Life InsurerPhase 1 (1/15 – 12/16) – Impact Assessment Top down approach to IAPhase 2 (1/17 – 12/18) – Implementation (Modeling) Cloud enabled Automated reservesPhase 3 (9/17 – 7/18) - Implementation (CSM Pilot) CSM for 2 entitiesPhase 4 (8/18 – 9/19) - Implementation (CSM Modeling all countries) Rollout CSM to all countriesPhase 5 (2020) – Dry Runs Full run including G/LPhase 6 (2021) – BAU

Company 10, North American Life InsurerPhase 1 - IA (2015) Top down approach to IAPhase 2 – Implementation (8/17 – N/A) In the RFP stage No milestones in RFP; it is focused on operational

aspects: Data, Ledger, Modeling, Reporting

Company 11, Asian Life InsurerPhase 1 (September 2016) – Preliminary Assessment Included financial impact and field testingPhase 2 (7/17 – 8/17) – IA Includes gap analysis, business impact analysis,

project plan/roadmap and cost analysis Plan to get budget this year and focus on

implementation next yearPhase 3 (8/17 – 12/17) – Detailed IA Look and financial impact and refine estimates Focus on getting information needed to announce to

market what IFRS means to themPhase 4 (1/18-12/18) – ImplementationPhase 4 (1/19-6/19) – Dry RunsPhase 5 (6/19-12/19) – BAU and Parallel RunsOther Observations Significant financial incentive to early adoption A lot has already been done

Company 12, Global Life InsurerPhase 1 (3/17 – 10/17) – Pilot Impact Assessment Includes gap analysis on data and models and

financial impact on the 3 largest and/or most complex IFRS countries

Phase 2 (11/17 – 8/18) – Full Approach Impact Assessment involving all or the majority of the remaining countries and a deeper dive into other components of an impact assessmentPhase 3 (8/17 – 6/20) Implementation Cash flow generation model centralization from 8/17

to 12/18 All other implementation from 4/18 to 6/20Phase 4 (3/20 – 12/20) Dry runs and re-runs based on learnings and adjustments from the previous runsPhase 5 (2021) BAU, which implies in full production mode

Appendix B

Country variations


European ConsiderationsEU observations— IFRS required for public companies in the EU, but in most countries private companies still use

local GAAP

— The CFO Forum has asked for more time for field testing – all of 2018 – before EFRAG starts its endorsement deliberations; the Commission is still working towards a 2021 implementation date

— The Financial Stability Board expects local regulators to support the new standards

UK observations— Implementation appears likely – hard to see how the UK can exit the EU and be a player on the

international stage without adopting IFRS

— IFRS is the norm for all other industries in the UK

— Delay is possible, though, as lobbying efforts continue to be very active

European holding company “exception”— Some are exploring if setting up a holding company in European countries such as Luxembourg

could potentially avoid reporting under IFRS

— However, need to consider comparability to competitors if not reporting under IFRS


Japanese ConsiderationsObservations— IFRS not mandatory in Japan at the moment – no plans to adopt in the near future

— General Insurance may apply IFRS first if there is movement toward adoption

— Life Insurance progress is very slow

— Some life insurers are in the process of identifying and looking at issues / conducting a preliminary impact analysis

— All companies will use JGAAP and no insurance companies of size have confirmed plans to move to IFRS at this time

Advantages of adoption— Helps with M&A activities in IFRS based jurisdictions

— Being able to compare Financial Statements to European counterparts

— May be able to compete in different marketplaces

— Consistent global financial framework for large foreign businesses

Disadvantages of adoption— Not as much ability to compete in US M&A marketplace

— Implementation cost

— JGAAP advantageous in Investment Accounting vs. IFRS 9

— Not enough internal resources to implement IFRS

— Will take 3 to 4 years to adopt IFRS – cost & systems

— Big change in operating profits


Analysis of Local Frameworks by RegionCountry KPMG Local Comments

Region: Americas and territories of relevance for reinsurance entities

United States

― It is possible for individual entities to produce IFRS financial statements

Bermuda IASB country profile― IFRS is permitted, but not required, to be used for the financial statements of

entities that are not publicly traded. No carve outs applicable

KPMG Bermuda comments:― KPMG Bermuda are not aware of any current or planned requirements to

mandate the use of IFRS in the Bermuda, although it is permitted for all entities that are not publicly traded

BVI IASB country profile:

― Not available

KPMG BVI comments:― Generally BVI regulated entities can select from different internationally

recognized GAAPs, including US GAAP, IFRS and UK GAAP. Other non-regulated entities are only required to hold nominal accounting records with no specific GAAP required. KPMG BVI are not aware of any planned changes to this situation

Cayman Islands

IASB country profile:

― IFRS are permitted, but not required, to be used for the financial statements of entities that are not publicly traded. No carve outs applicable

KPMG Cayman Islands comments:― KPMG Cayman Islands are not aware of any current or planned requirements

to mandate the use of IFRS in the Cayman Islands. Currently any recognised GAAP, including US GAAP, is acceptable


Analysis of Local Frameworks by Region (cont.)Country KPMG Local Comments

Region: LatAm

Brazil ― CPCs (or “BR GAAP”) are substantially IFRS with some relatively minor carve outs

KPMG Brazil comments:― KPMG Brazil considers that the government’s commitment to keep BR

GAAP close to IFRS is strong one

― In the week commencing 17/4/2017, SUSEP, the insurance regulator, confirmed that IFRS 9 and IFRS 17 would be adopted by insurers together from 2021 (when IFRS 17 is effective)

― Although no mention was made of whether any changes would be made to the standards when adopted into CPCs, the expectation is that all or substantially all of the standards will be adopted

― No news so far regarding whether the regulator is going to adopt IFRS 17 into local law.

Chile IASB Country profile:― IFRS Standards are required for domestic public companies.

Colombia KPMG Colombia comments:― IFRS 9 (2014 version) will be applicable from 2018. While there could be

exceptions for financial institutions, these have not yet been defined by the Colombian regulator. KPMG Colombia expects there to be no major exceptions from full IFRS 9

― KPMG Colombia does not have a view at this stage on the extent to which IFRS 17 may or may not be adopted

Mexico KPMG Mexico comments:― MFRS are very similar to IFRS, and it has already been determined that a

similar version of current IFRS 9 will be in place for local MFRS

― However, insurance companies (whether public or not) only use MFRS in certain areas. In many of the important areas (insurance-related balances, investments etc.) the regulator sets specific accounting rules or criteria that are different from MRFS and IFRS

― The regulator doesn’t have any plans to adopt IFRS 17 or IFRS 9 in the foreseeable future, nor to fully adopt MFRS



Region: EMEA

UK KPMG UK comments:― UK GAAP is subject to efforts to converge to IFRS, and therefore any

changes to IFRS are considered for incorporation into UK GAAP

― However, the lead time for inclusion into UK GAAP can be significant for big areas of IFRS change. This is to allow the UK regulator to assess any problems arising for reporters in the first years of the standard

― For example, in the second half of 2017 the UK accounting regulator is expected to consult on whether the IFRS 9 expected credit loss model should be incorporated into UK GAAP. Any changes would not be effective until 2022

Belgium KPMG Belgium comments:― Revisions to local GAAP reporting is not expected to change in line with

IFRS 17 due to the connection of it with tax treatmentsBulgaria KPMG Bulgaria comments:

― Bulgaria is an IFRS country, so IFRS 17 will be adopted as of its effective date

Czech Republic

KPMG Czech Republic comments:― Currently Czech local GAAP is different to IFRS. All insurance companies

use CZ GAAP for local reporting purposes, whereas on top of that large insurance companies use usually IFRS for group reporting purposes (practically they perform double accounting)

― The same will be valid for IFRS17. At the moment there is no discussion about changing CZ GAAP towards including IFRS17 (or other IFRS) rules or principles. We don’t expect there will be an adoption in CZ GAAP in short term horizon

France IASB country profile:

― IFRS not permitted for separate financial statements, which must use French GAAP

KPMG France comments:― There are no plans to converge French GAAP with IFRS

― Revisions to local GAAP reporting is not expected to change in line with IFRS 17 due to the connection of it with tax treatments



Region: EMEA continued

Greece KPMG Greece comments:― IFRS are mandatory for all insurers in Greece with a permanent

establishment and SA legal type and so IFRS 17 will be effective for January 1, 2021

Hungary KPMG Hungary comments:― In Hungary, insurers have the option from 2018 to apply IFRS for local

purposesIreland ― Financial Reporting Standards issued by the FRC (see UK) are applicable

in the Republic of Ireland

Italy KPMG Italy comments:― Italian non-listed insurance companies prepare their separate financial

statements in accordance with Italian GAAP. They cannot apply IFRS

― This rule may be modified in the next few years, with the aim to require the application of IFRS for separate financial statements starting from 2019 or 2020

― However, this change is still under discussion and involves various stakeholders with different interests (insurers, regulators, tax authority etc.). It is therefore difficult to understand if and when the application of IFRS on the separate financial statements will be required

― It is also noted that current Italian GAAP is not aligned to IFRS – we expect local GAAP to be changed in line with IFRS 17 if the tax burden is reasonable. This decision will be made in ~2018. The Italian Association of the Insurance Undertaking is already discussing the topic with the Regulator, the Ministry of Economy and the tax authorities and we expect any changes to be introduced in 2021

― Changes/deviations are expected to be significant between the old and new local GAAP. For example, Local GAAP is currently based on the historical cost criteria, rectified where needed with a LAT calculated with local criteria

Liechtenstein IASB country profile:

― IFRS is permitted, but not required, to be used for the financial statements of entities that are not publicly traded. IFRS is as adopted by the EU

KPMG Liechtenstein comments:― There are no plans to converge local GAAP with IFRS




Luxembourg IASB country profile:― IFRS are permitted, but not required, to be used for the financial

statements of entities that are not publicly traded. IFRS are as adopted by the EU

KPMG Luxembourg comments:― KPMG Luxembourg has no knowledge of an official plan to

converge towards IFRS for insurance companies in Luxembourg

― Leadership does not expect IFRS 17 will be implemented in local law.

Poland KPMG Poland comments:― IFRS is obligatory in Poland only for listed entities and their

consolidated financial statements

― It is optional to use IFRS for statutory but currently insurers are not using this option. The reason is that still tax and regulatory reporting is based on Polish GAAP. We do not expect any change soon

Romania KPMG Romania comments:― There is currently no clear expectation that IFRS 17 will be

adopted as local GAAP in Romania. There was a plan to replace local GAAP with IFRS, but that plan is overdue by two years and there is no clarity of when this might happen, due to unclear decision making process at the level of local regulatory authorities. Currently, IFRS is compulsory for parallel reporting (second set of individual/separate financial statements) for all insurers in Romania

Slovakia KPMG Slovakia comments:― IFRS (EU) is the predominant reporting framework for selected

companies – including insurance companies, therefore IFRS 17 will be adopted automatically and will therefore become effective 1 January 2021




Turkey KPMG Turkey comments:― For Turkey, local regulator is not fully applying current standard

IFRS 4. They want to regulate technical income and solvency requirements. Additionally, Turkish insurance firms is not subject to Solvency II requirements. There is a regulatory project for Solvency II implementation for Turkish insurance industry, expected to be finalized not later than 2020-2021

― For IFRS 17, we are in discussion with local regulator about when and how this new standard will be effective for Turkey. We cannot predict whether local regulator will adopt IFRS 17 fully, it is still a question mark for us

UAE ― All companies report under IFRS as per the requirements of local regulators. As such, IFRS 17 will be mandatorily adopted by all local insurance companies as its effective date

― The local regulator (Insurance Authority) will leave it to each insurance company to decide if they early adopt or not. Otherwise, 2020/21 will be the likely point when all companies will transition to the new standard. We don’t anticipate the regulator promulgating any deviations/changes to the IASB issued IFRS 17

Ukraine ― Ukraine is an IFRS country


Analysis of Local Frameworks by Region (cont.)Country Expected implementation date

Region: ASPAC

As each country has to go through its own endorsement process, there is always a possibility of a regulator concluding that a standard should not be adopted into local Accounting Standards or adopted with modifications

We set out below our current expectations of most likely implementation dates for IFRS 17 and IFRS 9 separately because in some ASPAC countries timing of adoption may differ

IFRS 17 IFRS 9

Australia Expected adoption in sync with the IASB 1 January 2018

BruneiWould most likely follow IFRS17,however situation is unclear. See left

Cambodia Expected adoption in sync with the IASB 1 January 2018

China / HongKong SAR

China: Expected adoption in sync with the IASB

China: Not decided. Our view: probable that it will be 1 January 2018

HK: Expected adoption in sync with the IASB Hong Kong: 1 January 2018

India ― From 1 April 2018, insurers and banks will be required to report under IndAS, in line with what is already required for non-regulated entities

― There are only relatively minor differences between Ind AS and IFRS― However, the insurance regulator IRDA is able to amend Ind AS for

application to insurers― Although it is expected that IFRS 9 and IFRS 17 will be incorporated into

Ind AS, KPMG India considers that carve outs are possible as the insurance industry better understands the standards

― The Indian insurance industry appears to be behind the European industry in its consideration of IFRS 17

Indonesia 1 years post IASB adoption Most likely 1 January 2019 (but decision not yet formalized)



ASPAC cont. IFRS 17 IFRS 9

Japan

― See earlier slide on Japanese Considerations― JGAAP is currently highly converged with IFRS― However, when new IFRS are issued, there is normally a period of

evaluation of the new standard by the Japanese regulator before it is incorporated (wholly or partially) into JGAAP

― This is the current position with IFRS 9. It is expected that over the longer term JGAAP will converge to IFRS 9 (wholly or partially), however the regulator is currently assessing the implementation experience of Japanese banks that report under IFRS

― The situation with IFRS 17 is even more uncertain, as the traditional reserving practice is applied unanimously to insurers Japan (whether listed or unlisted). As per the above, IFRS 17 may impact JGAAP in the future, but this is likely to be some time after the standard’s effective date in other parts of the world

― Revisions to local GAAP reporting is not expected to change in line with IFRS 17

Korea Expected adoption in sync with the IASB, graded impactt on capital

1 January 2018 (early adoption not allowed)

Malaysia Expected adoption in sync with the IASB 1 January 2018

New Zealand Expected adoption in sync with the IASB 1 January 2018

Philippines Possibly up to 1 year later than the IASB 1 January 2018

Singapore

Adopting full IFRS as from 2018 so we assume they will adopt IFRS 17 in sync with the IASB

Based on discussions with MAS, we do not expect the local regulatory reporting to align with IFRS 17.

1 January 2018

Sri Lanka Expected adoption in sync with the IASB 1 January 2018

Taiwan 3 years post IASB adoption Not yet determined



ASPAC cont. IFRS 17 IFRS 9

Thailand About 2-3 years after IASB adoption 1 January 2019/20

VietnamHave not yet adopted IFRS as reporting framework (informally considering 2016; unclear when IFRS 4 will be adopted)

Have not yet adopted IFRS as reporting framework (informally considering 2016; unclear when IFRS 9 will be adopted)

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