As IFRS 17 moves from the standard setting to implementation stage, a new chapter has opened, bringing with it fresh uncertainties. Stakeholders are starting to debate what users of (re)insurance company financial reporting will do with the new data and what the likely key performance indicators (KPIs) will be under IFRS 17. A new report from AM Best, "Key Performance Indicators More Meaningful Under IFRS 17", explores some of the challenges and opportunities that it has identified as stemming from the new framework, as well as some of the KPIs it believes will be critical for both (re)insurers' financial stakeholders and (re)insurers themselves.
These include the calculation of net of reinsurance combined ratios, claims ratios and expense ratios, non-life deferred acquisition costs (DAC) in capital models, the use of contractual service margin (CSM) disclosure, and the behaviour of return on equity (ROE) under the new standard. Report author Tony Silverman said: "A closer link between accounting ROEs and underlying profitability should provide more transparency for financial stakeholders."
Silverman added, "AM Best does not expect IFRS 17 to have a direct impact on credit ratings, as the economic reality assessed by credit ratings will remain unchanged. Nevertheless, the content of analysis, the KPIs used, the terminology and the conversations with insurers will all change, and rating committees will be making their assessments utilising the new data."
To access a complimentary copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=308167.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Contacts:
Tony Silverman
Director, Credit Rating Criteria Research Analytics
+44 20 7397 0264
anthony.silverman@ambest.com
Mahesh Mistry
Senior Director, Credit Rating Criteria Research Analytics
+44 20 7397 0325
mahesh.mistry@ambest.com
Richard Banks
Director, Industry Research EMEA
+44 20 7397 0322
richard.banks@ambest.com
Edem Kuenyehia
Director, Market Development Communications
+44 20 7397 0280
edem.kuenyehia@ambest.com
