ey insurance accounting alert jan 2019

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1 Insurance Accounting Alert January 2019 IASB proposes changes to IFRS 17 for acquisition cash flows, reinsurance contracts and recognition of the CSM What you need to know At its meeting on 23 January 2019, the IASB (or Board) tentatively decided to make changes to the following aspects of 17 Insurance IFRS Contracts : ► D eferral of insurance acquisition cash flows for renewals outside the contract boundary ► ccounting for reinsurance contracts held when underlying A insurance contracts are onerous ► E xtending the scope of the risk mitigation exception in the Variable Fee Approach to include financial risk mitigation through reinsurance contracts ► R ecognition of the contractual service margin in profit or loss under the general model for contracts containing investment components The Board decided not to remove the prohibition in IFRS 17 from applying the Variable Fee Approach to reinsurance contracts issued or held.

2 Overview The criteria for assessing potential At its Board meeting on Wednesday, 23 January, the International changes to IFRS 17 Accounting Standards Board (IASB or the Board) considered The Board applied the criteria agreed upon at the October 2018 17 Insurance Contracts five further potential changes to IFRS Board meeting to assess whether any of the potential changes (IFRS 17). It tentatively decided to proceed with four of them but, suggested by stakeholders were warranted. in line with the IASB staff recommendation, did not agree with one Those criteria are that, in addition to demonstrating a need for proposed change. amendment, the IASB staff must show that: a) he amendments would not result in significant loss of T The story so far useful information for users of financial statements, i.e., any The IASB issued IFRS 17 in May 2017. Our publication, Applying amendments would avoid: , IFRS 17: A closer look at the new insurance contracts standard Re i. ducing the relevance and faithful representation of http://www.ey.com/ provides further details on the requirements: information in the financial statements Publication/vwLUAssets/ey-Applying-IFRS-17-Insurance-May- 18/$FILE/ey-Applying-IFRS-17-Insurance-May-18.pdf ausing reduced comparability or introducing internal C ii. inconsistency in IFRS standards The cover note and papers for the January 2019 meeting, including an analysis of the concerns raised by stakeholders Or https://www.ifrs.org/news- are available on the IASB’s website: I iii. ncreasing complexity for users and-events/calendar/2019/january/international-accounting- standards-board/ he amendments should not unduly disrupt implementation b) T processes that are already under way or risk undue delays to the effective date of a standard that is needed to address Potential changes to IFRS 17 many inadequacies in the existing wide range of insurance The IASB agreed during its October 2018 meeting, to consider practices accounting changes to IFRS 17 at future meetings, and the IASB staff presented 25 concerns and implementation challenges raised Proposed amendments to IFRS 17 by stakeholders for future consideration. At the November 2018 meeting, the Board considered two of these issues and proposed 1. nsurance acquisition cash flows for renewals outside the I deferring the effective date of IFRS 17 (and IFRS 9 Financial contract boundary Instruments (IFRS 9) for insurers that elected the temporary The Board agreed with the staff recommendations to require an exemption from applying that standard) by one year to 2022. entity to: the December 2018 meeting, the Board considered 13 further At issues and tentatively decided to amend the existing provision in ► llocate to anticipated contract renewals, parts of insurance A IFRS 17 that requires an entity to present separately, on the face acquisition cash flows that are directly attributable to newly of the balance sheet, groups of contracts that are assets from issued contracts and to recognise an asset until the renewed groups of contracts that are liabilities. The Board did not agree to contracts are recognised potential changes and deferred a decision on one other issue. 11 ssess the recoverability of the asset recognised in each ► A At the January 2019 meeting, the Board considered a further five reporting period before the related contracts are recognised. issues and tentatively decided to amend the standard to reflect The recoverability assessment would be based on the expected four of these. fulfilment cash flows of the related group of contracts , we provided the full list Insurance Accounting Alert In our October Re cognise a loss in profit or loss for any unrecoverable ► of the 25 concerns and implementation challenges, as reported to amounts, and reversals of such losses in subsequent periods if the IASB. The current status of the items and their review by the the impairment conditions no longer exist or have improved IASB, are summarised in the table in the Appendix on page 7. Insurance Accounting Alert January 2019 | 2

3 ► Re quire an entity to apply the expanded exception when Rationale for the decision it measures contracts applying the premium allocation IFRS 17 requires insurance acquisition cash flows directly approach (PAA) attributable to newly issued contracts (e.g., commissions) to be allocated to a group of contracts issued in a reporting period. Rationale for the decision This could cause the group of contracts to be onerous on initial The contractual service margin of a group of reinsurance contracts on-refundable a nd or i nstance, c ommissions a re n recognition i f, f an entity holds is adjusted to reflect changes in estimates of expected renewals are outside the initially written contracts’ fulfilment cash flows relating to future service at the end of boundary (e.g., because the entity can reprice the contracts each reporting period. Paragraph 66(c) of IFRS 17 provides an when they are renewed). Some stakeholders are concerned that exception to this general rule when changes in estimates relating losses from onerous contracts does not reflect recognition of to underlying groups of insurance contracts are recognised the economic substance, because renewals are expected even immediately in profit or loss, because the group is or has become if the entity has no substantive right to compel the policyholder onerous. In these circumstances, the corresponding changes in to renew. They also argue this treatment i s inconsistent with fulfilment cash flows of reinsurance contracts held do not adjust I FRS 15) which, FRS 15 Reven ue from contracts with customers (I the reinsurance contractual service margin but are recognised or the incremental costs requires an entity to recognise an asset f in profit or loss. The result is that the entity recognises no net of obtaining a contract with a customer and to amortise this asset effect in profit or loss for the period, to the extent that the change on a systemati n-refundable c basis. Under IFRS 15, a no in the fulfilment cash flows of the underlying group of insurance on of renewal s would be amortised commission paid in anticipati contracts is matched with a change in the fulfilment cash flows of over a period, including anticipated renewa l periods of the the group of reinsurance contracts held. e recoverabl e from the consideration ided it could b contract, prov less costs related to t he contract. The exception in paragraph 66(c) applies to changes in measurement of cash flows for reinsurance contracts held, but The IASB staff paper notes that IFRS 15 is not directly comparable does not currently apply when an underlying group of insurance 7, but acknowledges that IFRS 17 could be amended to to IFRS 1 contracts is onerous on initial recognition. Although the IASB align its requirements more closely to those of IFRS 15. In making was aware of a potential mismatch between recognising losses staff noted that the their recommendation for change, the IASB from onerous underlying contracts immediately in profit or Board should not develop specific requirements for how to allocate loss, but deferring recognition of a corresponding gain from part of the insurance acquisition cash flows to anticipated contract reinsurance over the reinsurance coverage period, it thought renewals, as existing allocation requirements in the standard are that this circumstance would be rare. During the implementation sufficient, and to avoid creating unnecessary complexity. of IFRS 17, some stakeholders have warned that there may be significant mismatches in profit or loss in many circumstances. meeting Observations from the Board staff think an amendment to IFRS 17 could be justified in The Several Board members expressed concerns about the risk of respect of the initial recognition of underlying onerous contracts. manipulation, or errors, in allocating acquisition cash flows to contract renewals, as this will allow the recognition of expenses to The staff and the Board prefer a solution that recognises a gain uture periods. However, there was broad agreement be shifted to f in profit or loss by adjusting the contractual service margin of amongst Board members that the proposal better reflects the reinsurance contracts held, when an onerous contract loss is economics of an insurer paying commissions in expectation of recognised relating to underlying contracts issued, rather than renewals, and acknowledgement that estimating cash flows and deferring recognition of an onerous loss. The existing exception allocation of cash flows to groups of contracts are integral parts in paragraph 66(c) is therefore expanded to require an entity to of IFRS 1 7. recognise a gain in profit or loss when the entity recognises losses on onerous underlying insurance contracts, to the extent that a The Board voted 13 to one in favour of the staff recommendation reinsurance contract held covers the losses of each contract on a mend t to a he s tandard. proportionate basis. 2. einsurance contracts held — when underlying insurance R In response to questions from Board members at the meeting, contracts are onerous the IASB staff agreed to provide additional clarification on the The Board agreed with the staff recommendations to: meaning of proportionate reinsurance coverage when preparing the forthcoming exposure draft on the proposed changes to ► E xpand the scope of the exception in paragraph 66(c) 17. I F R S (ii) of IFRS 17 to require an entity to recognise on initial recognition, a gain in profit or loss when it recognises losses on The Board agreed with the staff recommendation to also onerous underlying insurance contracts, to the extent that a require insurers to apply the expanded exception above when reinsurance contract held covers the losses of each contract on the entity measures contracts under the Premium Allocation a proportionate basis Approach (PAA). Insurance Accounting Alert January 2019 | 3

4 For variable fee contracts that an entity issues, the contractual Observations from the Board meeting service margin is adjusted for, amongst other things, the effect of The IASB staff informed the Board that several stakeholders had changes in: asked why the proposed extension to the exception in paragraph 66(c) (ii) should only apply when reinsurance coverage is on a he entity’s share of the underlying items T ► proportionate basis. The staff explained that the restriction was F ► inancial risks, other than those arising from the underlying proposed because, under proportionate reinsurance coverage, items; for example, the effect of financial guarantees there is a direct contractual link between an initial onerous contract loss and corresponding reinsurance recoveries, whereas IFRS 17 currently permits entities (as an exception to the the link would not be direct for non-proportionate coverage. requirements above) to recognise changes in financial risks in The staff acknowledge that their argument about a direct link profit or loss instead of adjusting the contractual service margin assumes that an onerous contract loss is attributed to claims when an entity mitigates those risks using derivatives. This expense, for which a cedant recovers a proportion from a option allows entities to avoid an accounting mismatch that would reinsurer, rather than to acquisition expenses or overheads that otherwise be created. The option currently applies only when an may not be subject to proportionate reimbursement. entity mitigates financial risks in insurance contracts through the use of derivative instruments. Several Board members asked the staff to provide more guidance on what is meant by proportionate reinsurance coverage. The IASB However, a similar accounting mismatch may arise if an entity staff noted that the definition of proportionate coverage becomes holds reinsurance contracts to mitigate the financial risks of more important when it affects measurement, and they agreed to variable fee contracts that it issues. Some reinsurance contracts provide additional clarification on the meaning of proportionate have cash flows that vary with the financial risks of underlying reinsurance coverage when preparing the forthcoming exposure contracts and are used to mitigate the effect of those risks. draft on the proposed changes to IFRS 17. Because reinsurance contracts are not eligible for the VFA, they are measured applying the general model. In the general model, Board members felt that the extension to the existing exception all changes in financial assumptions are regarded as relating to was justified, but were reluctant to extend it to non-proportionate the current period, and are recognised in the statement of profit reinsurance. Some asked that the rationale for restricting the or loss and other comprehensive income. An accounting mismatch extension to proportionate coverage be explained in the basis for would arise if the effect of changes in financial risk of underlying conclusions accompanying the proposed changes to IFRS 17. variable fee contracts in a period adjusted the contractual service The Board unanimously voted in favour of the staff margin of those contracts, but the corresponding changes in recommendation to amend the standard. fulfilment cash flows of the reinsurance contracts an entity holds are recognised in the statement of profit or loss and other 3. ligibility of reinsurance contracts to apply the Variable E comprehensive income. For this reason, the Board agreed to Fee Approach (VFA) and extension of the scope of the risk extend the risk mitigation exception so that it also applies when an mitigation exception in the VFA to include financial risk entity uses a reinsurance contract to mitigate financial risk. mitigation through reinsurance contracts an entity holds Observations from the Board meeting The Board agreed with the staff recommendations to: IASB staff noted that the VFA was designed for asset ► C onfirm that both reinsurance contracts held and issued are management-like contracts. In their opinion, there is no asset ineligible for the VFA management service between a reinsurer and a cedant. One Board E xpand the scope of the risk mitigation exception to the VFA ► member asked for the basis for conclusion to include detailed treatment of changes in financial risk so that the exception reasoning behind the decision to make reinsurance contracts applies when an entity uses a derivative or a reinsurance issued and held ineligible for the VFA. to mitigate financial risk contract The Board unanimously voted in favour of the staff Rationale for the decision recommendation to expand to reinsurance contracts held the scope of the risk mitigation exception to the VFA treatment for The VFA was not designed to apply to reinsurance contracts — changes in financial risk. either issued or held by an entity. Some stakeholders think that the prohibition on applying the VFA to reinsurance contracts can create an accounting mismatch when a reinsurance contract transfers financial and insurance risk to a reinsurer. The IASB staff think that to apply the VFA to contracts for which it was not developed would not be suitable. Insurance Accounting Alert January 2019 | 4

5 this service is managing assets on behalf of the policyholders, R 4. ecognition of the contractual service margin in profit or rather it is providing policyholders with access to an investment loss for the general model return that would not otherwise be available to them. The IASB The Board agreed with the staff recommendations to amend staff use the term ‘investment return service’ for this service. I F R S 17: Investment return services only apply when an insurance contract o that in the general model the contractual service margin is S ► includes an investment component, although the existence of an allocated on the basis of coverage units that are determined investment component does not necessarily mean that an entity by considering both insurance coverage and any investment provides an investment return service, for example, when the return service entity provides only custodial services in relation to the investment T ► o establish that an investment return service exists only when component, or when the investment component is included solely an insurance contract includes a (non-separated) investment to facilitate insurance coverage, such as the inclusion of a no component claims bonus in some insurance contracts. An entity would need to apply judgement to determine whether it provides an investment T o require an entity to apply judgement consistently in ► return service in addition to insurance coverage. That judgement deciding whether to include an investment return service when should be applied consistently to similar contracts. determining coverage units, and not to provide an objective or criteria for that determination An investment component exists only if amounts are paid to policyholders in all circumstances, including contract lapsing. o establish that the period of investment return services T ► The IASB staff paper implies that deferred annuities could have should be regarded as ending when the entity has made all investment components — and therefore potentially provide investment component payments to the policyholder of the an investment return service — if they have all of the following contract, i.e., not including payments to future policyholders features: surrender value in the accumulation phase; payment on o require the assessments of the relative weighting of the T ► death in the accumulation phase, and guaranteed payments in the benefits provided by insurance coverage and investment annuity phase. The paper notes that an entity that issues deferred return services and their pattern of delivery to be made on a annuity contracts that do not contain an investment component systematic and rational basis would recognise the contractual service margin in profit or loss on the basis of insurance coverage only. They may still be able to ► o establish that the one-year eligibility criterion for the PAA T recognise some of the contractual service margin in profit or loss should be assessed by considering both insurance coverage during the accumulation phase of the contracts if they provide a and an investment return service, if any death benefit during the accumulation phase. Rationale for the decision In determining the release of the contractual service, an entity The IASB decided in June 2018 to clarify that coverage units would have to assess the relative weighting of the benefits of the should be determined by considering both insurance coverage investment return service and the insurance coverage services, and investment-related services for direct participating contracts and the pattern of delivery of these services. The IASB staff subject to the VFA. Some stakeholders think that contracts that think that, to the extent that an entity includes an investment are not direct participating contracts also provide investment- return service for general model contracts in the determination related services, and that these should be reflected in coverage of coverage units, it should also include cash flows related to the units and release of the contractual service margin to profit fulfilment of that service in the fulfilment cash flows. loss. They note that the measurement of the contractual service or This IASB decision does not change the requirements of the margin implicitly includes any difference between returns on general model, which prohibit the adjustment of the contractual investment components promised to policyholders and the market service margin for the effects of changes in financial risks. Nor rate for such returns (investment spreads). They also highlight does it allow for the contractual service margin release pattern to anomalous outcomes that can arise from release of contractual consider services other than the provision of insurance coverage service margin only in periods when a contract provides insurance and investment return services. coverage, for example: Observations from the Board meeting ► C ontracts that provide insurance coverage that ends significantly before the investment-related services would The IASB staff view an investment return service as different from result in a front-end revenue recognition an investment-related service (equivalent to asset management) provided in VFA contracts. They believe that an investment D ► eferred annuity contracts with an account balance return service only exists when a contract includes an investment accumulating in the period before the annuity payments start component, but it does not always exist when there is an could result in back-end revenue recognition if insurance investment component. Deciding when a contract provides an coverage is provided only during the annuity periods investment return service requires judgement. The staff reported The IASB staff think that an entity may provide an investment on feedback from constituents on the proposals, noting that most service when it repays an investment component to the holder of were supportive, but that one stakeholder said the proposed a contract without direct participation features. They do not think Insurance Accounting Alert January 2019 | 5

6 also provide opportunities to stray from the economics. Others change would severely disrupt its implementation of IFRS 17. agreed with the staff that it would be difficult to specify how to The staff think that stakeholders, in general, would welcome this make the necessary judgements. The staff noted that there are change, and noted that the operational consequences already apply to the proposed change to the standard already proposed extensive disclosure requirements in respect of the movements for VFA contracts. in the contractual service margin and how it is expected to be released to profit or loss. The staff also said they would review the Several Board members sought constraints over, or at least more guidance and disclosure requirements for all of the changes to the disclosure of, the amount of judgement required to determine standard that the Board is considering. whether an investment return service existed, as well as the relative weighting and pattern of delivery of this service and the The Board voted 13 to 1 in favour of the staff recommendation to amend the standard. insurance coverage. One Board member noted that judgement can help an entity to reflect the economics of its products, but it can How we see it under IFRS 17 and avoid what many consider to be an verall, the industry will welcome the four proposed O ► accounting mismatch changes to the topics discussed at the January 2019 IASB meeting y considering investment return services in determining ► B the CSM release pattern, the Board is responding to T he allocation of a portion of acquisition cash flows to ► the views of stakeholders. However, the assessment of future renewals should reduce the risk of onerous groups of whether or not to include investment return services, and contracts being recognised. It also results in better alignment their relative weight and pattern of delivery, will require with the underlying economics of the business. The proposed considerable judgement, potentially giving rise to different change could, however, increase complexity for preparers applications in practice T ► he decision to match onerous contract losses recognised ► I ncluding an investment return service may increase in profit or loss on initial recognition of underlying the reporting periods in which the liability for remaining contracts that an entity issues with corresponding gains coverage exists. This may affect the eligibility criteria for from reinsurance contracts it holds, applies to only those applying the premium allocation approach (PAA), and reinsurance contracts held that provide proportionate therefore, could potentially reduce the number of contracts coverage. However, in order to understand the scope of this eligible for the PAA measurement change, it would be important for the IASB to provide further clarification on what reinsurance contracts nsurers that issue deferred annuity contracts that are ► I should be viewed as providing proportionate cover subject to the general model will need to review the terms and conditions of those contracts to determine whether ► M any preparers may have preferred reinsurance contracts they provide policyholders with an investment return to be eligible for the VFA. However, the possibility to service and/or an insurance coverage service during the identify reinsurance contracts as risk mitigation items accumulation phase of the contracts, and would therefore under the VFA will be seen as a positive step by companies be able to recognise contractual service margin in profit or using such contracts. These companies will now be able loss before the annuity phase to reflect their risk mitigation decisions in the accounting Next steps amendments outweighs the costs. The staff indicated during The next Board meeting will be held in February 2019, when the January 2019 Board meeting, that they intend for the the IASB staff are expected to present more detailed analyses Board to complete its review of proposed changes by the of at least some of the remaining topics to help the Board end of the first quarter of 2019. The IASB plans to issue an consider whether any warrant potential changes to IFRS 17. exposure draft setting out the proposed changes to IFRS 17 by Insurance Accounting Alert Refer to our October 2018 for the end of the second quarter of 2019. further details of the concerns and implementation challenges that were discussed at the October meeting. The next meeting of the Transition Resource Group (TRG) is on 4 April 2019. This was deferred from 4 December 2018, based After the Board has considered all of the individual topics, on the submissions received. it plans to consider the package of amendments as a whole, before concluding whether the benefits of making the Insurance Accounting Alert January 2019 | 6

7 Appendix: Status of suggested changes to IFRS 17 raised by stakeholders Decision Timing Suggested changes to the Standard raised by stakeholders Initial Tentative Decision S cope | Exclude from the scope of IFRS 17 some or part of insurance contracts that have as 1. Future meeting their primary purpose the provision of loans or other forms of credit 2. evel of aggregation | Simplify the level of aggregation requirements to make them less L Future meeting prescriptive and/or less granular A cquisition cost deferral | require or allow an entity to allocate insurance acquisition cash 3. January 2019 flows directly attributable to a contract not just to that contract, but also to expected future Amend Require deferral Paper 2A renewals of that contract C SM discount rate | Use of current discount rates when adjusting the contractual service 4. December 2018 No Change Paper 2B margin for changes in estimates related to future service under the general model 5. S ubjectivity regarding risk adjustment and discount rate | Prescribe specific methods for December 2018 No Change selecting of discount rates and techniques for measuring the risk adjustment Paper 2B R isk adjustment in a consolidated group | Clarify that the risk adjustment of insurance 6. December 2018 No Change liabilities within a consolidated group is determined only by the issuing entity that is party to Paper 2B the contract with the policyholder 7. C SM coverage period in general model | IASB staff will perform further analysis of ways to January 2019 Amend Include change the definition of the coverage period for contracts to which the general model applies Paper 2E investment service that provide both insurance and investment services to policyholders V ariable fee approach CSM | Extend the applicability of the risk mitigation exception in the (A) December 2018 8. (A) Amend Allow for variable fee approach to non-derivative instruments (e.g., reinsurance contracts) and allow Paper 2C and January reinsurance held (B) the application of the exception retrospectively on transition 2019 Paper 2D (B) Defer decision Future meeting 9. P remium Allocation Approach (PAA) Premiums Receivable | Possibility to identify premiums December 2018 received and receivable at a higher level of aggregation than a group of contracts, e.g., at No Change Paper 2A portfolio level 10. B usiness combinations | Classification of insurance contract to be performed on the date that December 2018 the contracts were originally written, rather than the date that the contracts are acquired in No Change Paper 2D a business combination 11. B usiness Combinations: contracts acquired during the settlement period | Continue to apply the accounting treatment of the transferring entity to contracts in their settlement December 2018 No Change period acquired in a business combination. IFRS 17 currently requires them to be treated as Paper 2D contracts providing coverage for the adverse development of claims einsurance contracts held | Modify the requirements on initial recognition of reinsurance 12. R Amend Recognise contracts held when they protect underlying contracts issued that are onerous at initial January 2019 reinsurance gain in P/L Papers 2B and 2C recognition. Modification would allow recognition of profit on reinsurance to the extent that to match underlying loss it offsets a loss recognised on the underlying contracts reinsured 13. R einsurance contracts and Variable fee approach | Allow reinsurance contracts to be eligible January 2019 No Change Paper 2D for accounting under the variable fee approach 14. C ontract boundary of reinsurance contracts held | Exclude expected cash flows arising December 2018 from underlying insurance contracts not yet issued in the measurement of reinsurance No Change Paper 2E held contracts 15. P resentation in the statement of financial position | Permit aggregation of groups of Amend Aggregate at December 2018 contracts in an asset position with groups of contract in a liability position in the statement of portfolio level Paper 2A financial position where they form part of the same portfolio Insurance Accounting Alert January 2019 | 7

8 Suggested changes to the Standard raised by stakeholders Decision Timing Initial Tentative Decision Presentation in the statement of financial position | Measure and present premiums December 2018 16. No Change Paper 2A receivable separately from insurance contract assets and liabilities 17. Presentation in the statement of financial performance — use of OCI | IFRS 17 permits but doesn’t require an entity to present the impact of changes in market interest rates directly December 2018 in OCI rather than the P&L. There are concerns that this choice could impair comparability No Change Paper 2B between entities and therefore the IASB should mandate either P&L or OCI treatment for all entities 18. Scope of the variable fee approach | Widen the scope of the variable fee approach to prevent December 2018 No Change contracts with similar features being accounted for very differently if on either side of the Paper 2C dividing line December 2018 19. Interim financial statements | Extend the treatment of accounting estimates in interim No Change financial statements to other types of interim reports, e.g., monthly management reports Paper 2F 20. Effective date | Delay date of initial application of IFRS 17, suggested by stakeholders to be Defer to 2022 November 2018 between one and three years 21. Comparative information on initial application | Remove the requirement for comparative Future meeting information on initial application of IFRS 17, consistent with IFRS 9 22. Effective date of IFRS 9 | Extend the temporary exemption from applying IFRS 9 for insurers Extend to 2022 November 2018 to be in line with any deferral of the mandatory effective date of IFRS 17 Transition | Reducing optionality: mandate a single alternative to the full retrospective 23. Future meeting transition approach (rather than allowing a choice between fair value and modified retrospective approaches) 24. Modified retrospective approach | Include additional modifications to the modified retrospective approach at transition to IFRS 17 for groups of contract to which the full Future meeting retrospective approach is impracticable 25. Transition: fair value transition approach with use of OCI option | Where an entity elects for the fair value approach on transition and elects to disclose the impact of market movements in discount rates in OCI, IFRS 17 allows the accumulated OCI on insurance contracts to be set Future meeting to nil at transition date. Stakeholders have called for the accumulated OCI on financial assets related to insurance contracts accounted for at fair value through OCI on transition to also be set to nil on transition to IFRS 17 Insurance Accounting Alert January 2019 | 8

9 Area IFRS Contacts Global +44 20 7951 0905 [email protected] Kevin Griffith [email protected] Martina Neary +44 20 7951 0710 +44 20 7951 8815 [email protected] Martin Bradley Conor Geraghty +44 20 7951 1683 [email protected] +31 88 40 70800 [email protected] Hans van der Veen Europe, Middle East, India and Africa +41 58 286 3297 Philip Vermeulen [email protected] +49 89 14331 25162 Thomas Kagermeier [email protected] Katrien De Cauwer +32 2 774 91 91 Belgium [email protected] Belgium Peter Telders +32 470 45 28 87 [email protected] Czech Republic Karel Svoboda +420225335648 [email protected] France Frederic Pierchon [email protected] +33 1 46 93 42 16 Patrick Menard [email protected] France +33 6 62 92 30 99 Jean-Michel Pinton +33 6 84 80 34 79 France [email protected] Germany Markus Horstkötter +49 221 2779 25 587 [email protected] Germany Robert Bahnsen +49 711 9881 10354 [email protected] Greece +30 2102886065 [email protected] Konstantinos Nikolopoulos India Rohan Sachdev +91 226 192 0470 [email protected] Ireland James Maher +353 1 221 2117 [email protected] Ciara McKenna Ireland +353 1 221 2683 [email protected] Italy Matteo Brusatori [email protected] +39 02722 12348 Emanuel Berzack +972 3 568 0903 Israel [email protected] +31 88 40 72581 [email protected] Hildegard Elgersma Netherlands Bouke Evers +31 88 407 3141 [email protected] Netherlands Ana Salcedas +351 21 791 2122 Portugal [email protected] Poland +48225578779 [email protected] Marcin Sadek Radoslaw Bogucki Poland [email protected] +48225578780 South Africa Jaco Louw +27 21 443 0659 jaco.lou[email protected] Spain Ana Belen Hernandez-Martinez +34 915 727298 [email protected] Switzerland Roger Spichiger [email protected] +41 58 286 3794 Philip Vermeulen [email protected] Switzerland +41 58 286 3297 Damla Harman +90 212 408 5751 Turkey [email protected] Turkey Seda Akkus +90 212 408 5252 [email protected] UAE Sanjay Jain +971 4312 9291 [email protected] UK +44 20 7951 1692 [email protected] Brian Edey UK Nick Walker +44 20 7951 0335 [email protected] UK Shannon Ramnarine +44 20 7951 3222 [email protected] [email protected] +44 20 7951 1047 Alex Lee UK Insurance Accounting Alert January 2019 | 9

10 Americas Argentina +54 11 4515 2655 [email protected] Alejandro de Navarette Eduardo Wellichen [email protected] Brazil +55 11 2573 3293 Brazil Nuno Vieira +55 11 2573 3098 [email protected] Janice Deganis +1 5195713329 Canada [email protected] Mexico Tarsicio Guevara Paulin +52 555 2838687 [email protected] USA Evan Bogardus +1 212 773 1428 [email protected] USA Kay Zhytko +1 617 375 2432 [email protected] USA Tara Hansen [email protected] +1 212 773 2329 Robert Frasca +1 617 585 0799 USA [email protected] USA Rajni Ramani +1 201 551 5039 [email protected] USA Peter Corbett +1 404 290 7517 [email protected] Asia Pacific +852 6124 8127 [email protected] Jonathan Zhao Martyn van Wensveen +60 3 749 58632 [email protected] Australia Kieren Cummings +61 2 9248 4215 [email protected] Australia Brendan Counsell +61 2 9276 9040 [email protected] China (mainland) Andy Ng [email protected] +86 10 5815 2870 Bonny Fu [email protected] China (mainland) +86 135 0128 6019 Hong Kong Doru Pantea +852 2629 3168 [email protected] Tze Ping Chng +852 2849 9200 Hong Kong [email protected] Hong Kong Steve Cheung +852 2846 9049 [email protected] Ta iwa n Angelo Wang +886 9056 78990 [email protected] Korea Keum Cheol Shin +82 2 3787 6372 [email protected] Korea Suk Hun Kang [email protected] +82 2 3787 6600 Martyn van Wensveen +60 3 749 58632 Malaysia martyn.van,[email protected] Malaysia Jeremy Lin +60 3 238 89036 [email protected] Philippines Charisse Rossielin Y Cruz +63 2 8910307 [email protected] Singapore +65 6309 6452 [email protected] Sumit Narayanan Japan Hiroshi Yamano +81 33 503 1100 [email protected] Norio Hashiba +81 33 503 1100 [email protected] +81 80 5984 4399 [email protected] Toshihiko Kawasaki Insurance Accounting Alert January 2019 | 10

11 Notes 11 Insurance Accounting Alert January 2019 |

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untitled

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