delivering ifrs 17 efficiency for p&c insurers...q1 2019 onwards –pocs selected client trials:...
TRANSCRIPT
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ResQ Financial Reporter
Implementing IFRS 17
16 May 2019
Delivering IFRS 17 efficiency for P&C insurers
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Agenda
1 IFRS 17 Background
2 IFRS 17 Target Operating Model
3 ResQ Financial Reporter
4 Demo and Key Benefits
5 Conclusion
6 Questions
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1. IFRS 17 Background
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IFRS 17 Background – The BasicsCommon global standard for reporting to investors, not regulators
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Global* accounting standard covering
insurance contracts with a consistent
measurement basis
General purpose financial reporting to meet
needs of investors and creditors
Not designed to meet requirements of
supervisors/regulators
Who
Any entity which issues insurance contracts and
reports under IFRS
May be mandated by (inter)national legislation
(eg listed entities in EU or insurance entities in some
jurisdictions)
Entities may opt to publish under IFRS alongside
national GAAP accounts
Subsidiaries of such entities will need to report
internally under IFRS (via reporting pack or similar
simplified mechanism)
Many large entities (particularly unlisted) will
continue to use local GAAP
US entities will report under US GAAP as now
What
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IFRS 17 Background - Market ProgressMost that are directly affected are in the design and implementation stage, after completing a gap
analysis and impact assessment
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Companies are not consistent in their progress – depends on own situation
Monitoring progress:
Design and Implementation:
Gap analysis and impact assessments:
Dry runs:
Very few companies are at this stage yet
Larger global companies
Regional variation
Varied approaches including full Finance rebuild, piecemeal additions to existing systems
Most are looking for external software solutions
May be a Finance-based, actuarial-based or combined solution
Increased cooperation between Actuarial and Finance required
Smaller companies
Companies indirectly affected
Some companies not directly affected are considering IFRS 17 to ensure comparability to peers
Those expecting it to apply at some point are also starting out
Those not directly affected e.g. US and some UK companies
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IFRS17 Background - Key Concepts
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The operating system design needs to be flexible for usage under
IFRS 17 to allow smooth transition and limit additional workloads
Some new concepts but similar principles of calculation
Cash flows
and discount
rates
Contractual
service
margin
Reporting
and
disclosure
requirements
Portfolio definition
and contract
boundaries
Onerous
contracts
Risk
adjustment
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IFRS 17 Background – Implementation
Key Challenges
Additional data granularity and data Storage
Assessment of grouping / cohorts
Identification of onerous contracts
Risk Adjustment – assessment and allocations
Possible changes to best estimate reserving process
Allocation of best estimate reserves to grouping / cohorts and
onerous / not onerous / other
PAA or GMM
Estimation of liability for incurred claims and liability for remaining
coverage
Separate assessment of outwards reinsurance
Calculation and earn out of CSM (GMM only)
Discounting and setting of discount rates (inception, previous
periods, current period, when incurred claims)
Transition
Roll forwards
Reporting – disclosures / reconciliations and dashboards
Uncertainty over final form and interpretation of the Standard
Timescales and governance
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Impact Assessment – Key Findings
• Data – e.g. granularity for groupings
assessment of groupings
• The amount of information that needs to
be stored and carried forward through the
years
• Timeframes and costs
• Process and system changes
• IFRS 17 pushing need for new or updated
Target Operating Models (TOMs)
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2. IFRS 17 Target Operating Model
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Example IFRS 17 Target Operating Model
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End-to-End reporting solution for P&C Insurers
Need for transformation or refinement of actuarial and finance target operating model (TOM)
Requirement for the design and implementation of a flexible reserving environment for IFRS 17, Solvency II and other reporting
requirements
Actuarial processes will move further into the finance processes
Implementation using Unify, ResQ and ResQ Financial Reporter
ResQ is a market leading reserving tool used to produce best estimate reserves, cashflow patterns and parameterise other key
assumptions
ResQ Financial Reporter provides an IFRS 17 engine that is fully integrated with best estimate reserving process
Orchestration and automation of the entire process with Unify, including the interfaces between Actuarial and Finance systems
within the Unify framework, ensure governance, stability and speed
Design and Implementation
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3. ResQ Financial Reporter
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Key functionality
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Allocations module to support
transformation of reserves,
patterns and risk adjustment to
different levels of granularity or to
different bases
Production of information required for reporting and key business decisions including
disclosures and diagnostics to support the validation of the estimates
Flexible data import and
export to allow ease of
integration with data and
financial systems
Fully integrated with
Unify, our workflow
management solution to enable
rapid production of reporting
process in a secure and
transparent environment
IFRS 17 calculation engine for P&C
insurers using both general
measurement model (GMM)
and simplified (PAA) model
ResQ Financial
Reporter
Part of our market leading ResQ reserving
toolkit with the flexibility to use as a
standalone solution
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What ResQ FR generates…
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The model generates all the data needed by the
Standard at the granularity required by the user…
…and organises the data points in a way
which follows the logic of the standard…
…and then opens up the black-box to
show the calculation components.
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What ResQ FR presents…
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The outputs of the model are mapped
and presented in a way which is
consistent with:
the original IASB IFRS effects
analysis;
the emerging market consensus
on the format of the IFRS 17
Financial Statements.
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How ResQ FR integrates with accounting process…
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ResQ FR has the granularity and
flexibility required to service all the
IFRS 17 related disclosures
required for external reporting.
Additionally, the functionality of its
Reporting db allows the
interrogation and presentation of
this granularity in the ways needed
to support internal reporting and
analysis – using Excel, Power BI or
similar tools.
For clients using an Accounting
Rules Engine or a Data Store,
ResQ FR will output straight to the
Target Value Table – and for those
using a SAP GL (and the SAP
Finance and Risk Data Model) or
an Oracle GL (and ‘Oracle
Accounting Hub).
The model is pre-mapped to a pro-
forma set of IFRS 17 accounts and
disclosures as a starting point.
The additional mapping required to
integrate with client-specific Charts
of Accounts is therefore greatly
reduced.
Internal and External reportingPassing the output through to the
General Ledger (GL)Pre-mapping in the model
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Storing multiple runs at full granularity in a
format that allows ‘slice and dice’ capability
Providing the diagnostic functionality to
better understand and explain the results
and movements before they are released to
the core accounting systems.
Giving the ability to ‘Sandpit’ - comparing
scenarios and optimising input parameters,
including the support for Strategic Planning.
Reporting
database*
*stand alone or integrated with client database
Multiple model runs
and ‘What if’?’
scenarios generated
How ResQ FR helps to understand and optimise results…
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ResQ FR
Core
Accounting
Systems
Mapping transformation
and ‘releasing’ of the
data
Passing the finalised data to the core
accounting systems – controlled, reconciled,
and auditable.
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4. Demo and Key Benefits
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DEMO
Demo
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ResQ Financial Reporter: Features Roadmap and Timelines
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Client demo available in
cloud environment
Partner programme for
selected clients
Early adopter discounts
available to 30 June 2019
Q1 2019 onwards – PoCs
Selected client trials: April
2019 onwards
March 2019: ResQ
Financial Reporter Beta
release
Q3 2019: ResQ Financial
Reporter General
Availability release
Incorporated in Q1 2019
Assumptions management tool
Reinsurance (held and issued)
Roll forwards
ResQ COM API and partial Unify integration
In progress
Interim reporting
Disaggregation of Insurance Finance Income and Expense between
Profit or Loss and OCI for PAA
Risk Adjustment allocations
Yield curve management
Finalise in 2019
Further Unify integration
Build out management information and diagnostics
Extended reporting
Enhanced allocations methodologies
Financial planning
SII Technical Provisions
On-going testing and user experience improvements
ResQ Financial Reporter: Features and timelines Testing and roll out
Note: Timelines are indicative and may change as a result of changing priorities, client feedback and testing procedures
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Closeness of best estimate and assumption generation (including cashflows) to CSM and IFRS 17
measurement models
Flexible implementation model with ability to integrate ResQ Financial Reporter fully in to end to
end target operating models for financial reporting
Ease of generation of many inputs, parameters and assumptions from core reserve analysis
Ability to transform reserves, patterns and risk adjustment to different levels of granularity or bases,
recognizing that the required level of aggregation under IFRS 17 may not align with current internal
segmentation for reserving.
Calculation and comparison of both PAA and GMM methods
Generic professional software that will keep up with evolution of the market standard
Ability to produce cashflows, detailed reconciliations and insurance contract liabilities to feed
different stages of the IFRS 17 process (including alternative CSM engines, subledgers and general
ledgers)
Detailed and flexible outputs mapped to IASB Taxonomy and a default Chart of Accounts (CoA)
with the ability to further map to client specific CoAs and to generate journal postings
Modular approach to fit a broad variety of different implementation models
Potential future use as a financial planning tool
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Key Benefits
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5. Conclusion
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IFRS 17 Conclusions
IFRS 17 is still a moving feast
BAU will force closer integration between actuarial and finance teams. Fast
efficient processes will be key for successful implementations
Focus on the interpretation of the numbers will necessitate strong
automation of ancillary processes
Governance will need to be extremely strong to support
the population of Financial Statements
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6. Questions
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ResQ Financial Reporter
Please contact:
Andy Teale
0044 7966 968997
Tina Gwilliam
001 571 606 9952