Investor Presentaiton

Analysts agree with insurers that there will be lower impacts on earnings, cash or solvency than previously anticipated Observations Most insurance groups are expecting limited disruptions from IFRS 17 and IFRS 9. CSM will be the biggest change, as it impacts reported book value negatively. Performance KPIs are shifting to cash flow-based metrics. IFRS 17 will lift reported RoE - this could flow through to higher valuations. What analysts are saying 66 We think UK annuity writers are set to see the greatest noise from IFRS 17 but valuations should not change for any insurers. Cash, dividends and solvency are unchanged. Fair IFRS PE ratios need to be adjusted to reflect the new paradigm. - BofA 66 The CSM is the biggest change. We view the treatment of new business gains, essentially "unearned profits" which are capitalized under IFRS 4 but will now be deferred and amortized under IFRS 17 through the CSM, as the biggest difference, which, from an accounting perspective, will lower reported book value upon transition and impact the timing of earnings. - BMO 66 Many life insurance-heavy names have switched their KPIs to non-earnings metrics, e.g., capital generation or cash, which are unaffected by IFRS 17. That said, we think IFRS 17 could introduce an element of 'presentational volatility' to earnings, which could conceivably increase the cost of equity in the space. Morgan Stanley 66 - We believe that the change to accounting linked to IFRS 17 is a positive — this is because it is reducing reported equity and, therefore, is lifting ROE (earnings are largely unchanged) ... Higher ROEs deserve a higher price-to-book ratio. This is because investing in a business with a high ROE produces a higher profit. - Berenberg 9 Market updates on impact of IFRS 17 and IFRS 9 EY

View entire presentation