Investor Presentaiton
Contractual service margin (CSM) will become a KPI, while the combined ratio will generally be
based on gross earned premiums
IFRS 17 and 9 bring some changes to the design of KPIs:
Combined ratio
Mostly planned to be
presented based on
gross earned
premiums. However,
others will continue to
use net-earned
premiums. The
combined ratio is likely
to improve (decrease)
due to the discounting
of the liability for
incurred claims.
Contractual
Service Margin
This is expected to
become a KPI. One
insurer also noted that
its new business
metric will include the
IFRS 17 CSM at
inception. Another will
use an IFRS 17 value
added metric
consisting of the IFRS
17 operating profit
plus the change in the
CSM for the year.
Some insurers plan to
separately present the
CSM on the face of the
balance sheet.
New business
(NB)
This will now include
the CSM of the new
business. Certain
players are presenting
a gross CSM, whereas
others are presenting
it net of taxes and of
projected non-
attributable costs. This
would impact the
comparability of the
NB value across the
market.
New business
margin
Since single premiums
are now released over
the coverage period,
the annual premium
equivalent (APE)
disclosed by some
insurers as a new
business volume
metric will be replaced
for certain companies
by the present value of
expected premiums
measured on an IFRS
17 basis.
Return on
Equity (ROE)
A number of insurers
plan to exclude from
equity the total of OCI
in ROE calculations.
The use of OCI for the
impact of changes in
financial assumptions
on insurance liabilities
is envisaged to provide
a better matching
between the
revaluation of
investments and
insurance liabilities.
Leverage ratio
CSM is added to the
denominator of the
leverage ratio. One
insurer also plans to
include the risk
adjustment net of tax
as part of the
denominator.
7
Market updates on impact of IFRS 17 and IFRS 9
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