2019年-普华永道全球_The_impact_of_IFRS_9_on_insurers_and_its_interaction_with_IFRS17_11页_2mb

IFRS 9 for Insurers Summary

Core Content

IFRS 9, effective from 1 January 2018, replaces IAS 39 and introduces significant changes in the classification, measurement, impairment, and disclosure of financial instruments. For insurers, the application of IFRS 9 has been deferred to 2022, aligning with the implementation of IFRS 17 Insurance Contracts, which also applies from 2021. This deferral allows insurers to better align their financial reporting processes with the new standards and manage potential accounting mismatches between assets and liabilities.

Main Views and Key Information

1. Classification and Measurement (C&M)

• New categories: Financial assets are now classified under three bases: amortised cost, fair value through other comprehensive income (FVOCI), and fair value through profit or loss (FVTPL).
• SPPI test: Debt instruments with contractual cash flows that represent solely payments of principal and interest are eligible for amortised cost or FVOCI measurement. Otherwise, they are measured at FVTPL.
• Equity instruments: Typically measured at FVTPL unless held for trading, in which case they must be at FVTPL. The FVOCI option is not available for equities.
• Impact on insurers: Those holding amortised cost or AFS assets under IAS 39 are likely to see a shift to FVTPL, which could result in increased profit and loss volatility when combined with IFRS 17.

2. Impairment Model

• Expected credit losses (ECL): Impairment is based on expected losses rather than incurred losses, requiring forward-looking assessments.
• Impairment levels: If there has been no significant increase in credit risk, 12-month ECL is used. If there has been a significant increase, lifetime ECL is applied.
• Simplifications: Entities with low credit risk can use a practical expedient to apply 12-month ECL without assessing significant increase in credit risk, which may reduce impairment provisions.

3. Hedge Accounting

• Optional under IFRS 9: Hedge accounting is not mandatory and entities can choose to continue using IAS 39 hedge accounting or adopt IFRS 9.
• Changes in IFRS 9: The new model is more closely tied to risk management and removes the 80%-125% quantitative test for hedge effectiveness.
• Limited relevance to insurers: Due to the nature of insurance operations, hedge accounting may not be of major interest, though some economic hedging programs may benefit from the new rules.

4. Disclosure Requirements

• Deferral disclosures: From 2018, insurers deferring IFRS 9 must disclose:
  • The fact that they are applying the temporary exemption.
  • How they concluded eligibility for deferral.
  • Fair value and changes in fair value for SPPI and non-SPPI financial assets.
• Post-2021 disclosures: Additional requirements include credit impairment losses, changes in fair value attributable to credit risk, and comprehensive disclosures on classification and measurement changes.

Who is Affected?

• All insurers who have elected to defer IFRS 9 application are affected by the deferral disclosure requirements.
• Insurers with AFS or amortised cost assets will face the most significant impact due to the need for SPPI testing and the potential for accounting mismatches with IFRS 17 liabilities.

Next Steps for Insurers

1. Classification and Measurement

• Assess financial instruments: Evaluate whether they meet SPPI criteria.
• Review business model: Determine if the investment strategy supports FVOCI or FVTPL measurement.
• Align with IFRS 17: Consider the OCI option in IFRS 17 to match the treatment of assets and liabilities.
• Plan for mismatches: If mismatches persist, consider non-GAAP measures or changes in investment strategy.

2. Impairment

• Develop ECL models: Build models to calculate both 12-month and lifetime ECL.
• Assess credit data: Collect, verify, and store relevant credit data for impairment calculations.
• Use simplifications: Consider the practical expedient for low credit risk assets to ease the impairment process.

3. Hedge Accounting

• Monitor macro hedging project: Assess whether the upcoming macro hedging project will offer better alignment with economic hedging programs.
• Evaluate options: Insurers may choose to stay with IAS 39 hedge accounting or adopt IFRS 9, depending on their needs and the expected benefits.

4. Disclosures

• Prepare for 2018 deferral disclosures: Complete SPPI testing and prepare disclosures for financial assets.
• Consider alignment with IFRS 17: Evaluate whether to disclose comparative information on an IFRS 9 basis to match IFRS 17 reporting.
• Update chart of accounts: Ensure compatibility with IFRS 17 changes to support accurate reporting.

IFRS 9 and Corporate Income Taxes

• Tax impacts: IFRS 9 may lead to current and deferred tax changes due to different valuations, accounting for gains/losses in P&L or OCI, and transitional adjustments.
• Tax regimes: Many tax systems still use realisation-based taxation, which may result in deferred tax impacts.
• Special rules: Some jurisdictions, like the UK, apply different tax rules to gains and losses in P&L versus OCI.
• Integrated approach: Tax impacts from IFRS 9 should be considered alongside those from IFRS 17 to fully understand the overall financial impact.

Conclusion

IFRS 9 introduces significant changes that insurers must prepare for, especially with the deferral to 2022. These changes require careful evaluation of financial instruments, impairment models, and disclosure requirements, all of which must be aligned with IFRS 17 to ensure consistency and reduce accounting mismatches. Insurers should now focus on understanding the operational, financial, and tax implications, and take proactive steps to implement IFRS 9 effectively.