execute an ifrs 4 phase 2 system implications pre-study to discover effects on it systems

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Execute an IFRS 4 Phase 2 System Implications Pre-Study to discover effects on IT Systems

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Risk adjustment

Contractual service margin

Reporting and disclosure requirements

Cash flows and discount rates

Par business Variable Fee

Approach

Portfolio definition

and contract boundaries

Model Capabilities/ Requirements IFRS

Execute an IFRS 4 Phase 2 System Implications Pre-Study to discover effects on IT Systems


Actuarial cash-flow modeling and associated reporting requirements under IFRS 4 P2 will drive the system and processes implications

Your reporting system design needs to be flexible for usage under IFRS 4.2, but also Solvency II

Risk adjustment





Approach



Storage and administration of

assumptions and other inputs

Lock-in and unlocking of

assumptions

Time-dependent discount rates

Differentiate between core and

other measurement models; e.g.

Premium allocation approach

Interfaces to current P&L

figures

Cash flows from options and

guarantees - stochastics





Risk adjustment





Approach



Additional requirements to

apply for the possible

approaches for participating

business

Linkage to IFRS 9

Minimize accounting

mismatches





Risk adjustment





Approach




Review and adjust portfolio

definitions and measurement

units for latest tentative board

decisions

Check contract boundaries and

the need of separating contract

components; this may result in

remodeling products




Risk adjustment





Approach




Definition of methodology?

Input from other calculation

engines and allocation to

portfolios, contracts

Necessity for interactions

with unlocking of the service

margin




Risk adjustment





Approach




Calculation, storage and

regular unlocking of service

margin per measurement

unit

Lock-in of interest rate at

issue or alternative

The drivers of resulting

profit recognition and

resulting P&L volatility need

to be analysed

Implementation options to

be tested




Risk adjustment





Approach




Requirements for earned

premium approach

Reconciliation between actual

and projected cash flows

Split of effects between P&L

and OCI and potential variants

produce complex reporting,

analysis and disclosure

requirements

Disclosure requirements reg.

RA, CSM, onerous contracts


A Pre-Study evaluating costs and benefits in more detail would directly feed into implementation planning

Phase 4Phase 1

Kick-off

Phase 2

Definition of relevant requirements ofIFRS 4 P2 and interactions with IFRS 9

A

Project Set up Target Blueprint & Gap Analysis Decision Support

Derivation of target picture / blueprint for an integration of actuarial core systems

C

Evaluated reccomendations

Phase 3

Project initialisation

Create project manual and templates for documentation

Collaboration and Communication strategy defined

Scope-definition with senior stakeholders

Derive and evaluate alternative scenarios Derive alternative

solution scenarios and list of required implementation measures

Rough indication of efforts for planning purposes

Impact on reporting processes

Cost/Benefits Analysis

Production of decision support Production of

decision support for follow up implementation routes and planning

Blueprint describing business requirements and strategy for an implemen-tation

A Pre-study could focus on the relevant aspects of the current IFRS 4 discussion basis

Analysis of current reporting processes, systems and data

B

Boardpresentation

Validation workshop

of initial hypothesis

Evaluation workshop

for differentscenarios

execute an ifrs 4 phase 2 system implications pre-study to discover effects on it systems

Business