Key Indicators for a Deeper Understanding of IFRS 17 Results

The Impact of IFRS 17 on Performance and Risk Indicators

The implementation of IFRS 17 marks a true revolution in the management of the income statement for the concerned insurance entities.

IFRS 17 has introduced significant changes compared to IFRS 4, including economic valuation, the concept of Groups of Contracts (GoC), Risk Adjustment (RA), and Contractual Service Margin (CSM).

Conversely, the disappearance of revenue that is no longer directly readable in the new IFRS 17 statements. The management of insurance activities thus becomes more complex with a more volatile outcome.

In this context, what are the Key Performance Indicators (KPIs) and Key Risk Indicators (KRIs) that can be implemented?

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Adjusting Indicators in the Context of IFRS 17

Until recently, insurers managed their activities based on Solvency II-stamped Key Risk Indicators (KRI) and Key Performance Indicators (KPI) reflecting their internal activity management. IFRS 17, aiming to ensure greater comparability, urges insurers to manage their activities and conduct their financial communication based on indicators built on IFRS 17 accounting measures and thus more comparable.

In this document, Addactis provides an overview of the challenges related to this new management framework before presenting five indicators that allow a better understanding of results published under IFRS 17: Business, Profitability, Risks, Equity, and Sensitivities.