Keeping the end goal in mind – from a Business, an Audit and Investor perspective
For the past few years, insurance companies across the world have been busy designing, implementing and updating systems and metrics in order to produce their first IFRS 17 & 9 figures. With Dry Runs and the current Parallel Run experiences fresh in mind they are transitioning towards an entirely new reporting standard in a 'Business as Usual' situation.
However, the closer insurance companies get to finalizing the implementation, the more complex the remaining challenges become, because previous decisions based on conceptual considerations are now becoming more tangible as real data is becoming available. Most insurance companies have also arrived at the stage where they are actively discussing their methodological decisions with their auditors. Not a moment too soon, since the Opening Balances per 1 January 2022 form an integral part of the first Financial Statements under IFRS 17, effective for periods beginning on or after 1 January 2023. While technical professionals continue to discuss the intricate details of the methodology, we were curious to learn whether shareholders, amongst other users of the financial statements, would be able to understand and appreciate the final methodology choices. Or to put it in another way: are insurance companies prepared to explain to investors what the consequences are from IFRS 17 for their equity story in a clear and transparent way?
In discussion with the insurance companies
On 2 March, 2022, KPMG hosted a round table, which included Finance and IFRS program representatives of the largest Dutch insurance companies. During the round table we had two main discussion topics:
- Business and audit readiness for reporting under IFRS 17 & 9, and
- The investor's point of view and their expectations regarding IFRS 17 & 9.
The discussion served as an important wake-up call to finance professionals, that after all the technical talk is over, investors don’t actually really care about the underlying complex assumptions and disclosures anyway, and look much more to the bottom-line returns, dividends and a limited set of KPIs. Details observed during the conversations are described in the downloadable 3-pager enclosed on this page.