The Big Change. 26th Annual Insurance Conference Tuesday, November 28, kpmg.ca/insuranceconference2017

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1 The Big Change 26th Annual Insurance Conference Tuesday, November 28, 2017 kpmg.ca/insuranceconference2017

2 KPMG IFRS 17 Global Results Haven't started yet 7% Which IFRS 17 project phase is your company in? Following the developments Project start-up phase 21% 24% Impact assessment phase 33% Design phase 13% Implementation phase 1% 2

3 The wide-ranging business implications for insurers Financial reporting Presentation & disclosure Management information Product design and pricing Capital Tax Financial planning & analysis Volatility of results Reinsurance strategy Data & systems People & processes Investment management Employee compensation 3

4 Key impacts Clearer picture of performance The impact that financial risks have on an insurer s results will be separately presented from insurance performance New perspectives for analysts and users IFRS 17 will change the way analysts interpret and compare companies. Global comparability and increased transparency will give users more insight into an insurer s financial health. Key financial metrics will change Premium volumes will no longer drive the top line. The new measurement model may result in profits being released over significantly different patterns for some contracts. 4

5 Key impacts (cont d) New data, systems and process demands The need for new data, and updated systems and processes will be challenging given the long time horizon over which many insurance companies operate and the legacy systems that many still use. Scarce resources under pressure The human talent required to operationalize IFRS 17 s requirements and translate theory into practice is significant in a sector that faces a war for talent. Communication challenges New presentation and disclosure requirements will change the way performance is communicated. 5

6 These lessons will help you get started in working out what IFRS 17 means for your business Get started with assessment Work cross-functionally Plan backwards from 2021 and iterate Look at data, systems and processes early This is a complex change manage it appropriately 6

7 KPMG IFRS 17 Global Results Yes - securing adequate budget and/or skilled people 88% Do you currently expect to experience significant resource challenges in implementing IFRS 17 and 9? No - I have secured the budget and personnel I need 10% I haven't defined my requirements 2% 7

8 Adding value as a Director What to ask Where can the non-executive directors add value to IFRS 17 implementation? Holding executive management to account for progress and outcomes Do they have a plan? Has management identified and secured sufficient resources and, if so, have they adequate time for the project and sufficient knowledge of the business? Effective date 1 JANUARY 2021 Has management secured sufficient budget and is it being controlled effectively? Challenging and assessing whether the output is fit for purpose Asking how management allowing for the uncertainties in the project, such as clarification on matters of interpretation? Asking how expert judgment has been exercised and how proposed choices in practice compare to peers 8

9 Thank you!

10 Contact us Johannes Pastor Global Financial Services Audit Leader and Insurance Sector Lead KPMG in Canada T: E: David Wilson Senior Manager, Financial Services KPMG in Canada T: E: 10

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