Insurance Breakfast Briefing IFRS 17 Accountancy Standard The road to successful implementation. What now?

Eimear McCarthy Opening 2

Sinead Minnock IFRS 17 Survey 3

Global IFRS Insurance Survey 2018 2021 Countdown Underway 2012 Winning the Waiting Game Alignment in opinion across borders towards adopting a global framework for insurance reporting Uncertainty in relation to adoption timelines was the biggest challenge according to insurers 2013 Gaining Momentum 2018 Countdown Underway Moving towards the effective date with accelerated pace and cautious optimism on ability to achieve compliance Now less sceptical that the benefits will outweigh the cost Insurers preparations were initiated using internal resources Assessing the impact of the new financial reporting regulations as well as understanding the cost of implementation More positive views in relation to the transition as it would lead to greater transparency and improved investor relations 4

Global IFRS Insurance Survey 2018 2021 Countdown Underway 5

Global IFRS Insurance Survey 2018 2021 Countdown Underway 6

Global IFRS Insurance Survey 2018 2021 Countdown Underway 7

Global IFRS Insurance Survey 2018 2021 Countdown Underway 8

Global IFRS Insurance Survey 2018 2021 Countdown Underway 9

Global IFRS Insurance Survey 2018 2021 Countdown Underway 10

Global IFRS Insurance Survey 2018 2021 Countdown Underway 11

Global IFRS Insurance Survey 2018 2021 Countdown Underway 12

Global IFRS Insurance Survey 2018 2021 Countdown Underway Closing Insights Insurers are more prepared and positive about the changes necessary to comply with IFRS 17. Second order impacts such as product design and KPI s will also take time to emerge. Significant challenge in getting systems technology ready. Greater integration and collaboration expected to result from organisational restructuring. Financial statement impact will take time to emerge. 82% of insurers expecting a positive impact in their ability to retain staff. 13

Carol Lynch Financial Reporting 14

Presentation and Disclosures Why is presentation and disclosure important? The IFRS Insurance regulations have a very ambitious goal: make insurance revenue presentation comparable to all other types of revenue under IFRS. The degree of change will vary based on the types of business written The change will affect both preparers and users of the financial statements On top of the presentation requirements, IFRS 17 will impose a much greater set of disclosure requirements than under current IFRS They may be significant changes to key financial metrics Communication is key 2018 Deloitte Ireland LLP. All rights reserved. 15

Changes in presentation Statement of comprehensive income Current format versus current proposal Current presentation format IFRS 17 presentation Insurance revenue Insurance service expenses () Gross written premium Fees and commission Net investment income Net income Policyholder claims Change in insurance liability Net policyholder claims and benefits incurred Acquisition costs Amortisation of acquired in-force business Administrative expenses Total operating expenses Profit or loss Incurred claims and expenses Amortisation of acq. costs Experience- liability for incurred claims Change in estimates liability for incurred claims Insurance service result Investment income Interest on insurance contract liabilities based on P&L presentation rules Finance result Profit or loss () () /() /() () Other comprehensive income Total comprehensive income Insurance finance income or expenses based on OCI presentation rules Total comprehensive income () IFRS 17 Boot Camp 2018 Deloitte Ireland LLP. All rights reserved. 16

IFRS 17 Presentation: balance sheet Current IFRS IFRS 17 Assets Deferred acquisition costs Insurance debtors (Premiums receivable) Assets Insurance contract assets Reinsurance contract assets 1 Groups of insurance and reinsurance contracts in an asset position presented separately from those in a liability position. Reinsurance contract assets 2 Liabilities Unearned premiums Insurance contract liabilities Liabilities Insurance contract liabilities Reinsurance contract liabilities Acquisition cost cash flows, premiums receivable and unearned premiums are included in the measurement of insurance contract asset/liability. Insurance creditors (Premiums payable to reinsurers) 2018 Deloitte Ireland LLP. All rights reserved. 17

Statement of comprehensive income Block 1 during current coverage Statement of comprehensive income (SCI) IFRS 17 Current, unbiased and probability weighted estimates of the contractual cash flows The expected release from the BBA liabilities less the investment component will be the first figure to be included in the revenue. These expected cash flows are undiscounted because the effect of discounting is taken through the insurance finance income or expenses Insurance revenue Incurred claims and expenses (exclude invest component) Amortisation of acquisition costs Exp. adjustment - liability for incurred claims Change in estimates liability for incurred claims Losses from onerous contracts Insurance service result Investment income Insurance finance income or expenses Net finance result Profit or loss () () () () () / () () / / () Insurance finance income or expenses based on OCI presentation rules Total comprehensive income 2018 Deloitte Ireland LLP. All rights reserved. 18 IFRS 17 Boot Camp

Statement of comprehensive income Incurred claims and other expenses relating to an insurance contract issued, reported as a separate line item after disaggregation of investment components. These are claims/benefits/expenses incurred/paid related to the portion of the remaining coverage that generates insurance revenue in the period. Statement of comprehensive income Insurance revenue IFRS 17 Incurred claims and expenses (exclude investment component) Amortisation of acquisition costs Exp. adjustment - liability for incurred claims Change in estimates liability for incurred claims Losses from onerous contracts Insurance service result () () () () () Investment income Insurance finance income or expenses / () () / Net finance result Profit or loss / () Insurance finance income or expenses based on OCI presentation rules Total comprehensive income 2018 Deloitte Ireland LLP. All rights reserved. 19

Statement of comprehensive income Block 1 post coverage Current, unbiased and probability weighted estimates of the contractual cash flows The future cash flows are reestimated every period with changes reflected in the SCI Statement of comprehensive income Insurance revenue IFRS 17 Incurred claims and expenses (exclude investment component) Amortisation of acquisition costs () () Exp adjustment- liability for incurred claims () Chg in est liability for incurred claims () The change of estimates of future cash flows on incurred claims are reflected in the SCI Losses from onerous contracts Insurance service result Investment income Insurance finance income or expenses () / () () / Net finance result Profit or loss / () Insurance finance income or expenses based on OCI presentation rules Total comprehensive income 2018 Deloitte Ireland LLP. All rights reserved. 20

Statement of comprehensive income Block 2 Discounting of cash flows The discount rates are reestimated every period with changes recognised in the SCI (OCI option or P/L) The interest expense from the discount unwinding is recognised in the SCI Statement of comprehensive income Insurance revenue IFRS 17 Incurred claims and expenses (exclude investment component) Amortisation of acquisition costs Exp. Adjustment - liability for incurred claims Change in estimates liability for incurred claims Losses from onerous contracts Insurance service result Investment income Insurance finance income or expenses Net finance result Profit or loss Insurance finance income or expenses based on OCI presentation rules () () () () () / () () / / () Total comprehensive income 2018 Deloitte Ireland LLP. All rights reserved. 21

Statement of comprehensive income The RA in the liability for remaining coverage is re-measured at each reporting period and the movement is recognised in the SCI for the portion of the change that relates to the coverage period expired in the reporting period. The other changes will flow in the unlocking of the CSM. Statement of comprehensive income Insurance revenue IFRS 17 Incurred claims and expenses (exclude investment component) Amortisation of acquisition costs () () After coverage period the changes in the RA will feed the expense line only because the key principle is that insurance coverage is the only service to generate insurance revenue. Block 3 Risk adjustment The portion of the RA changes that relates to incurred claims will be reported in P&L through this line Exp. adjustment liability for incurred claims Chg in est liability for incurred claims Losses from onerous contracts Insurance service result Investment income Insurance finance income or expenses Net finance result Profit or loss Insurance finance income or expenses based on OCI presentation rules () () () / () () / / () Total comprehensive income 2018 Deloitte Ireland LLP. All rights reserved. 22

Statement of comprehensive income Statement of comprehensive income IFRS 17 Insurance revenue Incurred claims and expenses (exclude investment component) () The CSM is released based on passage of time and coverage unit, in a way that reflects this principle on a group basis Amortisation of acquisition costs Experience adjustment - liability for incurred claims Change in estimates liability for incurred claims () () () Block 4 Acquisition costs are included in BEL. Losses from onerous contracts Insurance service result () Contractual service margin Investment income Insurance finance income or expenses / () () / Net finance result / () Profit or loss Insurance finance income or expenses based on OCI presentation rules Total comprehensive income 2018 Deloitte Ireland LLP. All rights reserved. IFRS 17 Boot Camp 23

Statement of comprehensive income Statement of comprehensive income IFRS 17 Block 4 Contractual service margin If the contract is part of an onerous group at initial recognition, there is no CSM. A loss is recognised immediately in the P&L Insurance revenue Incurred claims and expenses Amortisation of acquisition costs Exp. variance - liability for incurred claims Change in estimates liability for incurred claims Losses from onerous contracts Insurance service result Investment income Insurance finance income or expenses () () () () () / () () / Net finance result / () Profit or loss Insurance finance income or expenses based on OCI presentation rules Total comprehensive income 2018 Deloitte Ireland LLP. All rights reserved. 24

Recap Brand new insurance revenue and expenses Disaggregation of investment components Statement of Profit or Loss Insurance revenue Expected net cash outflows during the period (excl. inv. component) Change in risk adjustment rem. coverage Release of CSM grossed up for acq. costs amort. Actual net cash outflows during the period (excl. inv. component) Insurance service expenses Amort. of acquisition costs (CSM gross up) Loss recognition on onerous contracts (incl. initial) Change in cash flows from liabilities for incurred claims (BEL+RA) Experience variance from loss components and liabilities for incurred claims Insurance finance income or expenses Investment income Expected unwind of discount rates on insurance liabilities (P&L disc. rates) Actual investment earnings on assets backing liabilities Other Comprehensive Income (optional) Present value of projected cash flows using current discount rates Present value of projected cash flows using P&L discount rates 2018 Deloitte Ireland LLP. All rights reserved. 25

Disclosures overview Qualitative and Quantitative information An entity shall disclose qualitative and quantitative information about: 1. Explanation of recognised amounts The amounts recognised in F/S that arise from insurance contracts New IFRS 17 requirements 2. Significant judgements The significant judgements, and their changes Some requirements brought forward from IFRS 4 3. Risks The nature and extent of risks that arise from insurance contracts Most requirements brought forward from IFRS 4 2018 Deloitte Ireland LLP. All rights reserved. 26

1. Explanation of recognised amounts The purpose of disclosing reconciliations is to show how the net carrying amounts of contracts changed during the period Separate reconciliations shall be disclosed for direct business and reinsurance Provide reconciliations in tables Present at beginning and end of period, disaggregated into assets and liabilities IFRS 17 Boot Camp 27 2018 Deloitte Ireland LLP. All rights reserved. 27

New in IFRS 17 New in IFRS 17 2. Significant judgements Inputs, assumptions and estimation techniques Methods used to measure insurance contracts and the processes for estimating the inputs, with quantitative information: changes in estimates of future CF arising from the exercise of discretion from other changes in estimates (indirect par contracts), RA for non-financial risk, including whether changes in RA are disaggregated into an insurance service component and finance component or presented in full in the insurance service result, Discount rates If an entity chooses the OCI option, disclose an explanation of the methods used to determine the insurance finance income or expenses recognised in P&L. Disclose the confidence level (CI) used to determine RA. If the entity uses a technique other than CI, it shall disclose the technique used and corresponding CI. Disclose the yield curve (or range of yield curves) used to discount CF that do not vary based on the returns on underlying items. 2018 Deloitte Ireland LLP. All rights reserved. 31

New in IFRS 17 3. Risks Regulatory matters Effect of each regulatory framework in which the entity operates; e.g., minimum capital requirements or required interest rate guarantees. Disclose the fact if regulation specifically constrains the entity s practical ability to set a different price or level of benefits for policyholders with different characteristics, and the entity chooses to include these contracts in the same group 2018 Deloitte Ireland LLP. All rights reserved. 32

Specific additional disclosures Premium allocation approach If the entity adopts PAA, also disclose: a) Which of the PAA criteria it has satisfied; b) Whether it makes an adjustment for the time value of money and the effect of financial risk c) The method it has chosen to recognise insurance acquisition CF (deferral or expensed as incurred) 2018 Deloitte Ireland LLP. All rights reserved. 33

Specific additional disclosures Transition With regards to transition, an entity shall disclose: Reconciliation of the opening to closing CSM, and amount of insurance revenue, separately for: a) insurance contracts that existed on 1/11/2020 to which the entity has applied the modified retrospective approach; b) insurance contracts that existed on 1/11/2020 to which the entity has applied the fair value approach; and c) all other insurance contracts For all periods in which disclosures are made applying the modified retrospective approach or the fair value approach, explain how it determined the measurement of insurance contracts on 1/11/2020. 2018 Deloitte Ireland LLP. All rights reserved. 34

Implementation considerations for disclosures Practical implications The proposed disclosures would be detailed and onerous to apply without strong systems, data and processes designed to produce these disclosures efficiently The disclosure of the confidence level would require investment in actuarial systems that would be able to produce the percentile for the confidence level based on the RA amount calculated with another valuation technique Insurers will need to determine the new disclosure requirements that will be built into the chart of accounts and those that will be prepared in off-line systems 2018 Deloitte Ireland LLP. All rights reserved. 35

Joanne Lonergan CSM Contractual Service Margin 36

Recap - Measurement Requirements The general model a.k.a the building blocks approach ( BBA ) Principles of CSM An accounting mechanism for recognising profit over the coverage period. Expected profit as it sells an insurance contract Absorbs changes in future cash flow expectations for release over time Profit measured and reported based on the delivery of the insurance coverage service CSM at initial inception = Max(0, - BEL + RA) Amount that results in no income or expenses Deferred profit absorbs assumption changes for future coverage ( Unlocking ) Total IFRS Insurance Liability Total IFRS Insurance Liability Block 4: Contractual Service Margin ( CSM ) Fulfilment cash flows Fulfilment cash flows Block 3: Risk Adjustment Block 2: Time Value of Money Block 1: Expected Future Cash Flows (unbiased probability weighted mean) Measured at inception as the expected contract profit to be earned as services are fulfilled. It is adjusted for changes in nonfinancial variables affecting future coverage cash flows. It accretes interest based on day 1 discount rate (locked-in rate) An entity-specific assessment of the uncertainty about the amount and timing of future cash flows An adjustment that converts future cash flows into current amounts Expected (probability-weighted) cash flows from premiums, claims, benefits, expenses and acquisition costs 2018 Deloitte Ireland LLP. All rights reserved. 37

Contractual Service Margin Subsequent measurement illustrative example of progression of CSM from inception 200 Reconciliation of opening and closing CSM 150 100 50 - CSM Opening New contracts added to Group Interest accreted to CSM Changes in value of FCFs Impact of currency changes Amortisation of CSM CSM Closing CSM is subject to a floor of zero. Given the loss component is zero, subsequent reductions in FCF (i.e. improvements in profitability) should be allocated to the loss component until the CSM is reduced to zero. Only the excess is allocated to CSM. 38

Contractual Service Margin Subsequent measurement Key Considerations 1. Opening Balance Monthly or quarterly reporting Store by unit of account Calculation Systems 2. Interest Accretion Use locked in yield curve at initial recognition Applied to opening CSM balance Locked in yield curve for each quarter, or recalculate a new locked in yield curve at each reporting date How to derive? Backsolve? WA yield curve? Currency considerations Should FCF s be recalculated using this locked in UoA yield curve? Methodology Methodology Methodology Calculation Calculation Methodology Storage of locked in yield curves Systems 39

Contractual Service Margin Subsequent measurement Key Considerations 2. Interest Accretion Background CFO Forum Discount rates Impact of assumption updates is absorbed in the CSM at locked in rates BEL is measured at current rate Difference between locked in and current rate is reflected in the P&L Implications Current period result significantly distorted by discount rate component of impact of assumption changes (particularly where BEL component is an asset) One respondent commented that a 12% difference in the net finance result was due to calculating interest on the CSM at the locked-in rate and that this does not reflect the financial performance of the insurance contracts. In extreme example where only interest rates change (and no other assumptions), the CSM and related amortisation would change if the CSM is accreted at current interest rates => not appropriate However issue is the anomalous result that is produced by the impact on P&L due to the different interest rates being used 40

Contractual Service Margin Subsequent measurement Key Considerations 3. Impact of adding new business New business on new contracts added to UoA Separation of new business vs existing Onerous vs profitable contracts Discount Rate? Methodology Calculation Methodology Calculation 4. Change in fulfilment cashflows relating to future exposure Actuarial models Allocation of risk adjustment Allowance for NB on existing contracts Currency considerations Discount rate? Assumed and ceded Policy ID s assumed and ceded Systems Methodology Methodology Calculation Calculation Calculation Systems 41

Contractual Service Margin Subsequent measurement Key Considerations 5. Impact of currency changes on the CSM Currency conversions and/or movement in F rates F rate or curve? Calculation Methodology 6. Amortisation of CSM Identification of coverage units Discounting? CSM at the reporting date * (Actual CU during reporting period)/(actual CU during reporting period + Expected future CU) Systems Methodology Calculation Storage of coverage units Systems 42

Contractual Service Margin Subsequent measurement Key Considerations 6. Amortisation of CSM How are coverage units determined? TRG Comments (May 2018) Systematic allocation of CSM to each period that represents service provided. Coverage units are assessed at each reporting period and are assessed prospectively Assess the expected coverage duration and the quantity of benefits provided for each contract Impact of new contracts joining the group and derecognised contracts. Not an accounting policy choice The period in which insurance risk is held coverage period Expectations of lapses incl. as impact exp. duration of coverage Different levels of service across periods should be reflected Suggested methods for determining benefits: 1. Straight line allocation based on passage of time 2. Max contractual cover 3. Premiums 4. Expected cashflows 2018 Deloitte Ireland LLP. All rights reserved. 43

Contractual Service Margin Subsequent measurement Key Considerations 6. Amortisation of CSM How to calculate the amount recognised in P&L Base Example Recognition at the end of period 1 - A group with expected duration of 4 coverage periods - Identical quantity of benefit in each period - Day 1 CSM of 160 Period 1 Period 2 Period 3 Period 4 Coverage Units 20 20 20 20 CSM P&L release 40 CSM in BS 120 CSM in BS: 20/80 (current CU /current CU +remaining CU) Recognise ¼ * 160 CSM in profit and loss Therefore CSM in BS = 120 2018 Deloitte Ireland LLP. All rights reserved. 44

Contractual Service Margin Subsequent measurement Key Considerations 6. Amortisation of CSM How to calculate the amount recognised in P&L Increase in coverage duration Recognition at the end of period 4 - Same example as base except that in period 4 it becomes known that the expected coverage will continue longer than originally expected (for 5 years) Coverage Units Period 1 Period 2 Period 3 Period 4 20 20 20 20 Period 5 20 CSM P&L release 40 40 40 20 CSM in BS 120 80 40 20 CSM in BS: 20/40 (current CU /current CU +remaining CU) Recognise ½ * 40 CSM in profit and loss Therefore CSM in BS = 20 2018 Deloitte Ireland LLP. All rights reserved. 45

Contents 1 What is a Financial Impact Assessment (FIA) 2 3 Background to the Deloitte FIAT IFRS 17 Reference Model Structure of the FIAT o Inputs o Calculations Overview Model Release 3 IFRS17 Reference Model The IFRS17 Reference Model has been developed to assess the final standard of IFRS 17 Insurance Contracts, published in May 2017 by the International Accounting Standards Board (IASB). The IFRS17 Reference Model considers the standards applying to both nonparticipating (Building Block Approach) and participating contracts (Variable Fee Approach). The tool produces illustrative Balance Sheets and Income Statements to show the high level impact of IFRS17. o Outputs Details Start Client Name Demo Client Model Name BBA Example Prepared by FIA Group Signed off by FIA Group Product Type Date Term 31/07/2017 2018 Deloitte Ireland LLP. All rights reserved. 48

What is a Financial Impact Assessment (FIA)? Key objective is to understand the financial impacts of IFRS 17: o Profit profiles, transition, P&L, balance sheet, future profit volatility, KPIs. A FIA enables informed decision making defining the As Is and To Be situations. Rules of thumb for a FIA? DOs Use simplifications e.g. make wider groups for calculation of CSM and use historical assumptions. Make use of information available from other processes e.g. Solvency II. Perform a FIA for new business initially; and extend to a selection of your most significant inforce book. Extrapolate results from one cohort year to another cohort year for contracts with similar profitability and risk profile. Avail of other approaches permitted in the standard, such as the modified retrospective approach. DON Ts Forget what your tolerance for your financial impact assessment is. Lose focus on the big picture. Start building a model for the FIA without understanding your data and approach. Try to address all data gaps. Forget to document all data and information gaps identified as part of the process and start thinking of how you will address those. Forget the limitations and bias the simplifications may introduce in your final results. Think that one size fits all. 2018 Deloitte Ireland LLP. All rights reserved. 49

Background to the FIAT The Financial Impact Assessment tool can generate outputs to enable you to: 1. Understand the impact of the new IFRS requirements on the assets and liabilities on your balance sheet (including at transition). 2. Understand the impact on future distributable profits and how the profit profile may change over time. 3. Understand the impact on income statement and balance sheet disclosures. 4. Understand and sensitivity test the impact of different implementation choices (e.g. BBA vs. VFA, OCI or not, ). 5. Highlight areas of high impacts to prioritise efforts. Key Features modelled Building Block Approach (BBA) Variable Fee Approach (VFA) Premium Allocation Approach (PAA) Non-Participating product Term (BBA) Participating product SP Unit Linked (VFA) Internal/External Cash flows Changes in assumptions (Economic and Demographic) Best Estimate Liabilities Risk Adjustment Contractual Service Margin (Run-off on number of basis) Direct and Non-Direct expenses Other Comprehensive Income (OCI) New Business Dividends Assets (only bonds and cash) Taxation Financial Statements Charts comparison Transition Unit of Account Yield Curve application Projection years (50 years) Presentation enhancement Timing of cashflows (BoY, MoY, EoY) Comments 2018 Deloitte Ireland LLP. All rights reserved. 50

FIAT - Inputs Internal Calculation Model Parameters Calculation approach Source of cashflow input Allowance for assumption changes (experience / discount / returns) Internal Calculation External Input Timing of assumption changes Run-off of Risk Adjustment Amortisation approach for CSM OCI solution Discounting (beginning / middle / end of year) Yield Curves 2018 Deloitte Ireland LLP. All rights reserved. 52

FIAT - Inputs Model Parameters Calculation approach Source of cashflow input Allowance for assumption changes (experience / discount / returns) Internal Calculation External Input Timing of assumption changes Run-off of Risk Adjustment Amortisation approach for CSM OCI solution Discounting (beginning / middle / end of year) Yield Curves 2018 Deloitte Ireland LLP. All rights reserved. 53

FIAT - Inputs Internal Calculation Policy level information (annual premium, no. of policies, face amount per policy) Expense assumptions Risk Adjustment percentage Demographic information o Lapse rate o Mortality rate Changes in assumptions over time External Input System generated (eg. Prophet / Excel) Demographic information Cashflows for: o Premium o Benefits (Death / Surrender / Maturity) o Expenses (Direct / Acquisition / Non- Direct) o Risk Adjustment 2018 Deloitte Ireland LLP. All rights reserved. 54

FIAT - Calculations Decrements BBA / VFA / PAA calculations Future cashflow projections o Premium, benefits, expenses o Experience adjustments Discount component and unwind Risk Adjustment Contractual Service Margin (CSM) o Initial recognition o Treatment of onerous contracts o CSM amortisation o Impact from assumption changes 2018 Deloitte Ireland LLP. All rights reserved. 55

Insurnace Contract Liability (Asset) FIAT - Outputs Example 1: BBA run-off base model ShR - Building Blocks by year - BBA Description: This worksheet displays a chart showing the building block assets and liabilities over time IFRS17 Reference Model - Demo Client 10/08/2018 Shareholder - Insurance Contract Portfolio - Building Block Approach Amounts are expressed in 40,000,000 Insurance Contract Portfolio Building Blocks 30,000,000 20,000,000 10,000,000 - Inception 1 2 3 4 5 6 7 8 9 10 (10,000,000) (20,000,000) (30,000,000) (40,000,000) (50,000,000) (60,000,000) (70,000,000) PV BEL Risk Adjustment Contractual Service Margin Total Building blocks approach Inception Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 PV BEL - 48,008,277-60,170,498-44,732,178-31,500,160-20,699,285-9,582,087-3,813,653-82,087 1,793,480 1,771,955 253,536 Risk Adjustment 20,340,701 19,089,889 17,780,737 16,413,626 14,989,228 12,223,916 10,775,637 9,340,926 7,920,032 6,513,435 5,142,735 Contractual Service Margin 27,667,576 25,229,033 22,853,469 20,537,051 18,293,798 14,545,090 12,539,412 10,671,069 8,926,469 7,309,293 5,822,950 Total - - 15,851,577-4,097,972 5,450,517 12,583,741 17,186,919 19,501,397 19,929,908 18,639,981 15,594,684 11,219,222 2018 Deloitte Ireland LLP. All rights reserved. 56

Insurnace Contract Liability (Asset) FIAT - Outputs Example 1: BBA run-off RA increased from 5% to 10%, 2% increase in death benefit ShR - Building Blocks by year - BBA Description: This worksheet displays a chart showing the building block assets and liabilities over time IFRS17 Reference Model - Demo Client 10/08/2018 Shareholder - Insurance Contract Portfolio - Building Block Approach Amounts are expressed in 60,000,000 Insurance Contract Portfolio Building Blocks 40,000,000 20,000,000 - Inception 1 2 3 4 5 6 7 8 9 10 (20,000,000) (40,000,000) (60,000,000) PV BEL Risk Adjustment Contractual Service Margin Total Building blocks approach Inception Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 PV BEL - 39,949,553-52,605,269-37,683,949-24,992,285-14,754,888-4,733,185 461,502 3,624,377 4,936,427 4,356,769 2,294,221 Risk Adjustment 41,487,274 38,936,301 36,266,297 33,478,040 30,572,895 24,932,722 21,978,790 19,052,497 16,154,359 13,285,351 10,489,539 Contractual Service Margin - - - - - - - - - - - Total 1,537,721-13,668,968-1,417,652 8,485,755 15,818,007 20,199,537 22,440,293 22,676,875 21,090,786 17,642,120 12,783,759 2018 Deloitte Ireland LLP. All rights reserved. 57

FIAT - Outputs Example 1: BBA run-off base model ShR - Net Income by Source - BBA Description: This worksheet shows a chart with the net income split by source IFRS17 Reference Model - Demo Client 10/08/2018 Shareholder - Net Income by source - Building Block Approach Amounts are expressed in 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000-1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (1,000,000) Experience gains (losses) Release from risk Contractual service margin Investment income, net of general expenses Contractual Service Margin Risk Adjustment Release Investment Income net of General Expenses Experience Gain/Losses 2018 Deloitte Ireland LLP. All rights reserved. 58

FIAT - Outputs Example 1: BBA run-off RA increased from 5% to 10%, 2% increase in death benefit ShR - Net Income by Source - BBA Description: This worksheet shows a chart with the net income split by source IFRS17 Reference Model - Demo Client 10/08/2018 Shareholder - Net Income by source - Building Block Approach Amounts are expressed in 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000-1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (1,000,000) (2,000,000) Experience gains (losses) Release from risk Contractual service margin Investment income, net of general expenses Contractual Service Margin Risk Adjustment Release Investment Income net of General Expenses Experience Gain/Losses 2018 Deloitte Ireland LLP. All rights reserved. 59

Eimear McCarthy Closing 62

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ie/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. With nearly 2,000 people in Ireland, Deloitte provide audit, tax, consulting, and corporate finance to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. With over 210,000 professionals globally, Deloitte is committed to becoming the standard of excellence. This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, Deloitte Global Services Limited, Deloitte Global Services Holdings Limited, the Deloitte Touche Tohmatsu Verein, any of their member firms, or any of the foregoing s affiliates (collectively the Deloitte Network ) are, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication. 2018 Deloitte LLP. All rights reserved 63