IFRS, UK GAAP and Solvency II Barnett Waddingham Kim Durniat 15 - - PowerPoint PPT Presentation

IFRS, UK GAAP and Solvency II

Barnett Waddingham

Kim Durniat

15 November 2012

Agenda

• Update on where we are with these
• What we expect to happen in 2013 and beyond
• Discussion on implications

UK GAAP

• The future of UK GAAP
• New UK GAAP – 1 January 2015
• Mind the Gap published in January 2012
• Introduction of SII will render current UK GAAP
• bsolete
• At time of publishing IFRS was expected after SII

but now who knows?

• Short term solution
• Long term solution
• ED expected in 2013

IFRS - Insurance Contracts

• ED in H1 2013
• Full text of standard
• Limited questions and do not intend to revisit
• ther aspects after exposure

Core Proposal – Measurement of insurance contract liability

Residual margin Risk adjustment Time value of money Cash flows

• Quantifies the unearned profit arising from the contract

that the insurer expects to earn as it fulfils the contract

• Quantifies the difference between the certain and

uncertain liability

• An adjustment that reflects the time value of money
• The amounts the insurer expects to collect from

premiums and pay out as it acquires, services and settles the contract, estimated using up-to-date information Total liability

Changes since July 2010 ED

• Presentation
• Volume information and changes in discount rate
• Measurement
• Unlocking the residual margin
• Participating contracts
• Transition

IFRS - Timelines

• H1 2013 Publish targeted exposure draft
• Q4 2013 begin redeliberations
• H2 2014 publish IFRS Proposed effective date 1

January 2018?

• Early adoption permitted and restate comparatives

Where is Solvency II?

Some definitions:

• “Omnibus II” – a piece of European legislation that

amends the Solvency II directive

• The “Trilogue” – The European Parliament,

European Commission and European Council. They must agree Omnibus II

• “Long-Term Guarantees Assessment” (LTGA) – a

quantitative impact study carried out by the larger European insurance companies

8

Where is Solvency II?

• 28 January 2013: LTGA launched by EIOPA
• 31 March 2013: Participants in LTGA to submit

information

• 14 June 2013: EIOPA to report results of LTGA to

the European Commission

• 12 July 2013: EC to report to the rest of the trilogue
• 10 June 2013: European Parliament vote on

Omnibus II

9

Long-Term Guarantees Assessment

• Report balance sheet (Assets, technical provisions,
• wn funds, SCR, MCR)
• 13 scenarios in total covering:
• Different methods for extrapolating swap rates
• Different matching adjustments
• Different counter-cyclical premiums
• Different transitional measures
• YE 2011
• YE 2009 (“during” the financial crisis)
• YE 2004 (“normal” market conditions)

10

Questions

• Which do you think will be first - Solvency II or

IFRS?

• Have your firms been focusing on IFRS? Is it on

the board’s agenda?

• What will the implications be on data, systems and

processes?

• What do you need to be doing now?

Contact us

Please contact us:

• Kim Durniat

020 7776 3885 kim.durniat@barnett-waddingham.co.uk