IN FOCUS6-8 min read

IFRS 9 and 17: the case for credit

What does IFRS 9 and 17 mean for asset liability management (ALM), and the use of credit?

18/05/2023
Tier 1_Business
Read full reportIFRS 9 and 17: the case for credit
7 pages

Authors

Patrick O’Sullivan
Head of Insurance Solutions
Ruolin Wang
Solutions Manager
Michael Lake
Investment Director, Fixed Income

In an earlier article, we saw that for insurers reporting under International Financial Reporting Standards (IFRS), the accounting balance sheet is moving to an economic measurement of both assets and liabilities.

For Solvency II insurers, this means closer alignment between the regulatory and accounting balance sheets.

In the long run, this convergence will make it easier for insurers to manage these two balance sheet presentations at the same time. However, in the short term, it calls for practical changes for some insurers, especially those who have placed more emphasis on their accounting balance sheets in the past and are used to asset-liability management (ALM) on a book accounting, rather than economic, basis.

Recent market changes are a further cue for insurers to review their investment strategies and make sure that these are still fit-for-purpose. For instance, now that investors are able to achieve non-trivial returns from government bonds, how should insurers think about the relative attractiveness of credit allocations?

Read full reportIFRS 9 and 17: the case for credit
7 pages

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Authors

Patrick O’Sullivan
Head of Insurance Solutions
Ruolin Wang
Solutions Manager
Michael Lake
Investment Director, Fixed Income

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