IFRS 17

PathWise helps insurance companies navigate in the challenging regulatory environment that is constantly changing. IFRS 17 and US GAAP regulations are just an example, where Aon PathWise took the lead and wrapped up the first global implementations early 2019. Because reporting requirements impact pricing, valuation, and capital, we here touch on the most recent reporting framework being IFRS 17. Note that our IFRS 17 results have been validated during 2020 and signed off by PwC in October 2020.

IFRS 17
Listed insurance companies need to comply with IFRS 17 requirements for the first reporting period after January 1, 2023. Extensive disclosure requirements in combination with transitional calculations, comparative information, simultaneous IFRS 9 implementation, reconciliation with IFRS 4 and IAS 39, movement analysis, sensitivity analysis, and Solvency II reporting gives close to impossible weight to the actuarial and financial functions.

PathWise® allows businesses to comply with IFRS 17 (June 2020 amendments) by deploying our customizable IFRS 17 Software-as-a-Service (SaaS) model, or by outsourcing the reporting process completely while gaining all the required business intelligence. PathWise® timely delivers IFRS 17 disclosures by orchestrating all business units’ data and calculations aided with state-of-the-art technology.

The IFRS 17 model can be accessed by users with just an internet connection. IFRS 17 disclosures can be produced for all measurement models at the lowest level of granularity, being the insurance contract level. We offer three types of solutions:

1. Customizable IFRS 17 model library to be operated by the insurance company
   Aon’s proprietary IFRS 17 model covers the basic functionalities to report under IFRS 17. PathWise users can choose their own setup to optimise key IFRS 17 metrics and model development.
2. Customized IFRS 17 model library to be operated by Aon
   Companies can outsource their IFRS 17 production processes to Aon for all its business units’, where clients can choose the reporting format. Aon provides the required IFRS 17 figures for each reporting period allowing insurers to focus on interpreting and acting on the results.
3. Customizable IFRS 17 model library integrated with IFRS 17 cash flow modelling
   The solution chosen above is integrated with PathWise Modelling Studio, where IFRS 9 and 17 cash flows for both assets and liabilities can be calculated on the fly with multiple (economic) scenarios.

Our propriety database can easily store and show millions of records, connect to other sources, and imposes a structured data hierarchy on our IFRS 17 data model. Moreover, the database is connected to all PathWise applications so there is a single version of truth and workflow management controls all the required base runs plus sensitivity, reconciliation, and movement runs.

PwC review on PathWise IFRS 17
PwC was engaged by Aon to review the PathWise® IFRS17 solution results. PwC Actuarial Services compared the results which were generated by PathWise® with the results of PwC’s IFRS 17 calculation tool, and benchmarked PathWise® using sample data sets. The data sets, the test plan and the test cases were developed in collaboration between Aon and PwC Actuarial Services with the aim of testing the elements that were in-scope under a variety of possible situations, including the various IFRS 17 accounting options. In-scope model outputs included all three measurement models (initial and subsequent measurement) as well as the CSM calculations, accounting treatment of the Risk Adjustment, reinsurance assets, and the associated disclosures representing the results.

Calculations were compared on the cohort level (unit of account). Additionally, in-scope disclosures included the IFRS 17 balance sheet line items and the profit & loss line items with Other Comprehensive Income (OCI). Out of scope for this project were the actual model logic implemented in Path Wise, sub-ledger functionality, holding level reconciliation and any other non-IFRS 17 standards. At October 19, 2020, the comparison did not show material deviations (above 1%) between the results of PwC Actuarial Services' IFRS 17 calculation tool version 0.8.1254.1442 and PathWise version 2.24. Note that the PwC internal tool is in line with the latest IFRS 17 insights including Amendments to IFRS 17 published by IASB in June 2020, and knowledge of PwC.

PwC Actuarial Services Hails Aon’s PathWise® Platform for IFRS 17 Reporting: View Press Release