IFRS-Related Services for Insurers

IFRS 17 in the Spotlight

Accessing reporting capability and building the appropriate implementation roadmap is key

IFRS is currently applied by a vast number of insurers globally. The new accounting framework introduced by IFRS 17 and IFRS 9 for financial instruments is considered the most significant accounting change since the publication of IFRS 4.

The introduction of new accounting rules in different areas in the next years will pose a significant challenge for insurers. Changes will most likely affect their financial statements, business process, internal controls over financial reporting and the application of IFRS in the context of specific transactions in the Swiss market.

The Swiss Marketplace

Intersection Ahead for Swiss insurers applying IFRS 17 Phase II and IFRS 9

Switzerland continues playing a significant role in the insurance Marketplace with more than 200 supervised insurance companies and CHF 188 billion in premium volume in 2014 according to the Swiss Insurance Association taking into consideration direct insurance and reinsurance premiums.

A number of entities in Switzerland applies IFRS, including insurance companies and other financial institutions which are listed in the Swiss Exchange (SIX). Regarded as a high-quality set of accounting standards, many market participants and investors rely on financial information prepared in accordance with IFRS to make relevant business decisions on a daily basis.

The alignment between IFRS and U.S.GAAP accounting practices for insurance contracts and financial instruments might also bring changes for entities that adopt U.S. GAAP in various aspects related to disclosure and measurement of short and long-term insurance contracts as a result of the joint decisions of the IASB and the FASB.

The introduction of IFRS 17 Phase II will solve many concerns experienced by users of financial statements which were not answered by IFRS 4. It is expected that the new accounting framework will bring more comparability and transparency in financial reporting for insurers. The elimination of a number of accounting policy options permitted by IFRS 4 will result in a common framework for all IFRS preparers under a new approach discussed for many years by the IASB. Swiss insurers will have to quickly and efficiently understand the key similarities and differences alongside Solvency II and current accounting practices applied.

How Deloitte can help?

Deloitte has been engaged by a number of insurance companies in Switzerland and other countries with exceptional outcomes regarding the application of IFRS.

Our multidisciplinary team has been established to deliver IFRS solutions in a variety of projects, further increasing Deloitte’s footprint towards adoption of current and future standards in many areas of expertise and specific transactions regarding insurance contracts, financial instruments and other relevant accounting topics for insurers.

Our comprehensive IFRS-Related Advisory Services for insurers covers areas where Deloitte has deep knowledge in the insurance industry:

IFRS complex accounting / financial reporting / implementation of new standards for Insurers

• Complete advisory for impact assessment, design and implementation of the new IFRS 9 and IFRS 17 standard for insurers.
• High quality accounting technical support including guidance, improvement of accounting policy manuals and training for application of IFRS and ongoing CPA training credits.
• Implementation of expected credit loss impairment model for financial assets and reinsurance assets under IFRS.
• Actuarial services and advisory.
• Customization of financial statements to improve or implement disclosures under IFRS.
• Advice on valuation, recognition, measurement and reporting for Life Settlements.
  
• Actuarial and valuation modelling for financial assets, liabilities (including investment contracts), insurance and reinsurance contracts.
• Advice on diagnostics and application of IFRS 16 Leases for insurers and their subsidiaries.

GAAP Transition / Dual Reporting / IFRS Readiness Assessment for Insurers

• Advisory for complete IFRS conversion projects for insurers from/to Swiss GAAP FER and US GAAP).
• Advisory for the preparation of reconciliations between IFRS/U.S. GAAP/Swiss GAAP FER/Regulatory Reporting and other managerial reporting using different basis or metrics.
• Advisory for entities in meeting challenging dual- or multi-GAAP reporting environment requirements.
• Advisory on tax implications of IFRS conversions.

IFRS Processes, Controls and IT Advisory Services

• Full IT advisory for implementation of IFRS 17 and IFRS 9 for insurers including the definition of IT Strategy, support and advisory for systems implementation and modification as a result of the introduction of new accounting standards in IFRS.
• Automation of IFRS for measurement, disclosures and financial reporting process for insurers, including reconciliations.
• Review of accounting processes under IFRS and development of IT cost reduction programmes.
• IT advisory for improvement or implementation of advanced finance analytics strategy under IFRS enabling companies to make smarter decisions that drive strategy and improve business performance. Deloitte’s comprehensive approach to analytics is fuelled by our deep insurance industry and products knowledge, broad functional experience and mastery of technology.
• Design and implementation of controls over financial reporting and business processes as a result of current or new accounting standards introduced by IFRS.
• IT Project Management and lifecycle implementation for your project.

Transaction-Related IFRS Services (M&A and Due Diligence)

• Advisory for corporate buyers and investors in the insurance segment throughout the entire deal lifecycle regarding the application of IFRS, meeting the unique needs of your project.
• Advice on acquisition strategy and IFRS adjustments/reconciliation.
• IFRS accounting advisory and consultations for application of IFRS for complex issues and structured transactions including pre-offering financial reporting conversion, debt or equity offering, financial reporting for cross-border M&A activity.
• Advice on application of IFRS for business combinations, portfolio transfers, carve outs, portfolio analysis, valuation of intangible assets and post-acquisition adjustments.
• Actuarial and valuation services for business combinations, portfolio transfers, integrations and separations.
• Customization of financial statements and preparation of pro-forma financial statements in accordance with IFRS for specific transactions.