IFRS 4 Phase II

IFRS 4 Phase II aims to introduce a single IFRS accounting model for all insurance contracts that is transparent and aligned as much as possible with the general IFRS accounting of other industries.

The changes proposed will affect the manner in which insurance profits are realised over the life of a contract, which (re)insurers need to understand because:

  1. Dividends are paid out of profits, so changes to the amount of distributable profit available each year will impact the amount of dividends that can be paid to shareholders.
  2. Profits are also used for reinvestment in the business; deferring profit affects investment activities (M&A, for example)

IFRS 4 Phase II provides (re)insurers with general principles and flexibility on their implementation. Therefore, the choices that the (re)insurer makes will impact how profits are released over the life of a contract. At Deloitte, we can enable you to:

  • Develop a better understanding of the IFRS changes and the impact on your business
  • Make decisions on implementation choices based on robust financial information
  • Highlight the areas of your business that will be most impacted in order to prioritise efforts
  • Strengthen your business case for internal IFRS project funding