The document provides an overview of IFRS 17, the new international accounting standard for insurance contracts. Key points include: - IFRS 17 aims to improve comparability between insurers and provide more transparent information to investors. It will take effect on January 1, 2021. - Contracts must be grouped together based on when they were issued, using annual cohorts. Three measurement approaches are outlined depending on contract features. - The standard changes how insurance contracts are presented on the balance sheet and income statement, including new line items for contractual service margin, risk adjustment, and risk margin. - An example for life insurance with profit participation demonstrates the new income statement and balance sheet presentation, and how results and asset-

1. International Financial Reporting Standard
IFRS 17 – Insurance Contracts
First Approach
DIAF Vietnam
1/24/2018 IFRS 17

2. NGO Duc Hoang Lan
Digital Officer
@IT Solutions
DIAF Vietnam
NGUYEN Dang Diep
Associate Actuary
@Reinsurance
VU Tuan Anh
Associate Actuary
@Savings &
Retirement Insurance
NGUYEN Quang Thang
Certificate Actuary
@Employee Benefits &
Life Insurance
IFRS 171/24/2018

3. Contents
 Introduction of IFRS 17
 IFRS 17 – What is new?
 Contracts groups by profitability information
 Measurement approaches
 IFRS 17 – Balance Sheet/ Income Statement
 IFRS 17 – Example of life insurance with profit participation
 Income statement/ Balance sheet
 Guidance of the results and performance
 Assets and Liabilities Management
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4. Introduction
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Optimize the comparability of
insurers
Enhance the transparency and
quality of investor information
Rebuild the confidence and
measure the cost of capital
March 2004
Publication IFRS 4
November 2013
Publication IFRS 9
July 2017
Publication IFRS 17
Jan 1st 2021
Application IFRS 17

5. Level of aggregation
 How to group contracts
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Portfolios of insurance contracts
Annual Cohort
Group 1 Group 2
Group 3
 Annual cohorts (source : IFRS 17 project summary)
The following example illustrates the rationale for the
requirement of IFRS 17: to group together only contracts
issued within the same year - ie annual cohorts
requirement.
Suppose a company writes the following contracts :
 (a) : in Years 1–2, five-year contracts with premiums of
CU100 and unearned profit of CU10; and
 (b) : in Years 3–4, five-year contracts with premiums of
CU100 and unearned profit of CU2.
Without the annual cohort requirement :
 the unearned profit of contracts written in Years 1–2
would persist beyond Year 6 because the profitability of
the contracts written in Years 1–2 is compensated with
the lower profitability of contracts written in Years 3–4
and recognized over Years 3–9; and
 the information about profitability change would not be
reflected in financial statements in a timely way.

6. Measurement Approaches
Insurance
Contracts
Short Term
Contract
Coverage
Period > 1
year
Without Profit
Participation
With Profit
Participation
Indirect
Participation
Direct
Participation
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PAA
(Premium Allocation
Approach)
BBA
(Building Block Approach)
VFA
(Variable Fee Approach)

7. Balance Sheet
 Simple Balance Sheet
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CSM
Risk
Adjustment
Risk Margin
Assets
&
Cash
BEL
Fulfilment
cash-flows
Underwritten
Premiums
(at inception)
At t = 0 31/12/N
Cummulated
operation profits
CSM
Risk Adjustment
Risk Margin
Assets & Cash
BEL

8. Income Statement
 Simple Income Statement
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IFRS 4 IFRS 17
Underwritten premiums (+) CSM depreciation
Interest income (+) Risk ajustment depreciation
Gain on liabilites (+) Risk margin depreciation
Gain on assets's fare value (+) Best Estimated Liabilites depreciation
(+) Total of income Underwritting profit
Claims charges
Interest cash-out
Commissions (+) Interest income
Insurance charges (-) Investment expenses
(-) Total of operation expenses Financial profit
Operation profit Operation profit
(-) Others expense (-) Others expense
(-) Company tax (-) Company tax
Net profit Net profit

9. Income Statement
 Example (Modified from source : Illustrative example of the Variable Fee Approach - EFRAG TEG meeting
Feb 23rd, 2017)
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Income statement
At inception 1st year 2nd year 3rd year 4th year 5th year 6th year
Total Interest income 0 41 500 42 987 28 326 29 082 30 610 32 100
Portfolio entries 1 000 000 0 0 650 0 0 0
BEL on Jan 1st 0 982 540 957 733 945 689 932 904 899 693 877 259
RA on Jan 1st 0 4 000 3 425 3 120 2 382 1 927 962
RM on Jan 1st 0 100 84 82 95 40 20
CSM on Jan 1st 0 13 360 21 613 11 972 2 845 1 755 3 069
Total expected income 1 000 000 1 041 500 1 025 842 989 840 967 308 934 025 913 410
Claims 0 57 275 63 833 50 200 61 914 49 944 909 532
BEL on Dec 31st 982 540 957 733 945 689 932 904 899 693 877 259 0
RA on Dec 31st 4 000 3 425 3 120 2 382 1 927 962 0
RM on Dec 31st 100 84 82 95 40 20 0
CSM on Dec 31st 13 360 21 613 11 972 2 845 1 755 3 069 0
Current fulfilment Value 1 000 000 1 040 130 1 024 697 988 426 965 329 931 254 909 532
Operation profit 0 1 370 1 145 1 414 1 979 2 771 3 879

10. Income Statement
 Example (next)
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Financial Block
1st year 2nd year 3rd year 4th year 5th year 6th year
Interest income from BEL 37 050 31 715 29 180 31 338 23 594 32 272
Interest income from RA 151 113 96 80 51 35
Interest income from RM 4 3 3 3 1 1
Interest income from CSM 504 716 369 96 46 113
Extra interest and gain on asset's value 3 792 10 440 -1 323 -2 435 6 918 -321
Financial Income 41 500 42 987 28 326 29 082 30 610 32 100
Financial expenses on BE interests 31 492 24 327 19 829 21 079 15 887 21 410
Financial expenses on RA interests 128 87 65 54 34 23
Financial expenses on RM interests 3 2 2 2 1 0
Financial expenses on CSM interests 428 549 251 64 31 75
Financial expenses on others financial incomes 3 223 6 867 8 053 6 715 11 991 6 023
Financial Outgo 35 275 31 833 28 200 27 914 27 944 27 532
Financial profit 6 225 11 155 126 1 168 2 666 4 569
Underwriting block
1st year 2nd year 3rd year 4th year 5th year 6th year
Underwriting income from BEL 24 807 12 044 13 435 33 211 22 434 877 259
Underwriting income from RA 575 304 739 455 964 963
Underwriting income from RM 16 2 -13 55 20 20
Underwriting income from CSM -8 253 9 641 9 127 1 090 -1 314 3 068
Claims charge -22 000 -32 000 -22 000 -34 000 -22 000 -882 000
Underwriting profit -4 855 -10 009 1 288 811 105 -690
Operation profit 1 370 1 145 1 414 1 979 2 771 3 879

11. Guidance of results and performance
 Example (next)
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-500
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
1st year 2nd year 3rd year 4th year 5th year 6th year
Guidance of results and performance
Controlled Operation profits Original example

12. Assets Liabilities Management
 Example (next)
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Assets management
1st year 2nd year 3rd year 4th year 5th year 6th year
Cash on Jan 1st 1 000 000 0 4 225 7 843 5 843 6 769 9 700
Cash on Dec 31st 0 4 225 7 843 5 843 6 769 9 700 12 558
Asset on Jan 1st 0 1 000 000 980 000 955 537 936 313 902 555 880 290
Asset on Dec 31st 1 000 000 980 000 955 537 936 313 902 555 880 290 0
Liabilities Management (except BEL)
Interest rates 3,77% 3,31% 3,09% 3,36% 2,62% 3,68%
CSM 1st year 2nd year 3rd year 4th year 5th year 6th year
CSM on Jan 1st 13 360 21 613 11 972 2 845 1 755 3 069
Interest income 504 716 369 96 46 113
Allocation of CSM into profit -624 -723 -590 -1 386 -1 735 -2 860
Gain on asset's value 8 373 -9 633 -8 907 200 3 003 -321
CSM on Dec 31st 21 613 11 972 2 845 1 755 3 069 0
Risk Adjustment (RA) 1st year 2nd year 3rd year 4th year 5th year 6th year
RA on Jan 1st 4 000 3 425 3 120 2 382 1 927 962
Interest income 151 113 96 80 51 35
Allocation of RA into profit -726 -418 -835 -535 -1 015 -998
Risk Adjustment on Dec 31st 3 425 3 120 2 382 1 927 962 0
Risk Margin (RM) 1st year 2nd year 3rd year 4th year 5th year 6th year
RM on Jan 1st 100 84 82 95 40 20
Interest income 4 3 3 3 1 1
Allocation of RM into profit -20 -5 11 -59 -21 -21
Risk Margin on Dec 31st 84 82 95 40 20 0

13. Assets Liabilities Management
 Example (next)
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ALM
At inception 1st year 2nd year 3rd year 4th year 5th year 6th year
Operation profit 0 1 370 2 515 3 929 5 909 8 679 12 558
BEL 982 540 957 733 945 689 932 904 899 693 877 259 0
RA 4 000 3 425 3 120 2 382 1 927 962 0
RM 100 84 82 95 40 20 0
CSM 13 360 21 613 11 972 2 845 1 755 3 069 0
Total of Liabilities 1 000 000 984 225 963 380 942 156 909 324 889 990 12 558
Cash 0 4 225 7 843 5 843 6 769 9 700 12 558
Asset 1 350 000 350 000 355 537 356 313 352 555 350 290 0
Asset 2 650 000 630 000 600 000 580 000 550 000 0 0
Asset 3 0 0 0 0 0 530 000 0
Total of Assets 1 000 000 984 225 963 380 942 156 909 324 889 990 12 558

14. THANK YOU !
1/24/2018
DIAF Vietnam
IFRS 17