WG IFRS 07/07/2010, 5-7PM
KBC, Havenlaan 2, Brussels
Attending: ann_duchene, audrey.meganck, pieterjan.vanheule, liesbet.de.deckere, christophe.gillain, kurt lambrechts, guy.nyssen, erik van hove, philippe demol
Apologized: ,frank.dhondt, Florence.Motte, katrien_mertens, sophie.misselyn, luc.kesters, jan.de.roeck , Gérard Vandenbosch
Minutes
1. Introductions
Ann Duchene / AON / S2 - IFRS / Phase 2 / X
Katrien Mertens / AON / S2 – IFRS / Phase 2 / X
Audrey meganck / Mensura / Life, non life, risk / - / X
Pieter jan vanheule / DKV / Risk & actuarial / - / X
Liesbet de deckere / Dexia ins Be / Life & Risk / - / X
Christophe guillain / AXA / Life individual / Phase 1 / X
Guy nyssen / Vivium / Non-life / X
Erik van hove / KBC / Risk, S2 - IFRS / Phase 1 / X
Philippe Demol / AXA / Life Group / Phase 1 / X
Kurt Lambrechts / KBC / Life / Phase 2 / X
Frank dhondt / Dexia ins Be
Florence Motte / Deltalloydlife
Sopie Misselyn / ING
Luc kesters / Vereycken
Jan de roeck / TowersWatson
Gérard Vandenbosch / PWC
2. Present status of IFRS phase 2
2005 IFRS phase 1 in place:
insurance contracts without insurance risk or discretionary participation features : investment contracts
other insurance contracts or contracts with DPF: keep using existing GAAP + LAT test
2007 Discussion paper:
3-building block approach (best estimate, discounting, risk margin) and as options exit value and entry value
end July 2010: Exposure Draft
May 2011: IFRS
As a quick introduction and preparation to the Exposure draft and/or to browsing the observer notes 2009-2010 (infra):
· Exit value in DP: “price at which an external party is prepared to take over the liabilities”
= transaction price
requires non-entity specific parameters (such as expenses)
= fictive notion: most insurance portfolios not meant to be sold
· Intensive monthly meetings of the IASB project working group in 2009-2010:
alternative measurement approaches: IAS37-oriented value, settlement value,
fulfillment value: cost for the insurer to fulfill the obligations
= not transaction based measurement principle (entity specific parameters will do)
· DP: profit at inception : difference between premiums received and IFRS value of contracts goes immediately to P&L
reaction on DP and further developments: NO profit at inception
-> residual margin to close the difference
· Related issues
· Insurance contracts is now joint project IASB-FASB, with often different opinions in both boards.
e.g. FASB: no need for explicit risk margin, only a composite margin that includes the IASB risk margin + residual margin
· Quid run-off of risk, residual and composite margin?
· Unearned premium approach (UEPA) (+/- entry value) for short term (nonlife) contracts as acceptable proxy?
· Characteristics of the discount rate
Note: lots of the Solvency2 “exit value” taken over from the IASB DP,
but clearly IASB has proceeded since then, while S2 valuation now appears to be diverging (lagging behind?)
Note: different opinions by IASB and FASB may lead to an Exposure Draft with different options and invitation (e.g. to the wg) for comments.
3. IFRS on the IA|BE website
· Webpage working group
Will contain minutes of previous meetings and time+agenda next meetings.
All members welcome to follow-up and join at any time
http://www.iabe.be/nl/werkgroep-ifrs
http://www.iabe.be/fr/node/5961
· Webpage IFRS publications
http://www.iabe.be/nl/ifrs-0
http://www.iabe.be/fr/ifrs-0
IFRS4 (2005), Discussion Paper (2007), Exposure Draft (end July 2010)
+ observer notes of last 12mth IASB working group papers
The idea is that when we start discussing the ED, all observer notes are available as extra background information to dig deeper in a certain topic.
Awaiting the ED, the DP and notes on residual/composite margin can already be a good read as preparation.
· IFRS Discussion Forum
New website has tool to have discussion threads. Working group will experiment with this
http://www.iabe.be/fr/forum
http://www.iabe.be/nl/forum
4. IFRS at the International Actuarial Association
Accounting Committee of the IAA is for a decade already following the developments in IFRS insurance contracts and related IFRS. The committee is also a privileged partner of the IASB project working Group.
Kurt represents IABE in this committee and will function as a go-between: accounting committee often has interesting papers and discussions,
http://www.actuaries.org/index.cfm?lang=EN&DSP=CTTEES_INSACC&ACT=INDEX
IFRS insurance contracts at the IASB website
http://www.iasb.org/Current+Projects/IASB+Projects/IASB+Work+Plan.htm
http://www.iasb.org/Current+Projects/IASB+Projects/Insurance+Contracts/Insurance+Contracts.htm
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5. Discussion on long term goals of the working group
Important principle is that the WG is not a training course, but that some work will be done, evenly distributed over all participants
By discussing IFRS topics, we can surely learn from each others point of view, but preferably also some physical document/ slides set should be produced to be shared with other IABE members (put on web page, eventually an IASB seminar?)
From a practical point of view, we would better focus then on some specific issues where the
IABE wg can have added value: specific Belgian topics (profit sharing…), actuarial technical aspect of IFRS valuation, comparion IFRS – S2 economic balance sheet, fast close…
· List of topics to be discussed (preliminary list awaiting the ED)
· Fast Close
· Belgian profit sharing
· Run-off of risk, residual and /or composite margin
· future premiums/contract boundaries: belgian situation
· expenses: overheads…
· Comparison IFRS – Solv II balance sheets
· UEPA in belgium
· Presentation & disclosure
· Acquisition costs
· Reinsurance
· Investment contracts with DPF
· Transition
· Discounting, unbundling…
· life , non-life perspective for each topic
· Steps / Phases in the long run, for instance:
Preparation ED discussions / Self-study of ED and any other relevant paper / 07-08/2010
Discussion ED / 09-11/2010
Follow-up from ED to IFRS / 11/2010-05/2011
IABE seminar??
6. Discussion on short term to do’s (tentative given limited attendants)
- distribute minutes and schedule for next minutes (feedback requested from those not present)
- wait for ED end July (lots of papers on website for those who can’t wait)
- look at composition of the ED and topics mentioned, compare with our own set of topics
· final list of topics to discuss in sept-nov
· topics we want to comment on (towards IASB, IAA accounting committee, Assuralia..)?
· plan topic discussions
7. Schedule next meetings (tentative given limited attendants)
biweekly in sept-nov 2010 in order to go through all topics of the ED
Then relaxing to monthly for following up move from ED to IFRS + use of website discussion forum to communicate
Practical : KBC, Havenlaan2, Brussels, on Mondays 17-19h
8. Various comments:
- also outside IASB papers available with a roundup of the current status: to be gathered and to be distributed among wg members
- web page wg only to be accessible for IABE members
- This minutes and scanned attendants list serve as proof for obtaining 2CPD points.
Next meetings:
Hierbij een overzicht van de geplande meetings bij KBC, Havenlaan 2, Brussel:
Gebouw Ref.nr. Datum Begin Einde Zaal Reden
BRUHAV2 3668393 30/08/2010 17:00:00 19:00:00 George Minnezaal IABE werkgroep IFRS
BRUHAV2 3668413 13/09/2010 17:00:00 19:00:00 George Minnezaal IABE werkgroep IFRS
BRUHAV2 3668414 27/09/2010 17:00:00 19:00:00 George Minnezaal IABE werkgroep IFRS
BRUHAV2 3668415 04/10/2010 17:00:00 19:00:00 George Minnezaal IABE werkgroep IFRS
BRUHAV2 3668416 18/10/2010 17:00:00 19:00:00 George Minnezaal IABE werkgroep IFRS
Place:
KBC, Havenlaan 2, Brussels, George Minne Zaal (up the escalators, then on your left or right)
Notify presence and car number plate to
Public transport: bus stop “Sainctelette”. Lots of busses “DeLijn” at Brussels-North station, going west: Anderlecht, Dilbeek, Grimbergen, Aalst, Puurs,….