IFRS 17, Insurance Contracts: 
                   An illustration 
                   Financial statements presentation and disclosures
                                      www.pwc.com/insurance
      (All amounts in CU thousands unless otherwise stated)
      2  |  IFRS 17, Insurance Contracts: An illustration                     PwC
                                                                                                             (All amounts in CU thousands unless otherwise stated)
                Introduction
                This publication (the Illustration) demonstrates the presentation and disclosure 
                requirements of IFRS 17, Insurance Contracts (IFRS 17), as issued by the 
                International Accounting Standards Board (IASB) in May 2017, as well as the new 
                disclosures introduced or modified by IFRS 9, Financial Instruments (IFRS 9), through 
                consequential amendments to IFRS 7, Financial Instruments: Disclosures (IFRS 7).  
                In compiling the Illustration, we have made a number of              •   Further examples of accounting policies and other 
                choices and assumptions. In particular:                                 disclosures required by IFRS that may be relevant to an 
                                                                                        insurer are available in the following PwC publications:
                •   We designed the illustrative consolidated financial 
                   statements and selected disclosures around a fictitious              –    Illustrative IFRS consolidated financial statements for 
                   multi-line insurance group, Value Insurance Plc and its                 2018 year-ends; and 
                   subsidiaries (the Group). The Group operates in one 
                   geographical area, Oneland, and offers its products to               –    IFRS 9 for banks - Illustrative disclosures.
                   domestic and foreign markets. The parent company and              •   The quantitative and qualitative disclosure requirements 
                   each of its subsidiaries share the same functional currency          in IFRS 17 are more extensive than the current reporting 
                   (CU), and this currency is used for the presentation of the          frameworks in many jurisdictions under IFRS 4, Insurance 
                   consolidated financial statements of the Group. Value                Contracts (IFRS 4), an interim standard effective prior 
                   Insurance Plc is a publicly listed entity.                           to the adoption of IFRS 17. Appendix A includes a 
                •   We have used a simplified set of insurance products,                summary highlighting what is new and different in IFRS 17 
                   basic investment transactions and a hypothetical set of              compared to the disclosure requirements in IFRS 4. 
                   assumptions, with the objective of illustrating the results       •   To illustrate a level of disclosures for insurance and 
                   of the application of different measurement models in                investment contracts that will be required on a recurring 
                   IFRS 17 and IFRS 9/IFRS 15, Revenue from Contracts                   basis post-transition, the Illustration assumes that the 
                   with Customers (IFRS 15). We have not intended to build              Group has already adopted IFRS 17 and IFRS 9 in the 
                   a realistic insurance or investment operation existing in a          preceding year (fiscal 20X2, using the date convention 
                   realistic market. The amounts disclosed in the Illustration          in the Illustration). We have not illustrated quantitative 
                   have been modeled purely for illustrative purposes to                impacts of the transition on the Group, as there will 
                   provide a user with a basis from which to assess the                 likely be a significant diversity in transition methods 
                   effect of the illustrated measurement models, transactions           and impacts, resulting in limited use of such pro forma 
                   and assumptions on the Group’s consolidated financial                information. Given the optionality available on transition, 
                   statements. A summary of the Group’s insurance products              the effect on the statement of financial position and future 
                   is included in the description of reportable segments in             revenue for similar types of insurance contracts issued by 
                   note 1.                                                              different entities may vary considerably. 
                •   As the Illustration is a reference tool, we have not removed     •   IFRS 17 includes specific disclosure requirements for 
                   any disclosures based on materiality. Consequently,                  groups of insurance contracts in force on transition, where 
                   some of the disclosures in the Illustration would likely             simplifications on transition affect the measurements in 
                   be immaterial if the Group were a real life entity. In               the financial statements. The effect on insurance revenue 
                   addition, some of the specific IFRS 17, IFRS 9 and                   and the contractual service margin (CSM) and judgements 
                   IFRS 7 requirements were not relevant to the Group’s                 applied in determining the transition amounts should be 
                   circumstances and have not been illustrated. Such                    separately disclosed and explained in the subsequent 
                   omitted disclosures are outlined in Appendix B.                      periods, until the insurance contracts written before 
                •   Financial statement line items and disclosures required by          the transition date are derecognised. Such recurring 
                   other IFRS are kept to a minimum with extracts included              disclosures illustrated in note 2.2.2 of the Illustration are 
                   where necessary only; therefore, the Illustration does not           also indicative of the type of information that would be 
                   represent a full set of IFRS-compliant financial statements.         required in the year of adoption, among other transition 
                                                                                        disclosures.
          PwC                                                                                                   IFRS 17, Insurance Contracts: An illustration   |   3  
          (All amounts in CU thousands unless otherwise stated)
               IFRS 17, IFRS 9 and IFRS 7 allow a variety of measurement,      The publication is current as of February 2019 and is based 
               presentation and disclosure options, and industry views         on IFRS 17 as issued by the International Accounting 
               of them continue to evolve. In addition, at the time of this    Standards Board in May 2017. It is prepared for illustrative 
               publication, the IASB continues to discuss IFRS 17 concerns     purposes only and should be used in conjunction with the 
               and implementation challenges raised by stakeholders            relevant financial reporting standards and any other reporting 
               and is undertaking a number of activities to support the        pronouncements and legislation applicable in specific 
               implementation of IFRS 17, including establishing the           jurisdictions.
               Transition Resource Group (TRG). In October 2018, the IASB 
               commenced a process of evaluating the need for making 
               possible amendments to IFRS 17 to address certain reported 
               concerns. The Illustration does not take into account any 
               amendments to IFRS 17 that are proposed as a result of this 
               process. 
               Insurers will need to closely monitor the developments and 
               take account of their individual circumstances in determining 
               the manner of providing material information required by IFRS 
               17 in the way that most faithfully represents their insurance 
               contracts and transactions. The approaches illustrated in this 
               publication are one possible way the requirements of IFRS 
               17, IFRS 9 and IFRS 7 may be met but are not intended to 
               provide any view on the type of approach that should be 
               applied. 
               Abbreviations used in the Illustration
               AC   Amortised cost
               AOCI   Accumulated other comprehensive income
               CSM   Contractual service margin
               DPF     Discretionary participation features
               EAD     Exposure at default
               ECL     Expected credit loss
               EIR     Effective interest rate
               FCF     Fulfilment cash flows
               FVOCI Fair value through other comprehensive income
               FVTPL Fair value through profit or loss
               GMM   General measurement model
               IFRS   International Financial Reporting Standards
               LIC     Liability for incurred claims
               LGD    Loss given default
               LRC     Liability for remaining coverage
               OCI     Other comprehensive income
               PAA     Premium allocation approach
               PD      Probability of default
               SPPI   Solely payments of principal and interest
               SICR   Significant increase in credit risk
               TRG    Transition Resource Group
               VFA     Variable fee approach
          4  |  IFRS 17, Insurance Contracts: An illustration                                                                               PwC