Insurance IFRS Seminar December 2, 2016 Bill Horbatt Session 35 Transition Workshop Insurance IFRS Seminar December 2, 2016 Bill Horbatt Session 35

First published Balance Sheet at end 2015 Situation Adopting IFRS in 2018 First published Balance Sheet at end 2015 2010 Portfolio of 10 Year Level Term Originally followed FAS 60 US GAAP What choices do we have for transition?

Review the spreadsheet Question # 1 Review the spreadsheet How was the Risk Adjustment calculated? Is it compliant with the ED? How does the IFRS net liability compare against the US GAAP net liability at 2015? Why is the % investment return assumption not the same as the discount rate assumption?

Review the profitability Question # 2 Review the profitability Why is the profit not a constant % of the claims? In what ways do you need to change the yellow cells in order to make the profit a constant % of the claims? How does the Risk Adjustment change the profitability, in terms of both shape and PV?

Comment on your choices Question # 3 Comment on your choices What elements of the calculations could you influence on transition? How much would these change the shareholder equity at transition and future profits after transition?

Thank You