Change in reference point for disaggregation of IFRS 17 discounting effects in If P&C
SAMPO PLC PRESS RELEASE 18 January 2024 at 9:30 am EST
Change in reference point for disaggregation of IFRS 17 discounting effects in If P&C
IFRS 17 Insurance contracts, implemented on 1 January 2023, requires insurance liability cash flows to be discounted at rates consistent with observable market prices, and for the effect of this to be disaggregated between the insurance service result (ISR) and insurance finance income and expense (IFIE).
Following an analysis of the application of IFRS 17 over 2023, Sampo Group has decided to change the reference point used in If P&C for disaggregation from the beginning of year to the beginning of quarter. This reflects the Group’s practice of providing financial results for individual quarters, and a desire to align more closely with common market practice and the approach taken by other Group companies.
The change in reference point will have an impact on the split of discounting effects between the ISR and IFIE, but it will not affect profit before taxes. Under the new methodology, current year discounting effects identified in If P&C’s ISR are estimated at EUR 52 million for the fourth quarter of 2023 and EUR 168 million for the full-year 2023. The unwind of discount rate included in IFIE is estimated at EUR -62 million/EUR -180 million for the fourth quarter/full year, respectively. As prior reporting periods will not be restated, the figures include a true up of 2023 discounting effects. IFRS 17 sensitivities that reflect the new reference point will be published on 8 February 2024, in connection with the publication of Sampo’s 2023 financial results.
The implementation of the new methodology for disaggregation is considered to be a change in accounting estimate. The implementation of IFRS 17 had no material effect on Sampo’s business but it represents a significant change in accounting that requires new judgements, models and data. As a result, Sampo has stated in financial reports issued during 2023 that it may update the accounting principles and management judgements related to the implementation of IFRS 17 until the group publishes its year-end financial statements for 2023.
SAMPO PLC
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