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Introduction of AXIS IFRS 17 Link Modules (September, 2018)

Article Summary:

AXIS version 2019.05.01 marks the first release in beta form of the new AXIS IFRS 17 Link modules, which are specifically designed to support current period reporting under IFRS 17 and all of the additional processing, reporting and interface changes needed. Initially IFRS 17 Link modules are available only for Regular Life and Par Products.

AXIS version 2019.05.01 marks the first release in beta form of the new AXIS IFRS 17 Link modules, which are designed to support the reporting challenges under the new IFRS 17 – Insurance Contracts standard.  While previous releases of IFRS 17 functionality in AXIS have supported current period reporting calculations (previously referred to as historical period functionality) in the same batch runs as projections of IFRS 17 results, we have now separated the support for current period reporting and bundled all of the additional processing and interface changes needed within the new AXIS IFRS 17 Link modules. This change allows us to clearly differentiate the two types of IFRS 17 applications and develop efficient processing options separately for current period reporting under IFRS 17 and for full financial projection.  Introductory versions of the IFRS 17 Link modules for the Regular Life and Par Products modules are now available under Beta Feature Code access in AXIS release 2019.05.01 as of September 29, 2018.  Details of the required Feature Codes are provided below.

For current period reporting, the new IFRS 17 Link functionality in release 2019.05.01 has several significant enhancements compared to the IFRS 17 functionality previously available, including new Batch processes, new reporting options, improved runtime efficiency and support for opening and closing date Assumption Sets.  Further details of the new features and of the approach to obtaining the feature code passwords are provided below.

Details of New and Changed Functionality in AXIS 2019.05.01

New IFRS 17 Current Period Reporting Batch Type

A new Batch object is available to define and execute Current Period Reporting calculations for IFRS 17 conveniently and efficiently.  This batch type will only be available with the IFRS 17 Link modules, and "historical period" calculations previously performed in each liability module under beta code functionality are now not available with other batch objects. 

When the Current Period Reporting Batch is defined, it will require specification of:

  1. A single Subfund, Fund or Office object must be selected to define the scope of business included in the run; all the Cells included in the selected model object will be recalculated.
  2. The number of years of future cash flows to be included under the "best estimate" projections (without margin). Note that these cash flows are projected using the Assumption Set attached to the Current Reporting Date, not by the Pricing Assumptions in the Cells, and they are only used in the current release to calculate future service costs needed for CSM amortization.
  3. One or more report packs to be produced from the run including the IFRS 17 Group, IFRS 17 Group for Reinsurance Held, and IFRS 17 Financials Reports, which may be exported to the Import Export Database, and the new RI IFRS 17 Outputs report which captures current period reporting results designed to be used by RiskIntegrity IFRS 17 (with the specific Feature Code for this report). 

The Current Period Reporting batch will start with calculations of the Fulfillment Cash Flows at the Prior Period Reporting Date (the start of the current reporting period) and will process transactions attached to these records with reporting dates in the period to age the business forward through the period to reach the Current Reporting Date.  Pricing Assumptions are ignored. Fulfillment Cash Flows are recalculated multiple times ending with the estimated in force at the Current Reporting Date using the Assumption Set for the Current Period so that each of the incremental changes needed for IFRS 17 reporting are captured.

Subfund, Fund and Office level reports capture the final calculations aggregated by IFRS 17 Group category and by the higher level object being run.

New Interactive Processing Options for Current Period Reporting

Interactive processing run options ("Run" button options while editing a Liability Cell) have been added to help test and investigate the calculations required under Current Period Reporting.  These include:

  1. A new run type "IFRS Historical Run" available within the "Run …" button dialogue in the Cell Screen interface, and
  2. A new "IFRS 17 Link" button in the seriatim data screen within the Cell which will start an interactive Current Period Reporting run on selected records.

Interactive processing will execute the Cell level calculations of the Fulfillment Cash Flows at the Prior Period Reporting Date (the start of the current reporting period) and will process transactions attached to these records with reporting dates in the period. Cell level reports including the IFRS 17 Group Category Reports and the IFRS 17 Financials report will be available for viewing but it should be noted that the final calculations for current period reporting should be obtained from Subfund or higher level reports that are only available by running a Current Period Reporting Batch.

Changes in IFRS Tab in Dataset Parameters

The IFRS Tab in Dataset Parameters enables IFRS 17 calculations subject to the required Feature Code passwords as discussed below.  It also defines the frequency of IFRS 17 calculations which controls the length of the reporting period used in Current Period Reporting runs.

Note that as part of this change, the Valuation Date must now be the same as the Current Period Reporting Date, and not the Prior Period Reporting Date as was the case in previous releases.  AXIS will define the Prior Period Reporting Date by reference to Valuation Date and the Reporting Frequency selected. 

In force seriatim business must be defined with an In Force Date equal to the Prior Period Reporting Date, which is the start of the current reporting period, and the status date attached to any policy movement transactions must be equal to the Current Reporting Date.

Existing client Datasets used in testing IFRS 17 historical period functionality in prior versions must be adjusted if necessary to reflect these new parameter settings.

Support for Prior Period Assumptions

The IFRS 17 Section of the Cell Assumptions Screen under prior beta releases allowed the selection of separate Assumption Sets for both the prior period and current period Fulfillment Cash Flow calculations but AXIS was not yet able to use different assumptions for these two dates.  With the introduction of IFRS 17 Link, this feature is now supported which enables the calculation of the Fulfillment Cash Flows at these dates on different assumptions, and the derivation of the impact of changes in assumptions as required for current period reporting. 

Improved Performance under IFRS 17 Link

Since the new IFRS 17 Link functionality focuses on the current period reporting calculations, it avoids all future projection logic beyond the Current Period Reporting Date except for the projection of expected future service costs reflected in the "Best Estimate Liability" cash flows as of the Current Period Reporting Date.  This results in improved run time performance compared to prior beta versions.

New Feature Codes Introduced for IFRS 17 Link

Feature Code #615 and the password previously used to enable testing of IFRS 17 Beta features are still in effect and must be used for all IFRS 17 testing.

A new Feature Code #646 is introduced to enable access to the new IFRS 17 Link functionality including the Current Period Reporting Batch object and interactive run processing, with the associated transaction processing, and all reporting of current period reporting calculations.

A second new Feature Code #647 is also introduced and is required in addition to the two other Feature Codes to enable the new reporting option that generates a report pack specifically designed to be transferred into RiskIntegrity IFRS 17.  Only clients licensing or investigating the use of RiskIntegrity IFRS 17 need to activate that feature code.

Later this year, as this functionality is enhanced, tested and approved, we will introduce formal module licenses for the IFRS 17 Link modules and ask you to speak to our Sales Team about the process to guarantee continued access to current reporting features in new AXIS releases or to investigate the RiskIntegrity IFRS 17 product that AXIS will directly support. 

Please have the designated company representative for IFRS 17 testing contact us for the passwords to unlock either of the two new Feature Codes.

Need more Information?

For a high level description of the overall IFRS 17 Solution Strategy being developed by Moody's Analytics refer to the AXIS website.  Functionality to support current period reporting previously introduced is documented in the IFRS 17 Users Guide.  Changes in the AXIS interface and other enhancements in release AXIS 2019.05.01 as summarized above will be added to the User's Guide shortly.  In the meantime, contact AXIS Client Support to learn more. 


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