Ping An discloses IFRS 17 update and financial information
Ping An discloses IFRS 17 update and financial information | Insurance Business Asia
Insurance News
Ping An discloses IFRS 17 update and financial information
The insurer was one of the first in Mainland China to adopt the new standard
Insurance News
By
Kenneth Araullo
Ping An, one of China’s top insurers, has disclosed its IFRS 17 update and provided an explanation of the major changes and impact under the new standard. In addition, the insurer also revealed financial information for 2022 under IFRS 17.
According to data revealed in the announcement, impact caused by the transition on the total assets, liabilities, and net assets is around 1%, resulting in a smooth transition. Profit indicators of Ping An have increased at different levels, with the life and health (L&H) business increasing by 2% and the property and casualty (P&C) line at 14%. Net profit, meanwhile, surged by 54% and 14% for the two lines, respectively.
That said, due to the nature of measurement methods under IFRS 17, the group’s 2022 revenue has dropped by approximately 19%.
Impacts to L&H, P&C businesses
Ping An noted that the insurance contract revenue of L&H is impacted by the exclusion of the investment component as well as revenue being recognized over the coverage period. This means that there will be a significant decrease in revenue from long term life insurance contracts, while premium income as a business scale indicator will not be impacted.
The timing of profit and loss recognition of the L&H business under IFRS 17 will also change, but there will be no changes to operating components that drive business growth. Ping An’s L&H business will continue to use a value-based performance appraisal system that focuses on several indicators.
As for the P&C business, it will be relatively less impacted by the transition as generally, the line is subject to the premium allocation approach under IFRS 17, and combined operation ratio (COR) is still a key profitability metric.
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