2008 Seminar for the Appointed Actuary Colloque pour l’actuaire désigné 2008

1. Canadian Institute of Actuaries L’Institut canadien des actuaires 2008 Seminar for the Appointed Actuary Colloque pour l’actuaire désigné 2008 PD1 IFRS - Role of the ASB

2. INTRODUCING IFRS TO CANADIAN INSURERS The role of the ASB Nicholas Bauer PD1 IFRS - Role of the ASB

3. ASB actions to date • Created working group for IFRS • Acts as a steering committee for standards • Will have designated groups for each proposed change in standards (may share with CIA) • Covers all specialties not only insurance, but insurance is primary affected area • Informal joint steering committee with CIA to ensure full harmony and consistency • Charles McLeod (chair ASB), Jacques Tremblay (chair PC); Nicholas Bauer (chair ASB working group) • Also lead group for communication with key external constituencies – AcSB/IATF; CICA; Regulators PD1 IFRS - Role of the ASB

4. ASB actions to date • Work plan • Focus on Phase 1 • Target dates for revision of standards • NoIs - 1 March 2009 • EDs - 1 June 2009 • Final standards – 1 November 2009 • Communicated to membership in June • Future communications planned to be quarterly PD1 IFRS - Role of the ASB

5. ASB actions to date • Identified standards potentially impacted under IFRS Phase 1 • Communication with OSFI re regulatory requirements • Communicated with AcSB/IATF to obtain clarification on specific issues PD1 IFRS - Role of the ASB

6. ASB/CIA working assumptions • Single set of financial statements • Standards continue to be required for insurance contracts • No actuarial standards for non-insurance financial instruments or service contracts • CIA will provide guidance • No standards for classification of contracts • Additional standards may be required for capital calculations (e.g. CALM for all policy liabilities) and/or DCAT • Timing less urgent, since no need for published 2010 comparables • May impact Sections 2400 and 2500 of CSOP PD1 IFRS - Role of the ASB

7. Projects started • Change from entity focus of CGAAP to contract focus of IFRS requires change of scope of insurance specific valuation sections (P&C and Life – Sections 2200 & 2300) • Will apply to insurance contracts only, not “policy liabilities” • Will cover financial instruments with DPFs • Non-insurance liabilities will follow IAS 39 or IAS18, therefore will not conform to AAP • But will (must) conform to IFRS/GAAP • Designated group being formed • Target for reporting to ASB re initial assessment of scope revision: mid-October meeting of the ASB PD1 IFRS - Role of the ASB

8. Projects started • Discretionary participation features (DPF) • Joint project with CIA • May result in modification of standards or only guidance, or both • Issue is that IFRS 4 may permit accounting policy change to include part of value of DPF in equity and, if so • How measure • How present PD1 IFRS - Role of the ASB

9. Liability adequacy test (LAT) • Does valuation under CSOP meet LAT? • LAT Applies to all contracts valued under IFRS 4 • Insurance contracts, financial instruments with DPFs • LAT must use current estimates of all cash flows • Not clear if include margins • Discounting required but no guidance in IFRS4 • LAT requires that change flow through P&L • CALM for life probably satisfies LAT • Less clear for P&C • Designated group likely to be created (joint ASB/CIA) PD1 IFRS - Role of the ASB

10. Future activity • Identify all other matters that may require changes to standards • Examples are taxes, FX, LAT • Most if not all to be handled by joint ASB/CIA designated group • Propose whether change to standards, ed notes or other guidance PD1 IFRS - Role of the ASB

11. IFRS 4 Phase 2 • Will mean that current insurance specific standards will require complete revision • A/L link disappears • “Current exit value”; MVMs • Will there be international actuarial standards? PD1 IFRS - Role of the ASB

12. Thank you PD1 IFRS - Role of the ASB