DBRS Morningstar Updates Its Global Insurance Methodology Following the Implementation of IFRS 17

DBRS Morningstar published a commentary summarizing the recent updates to its “Global Methodology for Rating Insurance Companies and Insurance Organizations” (the Global Insurance Methodology) following the implementation of IFRS 17 earlier this year. The commentary discusses the changes in the calculation of certain financial metrics used in the Earnings Ability and Capitalization building blocks.

Key highlights include the following:

-- Insurance companies adopted IFRS 17 and IFRS 9 accounting standards on January 1, 2023, in most jurisdictions.

-- Our initial assessment of interim financial information under IFRS 17 and IFRS 9 indicates no material changes in the credit profile of insurers in our rated universe.

-- We will continue collecting additional financial and statistical information to further refine our Global Insurance Methodology in response to the changes introduced by IFRS 17.

“With the implementation of IFRS 17, insurance companies are moving to a more homogenous accounting regime than IFRS 4, the previous standard adopted in 2005,” said Marcos Alvarez, Global Head of Insurance. “Our preliminary analysis of the financial results of insurance companies under IFRS 17 in our rated universe suggests that implementing the new accounting regime is not causing pressure on their financial strength ratings at this point.”