International Financial Reporting Standard 17 (IFRS 17) is a principles-based standard and, as such, is open to different interpretative approaches. In this context, the criteria for determining the measurement approach applicable to certain savings products with participation features, such as universal life insurance contracts, have resulted in differing interpretations across the Spanish market.

This paper analyses, first, the eligibility criteria for the measurement approaches set out in IFRS 17, taking into account the different interpretations observed in the Spanish market and, second, how each approach affects the measurement of the principal components of IFRS 17 (CSM, present value of future cash flows, risk adjustment, income statement, etc.).

The final section presents an illustrative case study comparing, over the life cycle of a portfolio of universal life contracts, the development of the principal IFRS 17 measurement components under both measurement approaches.

Download the full paper - English (PDF).
Download the full paper - Spanish (PDF).