Best’s Special Report: IFRS 17: Transitioning to a Standard with New Concepts and Terminology

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LONDON, April 28, 2022--(BUSINESS WIRE)--A new special report from AM Best sets out the rating agency’s current thinking on how it will treat the IFRS 17 accounting standard in the context of the insurance industry’s progress toward its implementation next year.

The Best's Special Report, "IFRS 17: Transitioning to a Standard with New Concepts and Terminology," confirms that AM Best does not expect the introduction of the new standard to have a direct impact on Credit Ratings in the normal course of events. However, it notes that new insights can emerge over time and behavioural changes can occur that might affect ratings.

The report discusses some of the key performance indicators (KPIs) that the rating agency may use and some of the inputs to its proprietary capital adequacy model—Best’s Capital Adequacy Ratio (BCAR). Subjects covered include the calculation of combined ratios under IFRS 17 and the treatment of the contractual service margin in BCAR. AM Best anticipates that industry decisions on KPIs, along with other aspects of IFRS 17 implementation, will evolve, and that it may take two or three years of experience after the effective date for practice to settle.

AM Best will continue to have an economic view of (re)insurers’ balance sheets to cater for different reporting standards across jurisdictions. Maintaining that consistency, along with the comparability of financial metrics calculated under different reporting standards, will be a key objective when analysing (re)insurers that report under the new standard.

To access a complimentary copy of this special report, please visit

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Anthony Silverman
Director, Criteria
+44 20 7397 0264

Richard Banks
Director, Industry Research – EMEA
+44 20 7397 0322

Mahesh Mistry
Senior Director, Criteria
+44 20 7397 0325

Edem Kuenyehia
Director, Market Development & Communications
+44 20 7397 0280