Why is IFRS important to rating agencies?Clearer financial communication is crucial for insurers now more than ever |
Part of corporate responsibility:
- Insurers have responsibilities to their stakeholders to provide transparent and clear financial information to explain their performance and capital position. This is critically important when the frameworks regulating both dimensions are undergoing a radical transformation
- Insurers need to consider Rating Agencies in their communication to the market, as they are influential in the financial markets
- Insurers should plan to engage in a dialogue with their key agencies to guide them on how to adapt their financial models during the transition. This is crucial to ensure the insurance company’s strategy and performance is understood under the new metrics and comparability with past performance and the insurer’s peer group aided
A competitive advantage:
- Since the financial crisis most insurance stakeholders are demanding more and more insightful financial information
- IFRS Insurance will impose more transparency and deliver uniform profit reporting for the first time in the history of the European insurance sector.
- The insurer who proactively manages the overlapping transition of Solvency II and IFRS Insurance could differentiate from its peer group improving the resilience of its stock price and its capacity to raise debt at competitive rates
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