Internal:Training/IFRS17/The income statement under IFRS 17: Difference between revisions
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Created page with "{{Internal:Training/IFRS17/nav-dropdown}} 🔗 '''Recall.''' In the previous page, you learned how the general model tracks an insurance group over time through unwinding the discount, releasing the risk adjustment, releasing the CSM, and adjusting for changes in estimates. Now we build on that by asking: where do all these movements actuall..." |
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⚖️ '''The OCI option.''' IFRS 17 gives insurers a significant presentation choice for the effect of discount rate changes. The insurer can recognise all insurance finance income or expense in [[Definition:Profit or loss|profit or loss]], which means every discount rate movement flows straight through the income statement. Alternatively, the insurer can choose to disaggregate: it recognises a systematic portion in profit or loss (typically based on the rate locked in at [[Definition:Initial recognition|initial recognition]]) and parks the difference caused by subsequent rate changes in [[Definition:Other comprehensive income|other comprehensive income]], or OCI. The OCI option reduces [[Definition:Volatility|volatility]] in reported profit because discount rate swings, which are often large and driven by macroeconomic conditions beyond the insurer's control, are kept out of the bottom line. For a multi-country group, this choice is made at the [[Definition:Portfolio|portfolio]] level, meaning some portfolios can use the OCI option while others present everything in profit or loss. The choice, once made, is applied consistently.
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