not vested
<News Alert> One time uplift in OPAT and book value upon IFRS 17 adoptionAIA was seen one-time uplift in FY22’s OPAT, shareholders’ allocated equity and shareholders’ equity of 1%/5%/17% upon IFRS 17 adoption, largely in line
As mark-to-market (MTM) movement in participating business and unit-link products (savings) will be absorbed within contractual service margin (CSM), net profit will become less volatile
FY23’s opening CSM will be US$50.2bn, new business CSM is expected to be 2x of value of new business (VONB)
AIA’s key financial metrics improved in FY22 under IFRS 17, with OPAT, shareholders’ allocated equity (excluding par business’ equity) and shareholders’ equity rising by 1%/5%/17% respectively, net profit increased by US$3bn to US$3.3bn.
Sources of earnings become more transparent by breaking down into
a) insurance contract services,
b) spread and
c) return on net worth, and CSM release will serve as the core driver of OPAT.
The new business CSM drives CSM accumulation and is expected to be 2x of VONB. The opening CSM reached US$50.2bn in 2023. VONB, embedded value (EV) and free surplus remain key measures of shareholder value creation.
We expect net profit and book value to be less volatile upon IFRS 17 adoption, which is considered positive.
The new accounting rule helps to remove the accounting mismatch and stabilize book value, where both of the assets and liabilities should be marked-to-market by adopting the updated discount rate and measuring at fair value.
As participating business and unit-link products (savings), which account for 41% of total invested assets, will be measured by variable fee approach (VFA) model, the discount rate changes, asset MTM and interest rate hedges will go through CSM, which results in reduced net profit volatility.
Source: DBS
https://www.dbs.com/insightsdirect/comp ... ecid=14712
It's all about "how much you made when you were right" & "how little you lost when you were wrong"