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IFRS 9 for insurers

In today's volatile market, insurers face the complex challenge of accurately and efficiently calculating expected credit loss (ECL) in compliance with the IFRS 9 accounting standard. This requirement to regularly assess the impact of future conditions on ECL estimates, alongside the implications for loan loss provisioning and capital requirements, is made all the more daunting by fluctuating market conditions and macroeconomic forecasts.

Moody’s IFRS 9 solution is designed to navigate these complexities with ease. Our modular, flexible approach helps insurers meet the IFRS 9 requirements through proven data management, model efficiency, and seamless integration. With Moody's, insurers gain access to extensive data and models, alongside award-winning frameworks for ECL processing, helping them make strategic, confident decisions in their credit loss provisioning and capital management efforts.

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Featured IFRS 9 solutions

01 Data

Data

IFRS 9 places significant requirements on a company’s data management programs. This includes the need for current information as well as extensive historical data to consider within your accounting estimates. Moody’s can assist with our award-winning data to help you develop, improve, and validate your data and credit risk models. We offer credit, economic, and financial datasets.

02 Economic Scenarios

Economic Scenarios

Moody’s can help your institution by providing our industry-leading economic scenarios that have been developed using our proprietary econometric models.

03 Models

Models

Many institutions have chosen to approach IFRS 9 using credit loss models to determine the likelihood and extent of future losses. Moody’s can assist you in addressing the challenge for your unique portfolio composition with our robust modeling methodologies. We help clients assess, manage, and validate models for ECL requirements and consistency with industry standards.

04 Calculation Engine

Calculation Engine

Moody’s has generated an award-winning framework to run your ECL process across various asset classes and methodologies. Our solution will allow you to run an integrated, scalable credit allowance process and step-by-step ECL analysis. The powerful engine features built-in analysis tools for meaningful and efficient decision-making.

05 Reporting and analytics

Reporting and analytics

Build a deeper understanding of your portfolio with our range of reporting and analytical capabilities. We help you look beyond the journal entry by isolating the individual drivers of risk and their future impact on your portfolio so you can confidently make strategic decisions guided by our industry-leading ECL benchmarking.

News and views

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Mar 24, 2022

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CECL benchmarking for portfolio management

After successful CECL implementations, credit and accounting executives now possess working relationships with multidisciplinary experts across the back office, detailed knowledge of credit data and use cases, and deep experience developing controlled processes for delivering actionable insight.

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CECL build – Is it enough?

In this paper, we set out to estimate, based on 14 top financial institutions, a lower-and upper-bound current expected credit loss (CECL) estimate as of March 31, 2020. 

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Unfunded commitments: Unintended consequences in times of turmoil

In this article, we use recent observations in commercial funding markets and empirical evidence from consumer lending markets to analyze the potential range of impacts to capital levels at US financial institutions, caused by the drawdown of commercial lines of credit.

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Moody's
Deconstructing scenario weights for CECL

For institutions that are considering incorporating future conditions using a probability-weighted multiple-scenarios approach, the choice of scenario weights is critical. This paper presents the theoretical motivation behind these weights and suggests reasonable ways of choosing these weights in practice.

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Moody's
Defining economic scenarios with constant severities

In this article, we define constant severity scenarios and the models used to estimate their probabilities before considering the use of these economic scenarios when complying with the CECL accounting standard.

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Aug 01, 2018

 Moody's
Beyond theory: A practical guide to using economic forecasts for CECL estimates

We discuss some of the options that institutions have for incorporating economic forecasts into their expected loan loss reserve calculations, including the benefits and costs of each approach, and provide practical recommendations based on institution size and complexity. 

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Sep 01, 2018

 Moody's
Mean reversion in CECL: The What and the How

With the CECL guidelines on mean reversion open to multiple interpretations, our paper discusses some approaches institutions can take for reversion beyond the reasonable and supportable horizon.

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Jun 01, 2016

 Moody's
IFRS 9 impairment regulations: Implementation challenges and potential solutions

In this article, we suggest solutions for meeting IFRS 9 requirements in areas such as portfolio segmentation, thresholds for transitions among impairment stages, and calculating expected credit losses, leveraging Moody's expertise in credit risk modeling.

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Jun 01, 2016

 Moody's
Complying with IFRS 9 impairment calculations for retail portfolios

This article discusses how to address the specific challenges that IFRS 9 poses for retail portfolios, including incorporating forward-looking information into impairment models, recognizing significant increases in credit risks, and determining the length of an instrument's lifetime. 

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