IFRS 17 GMM Insurance Financial Projection Model

Description
PURPOSE OF MODEL


User-friendly Excel model for the preparation a of 5-year 3 statement (Income Statement, Balance Sheet and Cash flow Statement) financial projection with quarterly timeline for a general insurance company on an IFRS 17 General Measurement Model (GMM) approach generating insurance revenue, insurance service expenses, reinsurance expenses, finance expenses, investment return and other non-technical expenses.


The model allows the user to model up to 10 different insurance portfolios / grouping including separate premium amounts; reinsurance arrangements; commission and other directly attributable expenses; payment and recognition patterns; loss ratios and risk adjustment percentages. The model calculates balances for contractual service margin, risk adjustments and present values for future cash flows for each insurance portfolio / grouping.


Apart from insurance revenues , the model allows the user to model other operating expenses, investment return, fixed assets, corporate tax, borrowings, equity additions and dividend distributions.


The model follows good practice financial modelling principles and includes instructions and input validations.




KEY OUTPUTS


The key outputs include:
- Projected full financial statements (Income Statement, Balance Sheet and Cash flow Statement) presented on a quarterly basis across 5 years and summarised on an annual basis.
- Dashboard with:
o Summarised projected Income Statement and Balance Sheet;
o Compounded Annual Growth rate (CAGR) for each summarised income statement and Balance Sheet line item;
o List of key ratios including, amongst other, gross service resultmargin; cession ratio, investment return, profit margins, average return on equity and average debt to equity ratio;
o Bar charts summarising income statement and Balance Sheet projections;
o Chart and table presenting insurance service result by portfolio / grouping.




KEY INPUTS


Inputs are split into Income Statement and Balance Sheet Inputs. Most inputs include user-friendly line item explanations and input validations to help users understand what the input is for and populate correctly.


Setup Inputs:
- Name of business;
- Currency;
- First projection year;
- Naming for insurance portfolios, payment patterns, recognition patters, operating expenses, and fixed asset categories;


Pattern Inputs:
- Premium payment patterns;
- Claims payment patterns;
- Recognition patterns.


Projection Inputs:
- Insurance Service Result:
o Gross premium written;
o Gross loss ratios;
o Gross commission ratios;
o Risk adjustment percentage;
o Payment and recognition patterns;
o Proportional and non-proportional reinsurance
o Discount rate.
- Other operating expense inputs;
- Financial investment inputs including return percentage and target cash balance;
- Dividend inputs including amount or percentage of retained earnings and frequency;
- Fixed Assets including addition amounts and useful life;
- Borrowings including addition/redemption amounts and interest rate;
- Share Capital additions.




MODEL STRUCTURE


The model comprises of 8 tabs split into input ('i_'), calculation ('c_'), output ('o_’) and system tabs. The tabs to be populated by the user are the input tabs ('i_Setup', ‘i_Patterns’ and 'i_Assumptions'). The calculation tab uses the user-defined inputs to calculate and produce the projection outputs which are presented in 'o_Fin Stats' and ‘o_Dashboard’.


System tabs include:
- A 'Front Sheet' containing a disclaimer, instructions and contents;
- A Checks dashboard containing a summary of checks by tab.




KEY FEATURES
Other key features of this model include the following:
- The model follows best practice financial modelling guidelines and includes instructions, checks and input validations;
- The model is not password protected and can be modified as required following download;
- The model contains a dynamic timeline that allows a different starting projection period;
- Timeline is split on a quarterly basis and summarised on an annual basis;
- Insurance Contract assets and liabilities are split into CSM, risk adjustment and present value for future cash flows;
- The model allows for the following number of underlying categories for each line item (these can be easily expanded if required):
o Insurance Portfolios / groupings – 10 portfolios / groupings;
o Operating expenses – 10 categories;
o Payment Patterns – 10 patterns;
o Recognition patterns – 10 patterns;
o Fixed Assets – 3 categories;
- Apart from projecting revenue and costs the model includes the possibility to model, investment return, fixed assets, borrowings, dividends and corporate tax;
- Business name, currency, starting projection period are fully customisable;
- Revenue, cost, fixed asset and borrowing category descriptions are fully customisable;
- The model includes a checks dashboard which summarises all the checks included in the various tabs making it easier to identify any errors.




MODIFICATIONS


If you require any be-spoke modifications to the tool, we are more than happy to assist with this. Please send us a private message or contact us on: [email protected]




ABOUT PROJECTIFY


We are financial modelling professionals with experience working in big 4 business modelling teams and strong experience supporting businesses with their financial planning and decision support needs. Our aim is to provide robust and easy-to-use tools that follow good practice financial modelling guidelines and assist individuals and businesses with useful financial projection and analysis requirements.


We are keen to make sure our customers are satisfied with the tools / models they purchase and will be more than happy to assist with any questions or support required following or in advance of purchase.


We are also keen to receive feedback so please do let us know what you think of our models by sending us a message or submitting a review.