Denis Ricard, president and CEO of iA Financial Group, says the coming into force of the new IFRS 17 accounting standards does not represent progress for Canadian insurers.
Ricard spoke at a conference held in Quebec City on Nov. 27. Much of his presentation echoed what he said at the Canadian Club in September in Montreal.
An issue since 2004
Ricard says he has been hearing about the new IFRS standards since 2004, when he was chief actuary. It was supposed to be done in 2012, however it will be finally implemented in 2022. "What is important is the capital. Accounting, recognition of profits over time, can be rather arbitrary," he says.
Ricard says the current accounting method which recognizes the ability to generate earnings is good, since there is very little difference between reported earnings per share (EPS) at iA and adjusted earnings. "With IFRS 17, we will have to separate assets and liabilities. There will be greater volatility in financial results. We will therefore all have to adjust our results."
A big mistake
According to him, in the 2000s, the Canadian Institute of Chartered Accountants "unfortunately abandoned its sovereignty with respect to its ability to define Canadian accounting standards." This was a "big mistake that was made at the time."
Ricard says he hopes Canadian regulatory authorities will take action. "We have to keep control here. Yes, there are international standards, but we must have a Canadian perspective on what is being done. We have different products here; that must be recognized. I am confident that regulators will recognize this and will not let the industry down," he says, citing lobbying efforts by the Canadian Life and Health Insurance Association (CLHIA).