AIA Group collaborates with SAS to embark on the IFRS 17 journey

SAS Solution for IFRS 17 rolled out for AIA in parallel run across major Asian markets¹

International Financial Reporting Standard 17 (IFRS 17) will be introduced globally on Jan. 1, 2023, providing a set of innovative rules and standards that will refine the transparency and comparability of financial reporting by insurance companies. The new standard will replace IFRS 4, which was issued in 2004.

AIA Group Limited and its subsidiaries (collectively “AIA” or the “Group”) comprise the largest, independent, publicly listed pan-Asian life insurance group, with a presence in 18 markets across Asia. Serving more than 41 million holders of individual policies and over 17 million participating members of group insurance schemes², AIA is a pioneer in implementing IFRS 17 on an extensive regional level.

To accommodate IFRS 17 and an evolving regulatory environment, AIA partnered with SAS in 2018 to develop a unique subledger solution engine to meet the tight global implementation timeline. Given the complexity involved, a phased approach was adopted for the development of the solution engine. Hong Kong, home to one of AIA’s major business units, was chosen as the pilot business unit to deploy and implement the SAS Solution for IFRS 17, and to start end-to-end integration testing with AIA systems.

“As our technology partner, SAS has striven to customize an out-of-the-box solution with flexibility that best fits AIA’s needs, while providing us with the compatibility to evolve with future upgrades of the core solution,” says Garth Jones, Chief Financial Officer for AIA Group.

Completion of solution build phase for parallel run 

The build phase of the solution, including calculation logic and posting requirements to address AIA’s business needs for reporting and disclosures, was successfully completed in November 2020 for all relevant business units. This was followed by a series of comprehensive functional tests. User acceptance testing for the Hong Kong pilot market commenced in September 2020, and covered other major business units across Asia in 2021.

In coordination with AIA Group, SAS experts conducted a series of IFRS 17 enablement workshops for the other business units starting in April 2020, covering topics on the overall solution design, system process flow, data input requirements, calculation logic and account posting mechanisms. These workshops provided AIA with requisite knowledge and hands-on practice on the new IFRS 17 solution engine, ensuring readiness for the system parallel run in 2021.

A milestone for the IFRS 17 journey

The close collaboration and transparent communication between SAS and AIA was key to the successful solution implementation.

“SAS and AIA established a tiered project governance structure to ensure efficient information sharing, close monitoring and tracking of progress, management support and timely project delivery,” Jones says. “SAS’ commitment and the open communication in this partnership has been crucial in resolving key issues and ensuring progress and results in compliance with the challenging timeline.”

“We are excited to continue working closely with AIA, and we are motivated to provide a seamless integration using a critical solution with adaptability and scalability to achieve benefits also beyond IFRS 17,” says Troy Haines, Senior Vice President, Head of Risk Research and Quantitative Solutions at SAS. “SAS is at the forefront of innovative analytics solutions for the financial and insurance industry. With the global introduction of IFRS 17, we fully understand the fundamental and significant changes this brings to insurance companies and the level of complexity that will be entailed as a result.”

Notes:
1. Major Asian markets include Hong Kong, Thailand, Singapore, Malaysia, China, Korea, The Philippines, Australia, Indonesia, Taiwan, Vietnam, New Zealand, Macau, Brunei and Sri Lanka.
2. AIA Group Limited Annual Report 2022, Hong Kong SAR.