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Oral Comprehensive Examination: Gerald Ray M. Galano

You are all invited to the Oral Comprehensive Examination of Mr. Gerald Ray M. Galano (Professional Masters in Applied Mathematics) on Friday, 14 June 2024, 2:00 PM, at the Institute of Mathematics Building, Room 117.

Title: A Comparative Study Between the Profit Profiles and Incidence of IFRS 4 and IFRS 17
Abstract: The implementation of the International Financial Reporting Standard (IFRS) 17 Insurance Contracts by the International Accounting Standards Board (IASB) introduces significant changes in the accounting for insurance contracts, emphasizing comparability and consistency across jurisdictions. This study examines the income incidence and profit profiles under IFRS 17 compared to the previously used IFRS 4, focusing on the Gross Premium Valuation (GPV) method adopted in the Philippines. The IFRS 17 introduces the Contractual Service Margin (CSM) and Fulfillment Cash Flows that incorporates best estimates of future cash flows, time value adjustments, and risk adjustments. Unlike IFRS 4, which allows immediate profit recognition, IFRS 17 mandates a more gradual profit realization as services is rendered.
This study employs a methodology to compare financial performance under both standards. We utilize existing templates from the Society of Actuaries (SOA) for IFRS 17 and the Asset Share format (IC CL 1992-30) for IFRS 4, with assumptions aligned for both standards. The analysis includes calculations of terminal reserves, cash values, gross premium rates, and reconciliations of various financial components. Results indicate that while total profit over the life of an insurance contract remains consistent across both standards, IFRS 17 offers more stable and transparent profit incidence and a clearer presentation of financial statements.

Examination Committee Members:

  • Dr. Jasmin-Mae S. Luy
  • Dr. Daryl Allen B. Saddi
  • Dr. Lu Kevin S. Ong