What are the similarities and differences between IFRS 17 and US GAAP LDTI?

International Financial Reporting Standard (IFRS) 17 and US GAAP long-duration contract targeted improvements (LDTI) will both become effective on January 1, 2022. Both frameworks require a current estimate of insurance liabilities instead of following a traditional net level premium reserve approach using assumptions locked in at policy issue. However, the source of period-by-period profit, and the resulting profit signatures due to experience or assumption changes, could differ significantly between the two. This briefing note by Milliman consultants Takanori Hoshino and William Hines illustrates these potential differences using a traditional level premium endowment contract.

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