Modeling Cash Flows Under IFRS17: TÜRK Case

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2022-8-5

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Jubeh, Rinad

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By the introduction of IFRS17, vital changes in measurements of insurance contracts are expected. This requires to assess the liabilities of insurance companies by two kinds. These are (i) fulfilment cash flows and (ii) contractual service margin, in which policyholder cash flows are the nucleus of both. Hence, this thesis consists of two main parts. Firstly, we use panel data analysis to analyze policyholder cash flows in respect to Türk returns, insurer’s cash outflows and changes in cash. Secondly, we consider a top-down modeling technique for the Türk insurance sector. The latter uses machine learning to model, simulate, and forecast future policyholder cash flows and compares the usage of IFRS17 with previous standards. We conclude that under IFRS17 insurers should expect their liabilities to be higher, which would change their capital structure; influencing their performance and position. This change in the liabilities of insurance companies will enhance the transparency, quality and trustfulness of the financial statements. Correspondingly, it will decrease the future variability and create homogeneity within insurance financial statements, which is the core aim of IASB in establishing IFRS17.

Subject Keywords

IFRS-17, Fulfilment Cash Flows, Contractual Service Margin, Policyholder Cash Flows, XGBoost, Prophet

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https://hdl.handle.net/11511/98203

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Graduate School of Applied Mathematics, Thesis

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Citation Formats

R. Jubeh, “Modeling Cash Flows Under IFRS17: TÜRK Case,” M.S. - Master of Science, Middle East Technical University, 2022.