Hiscox Ltd on Thursday reported its restated financial results for 2022 under IFRS 17, a financial reporting standard newly adopted by the Bermuda-based insurer.

IFRS 17 is an accounting standard for insurance contracts. According to the UK government’s Actuary Department, the aim of the standard is to make risk transfer contracts more comparable between different entities.

Hiscox said that despite the new presentation and remeasurement of the numbers, there is no change to its outlook.

‘While IFRS 17 marks a significant change in the accounting, presentation, and disclosures of our financial results, the economics of our business remain unchanged. We continue to look forward with confidence given our strong foundations, favourable market conditions and investment income outlook, Chief Financial Officer Paul Cooper said.

The insurer reported pretax profit of $275.6 million for all of 2022 under IFRS 17, compared to profit of $44.7 million under IFRS 4. For the first half of 2022, pretax profit was $25.4 million under IFRS 17, compared to a loss of $107.4 million under IFRS 4.

Hiscox explained this was due to the significant impact of discounting on its financial results. Discounting has been introduced to represent a ’more economic view of claims liabilities on the same discounted basis as assets‘, it said, which ’ultimately reduces volatility in the income statement‘.

In 2022, the benefit of discounting on pretax profit was $195.6 million, Hiscox said. This consists of $75.6 million from initial discounting on recognition of claims, offset by a $17.8 million unfavourable movement from the unwinding of the discount. There also was a $137.8 million favourable impact from rate movements, Hiscox said.

The company noted that discounting is a timing difference as claims are settled, and the discount unwinds throughout the claims settlement period. This will have an initial favourable impact on profit as the discount is established followed by an unfavourable impact in a positive interest rate environment as the initial credit from discounting unwinds.

For 2023, Hiscox estimates the unwind is likely to be in the region of $110 million to $140 million at full year, and $60 million to $65 million at half year. This is significantly higher than the year before, when interest rates were comparatively lower, it explained.

Shares in Hiscox were up 0.5% at 1,160.00 pence on Thursday morning in London.

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