Statutory, GAAP and IFRS 17 reconciliation: one explained walk between the three bases, every quarter
One explained walk from statutory to GAAP or LDTI to IFRS 17 results.
See one case, screen by screen ↓It is the walk that explains why equity and profit differ between bases: statutory capital and surplus to US GAAP equity, then to IFRS 17 equity, step by step. Statutory expenses acquisition costs and holds reserves under VM-20, VM-21 and CARVM; US GAAP with LDTI capitalises DAC and measures market risk benefits at fair value; IFRS 17 holds the contractual service margin and a risk adjustment as liabilities. This solution builds that walk each quarter and explains each step.
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A life and annuity writer reports the same book three ways: statutory for the regulator, US GAAP with LDTI for its long-duration contracts, and often IFRS 17 for a parent. Each basis lands on a different working day, from a different system, at a different grain — the quarterly statement by page and line, the GAAP trial balance by account, the IFRS 17 results by movement-analysis row.
The numbers are usually right early. Explaining them is what takes the time: about 1,200 ledger lines mapped by hand to the steps of the walk, last quarter’s bridge copied forward, explanations retyped. A walk that does not foot gets a plug, the opening CSM does not equal last quarter’s close, and the CFO still wants two sentences on why IFRS 17 equity is a billion lower.
Estimated split for one quarter’s three-basis walk, by spreadsheet and with the solution.
Six specialist agents read the three bases, build the walk, tie each item to its rule, explain the CSM by cohort and chase what doesn't tie; the head of reporting signs.
Ashcombe Life & Annuity Company, Q3 2026. The IFRS 17 results land on Sunday night; the group pack is due Wednesday. Here is what happens next, screen by screen, in the working solution.
The statutory quarterly statement lands Thu 8 Oct on working day 6, the GAAP trial balance and LDTI roll-forwards Fri 9 Oct, the IFRS 17 results and movement analysis Sun 11 Oct at 21:55. The basis reader ties each total to its source line: capital and surplus $1,842.6m to page 3 line 38, GAAP equity $2,962.2m to the trial balance, IFRS 17 equity $1,677.7m to sheet B1.
The prior-quarter walk does not tie: “Opening tie fails by $0.8m.” It is flagged, not adjusted.
Helen opens the walk: statutory $1,842.6m to US GAAP $2,962.2m to IFRS 17 $1,677.7m, in 15 steps. 48 of 52 items tie to their rule and journal; 4 don’t yet. The rail shows how it was built — six agents, Sunday 21:56 to 22:40.
“Mapped 1,214 ledger lines to 15 steps with basis map v2026.3. The walk foots to $0.0m — nothing plugged.”
Deferred acquisition costs, +$1,126.4m: statutory expenses the costs of selling a contract when they are paid; US GAAP capitalises them and amortises them on a constant-level basis. Four items — term life, universal life, fixed indexed and variable annuities — the journal that books them, and the rule: AP-07 §3.2 · ASC 944-30 · SSAP 71.
Every difference between the bases at 30 Sep: 25 statutory to GAAP, 23 GAAP to IFRS 17, 4 totals and ties. Each row carries the source line on each basis, the walk step, the standard and the owner. One button exports the list for the auditors.
“$0.0m plugged.”
RI-13, variable annuity withdrawal guarantees: the VM-21 reserve on the statutory side, the MRB roll-forward under GAAP, a difference of −$121.6m. The rule quotes AP-09 §4 and ASC 944-40-25-25C. The journal is entry JE-Q3-413 — and a warning that the MRB own-credit change is not in the AOCI ledger.
“Adjusting ledger · posted by the reporting team, not the agents.”
The CSM step opens inside the walk, one bar per annual cohort. The 2023 cohort moved most: Horizon 7 fixed indexed annuities are being surrendered faster once their surrender charge falls below 5%. The Q3 lapse study raised the lapse assumption from 6.0% to 7.8% a year, and the cohort’s future profit fell $22.6m — through the CSM, not this quarter’s profit.
“The cohort is still profitable; no loss component.” Waiting for Tomás Lindqvist, the valuation actuary, to approve.
Four items, $7.6m in all. The one that matters is a zero-tolerance tie: the opening CSM is $0.8m below the signed Q2 close, because treaty RT-114 was recaptured on 21 Jul with effect from 1 Jul and the Q2 walk was not restated. Each item carries the numbers, the likely cause, and the question already sent to its owner.
Agents never accept a difference on a zero-tolerance tie.
On OI-4, Tomás replies: “Yes — the split was missed in the September entry. I’ll send the corrected top-side to Grace.” Resolving OI-4 records how it cleared — “Corrected entry posted by the owner” — with JE-Q3-434 attached as evidence.
Six short paragraphs for Daniel Shore and the audit committee of Thu 29 Oct: equity on each basis, statutory to GAAP, GAAP to IFRS 17, the CSM, profit, what is open. 23 figures, each linked to its step. In the margin, Tomás and Grace note the paragraphs they checked against the movement analysis, the statement and the trial balance.
“No term an audit committee would need explained.”
Helen signs the Q3 2026 walk with 48 of 52 items tied. The meaning of the signature is recorded with it — “Reviewed: the walk foots, every step has its rule” — and the items still open are listed on the signed walk with their owners, to clear before the group pack on Wed 14 Oct.
The same quarter, seen by the five people who carry it — what they said before, and what they see now.
Six specialist agents read the three bases, build the walk, tie each item to its rule, explain the CSM by cohort and chase what doesn't tie; the head of reporting signs.
Reads the statutory quarterly statement (pages 2–4, Exhibit 5, Schedules D and S), the GAAP trial balance and LDTI roll-forwards, and the IFRS 17 movement analysis, and ties each total to its source line.
Maps every ledger line to its walk step through the basis map and checks the walk foots from statutory to GAAP to IFRS 17, for equity and for profit.
Ties each reconciling item to its standard paragraph — NAIC SSAP, ASC 944, 320 or 740, IFRS 17, IFRS 9, IAS 12 — and to the section of the company’s accounting policy paper that applies it.
Breaks the CSM movement out by annual cohort, compares the release to plan, links each change in estimates to its assumption memo and writes a plain-words note.
Lists items that do not reconcile above materiality and every failed zero-tolerance tie, looks for the likely cause in treaties, entries and memos, assigns an owner and drafts the question.
Drafts the management and audit-committee commentary from the walk, in six short paragraphs, with every figure linked to its step.
Signs the walk; actuary approves cohort notes; CFO the commentary. The agents propose; a named person decides.
Ask about a step, a cohort or an open item — or tell it what to change. Answers cite the walk.
Why is IFRS 17 equity $1.28bn below GAAP?
Because IFRS 17 holds the profit not yet earned as a liability. The contractual service margin is $1,612.4m and the risk adjustment $318.6m; the $1,126.4m of DAC also goes. Replacing the GAAP reserves with best-estimate cash flows adds back $1,474.0m, and tax $341.4m. Net: −$1,284.5m, from $2,962.2m to $1,677.7m.
Why did the 2023 cohort’s CSM fall?
Annuity customers are surrendering faster. The Q3 lapse study raised the Horizon 7 lapse assumption from 6.0% to 7.8% a year, cutting the 2023 cohort’s future profit by $22.6m — through the CSM, not this quarter’s profit. It also earned $11.3m against $9.4m planned, because a bigger share of a smaller margin is earned now.
What still doesn’t tie before the group pack?
4 items, $7.6m in all. The one that matters is OI-1: the opening CSM is $0.8m below the signed Q2 close — the RT-114 recapture — and it is a zero-tolerance tie. The others: RT-109 ceded reserve credit $3.4m (Grace), the AOCI tax rate $2.1m (Wen) and the MRB own-credit split $1.3m (Tomás, fix on its way). All due by Wed 14 Oct.
Also tie the opening risk adjustment to last quarter
Done. New zero-tolerance tie: “Opening risk adjustment equals last quarter’s closing risk adjustment, by cohort.” It runs from this quarter: today the opening $322.1m equals the Q2 close, so nothing new is open. You can change it in Settings.
12 screens from the working solution, on its sample data. Pick one to see it large.
Materiality, ties, approvers and dates are settings for each entity, not a project.
| Setting | Default | Choose from |
|---|---|---|
| Materiality for an explanation | $1.0m or 2% of the step | $0.5m or 1% · $1.0m or 2% · $2.0m or 3% of the step |
| Cohort grain | Annual cohort, transition group apart | Annual cohort, transition group apart · Annual cohort by portfolio |
| Commentary voice | CFO and audit committee | CFO and audit committee · Group reporting team · Rating agency |
| Zero-tolerance ties | Basis totals, opening CSM, no plug | Each on or off · add one by asking the assistant |
| Bases | Statutory, US GAAP with LDTI, IFRS 17 with IFRS 9 | Each on or off |
| Who signs the walk | Helen Marchetti | Helen Marchetti · Grace Adeyemi |
| Who approves CSM cohort notes | Tomás Lindqvist | Tomás Lindqvist · Appointed actuary |
| Group reporting pack | Working day 10 · Wed 14 Oct | Working day 10, Wed 14 Oct · Working day 8, Mon 12 Oct |
Every figure is labelled: a target the solution is built to, an estimate, a typical published result, or a proven one.
“demo” = seen in the working solution, on its sample Q3 2026 data · “target” = the design goal, measured in the live solution · “estimated” = our estimate · “typical” = published figures (WTW IFRS 17 survey of 235 insurers — 55% highly confident explaining simple results; KPMG, Benchmarking LDTI implementation — US$26.4m average cost). People, companies, treaties and products named on this page are fictional — characters and sample data in the working solution.
It is the walk that explains why equity and profit differ between bases: statutory capital and surplus to US GAAP equity, then to IFRS 17 equity, step by step. Statutory expenses acquisition costs and holds reserves under VM-20, VM-21 and CARVM; US GAAP with LDTI capitalises DAC and measures market risk benefits at fair value; IFRS 17 holds the contractual service margin and a risk adjustment as liabilities. This solution builds that walk each quarter and explains each step.
The basis reader ties each basis total to its source line. The walk builder maps every ledger line to one of the walk steps through your basis map and checks the walk foots with no plug. The rule matcher ties each reconciling item to its standard and to your policy paper section.
The CSM cohort analyst splits the movement by annual cohort — opening, new business, interest, changes in estimates, release and closing — compares the release to plan and links each change in estimates to its assumption memo. It writes a plain-words note per cohort, and the valuation actuary approves each one.
The break chaser lists every item above materiality and every failed zero-tolerance tie, looks for the likely cause in treaties, entries and memos, and sends the owner a question with the numbers and a due date before the group pack. Agents never accept a difference or post a correcting entry.
No. The agents read the three bases, the policy papers and last quarter’s walk, and draft the walk, the notes and the commentary. Adjusting entries are posted by your reporting team, and assumptions stay with your actuaries.
Yes. The head of financial reporting signs the walk, the valuation actuary approves every cohort note and the CFO approves the commentary before the audit committee. Who signs, materiality and the zero-tolerance ties are all settings.
The external auditor can read the walk, the items, the sources and the audit trail. Every reconciling item, with its rule, journal and owner, can be exported for the auditors.
The Agentic Solution Engine builds and deploys it from your requirements — your basis map, accounting policy papers and a past quarter’s statement, ledger and IFRS 17 results — and it goes live once every quality gate has passed. We will walk you through it on one of your own quarters first.
Adverse development seen in weeks, not at the next quarterly review.
1-min demoActuarial Assumption ManagementAn auditor's question answered in minutes, with the original support attached.
1-min demoPremium & Claims ReconciliationBreaks found and explained on day one of close, each tied to its source records.
1-min demoWe’ll build the walk on one of your own past quarters, from your statement, ledger and IFRS 17 results.