As of January 1, Canadian life insurance companies like Manulife Financial Corp., Sun Life Financial Inc. and Great-West Lifeco Inc. will be reporting quarterly results under a new international accounting standard.

In a Tuesday interview on BNN Bloomberg’s The Close, Nigel D’Souza, financial services analyst at Veritas, says the effects of the switch to International Financial Reporting Standards (IFRS) 17 will mean changes in the near term.

“It’s going to take some adjustment as we move over to the new standard to recalibrate how we think about the life insurers, how they report their earnings, and get comfortable with the return rate of earnings going forward.” he says.

Some of the changes include a simplified view of the income statement, disclosures on the sources of earnings and new key performance indicators (KPIs).

John Aiken, head of research, Canada for Barclays, suggests it could be a benefit for investors, despite expected lower earnings.

“We’re going to see higher levels of regulatory capital, and hopefully we’re going to see a lot less volatility of earnings, which is one of the biggest complaints investor have about the Lifeco’s at present.”

On the topic of Asia growth, D’Souza, who is cautious on the Lifeco’s, says despite the lifting of COVID-19 restrictions in China, he doesn’t expect the country to be a catalyst for investors in the next 12 months.

However, Aiken sees a potential upside beyond the first quarter.

“We do think this is going to translate to strong growth for the remainder of the year, even if we have the economic slowdown in North America. This is going to be supportive for the Lifeco valuations because investors can point to both the near term, as well as medium and longer term benefits coming through.”

Aiken is overweight on Manulife and Sun Life, but underweight on Great-West Lifeco Inc.. Nigel has a reduce rating on all three stocks.