Reserving, valuation and revenue recognition are at the core of the insurance business. The effect of accounting standards proposals in these and other critical areas must be carefully measured and understood before their implementation. In order to assist standard-setters and interested parties in understanding the potential affects and possible direction of proposed standards, the GNAIE has and will continue to solicit research projects from independent accounting and actuarial firms. Below are the results of our projects to date:
- 26.March.2008 Study prepared by Ernst & Young: Summary of Comment Letters on IASB Discussion Paper Preliminary Views on Insurance Contracts
A group of industry association/trade groups engaged Ernst & Young to review and summarize the comment letters submitted to the International Accounting Standards Board (IASB) in response to its Discussion Paper Preliminary Views on Insurance Contracts.
Consortium members:
American Council of Life Insurers (ACLI)
American Insurance Association (AIA)
CFO Forum (CFOF)
European Insurance and Reinsurance Federation (CEA)
Group of North American Insurance Enterprises (GNAIE)
Life Insurance Association of Japan (LIAJ)
National Association of Mutual Insurance Companies (NAMIC)
Property Casualty Insurers Association of America (PCI)
Reinsurance Association of America (RAA). |
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- 1.November.2007 News Release, Study prepared by Ernst & Young on Market Value Margins for Insurance Liabilities, FAQ
Two important insurance industry developments have brought considerable attention to the need for a consistent framework for measuring the fair value of insurance liabilities. First, new financial reporting standards aimed at producing fair value financial statements for insurers are being considered by the IASB, the FASB and other accounting policy organizations. Second, insurer solvency standards being considered in various countries have focused on the potential variability of fair value financial statements as the basis for establishing minimum regulatory capital requirements for insurers.
A key element of the calculation of fair values for insurance liabilities is the determination of a market value margin (MVM) for non-hedgeable risk. The cost of capital method has emerged as a strongly preferred methodology for this calculation and has already been adopted in certain jurisdictions as part of the framework for establishing capital requirements and measuring available capital.
This report examines the cost of capital method in two specific contexts:
€ Measuring the fair value of insurance liabilities for financial reporting purposes, and
€ Establishing regulatory capital standards for insurers.
Examples of the application of the cost of capital method to life and non-life insurance products are used to highlight practical challenges that must be addressed to ensure proper implementation of this method. |
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- March.2005 Draft Study
Prepared by Watson Wyatt on Alternative GAAP Issues
In the development of the first Watson Wyatt study on a potential accounting model for life insurance , several issues presented themselves that were in
need of further development. Watson Wyatt has completed this second study to explore those issues. |
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- 15.September.2004 Study
prepared by Ernst & Young on the Impact of Fair Value on Property/Casualty
Insurers
| What will be the effect of risk margins on the accounting for non-life lines of business? Based on the principles expressed in the IASB's Draft Statement of Principles for Insurance Contracts, Ernst & Young completed a study of several common lines of non-life business using recent experience models to measure the likely differences between Fair Value as it was described and US GAAP. |
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- 14.October.2004 Draft study prepared by Watson Wyatt on the Development
of Alternative Accounting Methodolgy for Life Insurance and Similar
Products
What would a practical, relevant and comparable accounting model for life insurance that uses the terms and concepts of fair value look like? Watson
Wyatt has completed a study of the possible development of an accounting model for life insurance that goes beyond US GAAP. |
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