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The Actuary The magazine of the Institute & Faculty of Actuaries
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Financial Reporting Group

On 3 May 2007 the International Accounting Standards Board (IASB) released for comment a discussion paper (DP) on accounting for insurance and reinsurance contracts entitled ‘Preliminary Views on Insurance Contracts’. This is the second phase of the IASB’s insurance contracts project, which in 2005 introduced IFRS 4 – the International Financial Reporting Standard for Insurance Contracts. The Financial Reporting Group (FRG) has established a working party to both listen to and address queries from members and, further, to develop the profession’s response to the IASB.

The IASB insurance project aims to establish a common standard for financial reporting of insurance contracts based on a form of ‘fair value’ (the DP describes this as current exit value). The proposals set out in the DP would introduce fundamental changes to insurance accounting, including, for actuaries, both what we measure in accounts for life and non-life insurance liabilities, as well as how we measure it.

The DP outlines the board’s preliminary views on the main components of the Phase II accounting model for all insurance contracts, including life, non-life, direct insurance, and reinsurance. Following a six-month consultation closing on 16 November 2007, an exposure document is expected to be issued late in 2008. This will formally expose the comprehensive standard for insurance as part of the IASB’s due process. The final standard, expected to be issued in 2010, will replace the temporary dispensations and interim accounting standard developed in IFRS 4.

Should you have any questions or points of view on the DP, please contact Peter Dingwall, secretary to the FRG (peter.dingwall@actuaries.org.uk) or me, Ian Moran (imoran@deloitte.com), or any other member of the working party, as follows:

Clayton Balkind (clayton.balkind@kpmg.co.uk), Erica Nicholson (erica.j.nicholson@uk.pwc.com), Michael Payne (michaelact.payne@prudential.co.uk), Paul Mylet (paul.mylet@aviva.com), Tony Silverman (anthony_silverman@standardandpoors.com), and Derek Wright (derwright@deloitte.co.uk).