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NAIC Begins International Solvency Initiative
The International Insurance Relations Committee of the NAIC announced the beginning of a major initiative to consider the link between U.S. and global insurance solvency standards. The focus will be on: capital requirements, international accounting, group supervision, valuation issues in insurance, and reinsurance. It will be done in cooperation with Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) and the European Commission. The NAIC will also look at the impact of Solvency II on insurers and the possible trade implications of the treatment of US insurers and reinsurers under Solvency II. The Financial Condition (E) Committee was also charged to analyze other foreign supervisory initiatives and international accounting standards and to identify and prioritize areas to be considered and the resources needed to do so. No timetable was set for the initiative, which still needs further detailed development. The current efforts towards Principles-Based Reserving and Reinsurance were seen as being a part of the Modernization Initiative.
IASB Hears Options for Insurance Contracts Measurement Basis
The International Accounting Standards Board (IASB) heard an Education Session for staff 15 October regarding candidate Measurement Bases for the Exposure Draft on IFRS 4, Insurance Contracts. There were five options presented in the session: Exit Value as presented in the Discussion Paper of last year; Estimate plus a margin ³for bearing risk²; Estimate plus a margin ³for bearing risk² plus a margin to premium received; Estimate plus a margin to premium received; and, Unearned Premium Reserve (UPR). The discussion by board members included a surprising amount of interest in UPR, questions as to the meaning of the margin in the second and third candidates, concerns over the distinction between market consistent and entity specific estimates and expenses, and questions as to whether the candidates do or need to adhere to the framework and the IAS 37 proposals.
Further information may be found at: IASB Meeting 15 October 2008
SEC votes to end reconciliation for foreign private issuers in the US
The Securities and Exchange Commission voted unanimously, on November 15, 2007, to approve rule amendments under which financial statements from foreign private issuers in the U.S. will be accepted without reconciliation to U.S. Generally Accepted Accounting Principles (US GAAP) only if they are prepared using International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Chairman Cox also announced that the SEC will convene two roundtables, on December 13 and December 17, to collect more feedback from the public on the issue of giving U.S. domestic issuers the same option that foreign issuers have in our markets to use either IFRS or U.S. GAAP.
SEC news release
GNAIE comment letters on IASB Insurance Contracts DP and FASB ITC on Accounting for Insurance Contracts
GNAIE has submitted a comment letter to the International Accounting Standards Board (IASB) on their Accounting for Insurance Contracts Discussion Paper, which is the first due process document for Phase II of the Insurance Contracts Project.
GNAIE also submitted a comment letter to the Financial Accounting Standards Board (FASB) on their Invitation to Comment on the FASB Agenda Proposal: Accounting for Insurance Contracts by Insurers and Policyholders, Including the IASB Discussion Paper, Preliminary Views on Insurance Contracts.
GNAIE comment letter on IASB Insurance Contracts DP
GNAIE comment letter on FASB ITC on Accounting for Insurance Contracts
SEC Concept Release On Allowing U.S. Issuers To Prepare Financial Statements In Accordance With IFRS
The Securities and Exchange Commission published a Concept Release to obtain information about the extent and nature of the public’s interest in allowing U.S. issuers, including investment companies subject to the Investment Company Act of 1940, to prepare financial statements in accordance with International Financial Reporting Standards (IFRS) as published by the International Accounting Standards Board (IASB) for purposes of complying with the rules and regulations of the Commission. U.S. issuers presently prepare their financial statements in accordance with generally accepted accounting principles as used in the United States, referred to as U.S. GAAP.
Comments should be submitted on or before November 13, 2007.
SEC Concept Release
Proposals for a IFRS Phase II Insurance Accounting Model
Three major insurance groups present views to IASB on insurance accounting
GNAIE Elects Jerry de St. Paer of AIG as New Chairman
Jerry M. de St. Paer, Senior Vice President – Finance of American International Group, was elected chairman and treasurer of the Group of North American Insurance Enterprises (GNAIE) at its annual meeting on April 4. He succeeds Richard J. Carbone, Chief Financial Officer of Prudential Financial.
GNAIE also elected Michael E. Sproule, Executive Vice President and Chief Financial Officer of New York Life Insurance Company, as vice chairman. Philip V. Bancroft, Chief Financial Officer of ACE Limited, was elected secretary.
IASB releases Preliminary Views on Insurance Contracts
On May 3, 2007 the International Accounting Standards Board (IASB) released the long delayed first due process document for Phase II of the Insurance Contracts Project. Weighing in at 236 pages in two parts, the document is available on the subscribers portion of the IASB website until May 14th,
when it will be released to the public.
The U.S. Financial Accounting Standards Board (FASB) is expected to release the same document for comment in the U.S. in order to gauge whether to add a convergence project to the FASB agenda.
Comments are due November 16, 2007.
FASB Votes Not to Defer SOP 05-1
With only two members supporting the Chairman, on 30 January FASB voted to not defer SOP 05-1. In addition, they said they would wait until the market shakes out to see if there was any diversity in practice before developing any additional guidance.
Manulife Financial becomes newest member of GNAIE
Nov. 2, 2006 — Manulife Financial has joined the Group of North American Insurance Enterprises (GNAIE), the only trade association that focuses exclusively on financial reporting, accounting and solvency issues.
Manulife Financial is a leading Canadian-based financial services company that operates worldwide, offering a diverse range of financial protection products and wealth management services.
IAIS Issues its Second Liabilities Paper
The IAIS believes that it is most desirable that the methodologies for calculating items in general purpose financial reports can be used for, or are substantially consistent with, the methodologies used for regulatory reporting purposes, with as few changes as possible to satisfy regulatory reporting requirements.
This paper provides a second set of IAIS observations on identified measurement themes common to both general purpose financial reporting and regulatory reporting that we understand the IASB to be addressing in its consideration of Phase II of its Insurance Contracts Project. It assumes that a prospective asset/liability model with adjustments for time value of money and a risk margin will be adopted. It follows on from our initial observations of May 2005.
FASB Releases Invitation to Comment on Bifurcation Project
The US Financial Accounting Standards Board (FASB) released an Invitation to Comment on a “Project to Improve Financial Reporting for Insurance Accounting”. The project was initially a reaction to US GAAP’s current reliance on a principle-based definition of risk transfer to define reinsurance contracts.. During discussions at December 20 meeting FASB members called for consideration of a bifurcated approach to all insurance contracts. They requested that staff prepare an Invitation to Comment on the concept. Comments are due August 24, 2006
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