Mr Hooger­vorst began by noting that although fostering financial stability is not the primary goal of accounting standards, the trans­parency of financial state­ments resulting from the accounting standards is a "crucial in­gre­di­ent for achieving financial stability". He discussed the work of the IASB in recent years to issue standards that lead to high-qual­ity accounting, which then leads to better insights of a company's per­for­mance, the ability to discover problems more timely and an early warning system to detect changes in a company's risks and per­for­mance, amongst other benefits.

In addition, Mr Hooger­vorst talked about IFRS 17 Insurance Contracts that was issued about one month ago and how it is finally an international standard that will reduce the in­com­pa­ra­bil­ity between national GAAPs for insurance. He also noted that IFRS 17 will improve financial stability in six areas:

First of all, the insurance liability will be properly measured and regularly updated, giving much better in­for­ma­tion. The build-up of un­sus­tain­able equity positions will become visible much more quickly.

Second, the cost of options and guar­an­tees will be regularly updated and fully reflected in the financial state­ments.

Third, companies will also provide updated in­for­ma­tion on the risk margin they hold for their insurance products.

Fourth, the losses embedded in onerous groups of contracts will have to be recog­nized im­me­di­ately. Contracts can be grouped, but in a way that ensures that the losses embedded in onerous groups of contracts will not be averaged with groups of prof­itable contracts.

Fifth, IFRS 17 ends up-front profit taking and revenue will only be recog­nized as the service is provided.

Finally, IFRS 17 will also make it easier for investors to judge the per­for­mance of any insurance company. Currently, many investors base their analysis on Solvency II, which is the pru­den­tial standard for the European Union. But Solvency II is almost entirely focused on the balance sheet. It makes no dis­tinc­tion between profits earned in the past and profits to be earned in the future. It does not convey in­for­ma­tion about prof­itabil­ity over time.

In his remarks about the IASB's role in improving com­mu­ni­ca­tion through financial reporting, Mr Hooger­vorst noted that this will be a central theme in the IASB's work plan. Instead of working on major cross-cut­ting Standards, the Board will focus on improving the primary financial state­ments, making dis­clo­sures more effective and improving the com­pa­ra­bil­ity and use of non-GAAP measures.

A full tran­script of Mr Hooger­vorst's remarks is available on the IASB website.