The Board discussed general education material on the nature of insurance contracts and current accounting models for insurance contracts. In essence, this meeting was the kick-off of the Phase II project starting with a clean slate. No decisions were made as this session was meant to be a 'refresher' for the Board.

The Board discussed general issues around which model(s) should be used for different types of insurance contracts--focussing on the 'asset/liability model' and the 'deferral and matching model'. The Board also discussed general issues on whether the model should:

• be constructed in a manner that prohibits or limits the recognition of net profit or loss on initial recognition,
• incorporate expectations about cash inflows and outflows that are a consequence of policyholder renewals or cancellations, and
• should require costs incurred to acquire new insurance contracts to be capitalised as assets and amortised.

In September, the Board will discuss issues related to measurement, such as discounting, asset/liability interaction, risk/service adjustments, unbundling, participating contracts, and credit standing. This discussion is also expected to be educational, and no decisions are expected.