This report, together with accounting standard FRS 27 Life Assurance issued in December 2004, completes the ASB's response to the request from the Financial Secretary to the Treasury asking for an urgent study into accounting by life assurers. The report summarises the needs of different users of financial statements of life assurance entities, and the improvements introduced in FRS 27 to meet those needs. It also analyses key areas where further improvements may be made, including the measurement of liabilities, profit recognition, the distinction between equity and liabilities, and the role of embedded value methods.

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The report notes that the following matters still require fuller consideration. They are likely to be addressed in the IASB's Project on Accounting for Insurance Contracts:

• Liability measurement and the role of management discretion.
• Basis for recognition of profit for these long term contracts.
• Liability/equity distinction for those surpluses not yet allocated.
• Role of embedded value information in the financial reports.