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Insurance Accounting Newsletter — Issue 14, May 2010

Published on: 21 May 2010

This edition is titled Steady, if slow progress.

After another long week of joint meetings during the month of April, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have prepared the ground for a last attempt to resolve the major disagreements between them. Officially moving the date of the exposure draft (ED) publication to June was the price to pay for the divergence in opinions between the Boards. The Boards did manage to make some progress and many important decisions have been reached. However, in our opinion, the complexity of the remaining issues still makes the June deadline look optimistic.

At their previous meetings, the Boards had spent time developing the foundations for a composite margin model with the aim of allowing for a meaningful comparison against the two-margin approach, also considered previously (explicit risk adjustment and residual margin). The Boards will compare the merits of these two models at the May meetings. Although there is uncertainty on the final choice for how to address margins, agreement was reached in many areas that would affect the recognition and measurement of margins, regardless of whether a single composite margin or an explicit risk adjustment is chosen.

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