Description: There is often a disconnect between the way products are priced IRR and embedded value methods and the way business performance is measured once it is already on the books GAAP and GAAP ROE. This article discusses the theoretical reasons for this disconnect and how an accounting system could be developed to eliminate the disconnect and thereby align investor and management expectations with the financial reporting system.

Description: This dialogue discusses the history and purpose of section 811(a) and its historic role in the computation of life insurance company taxable income and, in particular, reserves.

Description: Review of modeling of impact of proposed GAAP changes and commentary on preparedness based on company survey.

Description: Actuaries are accustomed to considering how much conservatism is appropriate in their estimates, whether made for pricing or for mea- surement of liabilities. In the proposals for a new standard on accounting for insurance contracts, this conservatism is referred to by the International Accounting Standards Board IASB and the Financial Accounting Standard Board FASB of the United States as the risk adjustment.

Description: This article is a brief review of the Society of Actuaries 1981 monograph ‘Adverse Deviation,’ by John C. Wooddy et. al. The author of this review notes that the monograph describes the approach - devised by the Committee on Theory of Risk - to ‘the problem of providing appropriately for the risks of adverse deviation in a GAAP valuation under the specifications of the ‘Audit Guide for Stock Life Insurance Companies.’

Description: Update on accounting and capital/RBC issues subsequent to tax reform.

Description: Examination of how mean reserve factors can best be calculated in light of the new accounting reporting requirements for the earnings of stock life insurance companies. Also examines some methods of expense amortization, including the reserve factor method, and also attempt to show an informative comparison of how reported calendar-year earnings can be expected to emerge with statutory mean reserve factors, natural mean reserve factors, and assorted expense amortization methods. Followed by several submitted discussion papers

Description: Understanding the Deferred Acquisition Cost (DAC) asset balance movements from one reporting period to the next can be a challenge when reportinged under FAS 97. The mechanics of FAS 97 call for an amortization ratio (i.e., k factor) that forces the amortization of the DAC asset to be matched to the earnings received over the life of the product. However, the fact that the k factor is dynamically set results in “unlocking” components of the DAC rollforward. This article shows how the basic equation for the amortization ratio can be used to derive equations that provide insights into what the DAC balance represents. Furthermore, partial derivatives of these equations are used to show how unexpected changes in the Estimated Gross Profit (EGP) stream impact the amortization and unlocking components of the DAC rollforward.

Description: Discussion of some of the implications of FAS 133 Implementation Issue B36 for the Financial Reporting of Reinsurance

Description: Practical Considerations for Implementing the New Statement of Position for Long Duration Contracts and Separate Accounts .