Financial Reporting for Insurance Contracts Under Possible Future International Accounting Standards

Research Projects – Life Insurance

 

The world of financial reporting continues to change as it is expected that the current U.S. financial reporting framework (GAAP) will converge to an international framework. The International Accounting Standards Board (IASB) issued an exposure draft and the U.S. Financial Accounting Standards Board (FASB) issued a discussion paper on a proposal to revise the reporting of liabilities for insurance contracts under a future international framework. The Society of Actuaries Financial Reporting Section is please to make available the following study performed by Steven Barclay, Sam Gutterman and Randy Tillis of PricewaterhouseCoopers examining the financial reporting effect of the proposals on U.S contracts.

Companies, consultants and software firms were recruited to model the impact of the exposure drafts on various product lines including term, participating whole life, universal life, deferred variable annuities, single premium immediate annuities, long term care, and supplemental health. In addition to examining the cash flows and income statements of the proposed international financial reporting framework to that of current US GAAP standards, the research analyzed alternatives scenarios in those cases where IASB and FASB have not settled on a set of final positions. The project also identified areas in which implementation guidance and further clarification of the principles are needed.

Research results from the SOA's analysis of IASB's Preliminary Views on this topic is also available.

The Financial Reporting Section Council would like to thank the companies that provided modeling assistance and those individuals who served on the Project Oversight Group.

If you have any questions or comments regarding this report, please direct them to Ronora Stryker, SOA Research Actuary, at rstryker@soa.org.