Ian E Dilks, PriceWaterhouseCoopers: The topic for discussion today is the development of international accounting standards for the insurance industry. Until recently, the insurance industry has been less proactive and so less successful than the banks in influencing the standard setting process. We will look at the reasons for this and then analyze some of the more complex issues facing us today.
Gerry Dickenson, The Geneva Association: Many of these issues arise from the fact that the IASB, and indeed the IASC before it, have had the theoretical preference in the long term for measuring all financial instruments at fair values, and because actuarial pricing and modelling is based on discounted cash flows, it was assumed that fair valuing insurance contracts would be easy. This has not proved the case and it was also one of the reasons why insurance contracts were taken out of IAS39 – with, I believe, the intention of bringing them back later to help support a revised IAS39 moving towards a fuller fair value measurement system.
ID, PricewaterhouseCoopers: Yes. One consequence has been the current two-phase approach with a separation of the measurement of assets of an insurance company under IAS39, and the liabilities – the insurance contracts – under IFRS4 for the next few years under Phase I.