Convergence of Us Gaap and Ifrs on Insurance Contract

Convergence of Us GAAP and IFRS on Insurance Contract

Contents:

1. Introduction(IFRS)

2. PwC Summary as of February 20, 2013

3. Changing the tide of risk (An analysis by PWC)

4. The Impact of IFRS and Solvency II on Asset-Liability Management and Asset Management in Insurance Companies

5. Questions to consider when implementing an IFRS framework

6. The Impact Of Combining The U.S. GAAP And IFRS

7. Looking Beyond the Accounting Changes

8. Project history

Introduction

IFRS 4 is the first guidance from the IASB on accounting for insurance contracts – but not the last. A Second Phase of the IASB's In surance Project is under way. The Board issued IFRS 4 because it saw an urgent need for improved disclosures for insurance contracts, and modest improvements to recognition and measurement practices, in time for the adoption of IFRS by listed companies throughout Europe and elsewhere in 2005. The improvements to recognition and measurement are ones that will not likely have to be reversed when the IASB completes the second phase of the project.

Summary of IFRS 4

Scope. IFRS 4 applies to virtually all insurance contracts (including reinsurance contracts) that an entity issues and to reinsurance contracts that it holds. It does not apply to other assets and liabilities of an insurer, such as financial assets and financial liabilities within the scope of IAS 39 Financial Instruments: Recognition and Measurement. Furthermore, it does not address accounting by policyholders.

Definition of insurance contract. An insurance contract is a "contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder."

Accounting policies. The IFRS exempts an insurer temporarily (until completion of Phase II of the Insurance...