Accounting

  • IAS - international accounting standards for insurers
  • "natural reserve theory"
  • AICPA - American Institute of Certified Public Accountants
    • The CPA letter
  • FASB - Financial Accounting Standards Board
  • IFRS - International Financial Reporting Standards
  • 1983 - SOA - Accounting Issues for Insurance Companies, Society of Actuaries - 20p
  • 1985 - SOA - New Product Accounting Alternatives, Society of Actuaries - 26p
  • 1989 - SOA - Source-of-Earnings Analysis Under FAS 97 Universal Life Accounting, Society of Actuaries - 64p
  • 2004 - SOA - International Accounting Standards—Current Developments, Society of Actuaries - 24p
  • In this project, we studied a typical universal life (UL) contract issued in the United States.
    • We studied three alternative approaches of recognizing renewal premiums and their effect on expected earnings.
      • The first was to ignore their recognition until received.
      • The second was to recognize the amount of expected renewal premium, while the
      • third only recognized the minimum required premium level that would keep the contract in force.
    • Many actuaries wonder why this subject even needs to be discussed, as the answer seems obvious. Why is this an issue?
      • The problem is that these renewal premiums are not guaranteed; they don't have to be paid and thus are not under the control of the insurer.
      • The definition of an asset is that it has to be under the current control of the entity. In fact, in sales illustrations, policyholders may not desire to pay a premium.

--  Sam Gutterman

2004 - SOA - International Accounting Standards—Current Developments, Society of Actuaries - 24p

  • Other differences between statutory and generally accepted accounting principles have been recognized. Some of these are:
    • ...certain assets and investments recognized under GAAP are "non-admitted" under statutory accounting practices.
      • Principal among these are certain loans and receivables, investments not authorized by statute or in excess of statutory limitations, and furniture and equipment.
    • income tax effects of differences between tax and book (statutory) accounting are not, in all cases, recognized under SAP.
      • With a few exceptions, accounting for income taxes generally is on an incurred basis.
    • the carrying value of subsidiaries is limited primarily due to restrictions in both the amount of and the amortization period for goodwill.
      • The deviations mandated or specified by the laws and regulations of the state department exercising jurisdiction result in a financial picture which presents the condition of the company or the results of its operations in conformity with the purposes and needs of the regulatory authority.
    • Financial statements prepared on the basis of generally accepted accounting principles meet the needs of a different contingency of users.  (p20-21)

1988-2, NAIC Proceedings

  • In May 1971 the Commission invited public comment on a proposal to amend certain registration and reporting forms and Regulation S-X to remove the exemption from certification of financial statements of banks filed under the Securities Act and the Securities Exchange Act and statements of life insurance companies filed under the Securities Exchange Act.54
  • After consideration of the comments received, the Commission, shortly after the end of the year, adopted amendments which removed the exemption from certification of financial statements of banks for fiscal periods ending after November 30, 1971.55
  • However, the Commission determined to retain at this time the exemption with respect to life insurance companies.
  • This will permit the accounting profession in collaboration with the life insurance industry to complete work now underway to develop and promulgate accounting guidelines for life insurance companies which will enable the financial statements of such companies to be certified in accordance with generally accepted accounting principles.  (p37)

1971 - SEC - 37th Annual Report - 250p