Reinsurance company Munich Re has become one of Europe’s first large financial institutions to bring its accounting in line with new International Accounting Standards Board (IASB) regulations that affect derivatives known as IAS 39.The regulations, which listed European Union companies must comply with by January 2005, require that all derivatives be accounted for at fair value. "Significant changes are required in the Munich Re group's consolidated financial statements to reflect the stricter impairment rules for equity investments and the ban on recognising write-ups on equity investments in the income statement," said Munich Re.
The company said equity investments were already recognised at market value in its consolidated financial statements, so that on the balance sheet the first application of the new rules “results merely in a reallocation between various items of shareholders’ equity”.
“Munich Re has a head start of two years, given that the first application of the new IAS rules is only compulsory for business years starting on or after January 1, 2005,” said Munich Re.
Jörg Schneider, a member of Munich Re’s board, said: “This provides a better insight into the earnings performance of our group. The capital market will respect this prompter and more informative reporting. That’s what happened when Munich Re was also among the first companies to switch its consolidated accounting from German Commercial Code to IAS back in 1999.”
Munich Re reported a loss for 2003 of €434 million.
Topics: Munich Re
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