IASB includes liquidity premium in new insurance accounting proposals

Exposure draft brings convergence with Solvency II but stops short of full market consistency


The International Accounting Standards Board (IASB) has included a liquidity premium in new proposals for insurance company accounting standards which retreat from the more market consistent exit value-based approach – in which asset and liability values reflect the cash required to liquidate them – outlined in its last draft in 2007.

The controversial premium would be added to the discount rate for liabilities, thereby decreasing their value – its inclusion in the Solvency II directive caused

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