Accounting Regulations

René Doff

At the same time that Solvency II was being developed, the European regulations for accounting for insurance products were also being updated. As mentioned in Chapter 9, there is a traditional difference between the publicly disclosed financial accounts and the accounts for prudential purposes, the statutory accounts. Although the differences between these accounts have not always been that great, in the early 2000s they did increase. This chapter will therefore discuss how the IFRS4 initiative will work to close that gap. IFRS4 has been split into two phases, with the initial version being published in 2004. However, further refinements were deemed necessary, leading to the IFRS4 phase II project, which we will also examine.

We will look at the differences of objectives and scope between Solvency II and the ultimate IFRS4 framework, before exploring some additional elements but without addressing too much of the detail. We will see that Solvency II and IFRS4 have many similarities, but that some differences are likely to persist.

FAIR VALUE IN ACCOUNTING

The accounting framework for insurance companies in Europe is laid down in the International Financial Reporting

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