The document announces an upcoming technical meeting on January 11, 2011 in London to discuss key issues in developing a converged international insurance accounting standard. It notes that industry representatives support using a "business model" concept for the standard, as was adopted in IFRS 9. The meeting will focus on discussing how the business model affects discounting of insurance contracts and other presentation issues. It invites interested parties to RSVP to attend and requests volunteers for an organizing committee.

1. December
23,
2010
To:
Interested
Parties
in
a
Converged
International
Insurance
Accounting
Standard
In
its
comment
letter
to
the
IASB
regarding
the
Exposure
Draft
on
Phase
2,
IFRS
4,
Insurance
Contracts,
the
IAIS
called
for
a
technical
group
to
be
created
and
to
meet
as
soon
as
possible
to
review
all
the
discussions
on
discount
rate
and
work
to
resolve
this
threshold
issue.
The
discussions
thereon
are
likely
to
be
critical
to
further
discussion
on
the
rest
of
the
provisions
of
the
standard.
Since
that
letter,
there
have
been
three
IASB/FASB
roundtables
where
representatives
of
all
elements
of
the
insurance
industry
were
represented
to
discuss
the
responses.
In
preparing
for
those
discussions,
there
was
strong
support
within
the
industry
for
the
use
of
the
“Business
Model”
concept
first
adopted
by
the
IASB
in
IFRS
9,
Financial
Instruments,
as
the
basic
objective
of
the
standard.
With
that
as
the
objective,
the
questions
of
Discounting
–
which
contracts
to
discount,
what
discount
rate
should
be
used
and
whether
to
lock-­‐in
the
discount
rate
–
and
Presentation
(e.g.
margin
vs.
traditional
approach
and
use
of
OCI)
would
then
follow
the
Business
Model
of
the
entity.
To
accomplish
its
supervisory
goals,
the
IAIS
Insurance
Contracts
Subcommittee
will
meet
in
London
at
the
UK
FSA
on
12-­‐14
January
2011.
Its
agenda
will
include
further
discussion
on
the
discounting
issue.
In
preparation
for
that,
insurers
have
had
several
calls
and
decided
they
would
support
the
recommendations
of
the
IAIS
Insurance
Contracts
Subcommittee
for
an
early
technical
meeting.
The
insurers
suggest
that
its
agenda
would
be
to
discuss
the
Business
Model,
Discounting
and
Presentation
issues.
It
will
be
held
on
Tuesday
11
January
2011,
09:00
–
18:00
in
London
in
a
location
to
be
determined.
Supervisors,
Board
Members/Staff,
Insurers,
Accounting
Firms
and
actuaries
will
be
invited.
Key
issues
for
the
Technical
Meeting
are:
a) Business
Model
approach:
With
the
adoption
by
the
IASB
and
the
recent
decision
by
the
FASB
to
be
inclined
to
support
the
use
of
the
Business
Model
for
Financial
Instruments
Classification
and
Measurement,
should
it
also
be
the
appropriate
principle
for
insurance
contracts
accounting?
b) What
would
the
Business
Model
principle
be
for:
i) Classification
and
Measurement
1) Assets
2) Liabilities
c) How
does
the
Business
Model
affect
the
discussions
on
discounting?
Jerry M. de St. Paer Douglas Wm. Barnert
Executive Chair Executive Director
Group of North American Insurance Enterprises ++1-212-480-0808
40 Exchange Place, Suite 1707 info@gnaie.net
New York, NY 10005 www.gnaie.net
UNITED STATES

2. December 23, 2010
Technical Meeting
Page 2
d) Which
insurance
contracts
should
be
discounted?
e) What
rate
should
be
used
to
discount
those
contracts
that
should
be
discounted?
i) Risk
Free
Rate
ii) Liability
premium
iii) Corporate
Bond
Rate
iv) Asset
–
Discount
rate
v) Other
possibilities?
vi) Are
there
alternatives
that
all
parties
can
live
with?
f) What
are
the
combinations
of
IFRS
9
and
IFRS
4
that
might
work?
i) Cost-­‐Cost
ii) Current
–
Cost
iii) Cost
-­‐
Current
iv) Current
–
Current
(with
OCI)
g) How
do
you
handle
changes
in
the
valuation
of
assets
and
liabilities
(Day
2)?
i) Current
methods
for
assets.
ii) Current
proposals
for
liabilities.
iii) Should
any
assumptions
be
locked-­‐in?
iv) Current
or
non-­‐current
book?
v) Portfolio
discussions.
If
you
would
be
interested
in
attending
this
meeting,
please
RSVP
as
soon
as
possible.
Depending
on
the
size
of
the
response,
we
will
want
to
adjust
the
meeting
room
size.
An
organizing
committee
will
be
formed
to
work
on
the
agenda
and
supporting
papers.
Please
indicate
in
your
response
if
you
would
be
interested
in
organizing
the
meeting.
Thank
you
for
considering
this
opportunity
to
pull
our
thoughts
together
on
these
important
issues.
Best
personal
regards
for
a
happy
and
health
holiday
season.
/s
Douglas
Wm.
Barnert
Executive
Director
DWB:
mtf