PracticeConsultingLloyd’s laments missing billions from balance sheets

Lloyd's laments missing billions from balance sheets

Two out of three businesses do not account for the value of their brands and other intangible assets on their balance sheets, according to a report by insurance market Lloyd's.

A survey of UK and US food and drink manufacturers found that only 39% of companies attributed a value to their intangible assets in their accounts. The majority of these companies had been involved in buying or selling a brand.

Valuing intangible assets is a relatively new phenomenon, the report said. Shailendra Kumar of consultancy Interbrand explained that there was ‘a degree of ignorance about the practice of brand evaluation’.

In the UK only brands that have been acquired are allowed onto the balance sheet. This means that large corporations with valuable brand names such as fast-food giant McDonalds cannot file accounts in Britain that include intangible asset valuations.

Lloyd’s is concerned that with current rules preventing some companies from intangible valuations, it is unable to offer the protection through insurance products that a large company requires.

‘A good reputation is always worth protecting,’ said chairman of Lloyd’s Max Taylor. ‘One of the basic principles of insurance is that you have to know something’s value before you can provide insurance cover for it,’ he added.

Deep branding: the challenge for professional services

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