Insurance companies take on IASB
Leading insurance companies have launched a campaign against the IASB over changes to accounting standards they claim will increase earnings volatility.
AIG, the world’s largest insurer, and several other insurance companies object to the use of ‘fair value’ accounting, where assets and liabilities are recorded at what the market would pay for them at a given time.
The group claims that the large swings caused by measuring at fair value, assuming that a market value can even be calculated, will severely reduce the effectiveness of financial statements to investors.
The IASB has said that changes to the insurance sector are still some way off and that insurance companies will have full access to the process. However the IASB has been notoriously resilient to fair value objections so far in other standards.