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Institute of Actuaries hits out at life offices&#39 accounting

The Institute of Actuaries has attacked the current accounting practices of UK life offices.


A keynote paper presented to the IoA this week describes the current accounting method as &#34flying in the face of what investors and other users of company accounts would consider to be &#39true and fair&#39 and understandable&#34.


The paper says that things have come to head because the International Accounting Standards Committee is developing a global accounting standard for insurance contracts.


Currently the UK statutory solvency basis, which is derived from the EU&#39s Insurance Account Directive, can actually lead to a loss being reported on soundly priced new business and vice versa.


The anomalies arise because of the stipulation in the Directive of very conservative estimates for mortality and investment returns.

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