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 "flying in the face of what investors and other users of company accounts would consider to be 'true and fair' and understandable".
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's 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.