Paris (July 30, 2003) -- European insurers are urging the International Accounting Standards Board to postpone approval of new accounting rules for the treatment of financial derivatives.
In a statement, director-general of the European Federation of National Insurance Associations Daniel Schante said keeping the rules as they now stand would make insurers' earnings "artificially volatile," Dow Jones reported. He added that insurers haven’t been given enough time to adapt to the new rules.
Schante said the new rules "would lead to serious inconsistencies between the measurement of assets and liabilities in the financial statements of insurance companies. As a consequence, artificial volatility, either in equity or in income, might arise."
The new rules would extend the principle of "marked to market" accounting to the derivatives regularly used by both banks and insurers to hedge their financial risks.
-- WebCPA staff
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