Oldwick, N.J. - A new report from global rating agencyA.M. Best said that the mark-to-market guidance recently adopted by theFinancial Accounting Standards Board would not impact the balance sheets ofinsurance companies despite claims to the contrary by the those in the capitalmarkets sector.
The new guidance was adopted after the Securities andExchange Commission study concluded that fair value accounting contributed tothe ongoing credit crisis.
However, the A.M. Best report contends the new rules helpto clarify the process, but the rules will continue to evolve as companiesnavigate a difficult economy. The report also pointed out that the guidancemaintains the objectives of fair value and the measurement of impairments andcontinues to call for measuring fair value independently of a company's abilityor intent to hold an asset.
Best said fair value remains a "market-basedmeasurement, not an entity-specific measurement."
