Insurance analysts note "adequacy gap" in countries with IFRS

News Article - 15 November 2007
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A marked gap in the adequacy of information needed by insurance analysts and that provided to them is most pronounced in countries where International Financial Reporting Standards (IFRS) are in force, it has been claimed.

Big Four accountancy firm PricewaterhouseCoopers found that this "adequacy gap" had led to life insurance analysts in Europe largely ignoring the standards.

Instead, they generally opt for embedded value disclosure. Meanwhile, the adequacy gap in the US is less defined, according to the report.

Insurance analysts in the US reported higher levels of satisfaction with the national standard in the country, generally accepted accounting principles (GAAP).

Commenting on the findings, Ian Dilks, global insurance leader at PricewaterhouseCoopers, said what analysts want is for accounting presentations and disclosure to be more consistent and comparable.

These factors, along with transparency, are deemed by insurance analysts to be more important than "academic purity", he said.

"Although this is a challenge for companies and standard setters, the pragmatism of investment professionals does offer wide scope for debate and consensus on the best way forward," Mr Dilks concluded.

The US Securities and Exchange Commission is voting today about whether international firms listed in the country should still be required to reconcile reports to GAAP.

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