The areas of greatest subjectivity and interest within the IFRS financial statements of large european insurance groups

For the fifth consecutive year, Mazars has carried out a detailed analysis of the largest insurance groups’ financial information. The accounts of insurance entities for the year ended 31 December 2012 were prepared against an ongoing background of economic crisis, characterised by: continuing weak growth in the major world economies; low interest rates; and persistently volatile markets.

European insurers nevertheless benefited in 2012 from some encouraging signs in the financial markets, illustrated by:

  • a relaxation in the sovereign debt market together with the measures taken by the European Central Bank and policy makers;
  • good global equity market performance.

Since the beginning of the financial crisis in 2008 analysts and investors have had higher expectations of financial information due to the problems of determining the exposure of insurers to economic difficulties and how they performe under situations of ongoing stress. We have analysed the financial disclosures of a sample of European insurers and re-insurers on the basis of their annual reports and their financial reporting material for the year ended 31 December 2012.

The analysis simultaneously addresses:

  • accounting issues, when we consider the application of international accounting standards in areas that we perceive as sensitive;
  • financial and regulatory aspects, where we extend the scope of analysis to financial communication on performance indicators and capital management.

This year we have focused on the following topics:

  • disclosures on goodwill and the impairment tests and disclosures associated with other intangible assets;
  • insurers’ communication on financial instruments, including derivative instruments, and the associated issues in a still-difficult market environment;
  • deferred tax assets and the disclosures required on assets of this type and their recoverability;
  • communication on Embedded Value and the main performance indicators;
  • disclosures on capital management against a background of regulatory reform.

We have sought to shed light on the comparability, comprehensibility and relevance of disclosures, both under IFRSs and the other reporting frameworks to which our analysis will refer.

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Insurance groups financial information
Insurance groups financial information