The IFRS Financial Statements of Large Insurance Groups as at 31 December 2010

Since 2008 and the financial crisis, both analysts and investors have faced increased difficulty in assessing insurance groups’ performance. We have performed an analysis of the financial statement disclosures based on the 2010 year-end IFRS financial statements of several of the largest insurance and reinsurance groups looking at issues:

 

  • from an accounting perspective, considering compliance with IFRS especially regarding topics that we consider to be particularly sensitive; and
  • from a financial and regulatory perspective, as we focus on the insurers’ and reinsurers’ financial disclosures regarding key indicators and capital management.

This year, the survey has focused on the following topics:

  • Goodwill and associated tests regarding recoverability;
  • Financial instruments and associated risks;
  • Key performance indicators (EEV, MCEV); and
  • Information related to capital management.

Throughout our study we have focused on the objectives of comparability, understand ability and relevance that are included in the IFRS framework and form the objective of other regulatory requirements.

We have focused on the objectives of comparability, understand ability and relevance that are included in the IFRS framework

Many insurance groups have a calendar financial year. In 2010, this financial close coincided with the continuing financial crisis, and as such was heavily impacted by unfavourable business environment conditions, such as:

  • Stagnation within the main developed countries;
  • Low interest rates;
  • Increased credit risk on government bonds;
  • Prolonged decline in the stock markets;
  • High market volatility; and
  • Solvency II framework early stage implications.

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