Transcript PowerPoint プレゼンテーション - Insurance

Let’s Talk About
The Fair Accounting
For The Business
Of Life Insurance
Makoto Okubo
Project Team for International Accounting Standards,
Life Insurance Association of Japan
Bonn, September 19th 2001, IAIS Panel for Insurance Accounting
2020/4/27
1
How people see Fair Value Accounting?
Classification by general views
on fair value accounting
Fair value accounting is generally
not appropriate.
- OSFI (Canada)
- FSA (UK)
- APRA (Australia)
International Association of
Fair value accounting is
universally applicable
without any exception
- NAIC (The United States)
- BAV (Germany)
- CCA (France)
*
Fair value accounting is
appropriate or acceptable.
But, certain adjustments are
required.
- Joint Working Group of bank associations (US, Australia,
Canada, Japan, EU, UK, France, Netherlands, Germany)
Insurance Supervisors
Insurance accounting
Fair value accounting is not
appropriate for insurers.
At least, certain special
treatments are needed.
Regulators, Industry
and other organizations
- GDV
(Germany)
- ACLI (US)
- LIAJ (Japan)
- ABI (UK)
- CLHIA(Canada)
- IBC (Canada)
- ICA (Australia)
- ASB (UK)
- AASB (Australia)
- AIMR (US)
- FASB (US)
（source) Comment letters to the Issues Paper, JWG, etc,
Note: * The position on fair value accounting as the IAIS is still waited, due to various views of the member countries.
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2
Life Insurance Products Are
Diversified!
AUSTRALIA
COUNTRY
Summary
Statistics
-
U.K.
CANADA
Superannuation is the - Investment-type
- Individual and group
U.S.
FRANCE
- Individual life and
GERMANY
JAPAN
- Individual saving
- Single payment
- Individual life and
insurance, such as
annuities, mainly
endowment and
participating, are
whole life products,
overwhelming in
are popular.
the market.
most popular product as products, such as
annuities cover almost annuities, health,
and life products,
employee benefit plan.
unit-links, ind.
half of the total
and group annuities
mainly participating,
- For ordinary insurance
retirement annuities,
premium income.
are popular.
are important in the
products, investment-link
are popular.
-Investment-type and
- For individuals,
market.
products are important in
-Typically, surrender
universal products are
2/3 are traditional
- Capitalization
the market, while
value is linked to the
popular.
products, and 1/3 are decrease, while
- Variable products, - Variable products are
traditional products are
market value rather
- International
variable products.
such as fund-links, extremely limited in
limited in sales.
than the contract term. business is important.
Premium Income
Premium Income
Premium Income
(bil. Aus.$, 10-12, 1998) (new business only)
(bil.￡, 12, 1998)
ordinary insurance
individual life
1.4 (14.0%)
18.95 (74.4%)
superannuation
8.9
7.89
0.37
( 1.4%)
9.26
(100.0%)
Total Assets
annuities
6.04
(23.7%)
0.11
(0.4%)
Total
25.46 (100.0%)
94.6
(59.1%)
other products
65.4
93.2
95.4
(21.5%)
8.25
(23.0%)
(100.0%)
24.4
134.0
(30.2%)
(23.0%
Insurance In Force
within individual life
unit-links
56.1%
whole life
others
43.9%
term
ABI,
insurance statistics
annual
(source) CLHIA,
Fact Book
sales.
Premium Income
Premium Income
(bil. DM, 12, 1999)
endowment
(3.5%)
individual
66.4
361.1
(79.9%)
25.9
26.8%
34.1%
(57.9%)
(22.6%)
46.9
(10.3%)
2.3
11.9
(10.3%)
32.8
(7.2%)
( 7.9%)
1.4
special contracts
Total 456.9 (100.0%)
(62.2%)
group life
6.3
( 5.5%)
4.2
( 4.8%)
group annuities
variable products
( 3.7%)
6.7
(23.3%)
other
0.5
(1.8%)
Total
28.8 (100.0%)
Total
114.8
French Insurance
(100.0%) Insurance In Force
within individual life
within life &
capitalisation (1996)
whole life
(source)
Die
deutsche
universal
25.0%
variable 51.2%
Lebensversicherung
variable
13.9%
other
Zahlen,
49.8%
(source) ACLI,
Fact Book
17.9
individual annuities
group
other
(tri. ￥, 3, 1999)
individual life
annuities
(source) FFSA,
(new business only)
(source)
16.1
are limited in sales.
444.3 (100.0)
within individual life
160.0 (100.0%)
capitalisation
( 5.5%)
group annuities
Total
(bil. FF, 12, 1998)
group
health 94.9
35.9
Premium Income
(21.0%)
individual annuities
(22.8%)
(40.9%)
(source) Insurance &
individual life
( 6.5%)
health
Total
(bil. Aus.$, 10-12, 1998)
investment-link
8.19
(bil. US$, 12, 1998)
group life
group annuities
others
Premium Income
(25.8%)
group life
2.33
gaining market share.
(22.0%)
individual annuities
individual retirement
10.3
Total
individual life
individual annuities
(86.0%)
Total
products
(bil. Can$, 12, 1998)
valiable products are
(source) CCA
in
term
70.5%
12.7%
endowment
7.8%
variable
0.6%
Geschäftsentwicklung
(source) JILI
1999
Fact Book
Superannuation Committee,
quarterly report.
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3
Insurance Accounting Rules Are Different!
COUNTRY
Valuation of
securities
AUSTRALIA
U.K.
- all assets are valued (GAAP)
at fair value
- stocks :
market value
- bonds :
CANADA
- stocks:
value with 15%
moving average
method
(Book
market value or
value plus 15% of
amortized cost
unrealized gain
- acquisition cost must be
every year)
disclosed in the separate - bonds
notes
U.S.
(GAAP)
amortized cost
- stocks
fair value
- bonds
trading:
fair value (P/L)
available for sale:
fair value (equity)
FRANCE
- stocks:
acquisition cost *
- bonds:
the OECD member
state-issued or traded
(Reporting to FSA)
lower of cost and
market value
- bonds:
principal amount
amortized cost
other
acquisition cost *
held-to-maturity:
amortized cost
GERMANY
- stocks:
JAPAN
- stocks:
market value
- bonds:
trading:
fair value (P/L)
available for sale:
- current value must
be disclosed in the
separate notes
fair value (equity)
held-to-maturity:
amortized cost
* the provision would
debt securities that
be set up when the
correspond to policy
- securities transferable
(SAP)
overall realized value
reserves:
within 97.5% of market
- stocks
at current value is
value:
market value
market value
- bonds
- other transferable
amortized cost
securities
reasonably estimated
- current value must
be disclosed in the
(Realized gain is
(For life, Asset
value not exceeding
recognized 15% every
Valuation Reserves
market value
year.)
would absorb
- non-transferrable
securities
amortized cost
below book value.
separate notes
volatility of stock
(Unrealized gain from
values to some
reasonably estimated
stocks is recognized
extent.)
value at surrender or
15% every year.)
redeemed value
Reserves
- fresh start
- MOS (Margin on
service)
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- lock in
(under actuary’s
- fresh start
- lock in
- lock in
- PAD (provision for
(technical provision
discretion)
adverse deviation)
cannot be below
- FFA(Funds for future
- no minimum reserve
surrender value)
appropriations)
requirement
- lock in
- lock in
4
The LIAJ’ s position on JWG
Disagree to the proposal which means “full recognition of fair
value changes of all financial instruments in the income
statements”.
An “insurance” project should be maintained and even developed
to tune the standards be fit to the insurance business as a whole,
not to insurance contracts.
The project should involve people in the practice and in the
supervision of insurance industry in order to reflect deeper
understanding of the industry.
Opposed to the application of the standards in present forms to
life insurers, absent a change in the current proposal to consider
specificities of insurance business.
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5
Why LIAJ is opposed to the recognition of
fair value change in the income
statement?
Treatment of fair value
change in the same
manner as operating
gains or losses
is not an appropriate
performance
representation
Volatility of profit and loss due to fair value
fluctuation
Obscures business operation figures, the
most important accounting information
Is not consistent with the long term nature
of the business
Interferes sound and stable corporate
management
Will deprive policyholders and investors of
profit opportunities, by forcing insurers to
sell out their stock portfolios
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6
Why should unique aspects of insurance
business be considered in accounting?
Life insurers are more than the
firms acquiring and holding
insurance contracts
Engaged in a series of risk
management, spreading both
the amount and timing of risks
Spreading the timing of risks is
a focus of the insurance
industry
Even under the framework of
asset-liability method, it is
necessary for life insurance
accounting to adopt a system
that incorporates a deferral
and matching approach
based on the spreading of the
timing of risks
2020/4/27
Insurance is the regulated industry.
The focus on policyholders and the
claim-paying ability is needed in
general-purpose accounting
Insurance business is conducted
more and more on a global basis.
However, insurance products are
widely diversified, deeply tied to
the national and cultural traits
Introducing fair value accounting
would make drastic and definite
changes to the existing infrastructure.
Hasty adoption of such standards
without careful discussions could
result in serious damage to some
country’s insurance system, and
pose a huge threat to both
policyholders and trading partners.
7
The LIAJ’ s position on the Issues Paper
Conservative assumptions taking longterm tendencies into account are
necessary for the evaluation of liabilities.
It is essential to prepare statements
emphasizing the insurer’s ability to
maintain insurer’s solvency and capital
adequacy.
In general, an insurer’s financial
statements should aim to provide
information mainly to policyholders, rather
than investors.
Further examination is needed as to the
interpretation of the IASC Framework as a
basis for developing an International
Accounting Standard on Insurance.
Basically support measuring assets and
liabilities. Nevertheless, it is appropriate
to incorporate some methods for deferral
into the measurement of liabilities.
Measurement has to be based upon the
life insurer’s expectations
There is no liquid market for life insurance
liabilities.
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It is not appropriate to regard all
insurance contracts uniformly as
financial instruments
Some features of service contracts.
Larger uncertainties in relation to the
occurrence of insurable contingency risk
due to the longevity of the contract
periods.
Opposed to the application of a fair value
standard to life insurance contracts
under current circumstances
Fair value is defined as the amount at
which the asset is exchanged or the
liability is settled between knowledgeable,
willing parties in an arm’s length
transaction. Nevertheless, there is no such
market for insurance contracts .
A fair value standard that does not
consider the diversification of risk over
time is inappropriate for the measurement
of insurance contracts, because of the
longevity of life insurance contracts.
8
Presence in capital market
(example in Japan)
ANNEX
Percentage of ownership in the shares
of all listed companies
Insurers, banks and nonfinancial companies have
played an important role in
Japanese stock markets.
1.2%
10.0%
Banks
20.7%
Insurers
Pension funds
27.6%
12.6%
Percentage of stocks and bonds
in the total assets
Non-financial
companies
Households
3.8%
All Industries
24.1%
Foreign
Others
(source Public Finance & Financial Statistical Monthly Report, 1999)
Stocks
All Banks
Bonds
All Life
Insurers
0.0
5.0
10.0
15.0
20.0
(source Insurance: life insurance statistics,
25.0
30.0 %
National banks comprehensive financial statements,
corporate business statistics, 1999)
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For Japanese life insurers,
about 15% of the total
assets are invested in
stocks, while they invest
27% in bonds.
9