As regulators here and abroad labor to reshape accounting standards, insurers are watching with a keen interest.

The Group of North American Insurance Enterprises (GNAIE) is expressing concern over an update proposed by the Financial Accounting Standards Board (FASB). GNAIE says the update fails to simplify existing accounting standards for financial instruments and hedging activities and does not provide decision useful information to investors in insurance companies.

In an August 31 letter to FASB Technical Director Russell Golden, GNAIE Executive Chair Jerry de St. Paer expressed concern that income and capital measures used by insurance company investors for purposes of making investment decisions would be significantly influenced by fair value movements that are expected to reverse over time and, therefore, will not be realized.

"To increase the decision usefulness of insurance company financial reports, we believe insurance companies should have the ability to align the measurement, classification and reporting of financial assets and liabilities with both the business strategy for the financial instruments and their business model," he wrote.

Accordingly, GNAIE recommended that "the criteria for allowing companies to classify, measure and report financial assets and liabilities on a basis other than fair value with fair value changes reported in net income be expanded to allow for these prudent sales to occur without impacting the future ability to utilize an alternative measure method."

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