16 September 2009
Published in: Regulation - supervision, Accounting - tax
Solvency II and IFRS are diverging, says Deloitte
Solvency II is diverging from the International Financial Reporting Standards (IFRS) with the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) adopting a more conservative approach, according to Deloitte.
Francesco Nagari, global IFRS insurance leader at Deloitte, said, "The last set of consultation papers seems to have moved the solvency basis for insurance liability valuation on a different path compared with the direction that the International Accounting Standards Board (IASB) is currently taking for its proposals on a new IFRS on insurance liabilities."
His comments are the latest in a debate about the Solvency II consultation papers issued by CEIOPS in July as part of its level 2 advice (see IERM, News/Comment, 11 September, ‘CEA complains of CEIOPS' "excessive prudence"'). He noted: "A difference between Solvency II and IFRS would seem to emerge around the hotly debated matter of discount rate selection."
Nagari explained: "The IASB proposals are expected to move towards a less conservative view than CEIOPS on discount rates accepting upward adjustments for liquidity risk in certain cases with lower IFRS liabilities than under Solvency II, all other things being equal. CEIOPS proposes the requirement of a ‘risk free' discount rate in all cases."