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General Interest

Financial Reporting

August 2006

As part of a broader initiative to improve financial reporting for insurance accounting, FASB issued an invitation to comment on whether bifurcating insurance and reinsurance contracts into insurance and financing components would improve the transparency of financial reporting for insurance accounting ( www.fasb.org/draft/ ). Current standards give insurers and reinsurers limited guidance on accounting for insurance contracts, which often have both insurance and financing components that are combined and accounted for as insurance contracts. The board therefore is asking buyers and sellers of insurance contracts, users of their financial statements and, in particular, noninsurance-company policyholders, including small and private companies, whether and how insurance and reinsurance contracts should be bifurcated into insurance and deposit components. Comments are due August 24, 2006.


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