doc__table__2569

| 28 | An insurer may overcome the rebuttable presumption described in paragraph 27 if, and only if, the other components of a change in accounting policies increase the relevance and reliability of its financial statements sufficiently to outweigh the decrease in relevance and reliability caused by the inclusion of future investment margins. For example, suppose that an insurer's existing accounting policies for insurance contracts involve excessively prudent assumptions set at inception and a discount rate prescribed by a regulator without direct reference to market conditions, and ignore some embedded options and guarantees. The insurer might make its financial statements more relevant and no less reliable by switching to a comprehensive investor-oriented basis of accounting that is widely used and involves: (a) current estimates and assumptions; (b) a reasonable (but not excessively prudent) adjustment to reflect risk and uncertainty; (c) measurements that reflect both the intrinsic value and time value of embedded options and guarantees; and (d) a current market discount rate, even if that discount rate reflects the estimated return on the insurer's assets.

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Source: EUR-Lex (Cellar) · retrieved 2026-11-08 · Text as adopted (Official Journal); later amendments are not incorporated in this text.