The international accounting standards project for life insurance contracts: impact on reserving methods and solvency requirements

In this communication, we review the fair value - based accounting framework promoted by the IASB Insurance Project for the case of a life insurance company. In particular, by means of a simple participating contract with minimum guarantee, we compare the fair value approach with the “traditional” accounting system based on the construction of mathematical reserves, and we assess the adequacy of the two reporting frameworks in terms of covering of the liability, implementation cost, volatility of reported earnings and solvency capital requirements.