Source: www.breakingviews.com is Europe's leading financial commentary service
Date: September 2003
By Christopher Hughes
After the spate of rights issues and dividend cuts that Europe's insurers have inflicted on shareholders over the past year, one might have thought the industry would be a little modest about its predictive powers. Not a bit of it. Insurers are fighting tooth and nail against new accounting rules that would limit their ability to manipulate or, in industry parlance, "smooth" their numbers.
These changes, they argue, will be detrimental to their business, and thus to the shareholder's interest.
The International Accounting Standards Board (IASB) wants to toughen the accounting rules for insurers in a move that could see the demise of the embedded-value method of calculating insurance profits that has dominated the industry in Europe for the past 20 or so years.
Accounts prepared on an embedded-value basis are effectively made up...
