VAL-4: International Actuarial Development CIA Annual Meeting Assemblée annuelle de l’ICA June 29 & 30, 2006  Les 29 et 30 juin 2006 Ottawa, Ontario

VAL-4: International Actuarial Development CIA Responses to IAA Papers CIA Annual Meeting  Assemblée annuelle de l’ICA

VAL-4: International Actuarial Development IASB/IAA IASB – International Accounting Standards Board –Goal to develop global accounting framework –Publishes International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) IAA – International Actuarial Association –TF on International Insurance Accounting chaired by Sam Gutterman –Subcommittee on Actuarial Standards Prepares actuarial guidance for application of IAS/IFRS CIA Annual Meeting  Assemblée annuelle de l’ICA

VAL-4: International Actuarial Development IFRS/IAS for “Insurance” IFRS/IAS for contracts written by insurers –IFRS 4 – Insurance Contracts Material insurance risk (e.g., term insurance) Phase 1 only –IAS 32&39 – Financial Instruments Investment contracts (e.g., certain annuities) –IAS 18 – Service Contracts Neither of above (e.g., group ASO) CIA Annual Meeting  Assemblée annuelle de l’ICA

VAL-4: International Actuarial Development IFRS/IAS for “Insurance ” Other relevant IFRS/IAS include: –IAS 19 – Employee Benefits –IAS 37 – Provisions, Contingent Liabilities and Contingent Assets –IFRS 3 – Business combinations –IFRS 7 – Financial Instruments: Disclosures CIA Annual Meeting  Assemblée annuelle de l’ICA

VAL-4: International Actuarial Development IAA Insurance Standards – 3 sets of papers 1st set – CIA response January 2005 –Actuarial practice General guidance –Measurement of investment contracts and service contracts Under IAS 39 and IAS 18 –Current estimates Choosing assumptions CIA Annual Meeting  Assemblée annuelle de l’ICA

VAL-4: International Actuarial Development IAA Insurance Standards – 3 sets of papers 2nd set – CIA response March 2005 –Contract classification IFRS 4, IAS 39, or IAS 18 –Changes in accounting policy –Discretionary participation features –Liability adequacy testing CIA Annual Meeting  Assemblée annuelle de l’ICA

VAL-4: International Actuarial Development 3rd set – CIA response March 2006 –Embedded derivatives and derivatives –Business combinations –Disclosure –Reinsurance CIA Annual Meeting  Assemblée annuelle de l’ICA IAA Insurance Standards – 3 sets of papers

VAL-4: International Actuarial Development IAA Insurance Standards – 3 rd set CIA response to 3 rd set of IAA papers was less supportive than for previous papers Key concern is that the IAA guidance is not really “actuarial” in nature –Expansion of accounting guidance should come from IASB not IAA –IAA only has jurisdiction over actuaries, who may not be responsible for financial reporting –Could lead to divergent practices However, better the IAA publish helpful guidance than not have it published at all CIA Annual Meeting  Assemblée annuelle de l’ICA

VAL-4: International Actuarial Development Embedded Derivatives and Derivatives Paper is too complex for educational guidance Does more harm than good in efforts to interpret related accounting guidance Should not be released until extensive revisions have been made CIA Annual Meeting  Assemblée annuelle de l’ICA

VAL-4: International Actuarial Development Business Combinations Adds little to IFRS 3 Could do without it –IFRS 3 is sufficiently clear CIA Annual Meeting  Assemblée annuelle de l’ICA

VAL-4: International Actuarial Development Reinsurance Guidance is helpful, however,it should be directed to those responsible for financial reporting and not just actuaries Some concerns about the content, but primarily relate to content of underlying IFRS –Large range of practice allowed for ceded reinsurance asset CIA Annual Meeting  Assemblée annuelle de l’ICA

VAL-4: International Actuarial Development Disclosure Guidance is helpful, however,it should be directed to those responsible for financial reporting and not just actuaries This paper should never become “binding” –Hundreds of examples of types of disclosure that would be considered Recommend easing of disclosure requirements for smaller companies that aren’t publicly traded, esp. those that operate in only one country CIA Annual Meeting  Assemblée annuelle de l’ICA