CIA Annual Meeting Assemblée annuelle de l’ICA

1. CIA Annual MeetingAssemblée annuelle de l’ICA June 29 & 30, 2006 Ÿ Les 29 et 30 juin 2006 Ottawa, Ontario

2. CIA Annual Meeting ŸAssemblée annuelle de l’ICA CIA Responses to IAA Papers

3. 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 ŸAssemblée annuelle de l’ICA IASB/IAA

4. 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 ŸAssemblée annuelle de l’ICA IFRS/IAS for “Insurance”

5. 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 ŸAssemblée annuelle de l’ICA IFRS/IAS for “Insurance”

6. 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 ŸAssemblée annuelle de l’ICA IAA Insurance Standards – 3 sets of papers

7. 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 ŸAssemblée annuelle de l’ICA IAA Insurance Standards – 3 sets of papers

8. 3rd set – CIA response March 2006 Embedded derivatives and derivatives Business combinations Disclosure Reinsurance CIA Annual Meeting ŸAssemblée annuelle de l’ICA IAA Insurance Standards – 3 sets of papers

9. CIA response to 3rd 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 ŸAssemblée annuelle de l’ICA IAA Insurance Standards – 3rd set

10. 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 ŸAssemblée annuelle de l’ICA Embedded Derivatives and Derivatives

11. Adds little to IFRS 3 Could do without it IFRS 3 is sufficiently clear CIA Annual Meeting ŸAssemblée annuelle de l’ICA Business Combinations

12. 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 ŸAssemblée annuelle de l’ICA Reinsurance

13. 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 ŸAssemblée annuelle de l’ICA Disclosure