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Insurers Say Fair Value Accounting Was a 'Powerful Accelerant' to Credit Crisis

National News • December 31, 2008
The application of fair value accounting measurements to an inactive, illiquid, and disorderly market for structured credit products helped fuel the worldwide credit crisis, an organization of ...

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Subject: RE: You need assets to pay claims...

Posted On: January 2, 2009, 11:52 am CST
Posted By: inscopywriter
Comment:
The issue you mention does not involve the assets used to pay claims. Loss reserves belong to the subsidiary insurance companies, while the assets discussed in this article belong to the parent (or holding) company. Illiquid assets of the parent company are reported for accounting and stockholder purposes and have nothing to do with paying claims (normally).

The investment of money in the loss reserve is strictly regulated by each state. (See here for more details about how this part of the industry works: http://www.naic.org/Releases/2008_docs/AIG_pay_claims.htm).

The FASB regulation mentioned in this article relates to financial statements filed for investors and stockholders and is separate from the loss reserves of the insurance subsidiary (which would not be reported in the same way).
Subject Posted By Posted On
RE: You need assets to pay claims... inscopywriter
Jan 2, 2009, 11:52 am
The application of fair value accounting measurements to an Agent
Dec 31, 2008, 12:46 pm
You need assets to pay claims... Robert
Dec 31, 2008, 11:55 am
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