Industry News

Better reporting standards could hike insurance stock prices

(BLOGGING STOCKS) - The worldwide insurance industry may be worth more than you think. Industry analysts believe that reporting isn’t as consistent as it could be, and that improvements to insurance financial reporting would pump up those stock prices.

PricewaterhouseCoopers interviewed more than 40 investment professionals from the U.S., Asia and Europe, finding that dissatisfaction with insurance financial reporting was widespread. They’d like to see the International Accounting Standards Board and Financial Accounting Standards Board build a better mousetrap for the industry.

Ian Dilks, PwC’s global insurance leader, said, “Feedback from global insurance analysts is clear; they believe the current reporting situation is harming the insurance industry and they are calling for the IASB and the FASB to come to a conclusion, and quickly. The desire for a swift solution is especially strong among life insurance analysts using IFRS.” He continues, “The degree to which a consensus is emerging among analysts on the fundamentals that they believe should form the bedrock of the new reporting framework, is a significant step.”

Nearly 90% of the survey participants indicated that the insurance industry is different enough from the rest of the business community to warrant its own reporting model. In the U.S., this perspective was unanimous. Some 56%prefer different approaches for life and nonlife businesses, with close to 70% interested in seeing contracts that contain differences in risk and earnings profiles to be accounted for based on the specifics rather than by taking the contract as a whole. The result would be an increased accuracy in reporting that reflects the financial conditions the carrier faces rather than the expediency of looking at a document in only one way.

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