The areas of greatest subjectivity and interest within the IFRS financial statements of insurance groups as at 31 December 2011

For the fourth year in a row, Mazars has carried out a detailed analysis of the largest insurance groups’ financial information as at 31 December 2011.

Since 2008 and the financial crisis, both analysts and investors have faced increased difficulty in assessing insurance groups’ performance due to current business environment conditions, such as:

• Stagnation within the main developed countries;
• European sovereign debt crisis;
• Low interest rates;
• Prolonged decline in the stock markets;
• High market volatility; and
• Solvency II framework implementation in progress.

In this context, we have performed an analysis of the financial statement disclosures based on the 2011 year-end IFRS financial statements of several of the largest insurance and reinsurance groups looking at issues:

• From an accounting perspective, considering compliance with IFRS especially regarding topics that we consider to be particularly sensitive; and
• From a financial and regulatory perspective, as we focus on the insurers’ and reinsurers’ financial disclosures regarding key indicators and capital management.

This year, the survey has focused on the following topics:

• Goodwill and associated tests regarding recoverability;
• Financial instruments and associated risks;
• Communication of Embedded Value and other key performance indicators; and
• Information related to capital management.