EEV: A new insurance accounting framework

European insurers have recently begun adopting the European Embedded Value Principles for supplementary financial reporting. In this article, Kamran Foroughi and James Creedon, consultants with the Tillinghast business of Towers Perrin, discuss key business implications, and give an update on the progress of implementation across the industry.

Market conditions since 2000 have had an unprecedented impact on the financial position of insurance companies worldwide. Sustained falls in equity markets and interest rates, combined with the mismatching of assets and liabilities, have exposed options and guarantees that had previously been thought of as well-protected, raising significant concerns about the profitability – and solvency – of insurance companies.