Fundamentals of Insurance Accounting and the Analysis of Insurers (Part 1)

• Discussion of P&C and life and health products and their risk and return profiles
• Policy tail and duration
• Reinsurance
• Statutory accounting principles
• Limitations of accounting to reflect an insurer's economic reality

Fundamentals of Insurance Accounting and the Analysis of Insurers (Part 2)

• Main accounting standards: FAS 60 Traditional P&C and life insurance
• FAS 163 Interpretation of financial guarantee insurance
• FAS 97 Investment-oriented life insurance
• SOP 03-1 (guaranteed minimum benefits and other contract features)
• FAS 133 (policies with embedded derivatives)

An Analyst’s Look at the Numbers

Speaker to be announced

• This session presents an equity research analyst’s perspective on decrypting and interpreting an insurer's more complex financial data in order to identify financial stability or financial weakness. Participants will learn how different accounting treatments affect key performance indicators and how adjustments can be made to manipulate these figures.

Property & Casualty Loss Reserves

• Accounting for loss reserves and analysis of the loss-reserve triangle
• Redundancies  and deficiencies
• Calendar year vs. accident year
• Analysis of loss ratios and profitability
• Effects of finite reinsurance on loss ratios and profitability

Identifying Issues in Bank Accounting

• Understanding a bank’s market risks and how they are mitigated
• Managing the balance sheet: asset and liability matching
• Fair-value vs. cost-based accounting
• Regulatory capital and reporting standards vs. GAAP accounting

Interest Rate Risk and Net Interest Earnings

• Amortized cost-accounting for interest revenue and expense
• Analysis of net interest income; looking at bank disclosures
• Analyzing maturity, repricing and interest rate sensitivity disclosures  

Credit Risk and Losses

• Accounting for loss contingencies (SFAS No. 5) -

- application to heterogeneous and homogenous loan types

- discretion

• Accounting for loan impairments (SFAS Nos. 114 and 118)
• Accounting for transfers of troubled loans (SOP 03-3)
• Recent FASB decisions regarding loan commitments (SFAS No. 149) and guarantees (FIN 45)

Credit Risk and Losses: A Case Study

• Working from published financial statements, participants engage in a detailed analysis of the accounting and disclosures associated with a bank's reporting of its credit risks.

An Analyst’s Look at the Numbers

Gary Gordon

Senior Analyst, Portales Partners

• This session will take you into the research analyst’s world of decrypting and interpreting a bank's more complex financial data in order to identify financial stability or financial weakness. Participants will learn how different accounting treatments affect key performance indicators and where management has discretion and latitude in reporting their financial results, with a special focus on distressed assets.

Fair Value Accounting for Financial Instruments

• Fair value disclosures for all financial instruments (SFAS Nos. 157 and 107)

- estimating unrealized gains and losses

• Fair-values of investment securities (SFAS No. 115)

- implications of trading vs. available for sale vs. held to maturity designations

- assessing gains trading

- other-than-temporary impairments (FSP FAS 115-1, FAS 124-1)

• Accounting treatment for mortgage and other servicing rights under FAS 156 and FAS 159

The Advisory Firm's Perspective

Hugh W. J. Guyler, Industry Professional Practice Director,
Banking and Finance, Deloitte

• Practical observations on how banks are interpreting accounting standards and how auditors are advising their clients
• Assumptions and acceptable practices around loss provisioning
• Interpreting existent FASB standards and new FSPs with regard to fair-value accounting
• Level 1-3 assets and how to determine what is an observable price
• Challenges with OTTI interpretation

Derivatives and Hedging

• Accounting for derivatives and hedging (SFAS Nos. 133, 138, 149)
• Analyzing how banks use derivatives to modify their market and nonmarket risks