TOKYO: A Japanese accounting group is seeking to ease rules on how life insurers book paper losses on government bonds.
Under the proposal, bonds held by life insurers to match long-term policies would be treated as held to maturity if certain conditions are met, and would not be subject to impairment accounting.
The Japanese Institute of Certified Public Accountants is seeking public comments on the proposal, which was posted on its website on Tuesday.
If the rule is revised, it will be easier for life insurers to hold government bonds and other securities for long periods, even in times of rising interest rates.
Under current rules, an insurer needs to record an impairment loss if the market value of an asset falls 50% below its book value and there is no prospect of recovery.
The country’s biggest insurers are sitting on swelling paper losses on their holdings of Japanese government bonds. — Bloomberg
