NEWS RELEASE 05/23/08

FASB Issues Statement No. 163, Accounting for Financial Guarantee Insurance Contracts

Norwalk, CT, May 23, 2008—The Financial Accounting Standards Board (FASB) today issued FASB Statement No. 163, Accounting for Financial Guarantee Insurance Contracts. The new standard clarifies how FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises, applies to financial guarantee insurance contracts issued by insurance enterprises, including the recognition and measurement of premium revenue and claim liabilities. It also requires expanded disclosures about financial guarantee insurance contracts. The Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for disclosures about the insurance enterprise’s risk-management activities. Disclosures about the insurance enterprise’s risk-management activities are effective the first period beginning after issuance of the Statement.

“By issuing Statement 163, the FASB has taken a major step toward ending inconsistencies in practice that have made it difficult for investors to receive comparable information about an insurance enterprise’s claim liabilities,” stated FASB Project Manager Mark Trench. “Its issuance is particularly timely in light of recent concerns about the financial health of financial guarantee insurers, and will help bring about much needed transparency and comparability to financial statements.”

The accounting and disclosure requirements of Statement 163 are intended to improve the comparability and quality of information provided to users of financial statements by creating consistency, for example, in the measurement and recognition of claim liabilities. Statement 163 requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. It also requires disclosure about (a) the risk-management activities used by an insurance enterprise to evaluate credit deterioration in its insured financial obligations and (b) the insurance enterprise’s surveillance or watch list.

Statement 163 can be found online at www.fasb.org.


About the Financial Accounting Standards Board

Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at www.fasb.org.