Proposed changes to insurance-contract accounting standards arerunning into delays amid vocal opposition, but whatever finalconclusions ultimately emerge, they are unlikely to have a broadimpact on credit ratings since new rules, by themselves, do notalter the economic position of an entity, according to Moody's.

The joint-accounting project between the InternationalAccounting Standards Board (IASB) and the U.S. Financial AccountingStandards Board (FASB) drew support from Moody's earlier in theyear. The rating agency said at the time that it believes“investors are well served by efforts to develop a single set ofhigh-quality accounting standards for insurance contracts.”

However, Moody's notes that the IASB plan has now been delayed.Moody's says the IASB's original intention was to issue a finalstandard in June, but the timeline was extended by “several months”in May. In a recent conference call, according to Moody's, the IASBsaid it now expects to conclude deliberations by the end of 2011.“IASB members have said that the earliest implementation date forany final standards would be 2015,” Moody's says in its WeeklyCredit Outlook, “though this could be pushed back evenfurther.”

The FASB, meanwhile, plans to issue its exposure draft by theend of this year.

“The project is highly controversial,” says Moody's, “and thedecision to delay was likely influenced by vocal opposition frominvestors and the industry, as well as by the difficulty inreconciling the two boards' views.”

But, Moody's says, “regardless of the boards' final conclusionsor the timing of the project,” the transition is unlikely to have abroad impact on credit ratings.

“However, credit ratings would be negatively affected ifaccounting changes affect insurance companies' behavior or businessmodels by making certain lines of business more or less attractive,or if the new accounting model is deemed so unhelpful to investorsthat it reduces the industry's access to capitalmarkets.”