A Connecticut regulator said he believes that the National Association of Insurance Commissioners will not be able reach a consensus on more specific accounting standards for finite reinsurance transactions.

Instead, some form of “best practices” could serve as detailed guidance for reinsurance accounting in the near term while policymakers hash out more final solutions, according to John Purple.

Mr. Purple, who serves as chief actuary for the Connecticut Department of Insurance as well as chair of the NAIC Casualty Actuarial Task Force, said it appeared highly unlikely the statutory accounting rules could be revised by year’s end to quantify risk transfer in finite reinsurance contracts.

Accounting for finite reinsurance deals has become an issue for regulators since federal and state investigators have turned up evidence that such transactions have been misused by companies to present a distorted financial picture.

The American Academy of Actuaries was to present some recommendations at the fall NAIC session that had been scheduled for New Orleans this week before the city was inundated by Hurricane Katrina.

The task force will meet on a conference call Tuesday and could recommend approving the recommendations to its parent, the Property and Casualty Reinsurance Study Group. But that will still leave little time to revise the current Statement of Statutory Accounting Principles 62, which most people agree does not speak clearly enough on the issue.

Earlier this year, reinsurance contracts came under scrutiny from both federal and New York state regulators for failing to transfer enough risk to qualify for reinsurance accounting. Their investigations put a major focus on a deal involving American International Group and General Reinsurance Corp.

In addition to AIG, both ACE Ltd. and MBIA Corp. have had to restate earnings as a result of the lack of clear definition between what constitutes a risk transfer and what constitutes a mere loan for the purpose of providing less volatility in quarterly earnings.

Mr. Purple said up until now, accountants have for the most part played the determining role in these issues, and it is time for actuaries to lend their expertise.

The AAA report could serve as a series of “Best Practices” for the industry that could provide guidance.

New York Superintendent of Insurance Howard Mills said he believed there is a need to develop new standards, or at least some form of “best practices” that would avoid the “one-size-fits-all” approach for one that could be applied to different situations in a flexible manner.