NU Online News Service, Aug. 1, 2:52 p.m.EDT

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 the year. The rating agencysaid at the time that it believes "investors are well served byefforts to develop a single set of high-quality accountingstandards 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 conference call last week, according to Moody's, theIASB says it now expects to conclude deliberations by the end of2011. "IASB members have said that the earliest implementation datefor any 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 benegatively affected if accounting changes affect insurancecompanies' behavior or business models by making certain lines ofbusiness more or less attractive, or if the new accounting model isdeemed so unhelpful to investors that it reduces the industry'saccess to capital markets."