FASB proposal could heighten insurance companies' earnings volatility

A proposal from the Financial Accounting Standards Board, expected to be released today, will standardize the way companies account for insurance contracts. The change is expected to increase insurance companies' earnings volatility. The proposal calls for insurers to measure income on insurance contracts based on assumptions of the amount of net cash they anticipate taking in on a policy. For each earnings period, the companies will have to re-evaluate these assumptions.

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