NU Online News Service, July 26, 10:48 a.m. – Annuity and Life Re (Holdings) Ltd., Hamilton, Bermuda, says it will be restating its financial results beginning with the first quarter of 2001 due to a change in the way it accounts for annuity reinsurance contracts.
Annuity and Life recently underwent a routine review by the U.S. Securities and Exchange Commission.
During the SEC review, “the company and its auditors concluded that the company’s annuity reinsurance agreements, which are standard industry modified coinsurance agreements or coinsurance with funds withheld agreements, contained embedded derivatives,” Annuity and Life says in a statement about the financial restatements.
A derivative is a financial instrument that derives its value from the performance of some other financial instrument or value, such as the value of a stock index.
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Annuity and Life says it now believes that it must restate its 2001 and early 2002 results because some of the embedded derivatives require separate accounting under an accounting rule called FAS 133.
The effects of the change will be “insignificant,” Annuity and Life says.