Changes in External Accounting Framework and its impact on Asset & Liability Management

Abstract: Purpose: The purpose of this investigation is to contribute to the understanding of how changes in the external accounting framework impacts an insurance company’s asset and liability management focusing on the asset side and credit risks. Method: This study has an actor’s approach. The theory and the empirical data have been approached consistently with the help of the model I designed. The design of the study is a case study with a qualitative approach using semi-structured interviews. When collecting and analysing the empirical material the study has been influenced by a qualitative approach. Result & Conclusions: The study indicates that the insurance sector is using economic and solvent risk based valuations to manage and steer their business to profitability.   This study has clearly shown that reality mirrors the theory. However due to the volatility of the insurance market, stress testing supports the ALM requirements which is at the heart of an insurance company. Suggestions for future research: A suggestion would be to focus on internal controls used to implement such changes in external accounting frameworks which impact management accounting.  Such a focus would possibly be quite interesting to study and develop further.  Contributions of the thesis: This study contributed to how changes in the external accounting framework impacts an insurance company’s asset and liability management focusing on the asset side and credit risks. The study offers an appropriate setting to address the purpose, considering insurance companies have experienced significant changes that affect those factors in future years.