As structured finance grows , life insurance companies are entering into new terrain and looking into life embedded value securitizations in the U.K., as well as in the U.S. Getting a grip on the accounting issues that surround this asset class is part of the story behind the rise in interest in embedded value securitizations.

"When a life insurance company writes a contract it initially incurs a number of costs, including administration and commission expenses," said David Anthony, a London-based analyst at Standard & Poor's. "The trouble is, because accounting is annual, whether for the regulators or the shareholders, the current years' accounts will only show the loss made today, without giving full credit for the profits the contract will likely bring tomorrow," he added.

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