As units within a regulated industry, fire and casualty insurance companies have long been subject to the accounting requirements of the National Association of Insurance Commissioners. In thoroughness of detail set forth concerning the various constituent elements involved in insurance company operations, the convention statement prescribed by the NAIC has made an important contribution over the years. However, to bring fire and casualty insurance company accounting into line with generally accepted accounting principles, many accountants and analysts now believe that a new approach to the practices of these companies is in order. In fact, the Insurance Committee of the American Institute of Certified Public Accountants is in the process of preparing a proposed new code, expected to take the form of supplementary statements, which will convert statutory earnings and policyholder’ surplus to earnings and surplus computed in accordance with generally accepted accounting principles.

In this article an attempt is made to present the modifications of insurance accounting which would be most helpful to financial analysts and stockholders in interpreting earnings and equities in net assets.