Right after the painful imposition of International Financial Reporting Standards (IFRS), the insurance sector is bracing itself for the second round of adjustments to the international rules. The full adoption of Standard No. 4 in 2007 is expected to put insurance companies to a new test, following the first phase of IFRS application that saw their net worth reduced by 93 percent. The risk of further depreciation of the listed insurers’ net worth comes from the adaptation of their future obligations to clients in fair value, an adjustment that is the weakness of the most sensitive insurance domain, life insurance. This was the issue examined by the Tax and Accounting Committee of the Association of Insurance Companies Greece. The effects of the IFRS adoption were calculated to come to 509 million euros, according to Ernst & Young’s Despina Xenaki. The initial application of Standard 4, which is about insurance contracts and sufficiency tests for the companies’ reserves, has brought on the worst losses. The negative adjustments have led to the dramatic reduction in equities, and reveal the extent of the phenomenon of inadequate stockpiling of reserves in the domestic insurance market. The data presented by Xenaki show that the 75 percent drop in the net worth of listed insurers is due to the application of Standard 4, which refers specifically to the sufficiency of insurance provisions. A distant second cause of the depreciation is Standard 19, which refers to the pensioning programs of companies, leading to a drop by 19 percent of equities in the five listed companies (Ethniki, Aspis Pronia, Agrotiki, Phoenix-Metrolife and European Reliance), while Standard 39 and the valuation of investment at present value have resulted in the drop of net worth by 10 percent. Under-reserves explain the 340-million-euro deficit found by the Development Ministry recently through the application of sufficiency tests at non-listed companies also. The next wave of effects is to come in 2007 when Standard 4 is fully adopted, meaning the recording of the fair value of the obligations of insurers, particularly those for pension programs. Xenaki explained that introducing Standard 4 in two phases was due to the complexity of insurance companies’ issues, adding that the second phase will not be postponed.