This issue arose most clearly in reinsurance, where the use of Financial Reinsurance to reengineer insurer balance sheets under US GAAP became fashionable during the 1980s. The accounting profession raised serious concerns about the use of reinsurance in which little if any actual risk was transferred, and went on to address the issue in FAS 113, cited above. While on its face, FAS 113 is limited to accounting for reinsurance transactions, the guidance it contains is generally conceded to be equally applicable to US GAAP accounting for insurance transactions executed by commercial enterprises.

In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: money economies (with markets, money, financial instruments and so on) and non-money or natural economies (without money, markets, financial instruments and so on). The second type is a more ancient form than the first. In such an economy and community, we can see insurance in the form of people helping each other. For example, if a house burns down, the members of the community help build a new one. Should the same thing happen to one's neighbour, the other neighbours must help. Otherwise, neighbours will not receive help in the future. This type of insurance has survived to the present day in some countries where modern money economy with its financial instruments is not widespread (for example countries in the territory of the former Soviet Union).

Health Insurance

WASHINGTON (AFP) –
President Barack Obama signed a 7.5 billion dollar aid package for Pakistan after the US Congress acted to placate critics in the strife-torn nation who warned it violated Pakistani sovereignty.

Obama's move followed days of disputes over the package, which sparked a showdown between Pakistan's government and its powerful military.

Tensions in Pakistan are mounting with a wave of attacks over the past 11 days have left 170 dead, the latest a double suicide attack on a police compound in which 11 died.

The US package aims to help the Pakistan government, a key ally in the battle against Al-Qaeda, meet the insurgent challenge by tripling non-military US aid. Related article: Guerrilla war escalating in Pakistan

"This law is the tangible manifestation of broad support for Pakistan in the US, as evidenced by its bipartisan, bicameral, unanimous passage in Congress," White House spokesman Robert Gibbs said in a statement.

The measure offers 1.5 billion dollars a year for five years to improve Pakistani schools, to fund groups that defend the rights of women and children, and to train and modernize the Pakistani peace force.

It also provide for funds for efforts to cement civilian control in nuclear-armed Pakistan, and supports voter education, civil society and improvements in the functioning of parliament.

Some leading political voices in Pakistan balked at what they saw as conditions on how the money could be spent, including calls for action in curtailing the anti-Indian militant movements Lashkar-e-Taiba and Jaish-e-Mohammed.

The bill also called for a cut-off in security assistance if Pakistan fails to crack down on extremists.

The requirements sparked uproar in the Pakistani parliament, and were used by opponents of the government's alliance with the United States to hammer President Asif Ali Zardari.

Pakistan's foreign minister delivered an impassioned defence of the package on Friday, insisting the legislation would help the fight against Islamist militants.

"This will enhance our counter-insurgency capability," Shah Mehmood Qureshi told parliament after returning from Washington with written guarantees the package would not violate Pakistan sovereignty.

"The legislation does not seek in any way to compromise Pakistan's sovereignty, impinge on Pakistan's national security interest or micro manage any aspect of Pakistan's military or civilian operations," said Qureshi.

In Washington, the minister held talks with Senator John Kerry and Representative Howard Berman, who head committees handling foreign relations in Congress, to get a document stating that the plan did not impose conditions or infringe on Pakistani sovereignty.

The lawmakers' statement said the aid was meant "to forge a closer collaborative relationship between Pakistan and the United States, not to dictate the national policy or impinge on the sovereignty of Pakistan in any way."

"Any interpretation of this act which suggests that the United States does not fully recognize and respect the sovereignty of Pakistan would be directly contrary to congressional intent," it said.

Obama signed the bill hours after militants unleashed coordinated attacks on Pakistani police in which 40 people died, storming offices in Lahore and bombing a police station in Peshawar. Two suicide bombers attacked a police compound in Peshawar again on Friday killing another 11 people.

The assaults underscored the power of armed radicals to strike in the heart of Pakistan, and the weakness of poorly equipped security forces, despite promises of a new offensive against the Taliban.

White House deputy spokesman Bill Burton said Obama was "always concerned when there's a loss of innocent civilian life."

"This shows once again that the militants in Pakistan threaten both Pakistan and the United States," Burton said, adding that Obama had been encouraged by recent actions by the Pakistani military to tackle extremists.

State Department deputy spokesman Robert Wood meanwhile extended US sympathy to victims of the attacks, and honored "brave Pakistani military police and security personnel who are fully engaged in combating these extremists."

UNITED NATIONS (Reuters) –
Politically divided Lebanon and Bosnia were among five countries elected to the U.N. Security Council on Thursday, in a move diplomats hoped would help strengthen the two countries' fragile institutions.

In an uncontested election, the U.N. General Assembly voted for Bosnia, Brazil, Gabon, Lebanon and Nigeria to serve on the council through 2010 and 2011. All five had been selected in advance by their regional groups.

From January 1 they will replace Burkina Faso, Costa Rica, Croatia, Libya and Vietnam as non-veto-holding members of the 15-nation body, the powerhouse of the United Nations with the authority to impose sanctions and send peacekeeping forces.

Unresolved political and security issues have meant that both Lebanon and Bosnia are subject to Security Council scrutiny. Lebanon has some 12,500 U.N. peacekeeping troops in its south, stemming from past conflicts with Israel, while Bosnia, torn by war in the 1990s, has a European Union force.

"The experience of being on the council will help strengthen their national government systems to enable them to take decisions on international issues," British Ambassador John Sawers said of Lebanon and Bosnia.

There are five veto-holding permanent members of the Security Council -- the United States, Britain, France, Russia and China -- and 10 temporary elected members without vetoes.

But the elected members have some power because a council resolution needs nine votes in favor as well as no vetoes.

Diplomats said they expected Lebanon to be able to speak for Arab countries despite its sectarian divisions, but one said he anticipated it would abstain if the council decided to impose further sanctions against Iran over its nuclear program. Three rounds of sanctions have already been passed.

SENSITIVE SUBJECT

Iran is a sensitive subject in Beirut, where politicians are seeking to put together a new government, because of the political weight of the Iranian-backed Shi'ite Hezbollah group, whose militants fought against Israel in 2006.

"If it comes to Iran, that would cause quite deep divisions within the Lebanese government, and it would be difficult for them to take a definitive position, i.e. they're likely to abstain," said one Western diplomat who had spoken to Lebanese officials.

But the diplomat, speaking on condition he that he not be identified, also expected Lebanon to be a more moderate Arab voice on the council than outgoing Libya, which has clashed with the United States over the Israeli-Palestinian conflict.

"They may look for a more moderate way through and take a lead perhaps more specifically from the Palestinians," he said. "There have been occasions when the Libyans have refused to take the advice of the likes of Palestine and Egypt because it wasn't to their own national taste."

Lebanese Ambassador Nawaf Salam said his country, on the council for the first time since 1953, had "a special mission as a country of tolerance, diversity" but declined further comment on how it would act.

Bosnian Foreign Minister Sven Alkalaj said his country's election was a tribute to the long way it had come since its 1992-95 ethnic war. The Balkan state remains politically divided between a Serb republic and a Muslim-Croat federation.

He said Sarajevo would favor a council policy of preventive diplomacy, "never to allow the crisis and loss of human lives to happen ever again as we experienced in Bosnia."

Nigerian Foreign Minister Ojo Maduekwe also said preventive diplomacy "will be central to our approach." Nigeria and Brazil have both been mentioned as possible new Security Council permanent members under reform proposals now under discussion.

The five countries elected on Thursday could only have been blocked if they had failed to obtain two thirds of the votes cast. All five were elected with overwhelming majorities.

(Editing by Jackie Frank)

UNITED NATIONS – The Security Council voted Thursday to extend U.N. authorization for NATO's 70,000-strong force in Afghanistan for a year, emphasizing the importance of protecting civilians just as the U.S. and international commitment to the war is under review.
Britain's U.N. Ambassador John Sawers said the resolution's unanimous adoption by all 15 council members "underlines the extent of international support for the international effort there."
The resolution calls for more personnel, equipment and other resources for NATO's International Security Assistance Force. But it makes no mention of the debate taking place in some NATO capitals on whether to increase or reduce the force.
The Security Council also did not address the debate in Washington on whether to add up to 40,000 additional U.S. troops. President Barack Obama is weighing recommendations and is expected to make a decision within weeks.
The United States has 65,000 troops in Afghanistan — approximately 31,000 serving with NATO and 34,000 under U.S. command.
The resolution does stress the importance of stepping up efforts "to train, mentor and empower" Afghanistan's security forces so they become self-sufficient and assume responsibility for protecting the country.
The allied strategy in Afghanistan hinges on increasing the number of Afghan soldiers and police so U.S. and NATO forces can one day withdraw. Some 134,000 Afghan troops are to be trained by late 2011, but U.S. officials say that number will need to be greatly increased, an expansion that the U.S. will finance.
Sawers said the resolution "goes out of its way to emphasize the importance of protecting the Afghan civilian population."
The Security Council expressed "serious concern with the high number of civilian casualties," and called for "compliance with international humanitarian and human rights law."
U.S. and NATO authorities have been strongly criticized for an increase in civilian casualties, which has alienated many Afghans.
Soon after assuming command of NATO and U.S. forces in June, Gen. Stanley McChrystal ordered troops to limit the use of airstrikes to prevent civilian casualties. He also required international troops to be accompanied by Afghan forces before entering homes.
The resolution welcomes the military's increased focus on making the protection of civilians "a central element" in their mission.
The Security Council expressed "strong concern" at the increasing violence and terrorist activity by the Taliban, al-Qaida, illegally armed groups, criminals and those involved in the narcotics trade — and at the "harmful consequences" on the government's ability to guarantee to rule of law and provide security and basic services to the Afghan people.
Sawers said "sustained and accountable and stable government across Afghanistan," was required "to ensure that Afghanistan can no longer be used as a base of terrorists."
The council also voiced concern at "the increasingly strong links between terrorism activities and illicit drugs."