At the time the insurance company was viewed as being perfectly sound, despite the parent company's problems. Rather, it was a downward revision of the value of assets in the investment portfolio. Even within the European Union single insurance market, countries have been given wide latitude to define valuation criteria. Germany uses the lower of cost or market. There is no recognition of unrealized capital gains.
Japan also uses cost for valuation.
Even with the bear market in equities of the last several years, cost is well below market value for many Japanese insurers. Brazil requires that equities be valued at cost or market, whichever is lower, and fixed income at cost or face value. Real estate valuation is frequently a more difficult task. In developing accurate values for fixed-income and equity securities, it is usually possible to rely on market mechanisms. Establishing an accurate current value for real estate is often more subjective.