ASC 210-944
Financial Services—Insurance
210 Balance Sheet
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This Subtopic addresses balance sheet presentation for insurance entities, focusing on when reinsurance-related balances may be offset. The core rule is that amounts payable to a policyholder and amounts recoverable from a reinsurer cannot be offset because the right of setoff under 210-20-45-1(b) requires amounts owed to and receivable from the *same* party. By contrast, balances arising between the ceding and assuming entities under a reinsurance contract may qualify for offsetting if the Subtopic 210-20 conditions are met.
Key points (4)
- This Subtopic provides balance sheet reporting guidance to insurance entities (210-944-05-1) and follows the scope of Section 944-10-15 (210-944-15-1).
- Amounts payable to a policyholder and amounts recoverable from a reinsurer fail the offsetting criteria in Section 210-20-45 because 210-20-45-1(b) requires a legal right to set off an amount owed to a party against an amount receivable from that same party (210-944-55-1).
- Reinsurance does not relieve the ceding entity of its direct obligation to the policyholder, so the reinsurance recoverable must be reported gross as an asset rather than netted against the policy liability (210-944-55-1).
- Balances between the ceding and assuming entities—funds withheld on ceded premiums, commissions, unsettled claims, and funds advanced by the assuming entity—may qualify for offsetting if the conditions in Subtopic 210-20 are satisfied (210-944-55-2).
For students. The classic exam trap is assuming that ceding risk to a reinsurer lets the insurer shrink its balance sheet: it does not, because the policyholder and the reinsurer are different parties, so the recoverable is a gross asset. Offsetting is only possible between the ceding and assuming entities themselves, and only if all of the 210-20 conditions are met.
right of setoffreinsurance recoverableceding entityassuming entityfunds withheldgross presentationpolicyholder liabilityoffsetting
Machine-generated study aid for ASC 210-944. Check the source paragraphs below.
210-944-00Status
Source downloaded: .Record version 8f9ba313facb. Effective date must be checked in the source.
210-944-00-1
The following table identifies the changes made to this Subtopic.
| Paragraph | Action | Accounting Standards Update | Date |
| Reinsurance | Added | Accounting Standards Update No. 2016-19 | 12/14/2016 |
| 944-210-55-1 | Amended | Accounting Standards Update No. 2016-19 | 12/14/2016 |
| 944-210-55-2 | Amended | Accounting Standards Update No. 2016-19 | 12/14/2016 |
210-944-05Overview and Background
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210-944-05-1
This Subtopic provides guidance to insurance entities on balance sheet reporting.
210-944-15Scope and Scope Exceptions
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Overall Guidance
210-944-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 944-10-15.
210-944-55Implementation Guidance and Illustrations
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Implementation Guidance
210-944-55-1
Amounts payable to a policyholder and amounts recoverable from a reinsurer do not meet the criteria for offsetting in Section 210-20-45 because paragraph 210-20-45-1(b) requires that the reporting party have the legal right to set off the amount owed to one party with an amount receivable from that same party.
210-944-55-2
Several balances may arise between the ceding and assuming entities in a reinsurance contract, including funds withheld on ceded premiums, commissions, unsettled claims, and funds advanced by the assuming entity. Those items may qualify for offsetting under the conditions established by Subtopic 210-20.
210-944-S00StatusSEC
Source downloaded: .Record version 1e5060a96171. Effective date must be checked in the source.
210-944-S00-1
The following table identifies the changes made to this Subtopic.
| Paragraph | Action | Accounting Standards Update | Date |
| 944-210-S99-1 | Amended | Accounting Standards Update No. 2019-07 | 07/26/2019 |
| 944-210-S99-1 | Amended | Accounting Standards Update No. 2010-21 | 08/02/2010 |
210-944-S45Other Presentation MattersSEC
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Presentation and Classification
210-944-S45-1
See paragraph 944-210-S99-1, Regulation S-X Rule 7-03 for the required balance sheet presentation for insurance companies.
210-944-S50DisclosureSEC
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Long-Term Investments
210-944-S50-1
See paragraph 944-210-S99-1, Regulation S-X Rule 7-03.1, for the required disclosures pertaining to long-term investments.
Restricted Cash
210-944-S50-2
See paragraph 944-210-S99-1, Regulation S-X Rule 7-03.2, for the required disclosures pertaining to restricted cash.
Policy Liabilities and Accruals
210-944-S50-3
See paragraph 944-210-S99-1, Regulation S-X Rule 7-03.13, for the required disclosures pertaining to policy liabilities and accruals.
Other Policyholders' Funds
210-944-S50-4
See paragraph 944-210-S99-1, Regulation S-X Rule 7-03.14, for the required disclosures pertaining to participating insurance.
Minority Interests in Consolidated Subsidiaries
210-944-S50-5
See paragraph 944-210-S99-1, Regulation S-X Rule 7-03.20, for the required disclosures pertaining minority interests in consolidated subsidiaries.
Stockholders' Equity
210-944-S50-6
See paragraph 944-210-S99-1, Regulation S-X Rule 7-03.21, for the required disclosures pertaining to redeemable preferred stock.
210-944-S50-7
See paragraph 944-210-S99-1, Regulation S-X Rule 7-03.22, for the required disclosures pertaining to preferred stocks that are not redeemable or are redeemable solely at the option of the issuer.
210-944-S50-8
See paragraph 944-210-S99-1, Regulation S-X Rule 7-03.22, for the required disclosures pertaining to common stocks.
210-944-S50-9
See paragraph 944-210-S99-1, Regulation S-X Rule 7-03.24(c), for the required disclosures pertaining to stockholders' equity.
Supplemental Information Concerning Property Casualty Insurance Operations
210-944-S50-10
See paragraph 205-10-S99-6, Regulation S-X Rule 5-04(c), for the required supplemental schedule concerning property casualty insurance operations.
210-944-S99SEC MaterialsSEC
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SEC Rules, Regulations, and Interpretations
210-944-S99-1
The following is the text of Regulation S-X Rule 7-03, Balance Sheets (17 CFR 210.7-03).
- (a) The purpose of this rule is to indicate the various items which, if applicable, and except as otherwise permitted by the Commission, should appear on the face of the balance sheets and in the notes thereto filed for persons to whom this article pertains. (See § 210.4-01(a).)
- ASSETS
- 1. Investments—other than investments in related parties.
- (a) Fixed maturities.
- (b) Equity securities.
- (c) Mortgage loans on real estate.
- (d) Investment real estate.
- (e) Policy loans.
- (f) Other long-term investments.
- (g) Short-term investments.
- (h) Total investments.
- NOTES:
- (1) State parenthetically or otherwise in the balance sheet (a) the basis of determining the amounts shown in the balance sheet and (b) as to fixed maturities and equity securities either aggregate cost or aggregate value at the balance sheet date, whichever is the alternate amount of the carrying value in the balance sheet. Consideration shall be given to the discussion of "Valuation of Securities" in § 404.03 of the Codification of Financial Reporting Policies.
- (2) Include under fixed maturities: bonds, notes, marketable certificates of deposit with maturities beyond one year, and redeemable preferred stocks. Include under equity securities: common stocks and nonredeemable preferred stocks.
- (3) State separately in the balance sheet or in a note thereto the amount of accumulated depreciation and amortization deducted from investment real estate. Subcaption (d) shall not include real estate acquired in settling title claims, mortgage guaranty claims, and similar insurance claims. Real estate acquired in settling claims shall be included in caption 10, "Other Assets," or shown separately, if material.
- (4) Include under subcaption (g) investments maturing within one year, such as commercial paper maturing within one year, marketable certificates of deposit maturing within one year, savings accounts, time deposits and other cash accounts and cash equivalents earning interest. State in a note any amounts subject to withdrawal or usage restrictions. (See § 210.5-02.1.)
- (5) State separately in a note the amount of any class of investments included in subcaption (f) if such amount exceeds ten percent of stockholders' equity.
- (6) State in a note the name of any person in which the total amount invested in the person and its affiliates, included in the above subcaptions, exceeds ten percent of total stockholders' equity. For this disclosure, include in the amount invested in a person and its affiliates the aggregate of indebtedness and stocks issued by such person and its affiliates that is included in the several subcaptions above, and the amount of any real estate included in subcaption (d) that was purchased or acquired from such person and its affiliates. Indicate the amount included in each subcaption. An investment in bonds and notes of the United States Government or of a United States Government agency or authority which exceeds ten percent of total stockholders' equity need not be reported.
- (7) State in a note the amount of investments included under each subcaption (a), (c), (d) and (f) which have been non-income producing for the twelve months preceding the balance sheet date.
- 2. Cash. Cash on hand or on deposit that is restricted as to withdrawal or usage shall be disclosed separately on the balance sheet.
- The provisions of any restrictions shall be described in a note to the financial statements. Restrictions may include legally restricted deposits held as compensating balances against short-term borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits. In cases where compensating balance arrangements exist but are not agreements which legally restrict the use of cash amounts shown on the balance sheet, describe in the notes to the financial statements these arrangements and the amount involved, if determinable, for the most recent audited balance sheet required. Compensating balances that are maintained under an agreement to assure future credit availability shall be disclosed in the notes to the financial statements along with the amount and terms of the agreement.
- 3. Securities and indebtedness of related parties. State separately (a) investments in related parties and (b) indebtedness from such related parties. (See § 210.4-08(k).)
- 4. Accrued investment income.
- 5. Accounts and notes receivable. Include under this caption
- (a) amounts receivable from agents and insureds,
- (b) uncollected premiums and
- (c) other receivables.
- State separately in the balance sheet or in a note thereto any category of other receivable which is in excess of five percent of total assets. State separately in the balance sheet or in a note thereto the amount of allowance for doubtful accounts that was deducted.
- 6. Reinsurance recoverable.
- 7. Deferred policy acquisition costs.
- 8. Property and equipment.
- (a) State the basis of determining the amounts.
- (b) State separately in the balance sheet or in a note thereto the amount of accumulated depreciation and amortization of property and equipment.
- 9. Title plant.
- 10. Other assets. State separately in the balance sheet or in a note thereto any other asset the amount of which exceeds five percent of total assets.
- 11. Separate account assets. Include under this caption the portion of separate account assets representing contract holder funds required to be reported in an insurance entity's financial statements as a summary total. An equivalent summary total for the related liability shall be included under caption 18.
- 12. Total assets.
- LIABILITIES AND STOCKHOLDERS' EQUITY
- 13. Policy liabilities and accruals.
- (a) State separately in the balance sheet the amounts of
- (1) future policy benefits and losses, claims and loss expenses,
- (2) unearned premiums and
- (3) other policy claims and benefits payable.
- (b) [Reserved]
- 14. Other policyholders' funds.
- (a) Include amounts of supplementary contracts without life contingencies, policyholders' dividend accumulations, undistributed earnings on participating business, dividends to policyholders and retrospective return premiums (not included elsewhere) and any similar items. State separately in the balance sheet or in a note thereto any item the amount of which is in excess of five percent of total liabilities.
- (b) State in a note to the financial statements the relative significance of participating insurance expressed as percentages of (1) insurance in force and (2) premium income; and the method by which earnings and dividends allocable to such insurance is determined.
- 15. Other liabilities.
- (a) Include under this caption such items as accrued payrolls, accrued interest and taxes. State separately in the balance sheet or in a note thereto any item included in other liabilities the amount of which exceeds five percent of total liabilities.
- (b) State separately in the balance sheet or in a note thereto the amount of (1) income taxes payable and (2) deferred income taxes. Disclose separately the amount of deferred income taxes applicable to unrealized appreciation of equity securities.
- 16. Notes payable, bonds, mortgages and similar obligations, including capitalized leases.
- (a) State separately in the balance sheet the amounts of (1) short-term debt and (2) long-term debt including capitalized leases.
- (b) The disclosure required by § 210.5-02.19(b) shall be given if the aggregate of short-term borrowings from banks, factors and other financial institutions and commercial paper issued exceeds five percent of total liabilities.
- (c) The disclosure requirements of § 210.5-02.22 shall be followed for long-term debt.
- 17. Indebtedness to related parties. (See § 210.4-0.8(k).)
- 18. Liabilities related to separate accounts. [See caption 11.]
- 19. Commitments and contingent liabilities.
- REDEEMABLE PREFERRED STOCKS
- 20. Preferred stocks subject to mandatory redemption requirements or whose redemption is outside the control of the issuer. The classification and disclosure requirements of § 210.5-02.27 shall be followed.
- NONREDEEMABLE PREFERRED STOCKS
- 21. Preferred stocks which are not redeemable or are redeemable solely at the option of the issuer. The classification and disclosure requirements of § 210.5-02.28 shall be followed.
- COMMON STOCKS
- 22. Common stocks. The classification and disclosure requirements of § 210.5-02.29 shall be followed.
- OTHER STOCKHOLDERS' EQUITY
- 23. Other stockholders' equity.
- (a) Separate captions shall be shown for
- (1) additional paid-in capital,
- (2) other additional capital,
- (3) accumulated other comprehensive income,
- (4) retained earnings (i) appropriated and (ii) unappropriated. (See § 210.4-08(e).) Additional paid-in capital and other additional capital may be combined with the stock caption to which they apply, if appropriate.
- (b) The classification and disclosure requirements of § 210.5-02.30(b) shall be followed for dating and effect of a quasi-reorganization.
- (c) State in a note the following information separately for (1) life insurance legal entities, and (2) property and liability insurance legal entities: the amount of statutory stockholders' equity as of the date of each balance sheet presented and the amount of statutory net income or loss for each period for which a statement of comprehensive income is presented.
- NONCONTROLLING INTERESTS
- 24. Noncontrolling interests in consolidated subsidiaries. The disclosure requirements of § 210.5-02.31 shall be followed.
- 25. Total liabilities and equity.
- [46 FR 54335, Nov. 2, 1981, as amended at 50 FR 25215, June 18, 1985; 74 FR 18615, Apr. 23, 2009; 83 FR 50203, Oct. 4, 2018]
Related subtopics
- 210-942 Financial Services—Depository and LendingBalance Sheet
- 210-946 Financial Services—Investment CompaniesBalance Sheet
- 220-944 Financial Services—InsuranceIncome Statement—Reporting Comprehensive Income
- 944-10 OverallFinancial Services—Insurance
- 210-10 OverallBalance Sheet
- 235-944 Financial Services—InsuranceNotes to Financial Statements