{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/340/30/#35-subsequent-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"340","topic_title":"Other Assets and Deferred Costs","subtopic":"340-30","subtopic_title":"Insurance Contracts That Do Not Transfer Insurance Risk","section":{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Insurance and Reinsurance Contracts that Transfer Only Significant Timing Risk and Insurance and Reinsurance Contracts that Transfer Neither Significant Timing nor Significant Underwriting Risk","paragraphs":[{"citation":"340-30-35-1","para":"35-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_676F8DDD-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">For insurance and <a href=\"/glossary/r/#reinsurance\" class=\"term\" title=\"A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.\"><span>reinsurance</span></a> contracts that transfer only significant <a href=\"/glossary/t/#timing-risk\" class=\"term\" title=\"The risk arising from uncertainties about the timing of the receipt and payments of the net cash flows from premiums, commissions, claims, and claim settlement expenses paid under a contract.\"><span>timing risk</span></a> or that transfer neither significant timing nor significant <a href=\"/glossary/u/#underwriting-risk\" class=\"term\" title=\"The risk arising from uncertainties about the ultimate amount of net cash flows from premiums, commissions, claims, and claim settlement expenses paid under a contract.\"><span>underwriting risk</span></a>, the amount of the deposit asset or liability shall be adjusted at subsequent reporting dates by calculating the effective yield on the deposit to reflect actual payments to date and expected future payments (as discussed in paragraph <a href=\"/asc/340/30/#340-30-35-3\" class=\"xref\">340-30-35-3</a>), with a corresponding credit or charge to interest income or expense (see Examples 1 through 3 [paragraphs <a href=\"/asc/340/30/#340-30-55-2\" class=\"xref\">340-30-55-2 through 55-7])</a>). </span></span> </div> </div>","snippet":"For insurance and reinsurance contracts that transfer only significant timing risk or that transfer neither significant timing nor significant underwriting risk, the amount of the deposit asset or liability shall be adju…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0df4f760c9967370531a730966121dc9d1bdac6bcdcc9ce64a398ca59c11196b","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}},{"citation":"340-30-35-2","para":"35-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_676F8EFB-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This approach is consistent with the interest method described in Subtopics <a altsource=\"GUID-3B8EB2BA-D375-41D5-B2C1-DDCEAE2C53D7.ditamap\" class=\"ditamap\">310-20</a> and <a altsource=\"GUID-AC91EF11-EBBC-437D-9F54-32678EDA632A.ditamap\" class=\"ditamap\">835-30</a>. </span></span> </div> </div>","snippet":"This approach is consistent with the interest method described in Subtopics 310-20 and 835-30.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1498695bf8001dca6dd3497c02d9e16ed9f2bec96c165f69356a446ca9eaf2ee","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}},{"citation":"340-30-35-3","para":"35-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_676F9031-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The calculation of the effective yield shall use the estimated amount and timing of cash flows. Consistent with paragraph <a href=\"/asc/310/20/#310-20-35-26\" class=\"xref\">310-20-35-26</a>, if a change in the actual or estimated timing or amount of cash flows occurs, the effective yield shall be recalculated to reflect the revised actual or estimated cash flows. The deposit shall be adjusted to the amount that would have existed at the balance-sheet date had the new effective yield been applied since the inception of the insurance or reinsurance contract. </span></span> </div> </div>","snippet":"The calculation of the effective yield shall use the estimated amount and timing of cash flows. Consistent with paragraph 310-20-35-26, if a change in the actual or estimated timing or amount of cash flows occurs, the ef…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:db765bf634db2a6c39180631fc7b8add6a8bb480eafbb9c45dc34102214ca1bc","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}},{"citation":"340-30-35-4","para":"35-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_676F914A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Significant changes in the expected amounts of aggregate cash flows are expected to occur infrequently because of the nature of these kinds of contracts. Should a significant change occur in the total amount of actual or estimated cash flows, the entity shall determine whether the change indicates that the contract does include significant underwriting risk and therefore shall be converted to the accounting for contracts that transfer only significant underwriting risk (see paragraphs <a href=\"/asc/340/30/#340-30-35-5\" class=\"xref\">340-30-35-5</a> and <div class=\"xref-range displayInline\"><a href=\"/asc/340/30/#340-30-45-3\" class=\"xref\">340-30-45-3 through 45-5</a></div>). In addition, a contract that transfers only significant timing risk, which subsequently is determined also to transfer significant underwriting risk, cannot be accounted for under insurance or reinsurance accounting when the revised determination is made. </span></span> </div> </div>","snippet":"Significant changes in the expected amounts of aggregate cash flows are expected to occur infrequently because of the nature of these kinds of contracts. Should a significant change occur in the total amount of actual or…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9007401af283d43e3c4b61165a5ab0be18c4b78fdf1c48e5afccc1755b2e0eb4","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:439356e6982d44e854fd0902e9fb2b639a4d96cb9acf5a717491382ed94104ed","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}},{"block":null,"heading":"Insurance and Reinsurance Contracts that Transfer Only Significant Underwriting Risk","paragraphs":[{"citation":"340-30-35-5","para":"35-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_676F9235-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Until such time as a loss is incurred that will be reimbursed under an insurance or reinsurance contract that transfers only significant underwriting risk, the deposit shall be measured based on the unexpired portion of the coverage provided. Once a loss is incurred that will be reimbursed under such a contract, then the deposit shall be measured by the present value of the expected future cash flows arising from the contract plus the remaining unexpired portion of the coverage provided (see Example 4 [paragraph <a href=\"/asc/340/30/#340-30-55-8\" class=\"xref\">340-30-55-8</a>]). </span></span> </div> </div>","snippet":"Until such time as a loss is incurred that will be reimbursed under an insurance or reinsurance contract that transfers only significant underwriting risk, the deposit shall be measured based on the unexpired portion of …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:94f9a2bdf309c3bc53db232b081d67dc78543db333efa24f36f3bed11e6639eb","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e7fcc9af62097680429f4d15fa64e8040e47ef23b09eda5ed5687ba3e5ed97da","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}},{"block":null,"heading":"Insurance and Reinsurance Contracts that Transfer Only Significant Underwriting Risk—Discount Rate","paragraphs":[{"citation":"340-30-35-6","para":"35-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_676F936B-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">For the insured or <a href=\"/glossary/c/#ceding-entity\" class=\"term\" title=\"The party that pays a reinsurance premium in a reinsurance transaction. The ceding entity receives the right to reimbursement from the assuming entity under the terms of the reinsurance contract.\"><span>ceding entity</span></a>, the discount rate used to determine the deposit asset shall be the current rate on U.S. government obligations with similar cash-flow characteristics, adjusted for default risk. Consideration of the default risk, if any, shall be based on the assessment of the creditworthiness of the insurer. For the insurer or <a href=\"/glossary/a/#assuming-entity\" class=\"term\" title=\"The party that receives a reinsurance premium in a reinsurance transaction. The assuming entity (or reinsurer) accepts an obligation to reimburse a ceding entity under the terms of the reinsurance contract.\"><span>assuming entity</span></a>, the discount rate used to determine the deposit liability shall be the current rate on U.S. government obligations with similar cash-flow characteristics. These rates shall be established at the date of each loss incurred and used for the remaining life of the contract and shall not be changed. </span></span> </div> </div>","snippet":"For the insured or ceding entity, the discount rate used to determine the deposit asset shall be the current rate on U.S. government obligations with similar cash-flow characteristics, adjusted for default risk. Consider…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9c71c7c06ba5380f85aba9715f919e96e795108b47dae10a81bed6cb505d4617","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}},{"citation":"340-30-35-7","para":"35-7","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_676F944A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If numerous losses occur, the use of average rates is permitted because establishing individual rates might require detailed record keeping and computations that could be burdensome and unnecessary to produce reasonable approximations of the results. </span></span> </div> </div>","snippet":"If numerous losses occur, the use of average rates is permitted because establishing individual rates might require detailed record keeping and computations that could be burdensome and unnecessary to produce reasonable …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2cf974a7f0578579e3230bea9188ae2cced274fa6ec08feededa04c9f4eccc1c","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:812774014b67bf138f359d04e099a180fe2a4f64da5ec091a4d38da05174a6d9","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:737c9d6f4448ee54ac1f39fd1e32513e0083320fb5d2cdbda01f6f14a3081e62","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:737c9d6f4448ee54ac1f39fd1e32513e0083320fb5d2cdbda01f6f14a3081e62","downloaded_from":"2026-09-09T23:55:55.079Z","last_downloaded_at":"2026-09-09T23:55:55.079Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483105","source_sha256":"4d97c91099c0d4f4a75a19d526aa90ca8c066f1c09158135a81aba82c49eae98"}}