# ASC 405-944: Liabilities — Financial Services—Insurance Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/405/944/) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:18:57.648Z to 2026-09-10T00:19:09.841Z Record version: sha256:0cecbbc34f83842c8bcfa001b6a8e47a1409948e6aeb97c299ae08459550a231 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-944: Liabilities — Financial Services—Insurance ### Machine-generated study aids ```json { "summary": "ASC 405-944 tells insurance entities where liability accounting guidance lives and adds one specific rule for reinsurance contracts. Liabilities for claims costs and future policyholder benefits are in Subtopic 944-40, premium deficiencies in 944-60, and policyholder dividends in 944-50. The substantive rule here: a ceding entity that agrees to service the reinsured contracts without reasonable compensation must accrue a liability for estimated excess future servicing costs (405-944-25-1).", "key_points": [ "The Subtopic is organized into a General Subsection and a Reinsurance Contracts Subsection, both addressing insurance entity liabilities (405-944-05-1).", "Cross-references direct users elsewhere: claims costs and future policyholder benefits to Subtopic 944-40, premium deficiencies to 944-60, and dividends to policyholders to 944-50 (405-944-05-2).", "Scope follows Section 944-10-15 (the Overall insurance Subtopic), and the Reinsurance Contracts Subsections apply only to reinsurance contracts, identified under 944-20-15 (405-944-15-1 through 15-3).", "If a ceding entity agrees to service all related insurance contracts without reasonable compensation, it must accrue a liability for estimated excess future servicing costs under the reinsurance contract (405-944-25-1)." ], "categories": [ "Recognition", "Industry-specific", "Subsequent measurement" ], "audience_level": "intermediate", "student_note": "The only operative rule in this Subtopic is the accrual of excess future servicing costs by a ceding entity that services reinsured contracts for less than reasonable compensation; everything else is a signpost to Subtopics 944-40, 944-50, and 944-60. A common mistake is looking here for measurement of claim liabilities or policyholder benefits, which are governed by 944-40.", "related_topics": [ "944-40", "944-50", "944-60", "944-20", "944-10", "944-30" ], "key_concepts": [ "reinsurance contract", "ceding entity", "excess future servicing costs", "policyholder benefits", "premium deficiency", "policyholder dividends", "insurance liabilities" ] } ``` Source downloaded (UTC): 2026-09-10T00:18:57.648Z to 2026-09-10T00:18:57.648Z Record version: sha256:d10b99525a600c21ec43f94cb1d77b6b7202612bcaf6dcaee1b9edc5ec4ffd7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-944-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/944/#00-status) SEC content: no ##### [405-944-00-1](https://asc.understandingaccounting.org/asc/405/944/#405-944-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:57.648Z to 2026-09-10T00:18:57.648Z Record version: sha256:7480a569faa2704ee479d6d1fd34d54ea9b84ddba3346e900d2c9f17291445ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Dividend to PolicyholdersAddedAccounting Standards Update No. 2014-0603/14/2014
944-405-05-1AmendedAccounting Standards Update No. 2016-1912/14/2016
944-405-05-2AmendedAccounting Standards Update No. 2014-0603/14/2014
Source downloaded (UTC): 2026-09-10T00:18:59.503Z to 2026-09-10T00:18:59.503Z Record version: sha256:543cd7a145f9ee5d2530683b98207896b7c26b112bf803ebd40ce5348bf938f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-944-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/944/#05-overview-and-background) SEC content: no ##### [405-944-05-1](https://asc.understandingaccounting.org/asc/405/944/#405-944-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:59.503Z to 2026-09-10T00:18:59.503Z Record version: sha256:76617de5bf8fab137d5d01c1a3e93d18246a7bb6ade47d9795f31d2c32695338 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to insurance entities on accounting for and financial reporting of liabilities. The guidance in this Subtopic is provided in the following two Subsections: 1. a General 2. b [Reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "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.") contracts. ##### [405-944-05-2](https://asc.understandingaccounting.org/asc/405/944/#405-944-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:59.503Z to 2026-09-10T00:18:59.503Z Record version: sha256:22d330924b80188a09c0cdf09ed358056fe9a42fceef5950fccbd60785269f4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on liabilities for claims costs and future policyholder benefits, see Subtopic 944-40. For guidance on liabilities related to premium deficiencies, see Subtopic 944-60. For guidance on liabilities for [dividends to policyholders](https://asc.understandingaccounting.org/glossary/d/#dividend-to-policyholders "Nonguaranteed amounts distributable to policyholders of participating life insurance contracts and based on actual performance of the insurance entity as determined by the insurer. Under various state insurance laws, dividends are apportioned to policyholders on an equitable basis. The dividend allotted to any contract often is based on the amount that the contract, as one of a class of similar contracts, has contributed to the income available for distribution as dividends. Dividends to policyholders include annual policyholder dividends and terminal dividends."), see Subtopic 944-50. ### Reinsurance Contracts ##### [405-944-05-3](https://asc.understandingaccounting.org/asc/405/944/#405-944-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:18:59.503Z to 2026-09-10T00:18:59.503Z Record version: sha256:ce0facaf959bd391b06c55fb9bec1a8cfd200844b234ef38672f9264054784ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to insurance entities on accounting for and financial reporting of liabilities related to [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "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.") contracts. Source downloaded (UTC): 2026-09-10T00:19:02.199Z to 2026-09-10T00:19:02.199Z Record version: sha256:cf1ccf395ded670a03c0c9bcff36dd39fbda853893c361616601def0ba89c4d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-944-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/944/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-944-15-1](https://asc.understandingaccounting.org/asc/405/944/#405-944-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:02.199Z to 2026-09-10T00:19:02.199Z Record version: sha256:9da12a4ae0c791540230cefd70da3d7609463f1409dfa541d9abe67c03a6d66b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 944-10-15. ### Reinsurance Contracts ##### [405-944-15-2](https://asc.understandingaccounting.org/asc/405/944/#405-944-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:02.199Z to 2026-09-10T00:19:02.199Z Record version: sha256:c2785a0b8f3abe2c5b6d5ae5962617ba18036cdb1917126b5babf976c8d139b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections of this Subtopic follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/405/944/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [405-944-15-3](https://asc.understandingaccounting.org/asc/405/944/#405-944-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:02.199Z to 2026-09-10T00:19:02.199Z Record version: sha256:393dccf6b2e41c6af99b627f89fbecb3d54e82934cb37d06f5753070b944b8c2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Reinsurance Contracts Subsections of this Subtopic applies only to [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "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.") contracts. For guidance on identifying a reinsurance contract, see the [Reinsurance Contracts Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15. Source downloaded (UTC): 2026-09-10T00:19:09.841Z to 2026-09-10T00:19:09.841Z Record version: sha256:29383066b08da1c143ba7c2191aba71eedde6803c123777b9b83a9ac805e9773 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-944-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/944/#25-recognition) SEC content: no ### Reinsurance Contracts ##### [405-944-25-1](https://asc.understandingaccounting.org/asc/405/944/#405-944-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:19:09.841Z to 2026-09-10T00:19:09.841Z Record version: sha256:194c63b7dd26dde13d09566c7e4d18fe7cd362fbda18e5b974263eaebaca32f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a [ceding entity](https://asc.understandingaccounting.org/glossary/c/#ceding-entity "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.") has agreed to service all of the related insurance contracts without reasonable compensation, a liability shall be accrued for estimated excess future servicing costs under the [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "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.") contract.