# ASC 605-944-05: Revenue Recognition — Financial Services—Insurance — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/605/944/#05-overview-and-background) 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): 2026-09-10T00:49:20.979Z to 2026-09-10T00:49:20.979Z Record version: sha256:3f3fe40daa53cb177eb9ca956bda7425a2ad993b06b96a69b00ea89604500871 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 605-944-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/605/944/#05-overview-and-background) SEC content: no ##### [605-944-05-1](https://asc.understandingaccounting.org/asc/605/944/#605-944-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:20.979Z to 2026-09-10T00:49:20.979Z Record version: sha256:93cd0546419051981d042cc1ad0954eb8001fa0639ffb6401300d12af2e31ba6 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 revenue from insurance contracts. The guidance in this Subtopic is presented in the following five Subsections: 1. a General 2. b Short-Duration Contracts 3. c Long-Duration Contracts 4. d [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 5. e Financial Guarantee Insurance Contracts. ### Short-Duration Contracts ##### [605-944-05-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:20.979Z to 2026-09-10T00:49:20.979Z Record version: sha256:9ab5cbf35c62d24acb405f16518debe13d40a43995b1d0c9ad1aa3a1375ab396 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Short-Duration Contracts Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of revenue from short-duration insurance contracts. ### Long-Duration Contracts ##### [605-944-05-3](https://asc.understandingaccounting.org/asc/605/944/#605-944-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:20.979Z to 2026-09-10T00:49:20.979Z Record version: sha256:1df6022ce4af4ff8ac7fcbc2250ce2bc6e4771e04af0da551cf294959f0a63c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of revenue from long-duration insurance contracts. ### Reinsurance Contracts ##### [605-944-05-4](https://asc.understandingaccounting.org/asc/605/944/#605-944-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:20.979Z to 2026-09-10T00:49:20.979Z Record version: sha256:5abff7a765088f2419ad6049522a15e5c416a073b8988f94674f205571bbfd9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of revenue from [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. #### All Reinsurance Contracts ##### [605-944-05-5](https://asc.understandingaccounting.org/asc/605/944/#605-944-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:20.979Z to 2026-09-10T00:49:20.979Z Record version: sha256:59a3f7d2a166603b55fe274c46f38815b496f707c7d6816de003b5f553ebe367 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Reinsurers](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") assuming business from domestic entities historically have had sufficient information to monitor and account for contract results. In contrast, some reinsurers assuming business from foreign entities do not receive such information, because in some foreign jurisdictions, insurance entities' accounting and reporting practices concerning periodic recognition of revenue and incurred claims are substantially different from U.S. practices. Therefore, reinsurers assuming business from foreign ceding entities cannot always obtain sufficient information to periodically estimate earned premiums for the business assumed from the foreign ceding entities. ##### [605-944-05-6](https://asc.understandingaccounting.org/asc/605/944/#605-944-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:20.979Z to 2026-09-10T00:49:20.979Z Record version: sha256:a0ced4cdab21a3e513a6fbbbc466a53c0559b13e9a463ad676bc5bd23951bad0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A significant amount of reinsurance is transacted through syndicates organized by Lloyd's of London. Lloyd's syndicates report the amounts of premiums, claims, and expenses recorded in an underwriting account for a particular year to the assuming entities that participate in the syndicates. The syndicates generally keep accounts open for three years. Traditionally, three years have been necessary to report substantially all premiums associated with an underwriting year and to report most related claims, although claims may remain unsettled after the account is closed. A Lloyd's syndicate typically closes an underwriting account by reinsuring outstanding claims on that account with a syndicate for the next underwriting year. The ceding syndicate pays the assuming syndicate an amount based on the unearned premiums and outstanding claims in the underwriting account at the date of the assumption and distributes the remaining balance to its participants. ##### [605-944-05-7](https://asc.understandingaccounting.org/asc/605/944/#605-944-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:20.979Z to 2026-09-10T00:49:20.979Z Record version: sha256:3e8c119924ec6649b8c6560718f266d7c956102a6cd1a56c8b92f29a49387737 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [605-944-05-8](https://asc.understandingaccounting.org/asc/605/944/#605-944-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:20.979Z to 2026-09-10T00:49:20.979Z Record version: sha256:3c3101282d4268b3dc8477706080c1a8cd09c3d2e1e39dc6c732caafb7a08681 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ### Financial Guarantee Insurance Contracts ##### [605-944-05-9](https://asc.understandingaccounting.org/asc/605/944/#605-944-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:20.979Z to 2026-09-10T00:49:20.979Z Record version: sha256:b9dea77382c6b6fb8ae2bc7cbfb66b1bf1be0d5505ef43d7ff33a25c51e28934 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Financial Guarantee Insurance Contracts Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of revenue from financial guarantee insurance contracts. #### Early Retirement and Replacement of an Insured Financial Obligation ##### [605-944-05-10](https://asc.understandingaccounting.org/asc/605/944/#605-944-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:20.979Z to 2026-09-10T00:49:20.979Z Record version: sha256:54ed7d443227edeec3b8f455f78931db665fac003f4f181afc79fc628adb6f03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some cases, the issuer of an insured financial obligation will retire an insured financial obligation before its maturity and replace it with a new financial obligation. That situation, referred to as a refunding, often occurs when interest rates decrease and the insured financial obligation is replaced with a new financial obligation at a lower interest rate.