# ASC 605-944-25: Revenue Recognition — Financial Services—Insurance — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/605/944/#25-recognition) 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): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:2edc9c88c4103363ea15e8617fcff8050644bad4c10bcd2a65db7331bc7c1aef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 605-944-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/605/944/#25-recognition) SEC content: no ### Short-Duration Contracts ##### [605-944-25-1](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:5fc3207e3e8898a5138ae173f26da053b9a2312e7cf5c7d2c7abe120055e67b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Premiums from short-duration contracts shall be recognized as revenue over the period of the contract in proportion to the amount of insurance protection provided. For those few types of contracts for which the period of risk differs significantly from the [contract period](https://asc.understandingaccounting.org/glossary/c/#contract-period "The period over which insured events that occur are covered by insurance or reinsurance contracts. Commonly referred to as the coverage period or period that the contracts are in force."), premiums shall be recognized as revenue over the period of risk in proportion to the amount of insurance protection provided. That generally results in premiums being recognized as revenue evenly over the contract period (or the period of risk, if different), except for those few cases in which the amount of insurance protection declines according to a predetermined schedule. ##### [605-944-25-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:48e687da323e3ba237e32b0eaaec5c9cb9b3f8d33e180c26436260bac59f4f3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If premiums are subject to adjustment (for example, retrospectively rated or other experience-rated insurance contracts for which the premium is determined after the period of the contract based on [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") experience or reporting-form contracts for which the premium is adjusted after the period of the contract based on the value of insured property), premium revenue shall be recognized as follows: 1. a If the ultimate premium is reasonably estimable, the estimated ultimate premium shall be recognized as revenue over the period of the contract. The estimated ultimate premium shall be revised to reflect current experience. 2. b If the ultimate premium cannot be reasonably estimated, the [cost recovery method](https://asc.understandingaccounting.org/glossary/c/#cost-recovery-method "A revenue recognition method under which premiums are recognized as revenue in an amount equal to estimated claim costs as insured events occur until the ultimate premium is reasonably estimable, and recognition of income is postponed until that time.") or the [deposit method](https://asc.understandingaccounting.org/glossary/d/#deposit-method "A revenue recognition method under which premiums are not recognized as revenue and claim costs are not charged to expense until the ultimate premium is reasonably estimable, and recognition of income is postponed until that time.") may be used until the ultimate premium becomes reasonably estimable. ### Long-Duration Contracts #### Traditional Long-Duration Contracts ##### [605-944-25-3](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:9c24d261e5fcee9fec70bbdd4653e0c3b3a640d2583faf9987d5c81649d9a41c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because no single function or service is predominant over the periods of most types of long-duration contracts, premiums shall be recognized as revenue over the premium-paying periods of the contracts when due from policyholders. This includes premiums from [whole-life contracts](https://asc.understandingaccounting.org/glossary/w/#whole-life-contract "Insurance that may be kept in force for a person's entire life by paying one or more premiums. It is paid for in one of three different ways: Ordinary life insurance (premiums are payable as long as the insured lives) Limited-payment life insurance (premiums are payable over a specified number of years) Single-premium life insurance (a lump-sum amount paid at the inception of the insurance contract). The insurance contract pays a benefit (contractual amount adjusted for items such as policy loans and dividends, if any) at the death of the insured. Whole-life insurance contracts also build up nonforfeiture benefits."), guaranteed renewable term life contracts, title insurance contracts, and participating life insurance contracts that meet the criteria in paragraph [944-20-15-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-3). ##### [605-944-25-4](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:affa815e71a2731dcbbeca8ed42070d3836052ced7b5bbdb9fd2500efcd2d3c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Premium revenue from long-duration contracts generally exceeds expected policy benefits in the early years of the contracts and it is necessary to accrue, as premium revenue is recognized, a liability for costs that are expected to be paid in the later years of the contracts. See Subtopic 944-40 for specific guidance. #### Limited-Payment Contracts ##### [605-944-25-4A](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-4A) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:22f0d1eac4c24e3e6ac2aaba8ef030d0ea57308fb9d2abcf060908bea9f70eb3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the collection of premium under a limited-payment contract does not represent the completion of an earnings process, any [gross premium](https://asc.understandingaccounting.org/glossary/g/#gross-premium "The premium charged to a policyholder for an insurance contract. See also Net Premiums.") received in excess of the net premium shall be deferred. #### Universal Life-Type Contracts ##### [605-944-25-5](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:378b58ffac739f89dc1bbfe76454e091c06889bd0ddfdf625c81b523867c5d7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Premiums collected on universal life-type contracts shall not be reported as revenue in the statement of earnings of the insurance entity. Revenue from those contracts shall represent amounts assessed against policyholders and shall be reported in the period that the amounts are assessed unless evidence indicates that the amounts are designed to compensate the insurer for services to be provided over more than one period. ##### [605-944-25-6](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:423da51c60cb343ed4696e0b344eb36fd3c055893f6081c99aa074c57719c963 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts assessed that represent compensation to the insurance entity for services to be provided in future periods are not earned in the period assessed. Such amounts shall be recognized as unearned revenue. ##### [605-944-25-7](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:f2312909ddcbf90bda1d6abc0bf12270671bec8fc1a70426576cff5bf6b95265 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts that are assessed against the policyholder balance as consideration for origination of the contract, often referred to as [initiation or front-end fees](https://asc.understandingaccounting.org/glossary/i/#initiation-or-front-end-fees "Amounts that are assessed against the policyholder balance as consideration for origination of the contract."), shall be recognized as unearned revenues. ##### [605-944-25-8](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:9a58799a06c43320e7239f97577bf48a595dba6c7ab20eea7ed1332703979360 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [605-944-25-9](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:75a5113b9d9eaf0871462c3c6c48b2c6e389c074240e7ad77d69938f18ca65fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall not record a liability for unearned revenue if the purpose is an attempt to inappropriately level the contract's gross profit over the life of the contract or the accrual would serve to produce a level gross profit from the [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place.") benefit over the life of the contract. ##### [605-944-25-10](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:c16c9aa60b74d039410fffeb8f5c008c8ca7b8e1cc22540c58b68f744061adc0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not limit the accrual of unearned revenue for insurance benefit features of universal life-type contracts to situations where profits are expected to be followed by losses; that is, the facts and circumstances of each situation must be considered in determining the need for accruing unearned revenue. ##### [605-944-25-11](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:4dad90b903f2b7f75ac4a8feb36b08da0439445e66f87223969f4c79d1d3cb00 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). #### Title Insurance Contracts ##### [605-944-25-12](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:e6a4c151c8d24c7dfc7adcfbb56ebe5a4505cbc61c13e8fa66a028577c743499 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except as noted in the next sentence, premiums from title insurance contracts shall be considered due from policyholders and, accordingly, recognized as revenue on the effective date of the insurance contract because most of the services associated with the contract have been rendered by that time. However, the [binder date](https://asc.understandingaccounting.org/glossary/b/#binder-date "The date a commitment to issue a policy is given.") is appropriate if the insurance entity is legally or contractually entitled to the premium on the binder date. ##### [605-944-25-13](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:934f1350caf5ede6d21c01b72fb31f34b5a98dc9fc915f074cc98d4cd536b22d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If reasonably estimable, premium revenue and costs relating to title insurance contracts issued by agents shall be recognized when the agents are legally or contractually entitled to the premiums, using estimates based on past experience and other sources. If not reasonably estimable, premium revenue and costs shall be recognized when agents report the issuance of title insurance contracts. #### Retrospective and Contingent Commission Arrangements ##### [605-944-25-14](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:5c578400e08042250a5f0448ca871a80f5be2f9308e7094c9166300ce7083365 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If retrospective commission or experience refund arrangements exist under experience-rated insurance contracts, a separate liability shall be accrued for those amounts. Income in any period shall not include any amounts that are expected to be paid to agents or others in the form of experience refunds or additional commissions. Contingent commissions receivable or payable shall be accrued over the period in which related income is recognized. ##### [605-944-25-15](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:3318a1e3c6bfcf9690ec9aae6014f63e52750e64e6b05ab8155cb4f7d418f546 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ### Reinsurance Contracts #### Foreign Property and Liability Reinsurance ##### [605-944-25-16](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:18ff76886be11b87bb17f0b3757d83ded26683fb894475b6776052f2368a89ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The periodic method and [open year method](https://asc.understandingaccounting.org/glossary/o/#open-year-method "A revenue recognition method under which underwriting results of foreign reinsurance are not included in the income statement until sufficient information becomes available to provide reasonable estimates of earned premiums.") are not interchangeable in the same circumstances. The periodic method and open year method are not alternative accounting principles as discussed in Topic 250. Rather, one or the other is to be used depending on the circumstances. As such, changes between these methods are not accounting changes. In addition, changes from the periodic method to the open year method would be seldom. ##### [605-944-25-17](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:22cfefae41ea538ba7063cd15bc603f923cb841fccfe0a6ae4cf5e680e64ca92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The periodic method of accounting for [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.") provides for current recognition of profits and losses. Premiums are recognized as revenue over the policy term, and claims, including an estimate of claims incurred but not reported, are recognized as they occur. The periodic method shall be used to account for foreign reinsurance except in the circumstance described in the following paragraph. Only if reasonable estimates cannot be made currently, for the reason discussed in the following paragraph, shall the open year method be used. ##### [605-944-25-18](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:b8b368d294a9ae238edc197f029b62873d8129a5b9ba270366fc586b7c68a234 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, due to local revenue recognition policies, the foreign [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.") cannot provide the information required by the assuming entity to estimate both the ultimate premiums and the appropriate periods of recognition in accordance with U.S. generally accepted accounting principles (GAAP), then the open year method shall be used. If the foreign ceding entity maintains supplementary records that are sufficient to reasonably estimate earned premiums currently, then the U.S. assuming entity shall obtain the necessary information and use the periodic method to account for the foreign reinsurance. The presence of uncertainties that may be inherent in estimating earned premiums is not an acceptable basis for using the open year method. ##### [605-944-25-19](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:c598b0cbf4d6f1703a9b5b1d3be177b8816ab757ea6dc6aeac91ae8d5a9b2dbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the open year method, premiums, claims, commissions, and related direct taxes shall not be reported currently as income; instead, paragraph [944-605-35-5](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-5) requires that they be included in the open underwriting balance to which they pertain. The underwriting balances shall be aggregated and each underwriting balance shall be kept open until, as discussed in paragraph [944-605-35-6](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-6), sufficient information becomes available to record a reasonable estimate of earned premiums. #### Reinsurance of Short-Duration Contracts ##### [605-944-25-20](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:6676dcc1948adee9836b90efa818d9bcd23d17b289c2b6b729f2a23d00cb500f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts paid for [prospective reinsurance](https://asc.understandingaccounting.org/glossary/p/#prospective-reinsurance "Reinsurance in which an assuming entity agrees to reimburse a ceding entity for losses that may be incurred as a result of future insurable events covered under contracts subject to the reinsurance. A reinsurance contract may include both prospective and retroactive reinsurance provisions.") of short-duration contracts that meet the conditions for reinsurance accounting shall be reported as [prepaid reinsurance premiums](https://asc.understandingaccounting.org/glossary/p/#prepaid-reinsurance-premiums "Amounts paid to the reinsurer relating to the unexpired portion of reinsured contracts."). ##### [605-944-25-21](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:374a6789ae0efbef6b80e678f69037e8a8914aaa37f1c62f11e523585a750c6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If practicable, prospective and retroactive provisions included within a single contract shall be accounted for separately. The Reinsurance Contracts Subsections of this Subtopic do not require any specific method for allocating reinsurance premiums to the prospective and retroactive portions of a contract. However, separate accounting for the prospective and retroactive portions of a contract may take place only when an allocation is practicable. Practicability requires a reasonable basis for allocating the reinsurance premiums to the risks covered by the prospective and retroactive portions of the contract, considering all amounts paid or deemed to have been paid regardless of the timing of payment. If separate accounting for prospective and retroactive provisions included within a single contract is impracticable, the contract shall be accounted for as a retroactive contract provided the conditions for reinsurance accounting are met. Impracticable is used to mean that the prospective and retroactive provisions cannot be accounted for separately without incurring excessive costs. Practicability is a dynamic concept: what is practicable for one entity might not be for another; what is not practicable in one year might be in another. ##### [605-944-25-22](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-22) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:711e59e6bddfdc2961b3f8d614f8ea7ddcf63fc645f02a72b3b1dec98cc58321 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts paid for [retroactive reinsurance](https://asc.understandingaccounting.org/glossary/r/#retroactive-reinsurance "Reinsurance in which an assuming entity agrees to reimburse a ceding entity for liabilities incurred as a result of past insurable events covered under contracts subject to the reinsurance. A reinsurance contract may include both prospective and retroactive reinsurance provisions.") of short-duration contracts that meets the conditions for reinsurance accounting shall be reported as [reinsurance recoverables](https://asc.understandingaccounting.org/glossary/r/#reinsurance-recoverable "All amounts recoverable from reinsurers for paid and unpaid claims and claim settlement expenses, including estimated amounts receivable for unsettled claims, claims incurred but not reported, or policy benefits.") to the extent those amounts do not exceed the recorded liabilities relating to the underlying reinsured contracts. If the recorded liabilities exceed the amounts paid, reinsurance recoverables shall be increased to reflect the difference and the resulting gain deferred. ##### [605-944-25-23](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-23) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:26f0e15d0547385c66010c78b4842ed72a9fc1f813a0e5bc0f8e83973fb749fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the amounts paid for retroactive reinsurance for short-duration contracts exceed the recorded liabilities relating to the underlying reinsured short-duration contracts, the ceding entity shall increase the related liabilities or reduce the reinsurance recoverable or both at the time the reinsurance contract is entered into, so that the excess is charged to earnings. ##### [605-944-25-24](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-24) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:62d79949e4a81a5670f5e98d60d539fea3e4f9c84211fee789b64ef0f2a60084 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 ##### [605-944-25-25](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-25) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:27b7d013d8d0c8b2f055c8e2862d9d5f3613fbb83ad8fc5f4c82efc092e625f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall recognize a liability for the unearned premium revenue at the inception of a financial guarantee insurance contract. The unearned premium revenue represents the insurance entity's stand-ready obligation under a financial guarantee insurance contract at initial recognition. ##### [605-944-25-26](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-26) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:add511fcb941f4d6414edf9de9d962427c1e125b0f4ac98cf16edc01206cbe94 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall recognize the premium from a financial guarantee insurance contract as revenue over the period of the contract in proportion to the amount of insurance protection provided with a corresponding adjustment (decrease) in the unearned premium revenue. ##### [605-944-25-27](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-27) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:05dab8dcee8b8a8885f64e8d5f49db43ac0d659831516d0a28cb47854a20e960 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of insurance protection provided is assumed to be a function of the insured principal amount outstanding. Therefore, the proportionate share of premium revenue to be recognized in a given reporting period shall be a constant rate calculated based on the relationship between the following: 1. a The insured principal amount outstanding in a given reporting period 2. b The sum of each of the insured principal amounts outstanding for all periods. ##### [605-944-25-28](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-28) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:63d944fd30aaa713e5967dd4daf96c4bf7f6f1914e48425041bdedae02dbb5ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accordingly, the premium revenue for each reporting period shall be determined by multiplying the insured principal amount outstanding for that period by the ratio of (a) to (b): 1. a The total present value of the premium due or expected to be collected over the period of the contract 2. b The sum of all insured principal amounts outstanding during each reporting period over the period of the contract (either contract period or expected period). Example 2 (see paragraph [944-605-55-17](https://asc.understandingaccounting.org/asc/605/944/#605-944-55-17)) illustrates the application of this guidance. ##### [605-944-25-29](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-29) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:5dbb9e847665d7e9d51f026744e33ac78b8d818d12f8d83204e3d9e52677b053 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an insured financial obligation accretes to the principal amount over its life and has a single principal payment at maturity, the sum of all insured accreted principal amounts outstanding during each reporting period shall be used as the denominator of the ratio and the insured principal amount outstanding is the accreted principal amount outstanding. Example 3 (see paragraph [944-605-55-19](https://asc.understandingaccounting.org/asc/605/944/#605-944-55-19)) illustrates the application of this guidance. ##### [605-944-25-30](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-30) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:b0510727f9bd14e3000f947b93828b9e493f5b84b69dfa9a3574116d0198b1aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the following paragraph applies if both of the following conditions exist: 1. a An expected period is used as discussed in paragraph [944-310-30-3](https://asc.understandingaccounting.org/asc/310/944/#310-944-30-3) 2. b The expected period changes due to changes in prepayment assumptions. ##### [605-944-25-31](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-31) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:0a9263683ba5d28307386f7600a02fa5ca8eb98d98b18aeae695f3685942fd96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the conditions in the preceding paragraph are met, the insurance entity shall recalculate the constant rate based on the new prepayment assumptions (and current risk-free rate) and apply that new constant rate to the principal amounts outstanding for the remaining expected period of the contract. Example 1 in Section 944-310-55 (see paragraph [944-310-55-1](https://asc.understandingaccounting.org/asc/310/944/#310-944-55-1)) illustrates the application of this guidance. #### Early Retirement and Replacement of an Insured Financial Obligation ##### [605-944-25-32](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-32) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:5028a619127f54fe68ba1260aa4a7017af11bf19c37b53fb26ca5c8b652b1559 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a refunding, the financial guarantee insurance contract on the retired financial obligation is extinguished—that is, the financial guarantee insurance contract must be extinguished to be considered a refunding for purposes of this paragraph. The insurance entity shall immediately recognize any nonrefundable unearned premium revenue related to that contract as premium revenue and any associated acquisition costs previously deferred under Subtopic 944-30 as an expense. ##### [605-944-25-33](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-33) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:29.001Z to 2026-09-10T00:49:29.001Z Record version: sha256:22ec964b33d0eeeb5c5846ebfa0ec7c410ef4daef4bc77ed7c9f33a65e81b7f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the insurance entity insures the new financial obligation, the insurance entity shall recognize the unearned premium revenue on the new financial obligation that is commensurate with the premium it would charge to insure a similar financial obligation in a separate (standalone) transaction. If that premium differs from the premium actually charged, the difference shall be recognized in current earnings. Example 4 (see paragraph [944-605-55-22](https://asc.understandingaccounting.org/asc/605/944/#605-944-55-22)) illustrates the application of this guidance.