# ASC 605-944-35: Revenue Recognition — Financial Services—Insurance — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/605/944/#35-subsequent-measurement) 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): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:25ab330c177b4c7f479256ba48612c69f53d2f99150a21bd295f46384811aa70 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 605-944-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/605/944/#35-subsequent-measurement) SEC content: no ### Long-Duration Contracts #### Limited-Payment Contracts ##### [605-944-35-1](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:d926a2d2ffd677ceddb33ecd75824695a36903df4b9a86efd4ca4bac0f744a0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") deferred in accordance with paragraph [944-605-25-4A](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-4A)(that is, the deferred profit liability) shall be recognized in income in a constant relationship with insurance [in force](https://asc.understandingaccounting.org/glossary/i/#in-force "Policies and contracts written and recorded on the books of an insurance carrier that are unexpired as of a given date.") (if accounting for life insurance contracts) or with the amount of expected future benefit payments (if accounting for annuity contracts). ##### [605-944-35-1A](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-1A) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:86990d44b3783648a19c8a949246085403ecbc9143a4073501435206661ce647 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The deferred profit liability shall be amortized in relation to the discounted amount of the insurance in force or expected future benefit payments, discounted as described in paragraph [944-40-30-9](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-9), and interest shall accrue to the unamortized balance. The use of interest in the amortization is consistent with the determination of the deferred profit using discounting. ##### [605-944-35-1B](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-1B) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:8f8625e1e3c5634e989aedabd38017faca02ed31076cd930a9f3d075652b1eaa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assumptions shall be updated in subsequent accounting periods to determine changes in the deferred profit liability, contemporaneously with the updating of assumptions for the corresponding [liability for future policy benefits](https://asc.understandingaccounting.org/glossary/l/#liability-for-future-policy-benefits "An accrued obligation to policyholders that relates to insured events, such as death or disability.") (see paragraph [944-40-35-5](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-5)). Cash flow assumptions shall be reviewed—and if there is a change, updated—on an annual basis, at the same time every year. Cash flow assumptions shall be updated in interim reporting periods if evidence suggests that earlier cash flow assumptions should be revised. The interest accretion rate shall remain the original discount rate used at contract issue date. ##### [605-944-35-1C](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-1C) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:27e818b16c5da2dfedf8681a8faa4a1166e280b7c4de9024c9815cecfffe4b67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A related charge or credit to net income for the current reporting period as a result of updating cash flow assumptions at the level of aggregation at which reserves are calculated shall be determined as follows: 1. a Cash flow assumptions used to calculate the deferred profit liability at contract issuance shall be updated in subsequent periods using actual historical experience and updated future cash flow assumptions. 2. b The recalculated deferred profit liability as of the contract issue date shall be subsequently amortized in accordance with paragraph [944-605-35-1A](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-1A) to derive the revised deferred profit liability estimate as of the beginning of the current reporting period. 3. c The revised deferred profit liability estimate calculated in (b) shall be compared with the carrying amount of the deferred profit liability as of the beginning of the current reporting period to determine the change in estimate adjustment to be recognized in net income for the current reporting period (see paragraph [944-40-45-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-4)). #### Universal Life-Type Contracts ##### [605-944-35-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:a982dcff919a2bd2d33b25917d9f74289c68a6bd301c4abe91bdd5b785acdb19 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts recognized as unearned revenue under paragraph [944-605-25-6](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-6) shall be recognized in income over the period benefited using the same assumptions and factors used to amortize capitalized [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") under the [Long-Duration Contracts Subsection](https://asc.understandingaccounting.org/asc/944/30/#35-subsequent-measurement) of Section 944-30-35. ##### [605-944-35-3](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:1b6b2a30c86104e173985e67a612c7883836c80d97f73457dfe7eeb71d7bf5e2 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—Open Year Method ##### [605-944-35-4](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:92f655171411e421cea5fd6c1749adfbe3b1b3698e238dedf6e3e1dce12c7bc0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-605-25-17](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-17) explains that only if reasonable estimates cannot be made currently for the reason discussed in paragraph [944-605-25-18](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-18), shall the [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.") be used. ##### [605-944-35-5](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:708cbca0b8f17c45a3febc33328b9356c3fc4b5013f8f32fbdb8498cbb9d752d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the open year method, underwriting results of foreign [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.") shall not be included in the income statement until sufficient information becomes available to provide reasonable estimates of earned premiums. Instead, premiums, claims, commissions, and related direct taxes shall 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 sufficient information becomes available to record a reasonable estimate of earned premiums. ##### [605-944-35-6](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:11ddea3578bf55476812117d52fa55ca7cec8db7c67d6e73f551ed19afa95f93 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The underwriting balance aggregated under the preceding paragraph shall be disaggregated and reported in the income statement as premiums, claims, commissions, and related direct taxes when earned premiums are reasonably determinable. ##### [605-944-35-7](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:623a983e66fa7f5d5730c034c37d2144cb6d0caffe705cb5f19aa7b674b63387 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it becomes [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that a loss has been incurred before an underwriting balance is closed, a provision for the loss shall be recorded. Examples of situations in which a provision may need to be recorded before an underwriting balance is closed include catastrophic losses, higher-than-expected [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") frequency, significant unanticipated adverse events, or a negative open year account. #### Reinsurance of Short-Duration Contracts ##### [605-944-35-8](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:b3eb0ddb230ec71dc5ce1336b9f523fe26a358adb30c6028fe0c758bb85d1c6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [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.") recognized under paragraph [944-605-25-20](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-20) shall be amortized over the remaining [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.") in proportion to the amount of insurance protection provided. If the amounts paid are subject to adjustment and can be reasonably estimated, the basis for amortization shall be the estimated ultimate amount to be paid. ##### [605-944-35-9](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:fb63c1aaa04bb66a4630b3188d35766bd447084241ef4c9d307e4ac068783db3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any gain deferred under paragraph [944-605-25-22](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-22) shall be amortized over the estimated remaining [settlement period](https://asc.understandingaccounting.org/glossary/s/#settlement-period "The estimated period over which a ceding entity expects to recover substantially all amounts due from the reinsurer under the terms of the reinsurance contract."). If the amounts and timing of the reinsurance recoveries can be reasonably estimated, the deferred gain shall be amortized using the effective interest rate inherent in the amount paid to the [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") and the estimated timing and amounts of recoveries from the reinsurer; that is, the interest method. Otherwise, the proportion of actual recoveries to total estimated recoveries (the recovery method) shall determine the amount of amortization. ##### [605-944-35-10](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:8531606c224b4b89c26ae75539ce73ee0b7bc3bfe9e1a06f73b772ac97e4f84a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amortization of deferred amounts arising from [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.") under both the interest method and the recovery method is based on the ceding entity's estimates of the expected timing and total amount of cash flows. The timing of changes in those estimates shall not alter the recognition of the revenues and costs of reinsurance. Therefore, changes in estimates of the amount recoverable from the reinsurer shall be accounted for consistently both at the inception of and after the reinsurance transaction. ##### [605-944-35-11](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:59729484b4ff550e5d8a561ea80c3ce3041546f192918b405af5314796db488c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Changes in the estimated amount of the liabilities relating to the underlying reinsured contracts shall be recognized in earnings in the period of the change. ##### [605-944-35-12](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:c793cd7ffe57fdbf62109dc89f9d18980441ca9e150ee20c110634ce502e1d6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [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.") shall reflect the related change in the amount recoverable from the reinsurer, and a gain to be deferred and amortized, as described in paragraph [944-605-25-22](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-22), shall be adjusted or established as a result. Decreases in the estimated amount of the liabilities shall reduce the related amount recoverable from the reinsurer and accordingly reduce previously deferred gains. ##### [605-944-35-13](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:b2165142a7a7f8279774c6f6f7dc1939b38b63569dffaf401e757b5ca20a34fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When changes in the estimated amount recoverable from the reinsurer or in the timing of receipts related to that amount occur, a cumulative amortization adjustment shall be recognized in earnings in the period of the change so that the deferred gain reflects the balance that would have existed had the revised estimate been available at the inception of the reinsurance transaction. However, if the revised estimate of the liabilities is less than the amounts paid to the reinsurer, a loss shall not be deferred. The resulting difference shall be recognized in earnings immediately, as described in paragraph [944-605-25-23](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-23). #### Reinsurance of Long-Duration Contracts ##### [605-944-35-14](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:ce35b8de578645e187f244d80bcbdca38e92c5c25ae695e3ff05b82522ec9a8b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amortization of the estimated cost of reinsurance of long-duration contracts that meets the conditions for reinsurance accounting depends on whether the reinsurance contract is long-duration or short-duration. The cost shall be amortized over the remaining life of the underlying reinsured contracts if the reinsurance contract is long-duration, or over the contract period of the reinsurance if the reinsurance contract is short-duration. ##### [605-944-35-15](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:0e5b6060ec70f78d4eaa0bd2dacee05a9a2db2eea7cbd9b8dcdf4d15c3a8fb5f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assumptions used in accounting for reinsurance costs shall be consistent with those used for the reinsured contracts. ### Financial Guarantee Insurance Contracts ##### [605-944-35-16](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:49:33.589Z to 2026-09-10T00:49:33.589Z Record version: sha256:a0171d151a48d405c676ea3130f0fa8f0077fa9b38ee970b7a4985ad7e047249 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In instances where a contract period is used as the period of the financial guarantee insurance contract to measure the unearned premium revenue an insurance entity shall adjust the unearned premium revenue to reflect early principal payments as they occur. The adjustment to the unearned premium revenue shall equal the adjustment to the premium receivable.