{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/605/944/#55-implementation-guidance-and-illustrations","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":"605","topic_title":"Revenue Recognition","subtopic":"605-944","subtopic_title":"Financial Services—Insurance","section":{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":"Reinsurance Contracts","heading":"Implementation Guidance","paragraphs":[{"citation":"605-944-55-1","para":"55-1","html":"
If a reinsurance contract provides the ceding entity's policyholders and claimants with the right to recover their claims directly from the reinsurer (a cut-through provision), the ceding entity shall not net the recoverable due from the reinsurer against the gross loss obligations on the underlying insurance contracts. As stated in paragraphs
944-20-40-3 through 40-4
, reinsurance contracts in which a ceding entity is not relieved of its legal liability to its policyholder do not result in removal of the related assets and liabilities from the ceding entity's financial statements. Amounts recoverable and payable between the ceding entity and a reinsurer may be offset only if a right of setoff exists, as defined in Subtopic 210-20.
","snippet":"If a reinsurance contract provides the ceding entity's policyholders and claimants with the right to recover their claims directly from the reinsurer (a cut-through provision), the ceding entity shall not net the recover…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dbbacc18befcc0ec44a0b835c3ecb24d2ea807cc432aa58929545f9e27b878e8","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-2","para":"55-2","html":"
Similarly, if the circumstances discussed in the preceding paragraph involved retroactive reinsurance of short-duration insurance policies that resulted in a gain to the ceding entity, the gain shall not be recognized in income immediately. Paragraph 944-40-25-33 states that reinsurance contracts do not result in immediate recognition of gains unless the reinsurance contract is a legal replacement of one insurer by another and thereby extinguishes the ceding entity's liability to the policyholder.
","snippet":"Similarly, if the circumstances discussed in the preceding paragraph involved retroactive reinsurance of short-duration insurance policies that resulted in a gain to the ceding entity, the gain shall not be recognized in…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:96bfb9b0149d6a16601733d47b37c9dde45ba7d5cd892318a474b90910237586","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-3","para":"55-3","html":"
Under the definition of settlement period, if the ceding entity does not expect to receive any recoveries because the reinsurer has agreed to reimburse claimants under the reinsured contracts directly, the settlement period shall not be considered to have ended on the effective date of the contract. Unless the reinsurance contract results in legal replacement of one reinsurer by another, a gain shall not be recognized at the inception of the contract. In the circumstances discussed in paragraph 944-605-55-1 the reinsurer is substantively acting as disbursing agent for the ceding entity. Therefore, the ceding entity cannot be said to have recovered amounts due from the reinsurer before payment is made to the claimant.
","snippet":"Under the definition of settlement period, if the ceding entity does not expect to receive any recoveries because the reinsurer has agreed to reimburse claimants under the reinsured contracts directly, the settlement per…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8dd3f790057840ef9c4ce7b4dd49e9ab7ab739b31845a75e2e94f89d28e0092a","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-4","para":"55-4","html":"
This implementation guidance addresses circumstances in which a ceding entity enters into a retroactive contract to reinsure short-duration insurance policies that gives rise to a deferred gain. Specifically, it addresses whether, if the reinsurer prepays its obligation under the contract, the ceding entity may recognize its deferred gain at the time the prepayment is received.
","snippet":"This implementation guidance addresses circumstances in which a ceding entity enters into a retroactive contract to reinsure short-duration insurance policies that gives rise to a deferred gain. Specifically, it addresse…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:727dba4d8210605e6c960936dea06825ea295fcdc415b917d01042ea8dce61f3","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-5","para":"55-5","html":"
The amortization period (the settlement period) is based on the period over which the reinsurer settles its obligations to the ceding entity, and it may be appropriate to recognize the gain over the expected prepayment period. However, all of the facts and circumstances shall be considered to determine whether the reinsurer has substantively settled its obligation to the ceding entity. For example, if the ceding entity agrees to compensate the reinsurer for the prepayment, such as by crediting the reinsurer with investment income on prepaid amounts or balances held, the reinsurer has not, in substance, settled its obligation but rather has made a deposit with the ceding entity that shall be accounted for accordingly.
","snippet":"The amortization period (the settlement period) is based on the period over which the reinsurer settles its obligations to the ceding entity, and it may be appropriate to recognize the gain over the expected prepayment p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7c9971ab6690b066ac9c4471dfcc72cb8c3110b4c80553acb90825a8b3d0ee06","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:44a9cfa9462d7979d1851a9707ab8b8fdbe3cac2c2e8f494043bd2c7aefcecdf","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"block":"Reinsurance Contracts","heading":"Illustrations","paragraphs":[{"citation":"605-944-55-6","para":"55-6","html":"
The following Cases illustrate how the requirement in paragraphs
944-605-25-22 through 25-23
that gains arising from retroactive reinsurance be deferred and losses be charged to expense immediately is affected by the requirements in paragraphs
944-605-35-11 through 35-13
for a catch-up adjustment to reflect changes in estimates of amounts recoverable from reinsurers:
  1. a
    Adverse development occurs (Case A)
  2. b
    Favorable development occurs (Case B).
","snippet":"The following Cases illustrate how the requirement in paragraphs 944-605-25-22 through 25-23 that gains arising from retroactive reinsurance be deferred and losses be charged to expense immediately is affected by the req…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f1f6c81beb3d41485e02af09ed17920b7fff98c5b6cbc4be029c2ba8954190f5","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-7","para":"55-7","html":"
Cases A and B share all of the following assumptions:
  1. a
    Entity A pays $100 of premium in 1993 for $150 limit of retroactive reinsurance.
  2. b
    Entity A has recorded related liabilities of $110.
  3. c
    There is a 5-year settlement period.
  4. d
    At inception, Entity A recorded a reinsurance recoverable of $110 and a deferred gain of $10.
","snippet":"Cases A and B share all of the following assumptions:\n(a) Entity A pays $100 of premium in 1993 for $150 limit of retroactive reinsurance.\n(b) Entity A has recorded related liabilities of $110.\n(c) There is a 5-year sett…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8663d6370ef55ef720a013b432f85c4958ad816511434bb98a56d4df1a5ea180","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-8","para":"55-8","html":"
If an adverse development of $30 occurred in the first year, paragraphs
944-605-35-11 through 35-13
require an adjustment to bring the balance of the deferred gain to the balance that would have existed had the revised estimate been available at inception, less cumulative amortization. The balance that would have existed at inception is $40 ($140 reserves less $100 premium) and cumulative amortization to date is $8 ($40/5 years). Therefore, a net $32 deferred gain balance is required. Entity A would defer $30 of additional gain ($40 less the $10 already recorded) and credit income for $8 amortization. Straight-line amortization is used for simplicity of illustration rather than the interest method or recovery method as required by paragraph 944-605-35-9.
","snippet":"If an adverse development of $30 occurred in the first year, paragraphs 944-605-35-11 through 35-13 require an adjustment to bring the balance of the deferred gain to the balance that would have existed had the revised e…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e7a7c7152600f1d7b9bd54908ea415f5f1496a2576d42e652d9fc0bdaa535729","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-9","para":"55-9","html":"
If a favorable development of $15 occurred in the first year, the amount of ceded premiums ($100) would exceed the related revised liabilities ($95). Paragraphs
944-605-35-11 through 35-13
state that decreases in the estimated amount of the liabilities reduce the related amount recoverable and reduce previously deferred gains. Further, if the revised estimate of the liabilities is less than the amounts paid to the reinsurer, the difference shall be charged to earnings. Entity A would therefore reduce the reinsurance recoverable by $15, reduce the $10 deferred gain to zero, and charge $5 to earnings.
","snippet":"If a favorable development of $15 occurred in the first year, the amount of ceded premiums ($100) would exceed the related revised liabilities ($95). Paragraphs 944-605-35-11 through 35-13 state that decreases in the est…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e8ba19e02f4c9d8272584805f000a6bb19d1b136d2d1cdfc7b4caf346865a32","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-10","para":"55-10","html":"
This Example illustrates the application of the requirements in the Reinsurance Contracts Subsections of this Subtopic to a property-casualty insurance entity (Property-Casualty Insurance Entity) that issues short-duration contracts.
","snippet":"This Example illustrates the application of the requirements in the Reinsurance Contracts Subsections of this Subtopic to a property-casualty insurance entity (Property-Casualty Insurance Entity) that issues short-durati…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c4b26c86eebc3c244bcb0c5625dcbba34c04ee6457229751efa22c1916399aaf","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-11","para":"55-11","html":"
Property-Casualty Insurance Entity's statement of financial position follows.
  1. a
    The Reinsurance Contracts Subsections of this Subtopic require that estimated amounts recoverable from reinsurers include amounts related to paid and unpaid claims and claims incurred but not reported. Details of the amounts comprising reinsurance recoverables may be presented separately.
  2. b
    Prepaid reinsurance premiums include amounts paid to reinsurers relating to the unexpired portion of reinsured policies, often referred to as ceded unearned premiums.
  3. c
    Alternatively, the effect of reinsurance on premiums earned and claim costs may be shown parenthetically or may be disclosed. An illustration of a parenthetical presentation follows.
","snippet":"Property-Casualty Insurance Entity's statement of financial position follows.\n(a) The Reinsurance Contracts Subsections of this Subtopic require that estimated amounts recoverable from reinsurers include amounts related …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:536600d158c8e8169d18dcf132c18deacc12d4af7d00dc218a3cdeee19381517","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-12","para":"55-12","html":"
Property-Casualty Insurance Entity's related notes to financial statements follow.
","snippet":"Property-Casualty Insurance Entity's related notes to financial statements follow.\nProperty-Casualty Insurance Entity— Notes to Financial Statements\nSummary of Significant Accounting Policies\nIn the normal course of busi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:61fa84c012c09ff47c3f6c0986e319ca1ba2d214e2465c606781b3fa472403d5","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-13","para":"55-13","html":"
This Example illustrates the application of the requirements in the Reinsurance Contracts Subsections of this Subtopic to a life insurance entity (Life Insurance Entity) that issues long-duration contracts.
","snippet":"This Example illustrates the application of the requirements in the Reinsurance Contracts Subsections of this Subtopic to a life insurance entity (Life Insurance Entity) that issues long-duration contracts.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:22a30e548ef14a29214bdd2d01a16cc359d90f2f1c2356e014eba426e1008328","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-14","para":"55-14","html":"
Life Insurance Entity's statement of financial position follows.
","snippet":"Life Insurance Entity's statement of financial position follows.\n(a) The Reinsurance Contracts Subsections of this Subtopic require that estimated amounts recoverable from reinsurers include amounts related to paid and u…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ced874c07f9b7ab4bfc89f5faeedcb3321fceea0ef5c406dc9e0697d57c07098","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-15","para":"55-15","html":"
Life Insurance Entity's related notes to financial statements follow.
","snippet":"Life Insurance Entity's related notes to financial statements follow.\nLife Insurance Entity—Notes to Financial Statements\nSummary of Significant Accounting Policies\nIn the normal course of business, the Entity seeks to l…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:73f671cad8c2a94340d9da548ac7bf843a35502aed88f7c2eee8e41fca823886","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ea8df9e823e90c90627e95cc91d1becbe67284195ae390d30e33758b81d49171","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"block":"Financial Guarantee Insurance Contracts","heading":"Illustrations","paragraphs":[{"citation":"605-944-55-16","para":"55-16","html":"
This example illustrates the application of paragraph 944-605-30-7, which states that if the premiums are received as payments over the period of the financial guarantee insurance contract, the insurance entity shall initially measure the unearned premium revenue at an amount equal to the present value of the premiums due or expected to be collected over the period of the financial guarantee insurance contract. For example, if the insurance entity expects to receive total premiums due over the period of the financial guarantee insurance contract of $28 million and the present value of that amount is $24.3 million, both the unearned premium revenue and the premium receivable initially shall be recognized at $24.3 million.
","snippet":"This example illustrates the application of paragraph 944-605-30-7, which states that if the premiums are received as payments over the period of the financial guarantee insurance contract, the insurance entity shall ini…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:095841fb91d475607319389c7067bf44170d5abe90b81fe1f8c63014f2a70851","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-17","para":"55-17","html":"
This Example illustrates the application of paragraphs
944-605-25-27 through 25-28
to insured principal payments made over the period of a contract. On January 1, 20X0, an insurance entity issues a single-premium financial guarantee insurance contract for a financial obligation (municipal bond) with a contract period of 10 years. The premium amount is $5 million. Insured principal payments of $100 million will be made by the issuer of the bond over the period of the contract. The contractual schedule of expected insured principal payments follows.
","snippet":"This Example illustrates the application of paragraphs 944-605-25-27 through 25-28 to insured principal payments made over the period of a contract. On January 1, 20X0, an insurance entity issues a single-premium financi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:08100e9a90aad27721a49f18b71a03efe53937a328bf695b70e8a1ece0673ce3","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-18","para":"55-18","html":"
The ratio of the premium to the sum of all contractual insured principal amounts outstanding during each reporting period (the constant rate) is 0.00877193 (calculated as $5 million divided by $570 million). Accordingly, the insurance entity would recognize $877,193 of premium revenue (calculated as $100 million of insured principal amount outstanding multiplied by 0.00877193) in the first year of the contract. In the second year of the contract, the insurance entity would recognize $833,333 (calculated as $95 million multiplied by 0.00877193) of premium revenue. Thus, premium revenue is recognized based on the insurance protection being provided (represented by the constant rate and the insured principal amounts outstanding).
","snippet":"The ratio of the premium to the sum of all contractual insured principal amounts outstanding during each reporting period (the constant rate) is 0.00877193 (calculated as $5 million divided by $570 million). Accordingly,…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f684e552a98fab460eb4f143f2681b5baa95f6e8ac18ca31fb96b259c9050070","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-19","para":"55-19","html":"
The Example illustrates the application of paragraph 944-605-25-29 to an insured principal payment made at the end of period of a contract. Assume all of the following:
  1. a
    On January 1, 200X, an insurance entity issues a single-premium financial guarantee insurance contract for a financial obligation (a zero-coupon municipal bond).
  2. b
    The insured financial obligation was issued at $61.4 million, resulting in an effective yield of 5 percent.
  3. c
    The premium amount is $5 million.
  4. d
    The insured principal payment of $100 million will be made by the issuer of the bond in total at the end of the 10-year period of the contract.
","snippet":"The Example illustrates the application of paragraph 944-605-25-29 to an insured principal payment made at the end of period of a contract. Assume all of the following:\n(a) On January 1, 200X, an insurance entity issues …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7c085ecca4b5fc6560b9b89c48b482da4e45b3922be48501755855cc2c91dc11","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-20","para":"55-20","html":"
In this Example, the insured accreted principal amount outstanding represents the obligation of the insurance entity. The schedule of the insured accreted principal amounts outstanding during each reporting period follows.
","snippet":"In this Example, the insured accreted principal amount outstanding represents the obligation of the insurance entity. The schedule of the insured accreted principal amounts outstanding during each reporting period follow…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e645d24160375b839a87e5c6ce49cbd37f3510acb7acda4cdc6af2ef51483e74","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-21","para":"55-21","html":"
The ratio of the premium to the sum of the insured accreted principal amounts outstanding (the constant rate) is 0.006474168 (calculated as $5 million divided by $772.3 million). Accordingly, the insurance entity would recognize $397,514 of premium revenue (calculated as $61.4 million of insured accreted principal amount outstanding multiplied by 0.006474168) in the first year of the contract. In accordance with the Financial Guarantee Insurance Contracts Subsection of Section 944-605-25, premium revenue is recognized based on the insurance protection being provided (represented by the constant rate and the insured accreted principal amount outstanding).
","snippet":"The ratio of the premium to the sum of the insured accreted principal amounts outstanding (the constant rate) is 0.006474168 (calculated as $5 million divided by $772.3 million). Accordingly, the insurance entity would r…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d781d0f454abc743e617827c5ae9a1652173d6296dcc869642e80080a632d482","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-22","para":"55-22","html":"
This Example illustrates the application of paragraphs
944-605-25-32 through 25-33
to the early retirement and replacement of an insured financial obligation if the same insurance entity insured the new financial obligation. This Example makes all of the following assumptions:
  1. a
    On January 1, 20X0, an insurance entity issues a nonrefundable, single premium financial guarantee insurance contract for a 30-year financial obligation (municipal bond).
  2. b
    The premium amount is $5 million.
  3. c
    On the municipal bond's 10th anniversary, the issuer of the insured financial obligation retires the municipal bond.
  4. d
    Premium recognized by the insurance entity for the financial guarantee insurance contract over the first 10 years was $2 million.
","snippet":"This Example illustrates the application of paragraphs 944-605-25-32 through 25-33 to the early retirement and replacement of an insured financial obligation if the same insurance entity insured the new financial obligat…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:039ca68f3605ba77370e963113182ec16a1bbd705472d5dedd75585ea3cab8a0","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-23","para":"55-23","html":"
At early retirement on the 10th anniversary, the insurance entity would recognize as premium revenue the remaining unearned premium revenue ($3 million) because the risk to the insurance entity is extinguished. In addition, any remaining associated deferred acquisition costs are expensed.
","snippet":"At early retirement on the 10th anniversary, the insurance entity would recognize as premium revenue the remaining unearned premium revenue ($3 million) because the risk to the insurance entity is extinguished. In additi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b8161a22fe398c873c61b71b3fc6039d35d9e3c5b1795358b85c25acfad3329f","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-24","para":"55-24","html":"
This Example makes all of the following further assumptions:
  1. a
    The issuer of the financial obligation facilitated the early retirement of the municipal bond by issuing a new municipal bond at a lower interest rate.
  2. b
    The same insurance entity insures the new municipal bond.
  3. c
    The premium amount for the financial guarantee insurance contract for the new financial obligation is $3 million.
  4. d
    The amount of premium charged to insure a similar financial obligation in a separate standalone transaction is $4 million.
","snippet":"This Example makes all of the following further assumptions:\n(a) The issuer of the financial obligation facilitated the early retirement of the municipal bond by issuing a new municipal bond at a lower interest rate.\n(b)…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dd480c35b75e14671d4f1c68216d36362470368072671f15c0615f73bf395b14","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},{"citation":"605-944-55-25","para":"55-25","html":"
The insurance entity would recognize unearned premium revenue of $4 million. It also would recognize a debit to earnings in the amount of $1 million. This represents the difference between the amount of premium charged ($3 million) and the amount of premium that would be charged for a similar financial obligation in a separate standalone transaction.
","snippet":"The insurance entity would recognize unearned premium revenue of $4 million. It also would recognize a debit to earnings in the amount of $1 million. This represents the difference between the amount of premium charged (…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4bebf92761fd85491a849a1a04bd6e9ee9ab49ac69e63f832640605d491a74cc","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a69e6d316a7ce4b650abe1dd36e97d97526e246b5bc5a4525cf58b1b1bc4ac1a","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ff651245d2e9066870dedd533e4f755b2afa5703f2324ea30d49286a8e4fd2ad","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ff651245d2e9066870dedd533e4f755b2afa5703f2324ea30d49286a8e4fd2ad","downloaded_from":"2026-09-10T00:49:43.753Z","last_downloaded_at":"2026-09-10T00:49:43.753Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477548","source_sha256":"0517a379415598e87253ee658813ee6611f6b0fe4668572f3450a21243b33320"}}