{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/805/944/#30-initial-measurement","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":"805","topic_title":"Business Combinations","subtopic":"805-944","subtopic_title":"Financial Services—Insurance","section":{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":"Insurance and Reinsurance Contracts Acquired","paragraphs":[{"citation":"805-944-30-1","para":"30-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0A7927ED-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The acquirer shall measure at <a href=\"/glossary/f/#fair-value\" class=\"term\" title=\"The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.\"><span>fair value</span></a> the assets and liabilities recognized under paragraph <a href=\"/asc/805/944/#805-944-25-3\" class=\"xref\">944-805-25-3</a>. </span></span><span class=\"sfragment\" id=\"sfr_0A792966-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">However, the acquirer shall recognize that fair value in components as follows: </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_0A792A96-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Assets and liabilities measured in accordance with the acquirer's accounting policies for insurance and <a href=\"/glossary/r/#reinsurance\" class=\"term\" title=\"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.\"><span>reinsurance</span></a> contracts that it issues or holds. For example, the contractual assets acquired could include a <a href=\"/glossary/r/#reinsurance-recoverable\" class=\"term\" title=\"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.\"><span>reinsurance recoverable</span></a> and the liabilities assumed could include a liability to pay future contract claims and claims expenses on the unexpired portion of the acquired contracts and a liability to pay incurred contract claims and claims expenses. However, those assets acquired and liabilities assumed would not include the acquiree's deferred <a href=\"/glossary/a/#acquisition-costs\" class=\"term\" title=\"Costs that are related directly to the successful acquisition of new or renewal insurance contracts.\"><span>acquisition costs</span></a> and unearned premiums that do not represent future cash flows. </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_0A792BBF-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An intangible asset (or occasionally another liability), representing the difference between the following: </span></span></div><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">1</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_0A792CDB-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The fair value of the contractual insurance and reinsurance assets acquired and liabilities assumed </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">2</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_0A792DF5-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The amount described in (a). </span></span></div></li></ol></li></ol></div></div>","snippet":"The acquirer shall measure at fair value the assets and liabilities recognized under paragraph 944-805-25-3. However, the acquirer shall recognize that fair value in components as follows:\n(a) Assets and liabilities meas…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:daa0c4f0dd96faaa86d6487ce05891e97173b5f3ea29f03da3307b4d88faeed7","downloaded_from":"2026-09-10T01:26:53.577Z","last_downloaded_at":"2026-09-10T01:26:53.577Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477249","source_sha256":"5adc429d7c9ee1043e17afda10da2102ca39fb58a71ff13474fa99477cdc3b75"}},{"citation":"805-944-30-2","para":"30-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0A792F24-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Other related contracts that are not insurance or reinsurance contracts shall be measured at the date of acquisition in accordance with Topic <a altsource=\"GUID-2E207482-2F2C-41D3-ADA4-A53A3509B10F.ditamap\" class=\"ditamap\">805</a>. </span></span></div></div>","snippet":"Other related contracts that are not insurance or reinsurance contracts shall be measured at the date of acquisition in accordance with Topic 805.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3e83496a738e24fdce26896ca81529ab8c83f5a3f09b63fdeb4adaa8903910ef","downloaded_from":"2026-09-10T01:26:53.577Z","last_downloaded_at":"2026-09-10T01:26:53.577Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477249","source_sha256":"5adc429d7c9ee1043e17afda10da2102ca39fb58a71ff13474fa99477cdc3b75"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:731a11a2b98b5528f2204bcff9a59f248faaa44ec4bafc44f5af11f286dc206f","downloaded_from":"2026-09-10T01:26:53.577Z","last_downloaded_at":"2026-09-10T01:26:53.577Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477249","source_sha256":"5adc429d7c9ee1043e17afda10da2102ca39fb58a71ff13474fa99477cdc3b75"}},{"block":"Demutualizations","heading":"Emergence of Earnings and Policyholder Dividend Obligation","paragraphs":[{"citation":"805-944-30-3","para":"30-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0A81332F-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">As of the <a href=\"/glossary/a/#actuarial-calculation-date\" class=\"term\" title=\"The date as of which the actuarial calculation is performed, which is as of the date of demutualization or formation of a mutual insurance holding entity.\"><span>actuarial calculation date</span></a>, a calculation shall be developed that represents the cash flows expected to be generated from the assets and liabilities included in the <a href=\"/glossary/c/#closed-block\" class=\"term\" title=\"A mechanism to preserve, over time, the reasonable dividend expectations of individual policyholders with individual life, health, or annuity policies for which dividends are currently being paid or are expected to be paid under the current dividend scale. A closed block comprises a defined, limited group of policies and a defined set of assets, and is governed by a set of operating rules.\"><span>closed block</span></a>. </span></span><span class=\"sfragment\" id=\"sfr_0A813522-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Based on that <a href=\"/glossary/a/#actuarial-calculation\" class=\"term\" title=\"The periodic expected changes in the net closed block liability (on the basis of generally accepted accounting principles [GAAP]), which is after the elimination of the effect of applicable items of other comprehensive income. The amortization of deferred acquisition costs is not a component of the actuarial calculation because deferred acquisition costs are not a closed block asset.\"><span>actuarial calculation</span></a>, the periodic expected changes in the <a href=\"/glossary/n/#net-closed-block-liability\" class=\"term\" title=\"The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets each adjusted to eliminate the effect of related amounts in accumulated other comprehensive income at the actuarial calculation date. Deferred acquisition costs are not assets of the closed block.\"><span>net closed block liability</span></a> (on the basis of generally accepted accounting principles [GAAP]), which is after the elimination of the effect of the applicable items of other comprehensive income shall be derived. </span></span><span class=\"sfragment\" id=\"sfr_0A8136C1-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The actuarial calculation shall be based on a best estimate (with no provision for adverse deviation) of the future performance of the closed block assets and liabilities as of the actuarial calculation date. </span></span></div></div>","snippet":"As of the actuarial calculation date, a calculation shall be developed that represents the cash flows expected to be generated from the assets and liabilities included in the closed block. Based on that actuarial calcula…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:afc375f737db5096ac2f56aba952b9c6365088c4ed7a3b4dbfd93d2170bf8405","downloaded_from":"2026-09-10T01:26:53.577Z","last_downloaded_at":"2026-09-10T01:26:53.577Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477249","source_sha256":"5adc429d7c9ee1043e17afda10da2102ca39fb58a71ff13474fa99477cdc3b75"}},{"citation":"805-944-30-4","para":"30-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0A813842-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The actuarial calculation described in the preceding paragraph shall continue to be used in subsequent accounting periods to determine the change in the policyholder dividend obligation. </span></span><span class=\"sfragment\" id=\"sfr_0A8139B9-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The actuarial calculation shall not be revised in future accounting periods. </span></span></div></div>","snippet":"The actuarial calculation described in the preceding paragraph shall continue to be used in subsequent accounting periods to determine the change in the policyholder dividend obligation. The actuarial calculation shall n…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b63f686299f3facfdcf764ce1f339a9fcf472b6cb257a5ac1bcbd6604e4bb06b","downloaded_from":"2026-09-10T01:26:53.577Z","last_downloaded_at":"2026-09-10T01:26:53.577Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477249","source_sha256":"5adc429d7c9ee1043e17afda10da2102ca39fb58a71ff13474fa99477cdc3b75"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a4e11db7a6a6584e9c4bf1778e1a58a4fa820b4e5db69bcddfaf4a306e970d6b","downloaded_from":"2026-09-10T01:26:53.577Z","last_downloaded_at":"2026-09-10T01:26:53.577Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477249","source_sha256":"5adc429d7c9ee1043e17afda10da2102ca39fb58a71ff13474fa99477cdc3b75"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e4192c61988aa1c6e320a1c8ae9710f18e7315211f35a44481ecaf819b147c62","downloaded_from":"2026-09-10T01:26:53.577Z","last_downloaded_at":"2026-09-10T01:26:53.577Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477249","source_sha256":"5adc429d7c9ee1043e17afda10da2102ca39fb58a71ff13474fa99477cdc3b75"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e4192c61988aa1c6e320a1c8ae9710f18e7315211f35a44481ecaf819b147c62","downloaded_from":"2026-09-10T01:26:53.577Z","last_downloaded_at":"2026-09-10T01:26:53.577Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477249","source_sha256":"5adc429d7c9ee1043e17afda10da2102ca39fb58a71ff13474fa99477cdc3b75"}}