{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/805/944/#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":"805","topic_title":"Business Combinations","subtopic":"805-944","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":"Demutualizations","heading":"Implementation Guidance","paragraphs":[{"citation":"805-944-55-1","para":"55-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0B035C9B-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A stock dividend declared by the stock insurer shall be accounted for in accordance with the guidance in Subtopic <a altsource=\"GUID-4D85B75A-F0A3-431A-9178-41F6FEF0A585.ditamap\" class=\"ditamap\">505-20</a>. </span></span><span class=\"sfragment\" id=\"sfr_0B035F4D-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Under existing laws or regulations, a mutual insurance holding entity is required to own a controlling voting interest in the stock insurance subsidiary and, therefore, shall reflect the stock insurer or intermediate holding entity on a consolidated basis. </span></span><span class=\"sfragment\" id=\"sfr_0B03612B-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">As a result, intra-entity dividends would be eliminated in the consolidated accounts of the mutual insurance holding entity. </span></span></div></div>","snippet":"A stock dividend declared by the stock insurer shall be accounted for in accordance with the guidance in Subtopic 505-20. Under existing laws or regulations, a mutual insurance holding entity is required to own a control…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6f0a0e79f4e3a968ce0166f956737c167f9c45da140f9f4165777d82e673a5a9","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:536ee3d8021e744ec53858f8eeaeeb2d6e9d77cb6ebffdbeb040a1c05f42e9ce","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"block":"Demutualizations","heading":"Illustrations","paragraphs":[{"citation":"805-944-55-2","para":"55-2","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Example illustrates emergence of earnings as discussed beginning in paragraph <a href=\"/asc/805/944/#805-944-25-8\" class=\"xref\">944-805-25-8</a>. <span class=\"sfragment\" id=\"sfr_0B036350-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">As part of the negotiations surrounding 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> and <a href=\"/glossary/d/#demutualization\" class=\"term\" title=\"The conversion of a mutual insurance entity to a stock insurance entity.\"><span>demutualization</span></a> process, the insurance entity may agree with the insurance regulator to designate participating policies with a <a href=\"/glossary/c/#carrying-amount\" class=\"term\" title=\"The amount of an item as displayed in the financial statements.\"><span>carrying amount</span></a> (liability) of $2,500,000,000 for the closed block. </span></span><span class=\"sfragment\" id=\"sfr_0B0365AA-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Fixed maturity available-for-sale investments with a carrying value and <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> of $2,300,000,000 and an amortized cost of $2,240,000,000 are designated as the closed block assets. </span></span><span class=\"sfragment\" id=\"sfr_0B0367B1-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If there are no other assets or liabilities included in the closed block, the maximum future earnings from the closed block that would be recognized in income over the period in which the closed block remains <a href=\"/glossary/i/#in-force\" class=\"term\" title=\"Policies and contracts written and recorded on the books of an insurance carrier that are unexpired as of a given date.\"><span>in force</span></a> is $260,000,000. </span></span></div></div>","snippet":"This Example illustrates emergence of earnings as discussed beginning in paragraph 944-805-25-8. As part of the negotiations surrounding the closed block and demutualization process, the insurance entity may agree with t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a663cc9866bd552d88f00f52617f288bf912283658670408c5512100952e5b0b","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"citation":"805-944-55-3","para":"55-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0B0376F7-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Example illustrates one application of the disclosure requirements of the <a href=\"/updates/page-2147479835/\" class=\"xref\">Demutualizations Subsection</a> of Section 944-805-50 for a single hypothetical insurance entity, referred to as ABC Life Insurance Entity. </span></span>ABC Life Insurance Entity would make the following disclosures.<ul class=\"ul simple\" id=\"d3e31043-158570__GUID-1EEDAA03-706E-487E-82A7-E54587E47AF9\"><li class=\"li\" id=\"d3e31043-158570__SL117422728-158570\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_0B037830-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">At the effective date (January XX, 20X1) of the Plan of Demutualization, eligible policyholders received, in the aggregate, approximately $XX million of cash, $XX million of policy credits, and XX million shares of common stock of ABC Holding Entity in exchange for their membership interests in ABC Life Insurance Entity. The demutualization was accounted for as a reorganization. Accordingly, ABC Life Insurance Entity's retained earnings at the Plan Effective Date (net of the aforementioned cash payments and policy credits, which were charged directly to retained earnings) were reclassified to common stock and capital in excess of par. </span></span></div></li><li class=\"li\" id=\"d3e31043-158570__SL117422729-158570\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_0B037998-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">As of January XX, 20X1, ABC Life Insurance Entity established a closed block for the benefit of certain classes of individual participating policies for which ABC Life Insurance Entity had a dividend scale payable in 20X0 and that were in force on January XX, 20X1. Assets were allocated to the closed block in an amount that, together with anticipated revenues from policies included in the closed block, was reasonably expected to be sufficient to support such business, including provision for payment of benefits, certain expenses, and taxes, and for continuation of dividend scales payable in 20X0, assuming experience underlying such scales continues. Assets allocated to the closed block inure solely to the benefit of the holders of the policies included in the closed block and will not revert to the benefit of stockholders of ABC Life Insurance Entity. No reallocation, transfer, borrowing, or lending of assets can be made between the closed block and other portions of ABC Life Insurance Entity's general account, any of its separate accounts, or any affiliate of ABC Life Insurance Entity without the approval of the Z State Insurance Department. </span></span></div></li><li class=\"li\" id=\"d3e31043-158570__SL117422730-158570\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_0B037B26-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If, over time, the aggregate performance of the closed block assets and policies is better than was assumed in funding the closed block, dividends to policyholders will be increased. If, over time, the aggregate performance of the closed block assets and policies is less favorable than was assumed in the funding, dividends to policyholders could be reduced. </span></span></div></li><li class=\"li\" id=\"d3e31043-158570__SL117422731-158570\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_0B037CF4-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The assets and liabilities allocated to the closed block are recognized in ABC Life Insurance Entity's financial statements on the same basis as other similar assets and liabilities. The carrying amount of closed block liabilities in excess of the carrying amount of closed block assets at the date of demutualization (adjusted to eliminate the effect of related amounts in accumulated other comprehensive income) represents the maximum future earnings from the assets and liabilities designated to the closed block that can be recognized in income over the period the policies in the closed block remain in force. ABC Life Insurance Entity has developed an actuarial calculation of the timing of such maximum future stockholder earnings, and this is the basis of the policyholder dividend obligation. </span></span></div></li><li class=\"li\" id=\"d3e31043-158570__SL117422732-158570\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_0B037E81-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If actual cumulative earnings are greater than expected cumulative earnings, only expected earnings will be recognized in income. Actual cumulative earnings in excess of expected cumulative earnings represents undistributed accumulated earnings attributable to policyholders, which are recognized as a policyholder dividend obligation because the excess will be paid to closed block policyholders as an additional policyholder dividend unless otherwise offset by future performance of the closed block that is less favorable than originally expected. If actual cumulative performance is less favorable than expected, only actual earnings will be recognized in income. </span></span></div></li><li class=\"li\" id=\"d3e31043-158570__SL117422733-158570\"><div class=\"p\"><span class=\"sfragment\" id=\"sfr_0B038019-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The principal cash flow items that affect the amount of closed block assets and liabilities are premiums, net investment income, purchases and sales of investments, policyholders' benefits, policyholder dividends, premium taxes, and income taxes. The principal income and expense items excluded from the closed block are management and maintenance expenses, commissions and net investment income, and realized investment gains and losses of investment assets outside the closed block that support the closed block business. The amounts shown in the following tables for assets, liabilities, revenues, and expenses of the closed block are those that enter into the determination of amounts that are to be paid to policyholders. </span></span></div></li></ul></div></div>","snippet":"This Example illustrates one application of the disclosure requirements of the Demutualizations Subsection of Section 944-805-50 for a single hypothetical insurance entity, referred to as ABC Life Insurance Entity. ABC L…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb041e12054528670efc2947cc2c7f662344e57ffc59c83dde1ab36669b4746e","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"citation":"805-944-55-4","para":"55-4","html":"<div class=\"asc-body\"><div class=\"norm-text\">ABC Life Insurance Entity may present summarized financial information for the closed block in a table as follows.<ul class=\"ul simple\" id=\"d3e31043-158570__GUID-2E4C25F7-F9E9-47E9-B612-96AE8311CB37\"><li class=\"li\" id=\"d3e31043-158570__SL6350104-158570\"><div class=\"p\"><div class=\"fig figure fignone\" id=\"d3e31043-158570__tbl-d3e31079\"><img src=\"/asc-img/GUID-BF693EFC-EF81-4256-89D3-FE4F8B91D84A-low.gif\" altsource=\"GUID-BF693EFC-EF81-4256-89D3-FE4F8B91D84A-low.gif\" loading=\"lazy\"><span class=\"sfragment\" id=\"sfr_0B038641-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span><div class=\"figcaption\"> \"December 31, 20X2\" 20X2 Activity (a) \"December 31, 20X1\" Closed block liabilities: Future policy benefits and policyholder account balances \" $8,903 \" $(8) B \" $8,911 \" Policyholder dividends payable 88 88 Policyholder dividend obligation 163 93 E 80 (10) C Other closed block liabilities 12 12 Total closed block liabilities \" 9,166 \" 75 \" 9,091 \" Assets designated to the closed block: Fixed maturities: \"Held to maturity, at amortized cost (estimated fair value, 20X2, $275; 20X1, $319)\" 289 289 \"Available for sale, at estimated fair value (amortized cost, 20X2, $3,809; 20X1, $3,502)\" \" 4,001 \" \" 307 93 \"\t\" D E \"\t\" 3,601 \" \"Equity securities, at estimated fair value\" 202 202 Mortgage loans on real estate \" 1,273 \" (307) D \" 1,580 \" Policy loans \" 1,766 \" \" 1,766 \" Real estate 105 105 Short-term investments 62 62 Cash and cash equivalents 119 82 A 37 Other closed block assets 76 76 Total closed block assets \" 7,893 \" 175 \" 7,718 \" Excess of reported closed block liabilities over assets designated to the closed block \" 1,273 \" (100) \" 1,373 \" Portion of above representing other comprehensive income -increase in unrealized appreciation 192 93 99 -increase in policyholder dividend obligation (93) (93) Total 99 - 99 Maximum future earnings to be recognized from closed block assets and liabilities \" $1,372 \" $(100) \" $1,472 \" Change in Policyholder Dividend Obligation: \"December 31, 20X2\" \"December 31, 20X1\" Balance at beginning of year $80 $- Impact on net income before income taxes (10) 5 Unrealized investment gains (losses) 93 75 Balance at end of year $163 $80 Change in Other Comprehensive Income: \"December 31, 20X2\" Change for 20X2 \"December 31, 20X1\" Fixed maturities available for sale: Fair value \" $4,001 \" $400 \" $3,601 \" Amortized cost \" 3,809 \" 307 D \" 3,502 \" Unrealized appreciation $192 $93 E $99 (a)\t\"Assumed 20X2 activity for assets and liabilities (similarly identified in statement of operations as applicable): A items are assumed settled in cash, with net impact reflected in \"Cash and cash equivalents.\" B and C are given effect in their respective balance sheet accounts. D represents the assumed sale of mortgage loans at book value and reinvestment of the proceeds in available-for-sale fixed maturities. E represents the increase in unrealized appreciation on available-for-sale securities held at both December 31, 20X1 and December 31, 20X2. It is assumed that there are no related taxes and that the available-for-sale fixed maturities sold (see above) had fair value equal to book value both at December 31, 20X1, and when sold. It is further assumed that the unrealized appreciation at December 31, 20X1, is equal to that at the date of demutualization. Unrealized appreciation that arises since the date of demutualization is to be included in the determination of the policyholder dividend obligation.\" </div></div></div></li></ul></div></div>","snippet":"ABC Life Insurance Entity may present summarized financial information for the closed block in a table as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:510718d634a4fcd959d108146aa27504f16c3468216231a910b99604dd0a3069","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"citation":"805-944-55-5","para":"55-5","html":"<div class=\"asc-body\"><div class=\"norm-text\">ABC Life Insurance Entity may present additional summarized financial information for the closed block in a table as follows.<ul class=\"ul simple\" id=\"d3e31043-158570__GUID-C7420BF3-31AC-452B-9B7A-A09B2CD072F5\"><li class=\"li\" id=\"d3e31043-158570__SL6350105-158570\"><div class=\"p\"><div class=\"fig figure fignone\" id=\"d3e31043-158570__tbl-d3e31120\"><img src=\"/asc-img/GUID-007EA11C-044A-4487-BA20-E613F05CCA17-low.gif\" altsource=\"GUID-007EA11C-044A-4487-BA20-E613F05CCA17-low.gif\" loading=\"lazy\"><span class=\"sfragment\" id=\"sfr_0B038CCA-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span><div class=\"figcaption\"> 20X2(a) 20X1 Closed Block Operations: Closed block revenues: Premiums $303 A $318 Net investment income 205 A 215 Realized investment gains (losses) (2)\tA 10 Other closed block revenues 5 A 5 Total closed block revenues 511 548 Closed block benefits and expenses: Policyholder benefits 402 A 376 Change in policyholder benefits and interest credited to policyholder account balances (8)\tB 17 Dividends to policyholders 8 A 8 Change in policyholder dividend obligation (10)\tC 5 Other closed block expenses 10 A 10 Total closed block benefits and expenses 402 416 \"Closed block revenues, net of closed block benefits and expenses, before income taxes\" 109 132 Income taxes 9 A 10 \"Closed block revenues, net of closed block benefits and expenses and income taxes\" $100 $122 Maximum future earnings from closed block assets and liabilities: Beginning of year \" $1,472 \" \" $1,594 \" End of year \" 1,372 \" \" 1,472 \" Change during the year $(100) $(122) (a)\t\"Assumed 20X2 activity for assets and liabilities (similarly identified in statement of operations as applicable): A items are assumed settled in cash, with net impact reflected in \"Cash and cash equivalents.\" B and C are given effect in their respective balance sheet accounts.\" </div></div></div></li></ul></div></div>","snippet":"ABC Life Insurance Entity may present additional summarized financial information for the closed block in a table as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8f6dd568c58821a23d871b1aa0225003fe6303ebdb208426b766f7eced48ff59","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"citation":"805-944-55-6","para":"55-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0B039413-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Example illustrates the accounting under the Demutualizations Subsections of this Subtopic for closed block business (meaning those assets and liabilities both inside and outside of the closed block that relate to or support the closed block policies) after the demutualization date. </span></span><span class=\"sfragment\" id=\"sfr_0B039568-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Example illustrates the computations involved in the following: </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_0B039677-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Determining the amount of the policyholder dividend obligation </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><a href=\"/updates/asu-2018-12/\" class=\"xref\">Subparagraph superseded by Accounting Standards Update No. 2018-12</a>.</div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\"><a href=\"/updates/asu-2018-12/\" class=\"xref\">Subparagraph superseded by Accounting Standards Update No. 2018-12</a>.</div></li></ol></div></div>","snippet":"This Example illustrates the accounting under the Demutualizations Subsections of this Subtopic for closed block business (meaning those assets and liabilities both inside and outside of the closed block that relate to o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c9682e00e9f6e8bef02d8b998363ab69594c1670a83f7a7339440a204eb07ffc","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"citation":"805-944-55-7","para":"55-7","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0B039F37-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">For simplicity, this Example assumes the closed block has not been funded for income taxes. </span></span><span class=\"sfragment\" id=\"sfr_0B03A066-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In practice, the closed block may or may not be funded for income taxes. </span></span><span class=\"sfragment\" id=\"sfr_0B03A17B-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If the closed block is funded for income taxes, the actuarial calculation would be constructed on a post-tax basis. </span></span><span class=\"sfragment\" id=\"sfr_0B03A2CE-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">However, for the purpose of determining the policyholder dividend obligation, pretax amounts should be used. </span></span><span class=\"sfragment\" id=\"sfr_0B03A425-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Generally, this would be accomplished by converting post-tax actuarial calculation values to corresponding pretax values for purposes of determining the policyholder dividend obligation. </span></span><span class=\"sfragment\" id=\"sfr_0B03A58F-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If the closed block is funded for income taxes, a change in income tax rates would result in an experience gain or loss that would affect closed block cash flows. </span></span></div></div>","snippet":"For simplicity, this Example assumes the closed block has not been funded for income taxes. In practice, the closed block may or may not be funded for income taxes. If the closed block is funded for income taxes, the act…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9e7efb00990664900cb2fc9d12dd8060350e15f051ab3c4bbfcd353724b1a23d","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"citation":"805-944-55-8","para":"55-8","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0B03ABB4-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The closed block business is assumed to be written in Year 1, with demutualization occurring at the end of Year 5. </span></span><span class=\"sfragment\" id=\"sfr_0B03ACD6-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Present values are assumed at a discount rate of 8.5 percent. </span></span></div></div>","snippet":"The closed block business is assumed to be written in Year 1, with demutualization occurring at the end of Year 5. Present values are assumed at a discount rate of 8.5 percent.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:56904d1143628254fbf70a84228bb1ae0f160cd8db4d3132be86213d8a16c281","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"citation":"805-944-55-9","para":"55-9","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0B03B68B-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">As discussed beginning in paragraph <a href=\"/asc/805/944/#805-944-25-10\" class=\"xref\">944-805-25-10</a>, the table in paragraph <a href=\"/asc/805/944/#805-944-55-10\" class=\"xref\">944-805-55-10</a> is based on the actuarial calculation for the closed block developed at the demutualization date and represents the 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> (closed block deficit) over the life of the closed block. </span></span><span class=\"sfragment\" id=\"sfr_0B03B79D-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The data in that table would be compared to actual results throughout the life of the closed block to determine the need for a policyholder dividend obligation. </span></span><span class=\"sfragment\" id=\"sfr_0B03B8F5-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">That table assumes an increase in interest rates in Year 6 from 8.5 percent to 9.5 percent, which results in the board of directors increasing dividends in Years 7 through 10. </span></span><span class=\"sfragment\" id=\"sfr_0B03B9FF-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The table assumes demutualization begins in Year 6. </span></span><span class=\"sfragment\" id=\"sfr_0B03BB3B-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">For purposes of the Example, </span></span><span class=\"sfragment\" id=\"sfr_0B03BC93-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">all other assumptions are held constant and </span></span><span class=\"sfragment\" id=\"sfr_0B03BDB2-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">expenses are assumed to be excluded from the closed block. </span></span></div></div>","snippet":"As discussed beginning in paragraph 944-805-25-10, the table in paragraph 944-805-55-10 is based on the actuarial calculation for the closed block developed at the demutualization date and represents the expected changes…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2d980591a41d4b62dc359ea1cc94af2ba952b6d88adcc6af7a498587b59a2ce8","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"citation":"805-944-55-10","para":"55-10","html":"<div class=\"asc-body\"><div class=\"norm-text\">Components of the illustrative closed block follow.<ul class=\"ul simple\" id=\"d3e31122-158570__GUID-1158DB70-CDE8-4607-87D5-019AEE7515F5\"><li class=\"li\" id=\"d3e31122-158570__SL117422852-158570\"><div class=\"p\"><div class=\"fig figure fignone\"><img src=\"/asc-img/GUID-96750B8C-37FC-48CE-98A0-ED519B7937ED-low.gif\" altsource=\"GUID-96750B8C-37FC-48CE-98A0-ED519B7937ED-low.gif\" loading=\"lazy\"><span class=\"sfragment\" id=\"sfr_0B03C8D7-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span><div class=\"figcaption\"> Year Premium Interest on Closed Block Assets Interest on Current Activity Death Benefits Incurred Surrender Benefits Incurred (Increase) Decrease in Net Level Premium Reserve Dividend Incurred (Increase) Decrease in Policyholder Dividend Obligation (a) (b) (c) (d) (e) (f) (g) (h) 1 \" $210,000 \" $- \" $17,850 \" \" $(9,000)\" $- \" $(126,103)\" \" $(18,857)\" $- 2 \" 184,611 \" \" 7,231 \" \" 15,692 \" \" (10,549)\" - \" (109,116)\" \" (21,399)\" - 3 \" 169,621 \" \" 7,846 \" \" 14,418 \" \" (13,731)\" \" (7,148)\" \" (93,669)\" \" (24,230)\" - 4 \" 155,763 \" \" 8,512 \" \" 13,240 \" \" (14,835)\" \" (14,984)\" \" (79,754)\" \" (26,574)\" - 5 \" 142,990 \" \" 9,236 \" \" 12,154 \" \" (15,661)\" \" (21,760)\" \" (67,117)\" \" (28,509)\" - 6 \" 131,222 \" \" 11,200 \" \" 12,466 \" \" (15,622)\" \" (17,237)\" \" (73,236)\" \" (30,043)\" \" (2,491)\" 7 \" 124,333 \" \" 17,839 \" \" 10,568 \" \" (16,578)\" \" (20,989)\" \" (66,499)\" \" (33,061)\" 549 8 \" 117,768 \" \" 24,819 \" \" 10,010 \" \" (16,824)\" \" (24,427)\" \" (60,005)\" \" (35,127)\" 595 9 \" 111,526 \" \" 31,298 \" \" 9,480 \" \" (17,526)\" \" (27,566)\" \" (53,706)\" \" (36,990)\" 646 10 \" 105,582 \" \" 37,266 \" \" 8,974 \" \" (18,603)\" \" (30,406)\" \" (47,485)\" \" (38,675)\" 701 11-20 \" 779,517 \" \" 585,648 \" \" 66,259 \" \" (311,112)\" \" (398,831)\" \" (162,077)\" \" (424,092)\" - 21-55 \" 589,392 \" \" 1,103,633 \" \" 50,099 \" \" (1,187,632)\" \" (686,079)\" \" 938,767 \" \" (669,668)\" - Total \" $2,822,325 \" \" $1,844,528 \" \" $241,210 \" \" $(1,647,673)\" \" $(1,249,427)\" $- \" $(1,387,225)\" $- Notes: (a)\tGross premiums. (b)\tInterest at 8.5 percent on the liability for future policy benefits at the end of the previous year. (c)\t\"Interest at 8.5 percent on current-year cash flow. This illustration assumes that premiums are received and all expenses are incurred at the start of the year. This illustration assumes that death benefits, surrender benefits, and dividends are all at the end of the year.\" (d)\tDeath benefits not reduced by related liability for future policy benefits. (e)\tSurrender benefits not reduced by related liability for future policy benefits. (f)\tRepresents the cumulative (increase) decrease in the liability for future policy benefits. (g)\tPolicyholder dividends for the year. (h)\tPolicyholder dividend obligation as of end of last year minus policyholder dividend obligation as of end of current year. </div></div></div></li></ul></div></div>","snippet":"Components of the illustrative closed block follow.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:497c0f8837767e01b573da2d5abecd7e87e1aa0dbade384a0c9c9e1cf4f03f42","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"citation":"805-944-55-11","para":"55-11","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_0B03CF63-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">For purposes of the table in paragraph <a href=\"/asc/805/944/#805-944-55-10\" class=\"xref\">944-805-55-10</a>, the product of the closed block policyholder dividend obligation calculation follows. </span></span><ul class=\"ul simple\" id=\"d3e31122-158570__GUID-203A52D5-BE04-4441-9BA9-8DF1926B6D73\"><li class=\"li\" id=\"d3e31122-158570__SL117422855-158570\"><div class=\"p\"><div class=\"fig figure fignone\"><img src=\"/asc-img/GUID-162A2E03-9916-4063-8215-49C4B1ACF713-low.gif\" altsource=\"GUID-162A2E03-9916-4063-8215-49C4B1ACF713-low.gif\" loading=\"lazy\"><span class=\"sfragment\" id=\"sfr_0B03D3D4-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"></span></span><div class=\"figcaption\">Actual as of Measurement Date \" $18,750 \" - Initial Actuarial Calculation \" $16,259 \" = Policyholder Dividend Obligation at Measurement Date \" $2,491 \" </div></div></div></li></ul></div></div>","snippet":"For purposes of the table in paragraph 944-805-55-10, the product of the closed block policyholder dividend obligation calculation follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a06deaf3787760c0791f2ff0d98c9cd6a8af04db73bb57c30a898af5b4a63d74","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"citation":"805-944-55-12","para":"55-12","html":"<div class=\"asc-body\"><div class=\"norm-text\"><a href=\"/updates/asu-2018-12/\" class=\"xref\">Paragraph superseded by Accounting Standards Update No. 2018-12</a>.</div></div>","snippet":"Paragraph superseded by Accounting Standards Update No. 2018-12.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3e88d7393f813a2ff78d9f9e0f09beaf074e074d207825f547d6c9d4c2e34434","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},{"citation":"805-944-55-13","para":"55-13","html":"<div class=\"asc-body\"><div class=\"norm-text\"><a href=\"/updates/asu-2018-12/\" class=\"xref\">Paragraph superseded by Accounting Standards Update No. 2018-12</a>.</div></div>","snippet":"Paragraph superseded by Accounting Standards Update No. 2018-12.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7a3c829bb0d5aa7d97eb9ad69d2ba691620a8bbc14da188f1da3cc218fca4ed9","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c8b528341ae5c163f0d9a92cc23954598388fe951fb77dc40cc6a7cc2e68d7d4","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c647d6b4f4c33055e86f4f0a3366b9e78df988da4578ad0a418ba947965672a3","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c647d6b4f4c33055e86f4f0a3366b9e78df988da4578ad0a418ba947965672a3","downloaded_from":"2026-09-10T01:27:03.516Z","last_downloaded_at":"2026-09-10T01:27:03.516Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477301","source_sha256":"007297060f80b1924cb99b93adec276bbff26525c3c2fd391a0d5a1bad4b4aee"}}