The following table identifies the changes made to this Subtopic.
Topic
815 provides guidance on accounting for and financial reporting of derivative instruments and hedging activities. This Subtopic includes guidance on some specific issues. The guidance in this Subtopic is presented in the following two Subsections:
- a
General
- b
Long-Duration Contracts.
The Short-Duration Contracts Subsections of this Subtopic provide insurance entities with references in Section
944-815-60 to guidance on accounting for and financial reporting of derivative instruments and hedging activities involving short-duration contracts.
The Long-Duration Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of derivative instruments and hedging activities involving long-duration contracts.
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section
944-10-15.
The Long-Duration Contracts Subsections follow the same Scope and Scope Exceptions as outlined in the
General Subsection of this Section, with specific instrument qualifications noted below.
The guidance in the Long-Duration Contracts Subsections of this Subtopic applies only to long-duration insurance contracts. For guidance on identifying a long-duration insurance contract, see the
Long-Duration Contracts Subsection of Section 944-20-15.
In determining the accounting for other seemingly similar structures, an entity shall not analogize to the guidance in the preceding paragraph due to the unique attributes of traditional variable annuity contracts and the fact that the guidance in that paragraph can be viewed as an exception for traditional variable annuity contracts issued by insurance entities.
In determining the accounting for other seemingly similar structures, an entity shall not analogize to the guidance in the preceding paragraph due to the unique attributes of nontraditional variable annuity contracts and the fact that the guidance in that paragraph can be viewed as an exception for nontraditional variable annuity contracts issued by insurance entities.
An insurance entity may find it difficult to identify a derivative instrument that will qualify for cash flow hedge accounting, which requires that the hedging relationship be expected to be highly effective in achieving offsetting cash flows attributable to the hedged risk. Because the decision to adjust the interest rate to match the change in interest rates is at the discretion of the insurance entity, it may be difficult to conclude that the changes in the hedged interest payments attributable to the hedged risk will be sufficiently correlated with changes in the cash flows of the hedging derivative.
For guidance on property and casualty insurance contracts for which payment of a benefit or claim is triggered by the occurrence of both an insurable event and changes in a separate pre-identified variable that contain an embedded derivative instrument, see paragraphs
.
For guidance on applying the scope exception in paragraph
815-15-15-10 during the period between the inception of the contract and the loss occurrence, see paragraphs
.
For guidance on synthetic guaranteed investment contracts, see paragraph
815-10-55-63.
For guidance on the economic characteristics and risks of the market adjusted value prepayment option in a market value annuity contract, see paragraphs
.
For guidance on common annuity payment alternatives, see paragraph
815-15-55-58.
For guidance on a reinsurer's receivable arising from a modified coinsurance arrangement, see paragraphs
.
For guidance on the payment of a claim under a dual-trigger financial guarantee insurance contract, see paragraphs
.