# ASC 815-944: Derivatives and Hedging — Financial Services—Insurance Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/815/944/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:40:24.221Z to 2026-09-10T01:40:44.205Z Record version: sha256:99d41acd81edcceea29a379ffb4eccff948d1b6df67047101cfa21fb8a830203 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-944: Derivatives and Hedging — Financial Services—Insurance ### Machine-generated study aids ```json { "summary": "This Subtopic applies Topic 815's derivative and hedging guidance to insurance entities, chiefly for long-duration contracts such as variable annuities. Its core rules are that a traditional variable annuity contract is not a hybrid instrument containing an embedded derivative requiring bifurcation (815-944-25-1 through 25-2), that the traditional variable annuity serves as the host contract for a nontraditional variable annuity whose other features (excluding market risk benefits) may be embedded derivatives (815-944-25-5), and that these conclusions are exceptions that may not be analogized to other structures (815-944-25-3, 25-6). It also illustrates when an insurer may apply cash flow hedge accounting to forecasted interest credited on surrenderable fixed-rate contracts.", "key_points": [ "Paragraph 815-944-25-1 confirms that traditional variable annuity structures contain no embedded derivatives warranting separate accounting under Subtopic 815-15, even though the insurer (not the policyholder) legally owns the separate account assets.", "Paragraph 815-944-25-2 lists indicators supporting non-hybrid treatment: special regulation of variable annuities, separate account assets insulated from general account liabilities, policyholder-directed investment and redirection, insurer required to invest in the referenced assets, account values based entirely on and all returns passed through from those investments, redeemability (subject to surrender charges), and voting rights in certain structures; and notes 944-80-25-3, 944-80-30-1, and 944-80-35-2 require a liability equal to the total fair value of separate account assets.", "Under 815-944-25-3 and 25-6, entities shall not analogize the traditional or nontraditional variable annuity conclusions to other seemingly similar structures because they are exceptions for insurance entities.", "Paragraph 815-944-25-5 treats the traditional variable annuity as the host contract of a nontraditional variable annuity; nontraditional features other than market risk benefits may be embedded derivatives subject to Subtopic 815-15.", "Paragraphs 815-944-55-1 through 55-3 permit cash flow hedge accounting for the forecasted future interest credited on fixed-rate surrenderable contracts (including voluntarily increased rates on existing contracts and rates on replacement contracts), provided the hedged interest relates to a volume of contracts whose existence at future crediting dates is probable.", "Per 815-944-55-4 (citing 815-20-25-16), the forecasted crediting of interest must be probable but the variability need only be possible; the derivative must still be highly effective at offsetting cash flows attributable to the hedged risk when variability occurs, and 815-944-55-5 warns effectiveness is hard to demonstrate because rate increases are discretionary.", "Section 60 cross-references other guidance, including dual-trigger property and casualty and financial guarantee contracts (815-10-55-37 through 55-40; 815-10-55-32 through 55-36), synthetic GICs (815-10-55-63), market value annuity prepayment options (815-15-55-120 through 55-127), annuity payment alternatives (815-15-55-58), and modified coinsurance receivables (815-15-55-107 through 55-109)." ], "categories": [ "Derivatives and hedging", "Industry-specific", "Financial instruments", "Recognition" ], "audience_level": "advanced", "student_note": "The exam trap is assuming the variable annuity \"no embedded derivative\" conclusion is a general principle: it is an explicit exception that cannot be analogized to lookalike products, and nontraditional features layered on top of the traditional annuity host still require bifurcation analysis (other than market risk benefits, which follow Topic 944).", "related_topics": [ "815-15", "815-20", "944-20", "944-80", "944-40", "815-10" ], "key_concepts": [ "embedded derivative", "traditional variable annuity", "nontraditional variable annuity", "separate account", "host contract", "cash flow hedge", "long-duration contract", "market risk benefit" ] } ``` Source downloaded (UTC): 2026-09-10T01:40:24.221Z to 2026-09-10T01:40:24.221Z Record version: sha256:d93fec9f5030f1077632e1a4dfd2da20a67e0d19faddbc77613719e54a0ffc75 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-944-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/815/944/#00-status) SEC content: no ##### [815-944-00-1](https://asc.understandingaccounting.org/asc/815/944/#815-944-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:24.221Z to 2026-09-10T01:40:24.221Z Record version: sha256:cf86dab2ff3bef024a94881dafa94fd84e37df5fb3cefc7d3a9cf27955c9372e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Market Risk BenefitAddedAccounting Standards Update No. 2018-1208/15/2018
944-815-25-2AmendedAccounting Standards Update No. 2012-0410/01/2012
944-815-25-4SupersededAccounting Standards Update No. 2018-1208/15/2018
944-815-25-5AmendedAccounting Standards Update No. 2018-1208/15/2018
944-815-60-3SupersededAccounting Standards Update No. 2018-1208/15/2018
944-815-60-6AmendedAccounting Standards Update No. 2018-1208/15/2018
944-815-60-7SupersededAccounting Standards Update No. 2018-1208/15/2018
Source downloaded (UTC): 2026-09-10T01:40:28.000Z to 2026-09-10T01:40:28.000Z Record version: sha256:6d3764d95520b5b550e2bc2bba5e6bbc9b4b8a77c26c983e1a8d27dd4fefb81c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-944-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/815/944/#05-overview-and-background) SEC content: no ##### [815-944-05-1](https://asc.understandingaccounting.org/asc/815/944/#815-944-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:28.000Z to 2026-09-10T01:40:28.000Z Record version: sha256:67f827268ca74d93f53e30110145d8f7fef2425561c47b314a69248d39bc64c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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: 1. a General 2. b Long-Duration Contracts. ##### [815-944-05-1A](https://asc.understandingaccounting.org/asc/815/944/#815-944-05-1A) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:28.000Z to 2026-09-10T01:40:28.000Z Record version: sha256:7d18eeb15da026e34acbfbbe86b5a4714076bffd06c8008cb889690c37e57cf6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ### Long-Duration Contracts ##### [815-944-05-2](https://asc.understandingaccounting.org/asc/815/944/#815-944-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:28.000Z to 2026-09-10T01:40:28.000Z Record version: sha256:72e60204a441bb4f43aea5d4fa191a4b9431d37637af1c44a740773b30253529 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:40:30.197Z to 2026-09-10T01:40:30.197Z Record version: sha256:30163d88db1b4f0c1a252554b5ec85a6798527168d2ad4ca96e73844077a657c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-944-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/815/944/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [815-944-15-1](https://asc.understandingaccounting.org/asc/815/944/#815-944-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:30.197Z to 2026-09-10T01:40:30.197Z Record version: sha256:77f0b3c71f94930328429f052c2840628e1bc0b15c3d97ff9487c7c500833801 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 944-10-15. ### Long-Duration Contracts ##### [815-944-15-2](https://asc.understandingaccounting.org/asc/815/944/#815-944-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:30.197Z to 2026-09-10T01:40:30.197Z Record version: sha256:f962740bd173420442c71682a0a27625a83e3e79ef930c624a7e79418668ad5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/815/944/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [815-944-15-3](https://asc.understandingaccounting.org/asc/815/944/#815-944-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:30.197Z to 2026-09-10T01:40:30.197Z Record version: sha256:4858c19a6c70d9c0a561b05fcfad4a26f3d40bcb2433cab797a18dcce172ec36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15. Source downloaded (UTC): 2026-09-10T01:40:37.969Z to 2026-09-10T01:40:37.969Z Record version: sha256:830d82adf2929a724435525fdcf07d2b2e2273f86fb3e82eba583a90c2d80e89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-944-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/815/944/#25-recognition) SEC content: no ### Long-Duration Contracts #### Traditional Variable Annuity Product Structures ##### [815-944-25-1](https://asc.understandingaccounting.org/asc/815/944/#815-944-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:37.969Z to 2026-09-10T01:40:37.969Z Record version: sha256:ef1d734700b04a046744c48ad223eda910151372a9f9994d83b71038f82d7ce6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In concluding that certain [traditional variable annuity](https://asc.understandingaccounting.org/glossary/t/#traditional-variable-annuity "An insurance product in which all the contract holder's payments are used to purchase units of a separate account.") product structures (see paragraph [944-20-05-18](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-18)) do not contain embedded derivatives, paragraph [815-15-55-55(b) through (c)](https://asc.understandingaccounting.org/asc/815/15/#815-15-55-55) does not refer to ownership of the assets specifically resting with either the policyholder or the insurer. While the policyholder is entitled to direct the investment of premiums into various approved funds, the insurance entity actually owns the investments. The guidance in (b) and (c) in that paragraph that a traditional variable annuity contract contains no embedded derivatives that warrant separate accounting under Subtopic 815-15 remains valid even though the insurer, rather than the policyholder, actually owns the assets. ##### [815-944-25-2](https://asc.understandingaccounting.org/asc/815/944/#815-944-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:37.969Z to 2026-09-10T01:40:37.969Z Record version: sha256:50bcf94ee99454b12d440b3c7aa7f57de8e06d44c53323389bf91eaab7992c42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following indicators provide the basis for concluding that a traditional variable annuity contract is not a hybrid instrument to be accounted for under paragraph [815-15-25-1](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-1): 1. a The [variable annuity contract](https://asc.understandingaccounting.org/glossary/v/#variable-annuity-contract "An annuity in which the amount of payments to be made are specified in units, rather than in dollars. When payment is due, the amount is determined based on the value of the investments in the annuity fund.") is established, approved, and regulated under special rules applicable to variable annuities, such as state insurance laws, securities laws, and tax laws. 2. b The assets underlying the contract are insulated from the [general account](https://asc.understandingaccounting.org/glossary/g/#general-account "All operations of an insurance entity that are not reported in the separate account(s).") liabilities of the insurance entity; that is, the policyholder is not subject to insurer default risk to the extent of the assets held in the [separate account](https://asc.understandingaccounting.org/glossary/s/#separate-account "A separate investment account established and maintained by an insurance entity under relevant state insurance law to which funds have been allocated for certain contracts of the insurance entity or similar accounts used for foreign originated products. The term separate accounts includes separate accounts and subaccounts or investment divisions of separate accounts."). 3. c The policyholder's premium is invested in contract-approved separate accounts at the policyholder's direction. 4. d The insurer must invest in the assets on which the account values are based. 5. e The policyholder may redirect its investment among the contract-approved investment options. 6. f The account values are based entirely on the performance of those directed investments. 7. g All investment returns are passed through to the policyholder, including dividends, interest, gains, and losses. 8. h The policyholder may redeem its interests at any time; however, it may be subject to [surrender charges](https://asc.understandingaccounting.org/glossary/s/#surrender-charges "Amounts expected to be assessed against policyholder balances at contract redemption, whole or partial, regardless of how the charges are labeled, such as contingent deferred sales charges."). 9. i The policyholder has voting rights in certain separate account structures. In addition, although the liability to policyholders is not specifically required by the Financial Services—Insurance Topic to be remeasured at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "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.") with changes reported in earnings, paragraphs [944-80-25-3](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-3), [944-80-30-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-30-1), and [944-80-35-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-2) require that an entity record a liability for traditional variable annuity contracts equal to the summary total of the fair value of the assets held in the separate account for the policyholders. ##### [815-944-25-3](https://asc.understandingaccounting.org/asc/815/944/#815-944-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:37.969Z to 2026-09-10T01:40:37.969Z Record version: sha256:5acdf7789bdf88407c00daaa07503f8df11028c54c87674278b1b2914bec6531 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [815-944-25-4](https://asc.understandingaccounting.org/asc/815/944/#815-944-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:37.969Z to 2026-09-10T01:40:37.969Z Record version: sha256:25fc58ed70851c3f4288b86a6b1ec594306bd36d7f414371770a30b5649728d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). #### Nontraditional Variable Annuity Contracts ##### [815-944-25-5](https://asc.understandingaccounting.org/asc/815/944/#815-944-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:37.969Z to 2026-09-10T01:40:37.969Z Record version: sha256:4c57e2b01ddc96becf78f7f76ff9bd52d8cbe38f51115bf599d685f259608aa1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The host contract in a nontraditional variable annuity contract would be considered the traditional variable annuity that, as described in paragraph [944-815-25-1](https://asc.understandingaccounting.org/asc/815/944/#815-944-25-1), does not contain an embedded derivative that warrants separate accounting. Certain nontraditional features other than [market risk benefits](https://asc.understandingaccounting.org/glossary/m/#market-risk-benefit "A contract or contract feature in a long-duration contract issued by an insurance entity that both protects the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk.") may be considered embedded derivatives subject to the requirements of Subtopic 815-15. ##### [815-944-25-6](https://asc.understandingaccounting.org/asc/815/944/#815-944-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:37.969Z to 2026-09-10T01:40:37.969Z Record version: sha256:5a25695d07113c665e17f77b078c58729ce39280460812ae0c084cd07d993863 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:40:41.496Z to 2026-09-10T01:40:41.496Z Record version: sha256:47a6d3737ca5b637665b3dbb19edf716432ca99e9fd76cfc8b2b3535e6e5e648 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-944-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/815/944/#55-implementation-guidance-and-illustrations) SEC content: no ### Long-Duration Contracts #### Implementation Guidance ##### [815-944-55-1](https://asc.understandingaccounting.org/asc/815/944/#815-944-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:41.496Z to 2026-09-10T01:40:41.496Z Record version: sha256:d7c730404d47ad8ca7c0e9a6f382c473c11993c38fce3774239280cdceb71f9f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some insurance contracts (for example, certain whole life policies, universal life policies, repetitive premium variable annuities, and single premium deferred annuities) contain an option allowing the policyholder to put (surrender) the contract to the issuer at contract value. Those contracts, which are not carried at [fair value](https://asc.understandingaccounting.org/glossary/f/#fair-value "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.") by the issuer, bear interest at a fixed rate. ##### [815-944-55-2](https://asc.understandingaccounting.org/asc/815/944/#815-944-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:41.496Z to 2026-09-10T01:40:41.496Z Record version: sha256:cc6e10f9e29a8f1aff9c991cde6368f1a201ec26ff24d9d921513ad2c06950b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The issuer is exposed to the risk that an increase in market interest rates will cause the policyholder to exercise its put. Accordingly, the issuer may voluntarily increase the contractual rate on the contract to forestall the policyholder's exercising its put. As a result, the issuer wants to hedge the risk of an increase in future interest cash flows due to an increase in interest rates associated with either of the following circumstances: 1. a The issuer's voluntary increase in the contractual interest rate on existing fixed-rate contracts 2. b The policyholder's exercise of its put option and the insurance entity's issuance of new higher fixed-rate contracts to new policyholders. ##### [815-944-55-3](https://asc.understandingaccounting.org/asc/815/944/#815-944-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:41.496Z to 2026-09-10T01:40:41.496Z Record version: sha256:0cccab471a1d7237da7ebee56472c66c98f20ba4dc51953284956768fa52b260 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subtopic 815-20 would permit an insurance entity to qualify for cash flow hedge accounting if it is hedging the possibility that it may need to voluntarily increase the interest rate used to credit interest on certain contract liabilities. Under the cash flow hedging model, the hedged forecasted transactions would be the future interest credited on its then-existing contracts. The hedged forecasted transactions for each interest crediting date could include both the future interest credited on older contracts whose contractual rate has been voluntarily increased and the future interest credited on new contracts with the current higher interest rate issued to new policyholders (which will have replaced older contracts that have been surrendered). In defining the forecasted transactions, the insurance entity shall ensure that the hedged interest relates to a volume of contracts whose existence at the future interest crediting dates is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur."). ##### [815-944-55-4](https://asc.understandingaccounting.org/asc/815/944/#815-944-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:41.496Z to 2026-09-10T01:40:41.496Z Record version: sha256:1326c51e4ef3f373b66a44f856cea8b4e39b89338c5c0c66b3451270146c614c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In designating the hedged risk, the insurance entity should decide whether it is hedging the total variability in those future interest payments or just the variability in the future interest attributable to changes in the designated benchmark interest rate. Although the occurrence of the forecasted transactions (that is, the crediting of interest) must be probable, paragraph [815-20-25-16](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-16) states that the cash flow hedging model does not require that it be probable that any variability in the hedged transaction will actually occur—that is, in a cash flow hedge, the variability in future cash flows must be a possibility, but not necessarily a probability. However, paragraph [815-20-25-16](https://asc.understandingaccounting.org/asc/815/20/#815-20-25-16) states that the hedging derivative must be highly effective at achieving offsetting cash flows attributable to the hedged risk whenever that variability in future interest does occur. ##### [815-944-55-5](https://asc.understandingaccounting.org/asc/815/944/#815-944-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:41.496Z to 2026-09-10T01:40:41.496Z Record version: sha256:eb97863633688d1b6492180db6e9726f8d8208213e1ce6ade20b79ea6d5f1d3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:40:44.205Z to 2026-09-10T01:40:44.205Z Record version: sha256:2c151cc0daa1358ee54fc73ef61c07df43bd92e8244c177eddd3961aa0163035 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-944-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/815/944/#60-relationships) SEC content: no ### Short-Duration Contracts #### Derivatives and Hedging ##### [815-944-60-1](https://asc.understandingaccounting.org/asc/815/944/#815-944-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:44.205Z to 2026-09-10T01:40:44.205Z Record version: sha256:7476040a69f70a6c6a07c2159973ae9f4481af6902dba7d9916fe9c04e045782 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 [815-10-55-37 through 55-40](https://asc.understandingaccounting.org/asc/815/10/#815-10-55-37) . ##### [815-944-60-2](https://asc.understandingaccounting.org/asc/815/944/#815-944-60-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:44.205Z to 2026-09-10T01:40:44.205Z Record version: sha256:c225d7f04d3225a50e799eb382bab141220d8566bebe64c46fac1fd1e3a0924a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on applying the scope exception in paragraph [815-15-15-10](https://asc.understandingaccounting.org/asc/815/15/#815-15-15-10) during the period between the inception of the contract and the loss occurrence, see paragraphs [815-15-55-1 through 55-4](https://asc.understandingaccounting.org/asc/815/15/#815-15-55-1) . ### Long-Duration Contracts ##### [815-944-60-3](https://asc.understandingaccounting.org/asc/815/944/#815-944-60-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:44.205Z to 2026-09-10T01:40:44.205Z Record version: sha256:66a5381795822647b89b71bcc1fa080dd5ec10e95eea86637309fe87573b94ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [815-944-60-4](https://asc.understandingaccounting.org/asc/815/944/#815-944-60-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:44.205Z to 2026-09-10T01:40:44.205Z Record version: sha256:fb24b152bc8a3c9faa9877a985f58d5944ec2cb39e2f5b178a9b89cecaed0b34 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on synthetic guaranteed investment contracts, see paragraph [815-10-55-63](https://asc.understandingaccounting.org/asc/815/10/#815-10-55-63). ##### [815-944-60-5](https://asc.understandingaccounting.org/asc/815/944/#815-944-60-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:44.205Z to 2026-09-10T01:40:44.205Z Record version: sha256:508c8685eabc131abb8df2b84bd97171d97fff85abc5ad9f759cc3331d8cc7a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the economic characteristics and risks of the market adjusted value prepayment option in a market value annuity contract, see paragraphs [815-15-55-120 through 55-127](https://asc.understandingaccounting.org/asc/815/15/#815-15-55-120) . ##### [815-944-60-6](https://asc.understandingaccounting.org/asc/815/944/#815-944-60-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:44.205Z to 2026-09-10T01:40:44.205Z Record version: sha256:1a34f76115e1f91fb59ea54067aa399667698fa8f4f1c2128aea22b05c282b1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on common annuity payment alternatives, see paragraph [815-15-55-58](https://asc.understandingaccounting.org/asc/815/15/#815-15-55-58). ##### [815-944-60-7](https://asc.understandingaccounting.org/asc/815/944/#815-944-60-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:44.205Z to 2026-09-10T01:40:44.205Z Record version: sha256:36868a0d74c581e6e6508e31a953e2555bf6818c0b95bcb26fb91c6787f59014 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [815-944-60-8](https://asc.understandingaccounting.org/asc/815/944/#815-944-60-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:44.205Z to 2026-09-10T01:40:44.205Z Record version: sha256:95cb379ba3e4260f277d152db8d68026302c8f36cbdaae9ce49ca9fcb1b8a0d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on a reinsurer's receivable arising from a modified coinsurance arrangement, see paragraphs [815-15-55-107 through 55-109](https://asc.understandingaccounting.org/asc/815/15/#815-15-55-107) . ### Financial Guarantee Insurance Contracts ##### [815-944-60-9](https://asc.understandingaccounting.org/asc/815/944/#815-944-60-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:40:44.205Z to 2026-09-10T01:40:44.205Z Record version: sha256:66e2305277dc982f9db6b48fc74f630debe6037beacc90b9a10b6cc13c78bb69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the payment of a claim under a dual-trigger financial guarantee insurance contract, see paragraphs [815-10-55-32 through 55-36](https://asc.understandingaccounting.org/asc/815/10/#815-10-55-32) .