# ASC 944-20-15: Financial Services—Insurance — Insurance Activities — 15 Scope and Scope Exceptions Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) 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): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a775426c09ddc2293e8ba943a69d825f8b8ff6de3021b719ed3cd9dde4497f25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [944-20-15-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:ec98564ef16b0f8d0977ee0d927d863c519610b1afeccabb9471abdae671648d 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, with other considerations noted below. #### Other Considerations ##### [944-20-15-1A](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-1A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:77377e5b6c2af8361feb6cd414c0f7fe1cbf4a4b2173ee0d53e3ac39c491f56c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For instruments and transactions within its scope, the guidance in the Financial Guarantee Insurance Contracts Subsections take precedence to other guidance in this Subtopic. ##### [944-20-15-1B](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-1B) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:ed4ade5e9e2cba0c547c6e8c5446da9da2ed83a1508bd27e5a498e30cbbaa18e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [720-20-25-1](https://asc.understandingaccounting.org/asc/720/20/#720-20-25-1) states that, to the extent that an insurance contract or [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "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.") contract does not, despite its form, provide for indemnification of the insured or the [ceding entity](https://asc.understandingaccounting.org/glossary/c/#ceding-entity "The party that pays a reinsurance premium in a reinsurance transaction. The ceding entity receives the right to reimbursement from the assuming entity under the terms of the reinsurance contract.") by the issuer or reinsurer against loss or liability, the premium paid less the amount of the premium to be retained by the insurer or reinsurer shall be accounted for as a deposit by the insured or the ceding entity. See paragraph [340-30-05-1](https://asc.understandingaccounting.org/asc/340/30/#340-30-05-1) for guidance on applying the deposit method of accounting. For guidance on long-duration contracts that do not incorporate significant insurance risk, see paragraph [944-20-15-14](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-14). ##### [944-20-15-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:59d4be6cf2571dc48119286e077071c2946386057ace7b4903af2f9bc2fdef62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance contracts, for purposes of this Subtopic, shall be classified as short-duration contracts (see paragraph [944-20-15-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-7)) or long-duration contracts (see paragraph [944-20-15-10](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-10)) depending on whether the contracts are expected to remain [in force](https://asc.understandingaccounting.org/glossary/i/#in-force "Policies and contracts written and recorded on the books of an insurance carrier that are unexpired as of a given date.") for an extended period. ##### [944-20-15-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:4fa7235cc130b6de23b89a177c020334f9797fa584df2314f7b3cf67254a0efb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain guidance in the Long-Duration Subsections in this Subtopic (and other Subtopics within the Financial Services—Insurance Topic) applies only to certain long-duration participating life insurance contracts of mutual life insurance entities and certain stock life insurance entities. For purposes of that guidance: 1. a Mutual life insurance entities include [assessment entities](https://asc.understandingaccounting.org/glossary/a/#assessment-entities "An insurance entity that sells insurance to groups with similar interests, such as church denominations or professional groups. Some assessment entities also sell insurance directly to the general public. If funds are not sufficient to pay claims, then assessments may be made against members."), [fraternal benefit societies](https://asc.understandingaccounting.org/glossary/f/#fraternal-benefit-society "An entity that provides life or health insurance to its members and their beneficiaries. Policyholders normally participate in the earnings of the society, and insurance contracts stipulate that the society has the power to assess its members if the funds available for future policy benefits are not sufficient to provide for benefits and expenses."), and stock life insurance subsidiaries of mutual life insurance entities. 2. b Participating life insurance contracts denote those that have both of the following characteristics: 1. 1 They are long-duration participating contracts that are expected to pay [dividends to policyholders](https://asc.understandingaccounting.org/glossary/d/#dividend-to-policyholders "Nonguaranteed amounts distributable to policyholders of participating life insurance contracts and based on actual performance of the insurance entity as determined by the insurer. Under various state insurance laws, dividends are apportioned to policyholders on an equitable basis. The dividend allotted to any contract often is based on the amount that the contract, as one of a class of similar contracts, has contributed to the income available for distribution as dividends. Dividends to policyholders include annual policyholder dividends and terminal dividends.") based on actual experience of the insurance entity. 2. 2 [Annual policyholder dividends](https://asc.understandingaccounting.org/glossary/a/#annual-policyholder-dividends "Amount of dividends to policyholders calculated and paid each year, representing the policyholders' share of divisible surplus.") are paid in a manner that both: 1. a Identifies divisible surplus 2. b Distributes that surplus in approximately the same proportion as the contracts are considered to have contributed to divisible surplus (commonly referred to in actuarial literature as the contribution principle). ##### [944-20-15-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:3479de451f94a4c120d398c2e5817746708c6aca8daaeb00d57f844b7fc2ff27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-11](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-11) states that stock life insurance entities with participating life insurance contracts that meet certain conditions are permitted to account for those contracts in accordance with the Long-Duration Contracts Subsections of this Subtopic. That paragraph explains that the same accounting policy shall be applied consistently to all those participating life insurance contracts. ### Short-Duration Contracts #### Overall Guidance ##### [944-20-15-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:89ad6b1d8cc261fc0532599d5abc0bc6a9b1e6528a4ac81b35ae3789192bd1f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Short-Duration Contracts Subsections follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications and exceptions noted below. #### Instruments ##### [944-20-15-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a7db8cae3840863b9b9a78715ed2f747a90869357feece465eeee870a7bc6253 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Short-Duration Contracts Subsections of this Subtopic applies only to short-duration contracts. ##### [944-20-15-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:2e7f18c24f1946af6698f01d4a01ff2634e8ffc97006cb23c0d9f2313c484de2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-2) states that insurance contracts, for purposes of this Subtopic, shall be classified as short-duration contracts or long-duration contracts depending on whether the contracts are expected to remain [in force](https://asc.understandingaccounting.org/glossary/i/#in-force "Policies and contracts written and recorded on the books of an insurance carrier that are unexpired as of a given date.") for an extended period. The factors that shall be considered in determining whether a particular contract can be expected to remain in force for an extended period are as follows for a short-duration contract: 1. a The contract provides insurance protection for a fixed period of short duration. 2. b The contract enables the insurer to cancel the contract or to adjust the provisions of the contract at the end of any [contract period](https://asc.understandingaccounting.org/glossary/c/#contract-period "The period over which insured events that occur are covered by insurance or reinsurance contracts. Commonly referred to as the coverage period or period that the contracts are in force."), such as adjusting the amount of premiums charged or [coverage](https://asc.understandingaccounting.org/glossary/c/#coverage "An insurance entity's exposure to loss. The concept of coverage would typically include policy limits, deductible, insured, and covered property or insured event.") provided. ### Long-Duration Contracts #### Overall Guidance ##### [944-20-15-8](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:03aba7343d536348297d84eb8f4e738da1e60aeae7c6d5bb83461d3a905cadff 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/944/20/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications and exceptions and other considerations noted below. #### Instruments ##### [944-20-15-9](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:3c93d77c9bacc622a3c49de38168e0bdb6fa3e842e3821edc875adeefcefa0f8 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 contracts. ##### [944-20-15-10](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:0650b1685ea9cff5b9d88518f5aa2880284dd019e7d3206a7feb52a784635b1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-2) states that insurance contracts, for purposes of this Subtopic, shall be classified as short-duration contracts or long-duration contracts depending on whether the contracts are expected to remain [in force](https://asc.understandingaccounting.org/glossary/i/#in-force "Policies and contracts written and recorded on the books of an insurance carrier that are unexpired as of a given date.") for an extended period. The factors that shall be considered in determining whether a particular contract can be expected to remain in force for an extended period are as follows for a long-duration contract: 1. a The contract generally is not subject to unilateral changes in its provisions, such as a noncancelable or guaranteed renewable contract. 2. b The contract requires the performance of various functions and services (including insurance protection) for an extended period. ##### [944-20-15-11](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:6a3260125d1ccf60b78bb05f8a1c30a31402662a9e787ab9d2169ac273836fef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Long-Duration Contracts Subsections of this Subtopic applies, in part, to the following classes of long-duration contracts issued: 1. a Universal life-type contracts, that is, long-duration insurance contracts with terms that are not fixed and guaranteed 2. b [Limited-payment contracts](https://asc.understandingaccounting.org/glossary/l/#limited-payment-contracts "Long-duration insurance contracts with terms that are fixed and guaranteed, and for which premiums are paid over a period shorter than the period over which benefits are provided. Limited-payment contracts subject the insurer to risks arising from policyholder mortality and morbidity over a period that extends beyond the period or periods in which premiums are collected."), including limited-payment participating and limited-payment nonguaranteed-premium contracts that are not, in substance, universal life-type contracts 3. c Except as noted in paragraph [944-20-15-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-3), participating life insurance contracts 4. d [Whole-life contracts](https://asc.understandingaccounting.org/glossary/w/#whole-life-contract "Insurance that may be kept in force for a person's entire life by paying one or more premiums. It is paid for in one of three different ways: Ordinary life insurance (premiums are payable as long as the insured lives) Limited-payment life insurance (premiums are payable over a specified number of years) Single-premium life insurance (a lump-sum amount paid at the inception of the insurance contract). The insurance contract pays a benefit (contractual amount adjusted for items such as policy loans and dividends, if any) at the death of the insured. Whole-life insurance contracts also build up nonforfeiture benefits."), that is, insurance contracts that may be kept in force for a person's entire life by paying one or more premiums 5. e [Term life insurance](https://asc.understandingaccounting.org/glossary/t/#term-life-insurance "Insurance that provides a benefit if the insured dies within the period specified in the contract. The insurance is for level or declining amounts for stated periods, such as 1, 5, or 10 years, or to a stated age. Term life insurance generally has no loan or cash value.") contracts, that is, insurance contracts that provide a benefit if the insured dies within the period specified in the contract. Stock life insurance entities with participating life insurance contracts described in (c) are permitted to account for those contracts in accordance with the Long-Duration Contracts Subsections of this Subtopic. The same accounting policy shall be applied consistently to all those participating life insurance contracts. ##### [944-20-15-12](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:caa98e2ed1e838894f6e81d8fb0dc71ecb3b4ae32992010a37b51b1e062f014d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If insurance contracts have characteristics significant to the contracts cited in (a) or (b) of the preceding paragraph those contracts are within the scope of the Long-Duration Contracts Subsections of this Subtopic. For example, universal disability contracts that have many of the same characteristics as universal life-type contracts, with the exception of providing disability benefits instead of life insurance benefits, shall be accounted for in a manner consistent with universal life-type contracts. ##### [944-20-15-13](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:bed2401f33d6ef120b45b603251ad87f2131184a626d9ccbbae716df62986d63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Subsections of this Subtopic also apply to certain contracts or features not covered elsewhere in the Codification, including asset, liability, revenue, and expense recognition. Examples of such contracts or features include the following: 1. a Contracts offered through an insurance entity's separate accounts 2. b Variable annuities with a [minimum guaranteed death benefit](https://asc.understandingaccounting.org/glossary/m/#minimum-guaranteed-death-benefit "A feature in an annuity, life insurance, or similar contract that provides that in the event of an insured's death, the beneficiary (or insurer in the case of a reinsurance contract) will receive the higher of the current account balance of the contract or another amount defined in the contract.") or a [guaranteed minimum accumulation benefit](https://asc.understandingaccounting.org/glossary/g/#guaranteed-minimum-accumulation-benefit "A minimum accumulation benefit or a guaranteed account value floor that is available to a deferred annuity contract holder in cash.") 3. c Variable annuities with a [guaranteed minimum income benefit](https://asc.understandingaccounting.org/glossary/g/#guaranteed-minimum-income-benefit "A guarantee that, regardless of account balance performance, the contract holder will be able to annuitize after a specified date and receive a defined minimum periodic benefit. These benefits are available only if the contract holder elects to annuitize.") 4. d Contracts providing multiple account balances 5. e Contracts with [sales inducements](https://asc.understandingaccounting.org/glossary/s/#sales-inducements "Contractually obligated inducements that are identified explicitly in a contract and are in excess of current market conditions. A sales inducement to a contract holder enhances the investment yield to the contract holder. The three main types of sales inducements are an immediate bonus, a persistency bonus, and an enhanced-crediting-rate bonus."). ##### [944-20-15-14](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:fead288f6982d371d20168c60ce747baacd28e7e1f7a06ecb937334be3ee0f53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Long-Duration Subsections of this Subtopic does not apply to [investment contracts](https://asc.understandingaccounting.org/glossary/i/#investment-contracts "Long-duration contracts that do not subject the insurance entity to risks arising from policyholder mortality or morbidity.") issued by an insurance entity that do not incorporate significant [insurance risk](https://asc.understandingaccounting.org/glossary/i/#insurance-risk "The risk arising from uncertainties about both underwriting risk and timing risk. Actual or imputed investment returns are not an element of insurance risk. Insurance risk is fortuitous; the possibility of adverse events occurring is outside the control of the insured.") and shall not be accounted for as insurance contracts. See paragraph [944-825-25-2](https://asc.understandingaccounting.org/asc/825/944/#825-944-25-2) for investment contracts. #### Other Considerations ##### [944-20-15-15](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:141e9d0427a6e23f592f14b9bf652ef733b9f38674a6826795fa00141d7c6ea0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses the scope application of the Long-Duration Subsections of this Subtopic: 1. a Distinguishing investment contracts from universal life-type insurance contracts 2. b Universal life-type contracts 3. c Embedded derivatives. ##### [944-20-15-16](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:6f5e2125fcaded16c7bb122ce1e04d3f40c8384afa2e5011f2dd5035f14d6c23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place.") or [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment.") risk is present if, under the terms of the contract, the entity is required to make payments or forego required premiums contingent on the death or disability (in the case of life insurance contracts) or the continued survival (in the case of annuity contracts) of a specific individual or group of individuals. ##### [944-20-15-17](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:b867ec8ff3c8feeba896903b56103e5f191bac8b274db168b31f1c9992bcc2f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract provision that allows the holder of a long-duration contract to purchase an annuity at a guaranteed price on settlement of the contract does not entail a [mortality risk](https://asc.understandingaccounting.org/glossary/m/#mortality-risk "The obligation to make payments that are contingent upon the death or continued survival of a specific individual or group.") until the right to purchase is executed. If purchased, the annuity is a new contract to be evaluated on its own terms. ##### [944-20-15-18](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:8ee1bc4a4c60bc4f2315df10d11d82a7574989d2495921440aa4ff47795808fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Annuity contracts may require the insurance entity to make a number of payments that are not contingent on the survival of the beneficiary, followed by [life-contingent payments](https://asc.understandingaccounting.org/glossary/l/#life-contingent-payments "Payments that are made if the beneficiary is alive when the payments are due."). ##### [944-20-15-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:bee90753231b842b16d7de528e4cae3339c9adb88bafe99d71303c4f16fbeab7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Such contracts are considered insurance contracts under this Subtopic unless either of the following conditions exist: 1. a The probability that life-contingent payments will be made is [remote](https://asc.understandingaccounting.org/glossary/r/#remote "The chance of the future event or events occurring is slight."). 2. b The present value of the expected life-contingent payments relative to the present value of all expected payments under the contract is insignificant. ##### [944-20-15-20](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:8b471ed67a14127bf3cc4dc43148572454d0acbffbb8c72fcf890bcb796871cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To determine the scope application for a contract that contains death or other insurance benefit features, the insurance entity shall first determine whether the contract is an investment contract or insurance contract. Classification of a contract as an investment contract or as an insurance contract shall be made at contract inception, and the classification shall not be reassessed during the [accumulation phase](https://asc.understandingaccounting.org/glossary/a/#accumulation-phase "The period during an annuity contract before annuitization. An insurance entity may call an annuity having an accumulation phase a deferred annuity.") of the contract. ##### [944-20-15-21](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:82daef5fd6e0ef9865188c1aae01315fbce8edd3cb3bd3385e9f23c74d17745b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the mortality and morbidity risk associated with insurance benefit features offered in a contract is deemed to be nominal—that is, a risk of insignificant amount or remote probability—the contract shall be classified as an investment contract; otherwise, it shall be considered an insurance contract. There is a rebuttable presumption that a contract has significant mortality risk if the additional insurance benefit would vary significantly in response to capital markets volatility. ##### [944-20-15-22](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:4bfb7deed4fa75b5a4ddbab3cdc22a15db1880ff067f812507eee327375e8147 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the mortality or morbidity risk is other than nominal and the fees assessed or insurance benefits are not fixed and guaranteed, the contract should be classified as a universal life-type contract by the insurance entity. ##### [944-20-15-23](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:0e09f3e91303f0402466bfd2567d6a70427fbc7d779bdf3d458b30f2ce251ca3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the fees assessed on a contract and insurance benefits provided by the contract are fixed and guaranteed or if the contract is short duration, the contract should be classified as a traditional long-duration contract or short-duration contract, respectively. ##### [944-20-15-24](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a2bae51f5ea7e7b523ad67ed2c56eae2133c5de8288f978f9a92e9ecd9a806d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The determination of the significance of mortality or morbidity risk shall be based on a comparison of the following amounts: 1. a Excess payments. The present value of expected excess payments to be made under insurance benefit features—that is, insurance benefit amounts and related incremental [claim adjustment expenses](https://asc.understandingaccounting.org/glossary/c/#claim-adjustment-expenses "Expenses incurred in the course of investigating and settling claims.") in excess of the account balances. 2. b Revenue. The present value of all amounts expected to be assessed against the contract holder and the expected investment margin. ##### [944-20-15-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:5fe5b95a925364da5d07b4f5671bfad5da07b9e8f98f89269140a7ef9fc5722d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In performing the analysis, an insurance entity shall consider both frequency and severity under a full range of scenarios that considers the volatility inherent in the assumptions, rather than making a best estimate using one set of assumptions. For example, if the [annuity contract](https://asc.understandingaccounting.org/glossary/a/#annuity-contract "A contract that provides fixed or variable periodic payments made from a stated or contingent date and continuing for a specified period, such as for a number of years or for life.") is a [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."), the insurance entity shall consider a range of fund return scenarios. If considering a range of scenarios, the insurance entity shall consider historical investment returns, the volatility of those returns, and expected future returns, as applicable. ##### [944-20-15-26](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:95986c932648e12c214b101002f59ca239ab0a717ab14eceed3e7dab7541bb82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of the scope application of the Long-Duration Subsections of this Subtopic, universal life-type contracts include contracts that provide either death or annuity benefits and are characterized by any of the following features: 1. a One or more of the amounts assessed by the insurer against the policyholder—including amounts assessed for mortality [coverage](https://asc.understandingaccounting.org/glossary/c/#coverage "An insurance entity's exposure to loss. The concept of coverage would typically include policy limits, deductible, insured, and covered property or insured event."), contract administration, initiation, or surrender—are not fixed and guaranteed by the terms of the contract. 2. b Amounts that accrue to the benefit of the policyholder—including interest accrued to policyholder balances—are not fixed and guaranteed by the terms of the contract. 3. c Premiums may be varied by the policyholder within contract limits and without consent of the insurer. ##### [944-20-15-27](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:cb23a1f5ae20e30e832bc9364217f483b2fcf4c612b2f5ef9908c03bca11fd65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A participating or nonguaranteed-premium contract is within the scope of the Long-Duration Subsections of this Subtopic if the terms of the contract suggest that it is, in substance, a universal life-type contract. The determination that a contract is in substance a universal life-type contract requires judgment and a careful examination of all contract terms. ##### [944-20-15-28](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:ca8165cba89c3f1691b14b4269e909aa165277abc0bba741003554de45af6298 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following two paragraphs describe some circumstances in which a participating or nonguaranteed-premium contract shall be accounted for as a universal life-type contract. The provisions of the following two paragraphs are not intended to be either all-inclusive or limiting. Limited-payment participating and limited-payment nonguaranteed-premium contracts that are not, in substance, universal life-type contracts are limited-payment contracts because they are not conventional forms of participating or nonguaranteed-premium contracts. ##### [944-20-15-29](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:60c89624d8dc1ba2632701db856faac4f62b9fb679fe80d1c95c4e884d7ac7c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A participating contract that includes any of the following features shall be considered a universal life-type contract: 1. a The policyholder may vary premium payments within contract limits and without consent of the insurer. 2. b The contract has a stated account balance that is credited with policyholder premiums and interest and against which assessments are made for contract administration, mortality coverage, initiation, or surrender, and any of the amounts assessed or credited are not fixed and guaranteed. 3. c The insurer expects that changes in any contract element will be based primarily on changes in interest rates or other market conditions rather than on the experience of a group of similar contracts or the entity as a whole. ##### [944-20-15-30](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:e08965ad5a05512a80880b0945e2a45dad19c18c9e3ba0c38cfdc725e2d47dc7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A nonguaranteed-premium contract that includes either of the features (b) or (c) in the preceding paragraph shall be considered a universal life-type contract. ##### [944-20-15-31](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:9f38ed9aa45661034a1c8102870756a7bd5cfdd84d9fc2ac7b395c7dfded7c1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on accounting for embedded derivatives contained in nontraditional and other contracts, see Subtopic 815-15. ### Reinsurance Contracts #### Overall Guidance ##### [944-20-15-32](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:e64b87f7859cc18c219e62a41f8f35bbe797e2b6cb744d7eb56a852a90e4bb60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of this Section, with specific entity and instrument qualifications and exceptions noted below. #### Entities ##### [944-20-15-33](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:8744ae3e44741d92a5c12ec8885385b65d330ff0c7174f6f58e4b8ac63824bd8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Servicing carriers for involuntary risk pools also are included in the scope of the Reinsurance Contracts Subsections of this Subtopic because the servicing carrier business is indistinguishable effectively from other types of [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "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.") for accounting purposes. #### Instruments ##### [944-20-15-34](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:60759e161626b6de23656373f12a29d22bcd94daba2c4937e2364a8570f9b9af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The financial reporting for a contract with a [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") depends on whether the contract is considered to be reinsurance for purposes of applying this Subtopic. Financial reporting for a reinsurance contract also depends on whether the contract reinsures short-duration or long-duration insurance contracts and, for short-duration contracts, on whether the contract is considered [prospective reinsurance](https://asc.understandingaccounting.org/glossary/p/#prospective-reinsurance "Reinsurance in which an assuming entity agrees to reimburse a ceding entity for losses that may be incurred as a result of future insurable events covered under contracts subject to the reinsurance. A reinsurance contract may include both prospective and retroactive reinsurance provisions.") or [retroactive reinsurance](https://asc.understandingaccounting.org/glossary/r/#retroactive-reinsurance "Reinsurance in which an assuming entity agrees to reimburse a ceding entity for liabilities incurred as a result of past insurable events covered under contracts subject to the reinsurance. A reinsurance contract may include both prospective and retroactive reinsurance provisions."). For contracts that reinsure long-duration contracts, characteristics of the reinsurance contract determine whether the contract is short- or long-duration. ##### [944-20-15-34A](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:340a85fafbc4935d79a1c4f130ec091c592afd98e6203a93b35e80f850a5f0a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Determining whether a contract that reinsures a long-duration insurance contract is long-duration or short-duration in nature is a matter of judgment, considering all of the facts and circumstances. For example, some contracts described as yearly renewable term may be, in substance, long-duration contracts, depending on their terms and how they are priced. ##### [944-20-15-34B](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34B) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:92fd494e81dc9301cbf9214906036aa90cf70211451c31419c04ce7d265634e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The distinction between prospective and [retroactive reinsurance](https://asc.understandingaccounting.org/glossary/r/#retroactive-reinsurance "Reinsurance in which an assuming entity agrees to reimburse a ceding entity for liabilities incurred as a result of past insurable events covered under contracts subject to the reinsurance. A reinsurance contract may include both prospective and retroactive reinsurance provisions.") contracts is based on whether the contract reinsures future or past insured events covered by the underlying contracts. For example, in occurrence-based insurance, the insured event is the occurrence of a loss covered by the insurance contract. In claims-made insurance, the insured event is the reporting to the insurer, within the period specified by the policy, of a [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") for a loss covered by the insurance contract. A claims-made reinsurance contract that reinsures claims asserted to the reinsurer in a future period as a result of insured events that occurred before entering into the reinsurance contract is a retroactive contract. ##### [944-20-15-34C](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34C) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:290f32ab7f7bcb5db278e95d26ce68fd1f93421b69717ac3c1cee6a21912d2ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reinsurance contracts may include both prospective and retroactive provisions. For example, a reinsurance contract that reinsures liabilities relating to contracts written during one or more prior years also may reinsure losses on contracts to be written during one or more future years. Reinsurance also may be acquired some time after the reinsured contract has been written, but before the close of the [coverage period](https://asc.understandingaccounting.org/glossary/c/#coverage-period "See Contract Period.") for that contract, and be made effective as of the beginning of the [contract period](https://asc.understandingaccounting.org/glossary/c/#contract-period "The period over which insured events that occur are covered by insurance or reinsurance contracts. Commonly referred to as the coverage period or period that the contracts are in force."). This may result in a reinsurance contract with prospective and retroactive provisions that relate to a single contract year. It is not uncommon for a reinsurance arrangement to be initiated before the beginning of a policy period but not finalized until after the policy period begins. Whether there was agreement in principle at the beginning of the policy period and, therefore, the contract is substantively prospective depends on the facts and circumstances. ##### [944-20-15-35](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:39a7258b66f49a591293a4472bd890bf751f5eabc3f3dd084c2c2012f235c4b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [944-605-30-4](https://asc.understandingaccounting.org/asc/605/944/#605-944-30-4) and [944-605-35-14 through 35-15](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-14) state that reinsurance of long-duration contracts can be either short- or long-duration. The fact that no similar guidance is provided for short-duration contracts is intentional, because it is not possible to reinsure more risk than was originally insured under the primary insurance contracts. ##### [944-20-15-36](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a7308172cbd86e62475ae714b925a4d69495a5e5160cb532669f882e4864683d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [944-20-15-37](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:73bef3f635908fe00bf9c1ac98149d268287d5c906f27ce243b1d0a15d19b54b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Reinsurance Subsections of this Subtopic applies to the following instruments: 1. a Any transaction, regardless of its form, whose individual terms indemnify an insurer against loss or liability relating to [insurance risk](https://asc.understandingaccounting.org/glossary/i/#insurance-risk "The risk arising from uncertainties about both underwriting risk and timing risk. Actual or imputed investment returns are not an element of insurance risk. Insurance risk is fortuitous; the possibility of adverse events occurring is outside the control of the insured."). That is, all contracts, including contracts that may not be structured or described as reinsurance, shall be accounted for as reinsurance if those conditions are met, including reinsurance contracts used to, in effect, sell a line of business by coinsuring all or substantially all of the risks related to the line. 2. b All contract amendments. ##### [944-20-15-38](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:8471fd7544c2459d709b63c0f8ecb4137e895cc9bac85e08a111132b415306f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Reinsurance Contracts Subsections of this Subtopic does not apply to the following instruments: 1. a Contracts that do not meet the conditions for reinsurance accounting 2. b Except as noted in the following paragraph, reinsurance assumed. ##### [944-20-15-39](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:17b830c21cf49dc609452922580a0366ab09d0757ce307893da594ed09bb875c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Only the following provisions of the Reinsurance Subsections in this Subtopic apply to reinsurance assumed: 1. a Paragraphs [944-20-15-40 through 15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40) , [944-20-15-46](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-46), [944-20-15-49](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-49), [944-20-15-51](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-51), [944-20-15-53](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-53), and [944-20-15-59 through 15-61](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-59) provide guidance on indemnification against loss or liability relating to insurance risk. 2. b Paragraphs [944-20-50-3 through 50-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-3) require certain disclosures. #### Other Considerations ##### [944-20-15-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:3250707c94206ba28bf96e65b5f64cefcf0776bd663d48e7ea7046e6976258e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Determining under paragraph [944-20-15-37(a)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-37) whether a contract with a reinsurer provides indemnification against loss or liability relating to insurance risk requires a complete understanding of that contract and other contracts or agreements between the ceding entity and related reinsurers. A complete understanding includes an evaluation of all contractual features that do either of the following: 1. a Limit the amount of insurance risk to which the reinsurer is subject (such as through experience refunds, cancellation provisions, adjustable features, or additions of profitable lines of business to the reinsurance contract) 2. b Delay the timely reimbursement of claims by the reinsurer (such as through payment schedules or accumulating retentions from multiple years). This risk transfer assessment shall be made at contract inception, based on facts and circumstances known at the time. ##### [944-20-15-40A](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:027d96431d97a408cd511d609d85d52ac33725b59fceb9dc08c1d8e32c9eb9a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reinsurance programs often entail the reinsurance of various layers of exposure through multiple reinsurance contracts. Indemnification against loss or liability relating to insurance risk shall be determined in relation to the provisions of the individual reinsurance contract being evaluated. ##### [944-20-15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a702d027a737e4f122861f8374185593295a2cb5aa48864929fd3007e4bbe604 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unless the condition in paragraph [944-20-15-53](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-53) is met, indemnification of the ceding entity against loss or liability relating to insurance risk in reinsurance of short-duration contracts exists under paragraph [944-20-15-37(a)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-37) only if both of the following conditions are met: 1. a Significant insurance risk. The reinsurer assumes significant insurance risk under the reinsured portions of the underlying insurance contracts. Implicit in this condition is the requirement that both the amount and timing of the reinsurer's payments depend on and directly vary with the amount and timing of claims settled under the reinsured contracts. 2. b Significant loss. It is [reasonably possible](https://asc.understandingaccounting.org/glossary/r/#reasonably-possible "The chance of the future event or events occurring is more than remote but less than likely.") that the reinsurer may realize a significant loss from the transaction. The conditions are independent and the ability to meet one does not mean that the other has been met. A substantive demonstration that both conditions have been met is required for a short-duration contract to transfer risk. ##### [944-20-15-42](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:f2342b8791fede4edb9eb5140dcbd7e67deec0e5ed189d95f4912b7dd3ca42f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The reference in (a) in the preceding paragraph acknowledges that a ceding entity may reinsure only part of the risks associated with the underlying contracts. For example, a proportionate share of all risks or only specified risks may be reinsured. The conditions for reinsurance accounting are evaluated in relation to the reinsured portions of the underlying insurance contracts, rather than all aspects of those contracts. ##### [944-20-15-43](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:97fda2d5b6ed4edec47c2fc4260160adda24bb9c5d06b7a5b3006e2db3e8cabc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assessment of the criterion in paragraph [944-20-15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41) shall be applied from contract inception, considering the effect of any subsequent contract amendments. Careful evaluation and considered judgment is required to determine whether a significant loss to the reinsurer was reasonably possible at inception. The status of a contract should be determinable at inception and, absent amendment, subsequent changes shall be very rare. ##### [944-20-15-44](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a3783b71ec378d29d02239e0612459b894e579ebaab756bcdcd26191b43d0675 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assessment in paragraph [944-20-15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41) is applied to a particular scenario, not to the individual assumptions used in the scenario. Therefore, a scenario is not reasonably possible unless the likelihood of the entire set of assumptions used in the scenario occurring together is reasonably possible. ##### [944-20-15-45](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:f84081e351807ade5e1561fda35fdfc6fa1f298224c57931e410f024eab516c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contracts that reinsure risks arising from short-duration contracts shall meet the definition of a short-duration contract in paragraph [944-20-15-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-2) to be accounted for as reinsurance, because reinsurance of short-duration contracts is inherently short-duration. Contracts that reinsure short-duration insurance risks over a significantly longer period are, in substance, financing transactions, because any of the following conditions exist: 1. a Premiums are deferred over a period beyond the term of the underlying insurance contracts. 2. b Losses are recognized in a different period than the period in which the event causing the loss takes place. 3. c Both events (a) and (b) occur at different points in time. ##### [944-20-15-46](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-46) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:f897f254593675e7e6201b1400fd8305094aa75c877a00c6041a37542ba21252 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reinsurer shall not be considered under paragraph [944-20-15-37(a)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-37) to have assumed significant insurance risk under reinsured short-duration contracts if the probability of a significant variation in either the amount or timing of payments by the reinsurer is [remote](https://asc.understandingaccounting.org/glossary/r/#remote "The chance of the future event or events occurring is slight."). Contractual provisions that delay timely reimbursement to the ceding entity would prevent this condition from being met because they prevent the reinsurer's payments from directly varying with the claims settled under the reinsured contracts. ##### [944-20-15-47](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-47) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:32805f60ebb2baeeedc7ebfd0c54478e3101dbcab2be0527112d6228053f84f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether [underwriting risk](https://asc.understandingaccounting.org/glossary/u/#underwriting-risk "The risk arising from uncertainties about the ultimate amount of net cash flows from premiums, commissions, claims, and claim settlement expenses paid under a contract.") has transferred to the reinsurer depends on how much uncertainty about the ultimate amount of net cash flows from premiums, commissions, [claims](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event."), and claim settlement expenses paid under a contract has been transferred to the reinsurer. The preceding paragraph indicates that insurance risk transfer requires that both the amount and timing of the reinsurer's payments depend on, and directly vary with, the amount and timing of claims settled under the reinsured contracts. Accordingly, the significance of the amount of underwriting risk transferred shall be evaluated in relation to the ceding entity's claims payments. ##### [944-20-15-48](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-48) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:6330d130a6dcb80b349ee9323a6a3d9e12ecc3bb7340b9eadcbb31374f63f54b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The word timely is used in paragraph [944-20-15-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40) in the ordinary temporal sense to refer to the length of time between payment of the underlying reinsured claims and reimbursement by the reinsurer. While the test for reasonable possibility of significant loss to the reinsurer provides for a present-value-based assessment of the economic characteristics of the reinsurance contract, the concept of timely reimbursement relates to the transfer of insurance risk (the condition in paragraph [944-20-15-41\[a\]](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41)), not the reasonable possibility of significant loss (the condition in paragraph [944-20-15-41\[b\]](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41)). Accordingly, timely reimbursement shall be evaluated based solely on the length of time between payment of the underlying reinsured claims and reimbursement by the reinsurer. ##### [944-20-15-49](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-49) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:382073371b6f3c185a60f524cb8a6e66406cc33e108af737993e9542b482464a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The ceding entity's evaluation of whether it is reasonably possible for a reinsurer to realize a significant loss from the transaction shall be based on the present value of all cash flows between the ceding and assuming entities under reasonably possible outcomes, without regard to how the individual cash flows are characterized. The same interest rate shall be used to compute the present value of cash flows for each reasonably possible outcome tested. To be reasonable and appropriate, that rate shall reflect both of the following: 1. a The expected timing of payments to the reinsurer 2. b The duration over which those cash flows are expected to be invested by the reinsurer. ##### [944-20-15-50](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-50) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:33de729949694f0efb0f63aa2d7786439dc466d446cfe1d61c5309ab65776625 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All cash flows are included in the calculation in the preceding paragraph because payments that effectively represent premiums or refunds of premiums may be described in various ways under the terms of a reinsurance contract. The way a cash flow is characterized does not affect whether it should be included in determining the reinsurer's exposure to loss. Only cash flows between the ceding and assuming entities are considered, therefore precluding consideration of other expenses of the reinsurer (such as taxes and operating expenses) in the calculation. ##### [944-20-15-51](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-51) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:f6cfd33eb46519471bd3e30307278a37cbcf1a83df48caaa9c2d38c2341d3dcb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Significance of loss shall be evaluated by comparing the following: 1. a The present value of all cash flows (determined as described in paragraph [944-20-15-49](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-49)) 2. b The present value of the amounts paid or deemed to have been paid to the reinsurer. Determining (for purposes of \[b\]) the amounts paid or deemed to have been paid for reinsurance requires an understanding of all contract provisions. For example, payments and receipts under a reinsurance contract may be settled net. The ceding entity may withhold funds as collateral or may be entitled to compensation other than recovery of claims. Gross premiums shall be used—expenses shall not be deducted from premiums in evaluating the significance of a reasonably possible loss. ##### [944-20-15-52](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-52) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:dcec934e3b90710e525cb5b8f8d0435e9059a49fadc22a5b879bb9e773cf9481 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the present value of cash flows shall be determined over the period in which cash flows are reasonably expected to occur, unless commutation ([termination](https://asc.understandingaccounting.org/glossary/t/#termination "In general, the failure to renew an insurance contract. Involuntary terminations include death, expirations, and maturities of contracts. Voluntary terminations of life insurance contracts include lapses with or without cash surrender value and contract modifications that reduce paid-up whole-life benefits or term-life benefits.")) is expected in the scenario being evaluated, commutation shall not be assumed in the calculation. Further, the assumptions used in a scenario shall be internally consistent and economically rational for that scenario's outcome to be considered reasonably possible. ##### [944-20-15-53](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-53) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:1c260cd0c14ee53c08ef4359a91a3e870a369f450486ceb7cbee25a0c8ff821d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, based on the comparison in paragraph [944-20-15-51](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-51), the reinsurer is not exposed to the reasonable possibility of significant loss, the ceding entity shall be considered indemnified against loss or liability relating to insurance risk only if substantially all of the insurance risk relating to the reinsured portions of the underlying insurance contracts has been assumed by the reinsurer. That condition is met only if insignificant insurance risk is retained by the ceding entity on the reinsured portions of the underlying insurance contracts. The assessment of that condition shall be made by comparing both of the following: 1. a The net cash flows of the reinsurer under the reinsurance contract 2. b The net cash flows of the ceding entity on the reinsured portions of the underlying insurance contracts. If the economic position of the reinsurer relative to the insurer cannot be determined, the contract shall not qualify under the exception in this paragraph. ##### [944-20-15-54](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-54) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:e29dfe155d6f461f12a6ebdc5585819cf0660a64d39e5a5c606059c70b7d5a39 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The extremely narrow and limited exemption in the preceding paragraph is for contracts that reinsure either an individual risk or an underlying book of business that is inherently profitable. To qualify under that exception, no more than trivial insurance risk on the reinsured portions of the underlying insurance contracts may be retained by the ceding entity. The reinsurer's economic position shall be virtually equivalent to having written the relevant portions of the reinsured contracts directly. ##### [944-20-15-55](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-55) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:407800ddcc60eb9925e2e1a23704e5d7d53d2e79e16d56aa37709914856ea76f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To be accounted for as reinsurance, a contract that reinsures risks arising from short-duration insurance contracts must meet all of the following conditions: 1. a The contract shall qualify as a short-duration contract under paragraph [944-20-15-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-7). 2. b The contract shall not contain features that prevent the risk transfer criteria in this Subsection from being reasonably applied and those risk transfer criteria shall be met. 3. c The ultimate premium expected to be paid or received under the contract shall be reasonably estimable and allocable in proportion to the reinsurance protection provided as required by paragraphs [944-605-25-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-2) and [944-605-35-8](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-8). If any of these conditions are not met, a [deposit method](https://asc.understandingaccounting.org/glossary/d/#deposit-method "A revenue recognition method under which premiums are not recognized as revenue and claim costs are not charged to expense until the ultimate premium is reasonably estimable, and recognition of income is postponed until that time.") of accounting shall be applied by the ceding and assuming entities. ##### [944-20-15-56](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-56) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:596d7bff18a28bc70fedae2a5831b48fa1ada1672b5a399974da7e7df9e57a54 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Condition (b) in the preceding paragraph applies to a contract and determining the substance of a contract is a judgmental matter. If an agreement with a reinsurer consists of both risk transfer and nonrisk transfer coverages that have been combined into a single legal document, those coverages must be considered separately for accounting purposes. Section 944-20-15 does not intend for different kinds of exposures combined in a program of reinsurance to be evaluated for risk transfer and accounted for together because that would allow contracts that do not meet the conditions for reinsurance accounting to be accounted for as reinsurance by being designated as part of a program that in total meets the conditions for reinsurance accounting. ##### [944-20-15-57](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-57) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:d05837072005fb84de0f3b947f9001be4bf51479a439190ca24abafd6160e2b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the retrospective rating provisions of single-year retrospectively rated contracts do not create benefits or obligations in a future accounting period, other guidance, including paragraphs [720-20-25-1](https://asc.understandingaccounting.org/asc/720/20/#720-20-25-1), [944-605-25-2(a) through (b)](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-2), [944-605-25-20](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-20), and [944-605-35-8](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-8), shall be applied to those contracts. ##### [944-20-15-58](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-58) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:40a6b7ed62e4de291bb5d18e34ca8a47d61e97f446cdebb7bd8f09d1b2aed1ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the retrospectively rated contract contains any of the characteristics of paragraph [460-10-15-4](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-4) and does not qualify for the scope exception in paragraph [460-10-15-7(d)](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-7), the guarantor would be subject to the initial recognition, initial measurement, and disclosure provisions of Subtopic 460-10. The guarantor could be the ceding entity, assuming entity, or both, depending on the terms of the retrospectively rated contract. ##### [944-20-15-59](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-59) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:b1744353ddabcdc495496747078d249f14d3287ad27dd656acf6e71ec22c56d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Indemnification of the ceding entity against loss or liability relating to insurance risk in reinsurance of long-duration contracts requires the reasonable possibility that the reinsurer may realize significant loss from assuming insurance risk. ##### [944-20-15-60](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-60) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:5270c95d6d8cf38c25e53b1e1c985207dab31c51b7de4e2967960fc829a89baf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consistent with the definition of [investment contract](https://asc.understandingaccounting.org/glossary/i/#investment-contracts "Long-duration contracts that do not subject the insurance entity to risks arising from policyholder mortality or morbidity."), a contract that does not subject the reinsurer to the reasonable possibility of significant loss from the events insured by the underlying insurance contracts does not indemnify the ceding entity against insurance risk. ##### [944-20-15-61](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-61) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:6009fe1af6b6742c375059806b45ab1809b7991a2c1e9d928acae75d766831e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The evaluation of [mortality risk](https://asc.understandingaccounting.org/glossary/m/#mortality-risk "The obligation to make payments that are contingent upon the death or continued survival of a specific individual or group.") or [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment.") risk in contracts that reinsure universal life-type policies shall be consistent with the criteria in paragraphs [944-20-15-16 through 15-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-16) . Evaluation of the presence of insurance risk in contracts that reinsure other long-duration contracts (such as those that reinsure ordinary life contracts or contracts that provide benefits related only to illness, physical injury, or disability) also shall be consistent with those criteria. ##### [944-20-15-62](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-62) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:3f050ef8d5f21743f01ca98437f8ef3ba83c8b0f512c7c22b4941d932a9ff974 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any change or adjustment of contractual terms is considered an amendment for purposes of applying this Subtopic, including all but the most trivial changes and without distinction between financial and nonfinancial terms. ##### [944-20-15-63](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-63) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:b8735dea474ad600e7469634ad3014237f8e4519805a1ab7cbea12ec47c51a9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of amendments include but are not limited to the following: 1. a Replacing one assuming entity with another (including an affiliated entity) 2. b Modifying the contract's limit, [coverage](https://asc.understandingaccounting.org/glossary/c/#coverage "An insurance entity's exposure to loss. The concept of coverage would typically include policy limits, deductible, insured, and covered property or insured event."), premium, commissions, or experience-related adjustable features. ##### [944-20-15-64](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-64) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:0ce58206761639d697bf339b6194485c2c17f0a9526fc89b582fdbe8cfa3e1b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If contractual terms are amended, risk transfer shall be reassessed. For example, a contract that, upon its inception, met the conditions for reinsurance accounting under this Subsection could later be amended so that it no longer meets those conditions. The contract shall be reclassified and accounted for as a deposit in accordance with the guidance in Subtopic 340-30. ##### [944-20-15-65](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-65) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:612e877e6090a9d6bd1ea71a6774a6c48fa078d5495e1452559b2b178c97edcc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether an amended contract in substance transfers risk shall be determined considering all of the facts and circumstances in light of risk transfer requirements. Judgment also will be required to determine whether an amendment in effect creates a new contract. ### Financial Guarantee Insurance Contracts #### Overall Guidance ##### [944-20-15-66](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-66) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:026f51c2663b1d977e0553c2f47784df2dadce4ff9c0d003a0b22554d9bb42e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Financial Guarantee Insurance Contracts Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Section, with specific instrument qualifications and exceptions noted below. ##### [944-20-15-67](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-67) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:e235e29473aabd24509796a6d553a5736be81e1dd320fa02691afc588466e619 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except as noted in the following paragraph, the guidance in the Financial Guarantee Insurance Contract Subsections applies to all [financial guarantee insurance contracts](https://asc.understandingaccounting.org/glossary/f/#financial-guarantee-insurance-contract "A contract issued by an insurance entity that provides protection to the holder of a financial obligation from a financial loss in the event of a default. Specifically, a contract that obligates the insurance entity to pay a claim upon the occurrence of an event of default. The event of a default (insured event) refers to nonpayment (when due) of insured contractual payments (generally principal and interest) by the issuer of the insured financial obligation.") and [financial guarantee reinsurance contract](https://asc.understandingaccounting.org/glossary/f/#financial-guarantee-reinsurance-contract "See Financial Guarantee Insurance Contract"). ##### [944-20-15-68](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-68) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:e54843c358d4aff041eb12b52b6074a034dff3fbd7b656d737ad9fad44946745 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Financial Guarantee Insurance Contract Subsections does not apply to any of the following: 1. a An insurance contract that is similar to a financial guarantee insurance contract (for example, mortgage guaranty insurance and credit insurance on trade receivables) 2. b A financial guarantee insurance contract accounted for as a derivative instrument within the scope of Subtopic 815-10. An insurance entity shall consider the application of the Financial Guarantee Insurance Contracts Subsections only if the contract is not within the scope of Subtopic 815-10 and is not accounted for as a derivative instrument. #### Other Considerations ##### [944-20-15-69](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-69) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:6b156049c652416c9856b487d437f9a081a2b66cd0e2a4fbf89c74475a504e01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The recognition and measurement provisions of the Financial Guarantee Insurance Contracts Subsections shall be applied on a contract-by-contract basis.