# ASC 944-20-40: Financial Services—Insurance — Insurance Activities — 40 Derecognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/944/20/#40-derecognition) 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): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:25e5258c0663f00a0b2f1acf31bc9710ed63ec24ca25ebf169b72bcfd8c5d144 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/944/20/#40-derecognition) SEC content: no ### Reinsurance Contracts #### Multiple-Year Retrospectively Rated Contracts by Ceding and Assuming Entities ##### [944-20-40-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:168dcd0ccd3064a17f0d5a0fe9bcb96cce8a3a6ebe3debeadf8b66d1868cbe8f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-25-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-6) states that, if either party entering into a new contract in consideration for canceling a retrospectively rated contract would not have agreed to cancel the existing retrospectively rated contract unless a new contract were entered into, the two contracts are in effect the same contract for purposes of measuring assets and liabilities and shall be accounted for that way. #### Payment from Continuation of Reinsurance Contract ##### [944-20-40-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:fdf6b74be770ce3c43182523e00b64c882e4b2f1e4fa78aeacaa6f1f8a42393b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a [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.") loses an asset recognized under paragraph [944-20-35-15](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-15) because it terminates the contract, the loss shall be recognized in the period [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.") takes place. #### Assumption Reinsurance ##### [944-20-40-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:37ec5816d26d004e2ed6ddf56fc9b4cc6e3190b08a176812278e0ef7a05adc5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [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.") contracts that are legal replacements of one insurer by another (often referred to as assumption and novation) extinguish the ceding entity's liability to the policyholder and shall result in removal of related assets and liabilities from the financial statements of the ceding entity. ##### [944-20-40-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:77d6042aa72d5a7dd92771b1840cbadf93d9d8a10d1fc388a472881339d5c933 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reinsurance contracts in which a ceding entity is not relieved of the legal liability to its policyholder shall not result in removal of the related assets and liabilities from the ceding entity's financial statements. ##### [944-20-40-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-40-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:59b494363f6032380198d24b4e6aecdc7201f3ca84b155bb0b91446b19b62f29 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether the liability to the policyholder has been entirely extinguished essentially is a legal question, depending on all of the facts and circumstances. See Section 405-20-40 for guidance for determining if a liability has been extinguished.