# ASC 944-20: Financial Services—Insurance — Insurance Activities Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/944/20/) 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): 2026-09-10T02:14:58.695Z to 2026-09-10T02:15:47.018Z Record version: sha256:0e1c1418b9d86542ae64a1cbe61762ca6d2c2c00cd39a0b672f94d9ded3ac35d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20: Financial Services—Insurance — Insurance Activities ### Machine-generated study aids ```json { "summary": "ASC 944-20 sets the framework for insurance accounting based on the nature of the contract rather than the type of entity: contracts are classified at inception as short-duration (fixed short coverage period, insurer can cancel or reprice each period, 944-20-15-7) or long-duration (not subject to unilateral change, services rendered over an extended period, 944-20-15-10), with sub-models for traditional, universal life-type, participating, and financial guarantee contracts. It also defines when a contract with a reinsurer actually transfers insurance risk (significant insurance risk plus reasonable possibility of significant loss, 944-20-15-41) and prescribes recognition and with-and-without measurement for multiple-year retrospectively rated contracts. Contracts lacking indemnification or significant insurance risk are accounted for under the deposit method (340-30) or as investment contracts.", "key_points": [ "Insurance contracts must be classified as short-duration or long-duration depending on whether they are expected to remain in force for an extended period (944-20-15-2, 15-7, 15-10); examples include property/liability and credit life as short-duration and whole-life, guaranteed renewable term, endowment, annuity, and title insurance as long-duration (944-20-55-1, 55-3).", "Classification as an investment contract or insurance contract is made at contract inception and is not reassessed during the accumulation phase; if mortality/morbidity risk is nominal (insignificant amount or remote probability) the contract is an investment contract (944-20-15-20 through 15-21), and significance is tested by comparing the present value of expected excess payments to the present value of assessments plus expected investment margin under a range of scenarios (944-20-15-24 through 15-25).", "A contract with other-than-nominal mortality/morbidity risk whose fees or benefits are not fixed and guaranteed is a universal life-type contract (944-20-15-22, 15-26); participating or nonguaranteed-premium contracts that are in substance universal life-type are also within that model (944-20-15-27 through 15-30).", "Reinsurance of short-duration contracts qualifies for reinsurance accounting only if the reinsurer assumes significant insurance risk (amount and timing of its payments directly vary with claims settled) and it is reasonably possible the reinsurer will realize a significant loss (944-20-15-41), with a narrow 'substantially all' exception when only insignificant risk is retained by the ceding entity (944-20-15-53 through 15-54).", "Risk transfer is assessed at contract inception based on all cash flows between the parties discounted at a single reasonable rate (944-20-15-49, 15-51); any amendment beyond trivial changes requires reassessment, and a failed contract is accounted for as a deposit under Subtopic 340-30 (944-20-15-62 through 15-64, 944-20-15-55).", "For multiple-year retrospectively rated contracts, an asset or liability is recognized for obligatory retrospective rating provisions created by past experience, measured using a with-and-without method excluding future losses and future premiums payable regardless of experience (944-20-25-2, 25-4, 944-20-35-1, 35-3 through 35-4); deposit accounting may not be used to avoid loss recognition (944-20-25-3, 944-20-35-12).", "Reinsurance that legally replaces one insurer with another (assumption and novation) extinguishes the ceding entity's liability and requires derecognition of related assets and liabilities; otherwise the ceding entity keeps them on its balance sheet and must disclose that it is not relieved of its primary obligation (944-20-40-3 through 40-4, 944-20-50-3 through 50-4)." ], "categories": [ "Industry-specific", "Recognition", "Subsequent measurement", "Contingencies and guarantees" ], "audience_level": "advanced", "student_note": "This subtopic is the gateway to all of ASC 944: get the short- vs. long-duration and insurance- vs. investment-contract classification wrong and every downstream revenue, liability, and DAC conclusion is wrong. The most common misunderstanding is assuming anything labeled 'reinsurance' gets reinsurance accounting—substance controls, and without significant insurance risk plus a reasonable possibility of significant loss to the reinsurer, deposit accounting under 340-30 applies.", "related_topics": [ "944-40", "944-605", "944-30", "340-30", "720-20", "815-15" ], "key_concepts": [ "short-duration contract", "long-duration contract", "universal life-type contract", "investment contract", "risk transfer", "reinsurance", "multiple-year retrospectively rated contract", "financial guarantee insurance" ] } ``` Source downloaded (UTC): 2026-09-10T02:14:58.695Z to 2026-09-10T02:14:58.695Z Record version: sha256:0ea86c8d4d7dbc8ee4f89ea515511f108c5eb9fc04856b3c5fc90152b2c5d669 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/20/#00-status) SEC content: no ##### [944-20-00-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:58.695Z to 2026-09-10T02:14:58.695Z Record version: sha256:ac9d11219395053a6a79fe315e69970e4f8a1231b13437fe6c5459662080d39e 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
Acquisition CostsAmendedAccounting Standards Update No. 2010-2610/13/2010
Contract PeriodAmendedAccounting Standards Update No. 2016-1912/14/2016
Dividends to PolicyholdersAddedAccounting Standards Update No. 2014-0603/14/2014
Enhanced-Crediting-Rate BonusAddedAccounting Standards Update No. 2014-0603/14/2014
Enhanced-Yield BonusSupersededAccounting Standards Update No. 2014-0603/14/2014
Guaranteed Minimum Income BenefitAmendedAccounting Standards Update No. 2018-1208/15/2018
Involuntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
Net Amount at Risk (Relating to Variable Annuity Contracts)SupersededAccounting Standards Update No. 2018-1208/15/2018
Reinsurance RecoverableAddedAccounting Standards Update No. 2016-1912/14/2016
Sales InducementsAmendedAccounting Standards Update No. 2014-0603/14/2014
TerminationAmendedAccounting Standards Update No. 2014-0603/14/2014
Voluntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
944-20-05-2AAmendedAccounting Standards Update No. 2016-1912/14/2016
944-20-05-23SupersededAccounting Standards Update No. 2018-1208/15/2018
944-20-05-32AmendedAccounting Standards Update No. 2014-0603/14/2014
944-20-10-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-15-1BAmendedAccounting Standards Update No. 2016-1912/14/2016
944-20-15-3AmendedAccounting Standards Update No. 2014-0603/14/2014
944-20-15-11AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-15-13AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-15-24AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-50-5AmendedAccounting Standards Update No. 2016-1912/14/2016
944-20-55-13AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-55-14AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-55-15 through 55-26
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-20-55-37AmendedAccounting Standards Update No. 2016-1306/16/2016
944-20-65-1AmendedAccounting Standards Update No. 2009-0207/01/2009
Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:4860d9c34438feb71236db500c68aa62a660bec0301a2b70fc047f18462cded8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/944/20/#05-overview-and-background) SEC content: no ##### [944-20-05-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:ec38065e14af20038813ae6f4c42a4a330e6a269772e1d67f3e79d125146f56c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Financial Services—Insurance Topic contains the following Subtopics unique to the accounting for and financial reporting of insurance activities and insurance contracts: 1. a Insurance Activities 2. b Acquisition Costs 3. c Claim Costs and Liabilities for Future Policy Benefits 4. d Policyholder Dividends 5. e Separate Accounts. ##### [944-20-05-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:4dc7fda123141bccb8a63d4cb5b8c8cbfcbef2988a2293a80328dd7a9d4028ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides a description of insurance activities and insurance contracts, provides guidance on accounting for multi-year retrospectively rated contracts, and contains other overarching industry-specific content. ##### [944-20-05-2A](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-2A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:a051af3c4726eb3cf239d74f7d348827042dfb9487072830f42733efe3231726 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some cases 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 transfer [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."). In those cases, Subtopic 340-30 provides guidance on applying the deposit method of accounting. ##### [944-20-05-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:72ac13e476311707ea4740ba961719c369b7039c30b045b9ad37995b41b18a1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Four methods of premium revenue and contract liability recognition for insurance contracts have developed: short-duration contract accounting and three methods of long-duration contract accounting—Traditional, Universal Life, and Participating Contracts. Generally, the four methods reflect the nature of the insurance entity's obligations and policyholder rights under the provisions of the contract. ##### [944-20-05-3A](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-3A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:8f5aae177bdd46b1f603c12d9d7cf5259ea2eaa3898309fd5a913c46e86508d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting model for financial guarantee insurance contracts incorporates attributes of both the short-duration and the long-duration models. Financial guarantee insurance contracts provide insurance protection to the holder of the insured financial obligation. Therefore, premium revenue recognition issues are addressed in the context of the short-duration insurance accounting model. The claim liability recognition and measurement approach for financial guarantee insurance contracts incorporates aspects of the long-duration insurance accounting model. ##### [944-20-05-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:8737c662043e376da072f1f67a3b3c2c8a3a7a894328a2187ffec8ee965ced83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic is presented in the following five Subsections: 1. a General 2. b Short-Duration Contracts 3. c Long-Duration Contracts 4. d Reinsurance Contracts 5. e Financial Guarantee Insurance Contracts. #### Insurance Contracts ##### [944-20-05-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:1b3f04fa95a56655dffdf61117558d258bd347b0f509cffcbe1aa2510338da9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The primary purpose of insurance is to provide economic protection from identified risks occurring or discovered within a specified period. ##### [944-20-05-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:6db376133201932661a38a2f86896644056d74e35e14d9905c282755864e4898 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance transactions may be characterized generally by both of the following: 1. a The purchaser of an insurance contract makes an initial payment or deposit to the insurance entity in advance of the possible occurrence or discovery of an insured event. 2. b When the insurance contract is made, the insurance entity ordinarily does not know if, how much, or when amounts will be paid under the contract. ##### [944-20-05-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:cbec0d3ff2967bb6733754efa7241f94f02532243992902ed4f3b2f5e2d1816e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of insured events include all of the following: 1. a The death or disability of the insured 2. b The maturity of an endowment 3. c The incurrence of hospital or medical bills 4. d The destruction or damage of property and related deaths or injuries 5. e Defects in, liens on, or challenges to the title to real estate 6. f The occurrence of a surety loss 7. g Business interruption. #### Statutory Accounting Practices ##### [944-20-05-8](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:7050d5b6a25a0cbef98d3ea71eab6de40ac544b8bfed9e34a526feac9330e3e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The insurance laws and regulations of most states require insurance entities domiciled in those states to comply with the guidance provided in the National Association of Insurance Commissioners' Accounting Practices and Procedures Manual, except as prescribed or permitted by state law. ##### [944-20-05-9](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:9c3d9be2976a3a6fc07cdd7ec4e2bd938b6fb6b2b36284f9c7d3b02471ad9dda Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prescribed statutory accounting practices are those practices that are incorporated directly or by reference in state laws, regulations, and general administrative rules applicable to all insurance entities domiciled in a particular state. A state may adopt the revised Accounting Practices and Procedures Manual in whole, or in part, as an element of prescribed statutory accounting practices. If, however, the requirements of state laws, regulations, and administrative rules differ from the guidance provided in the revised Accounting Practices and Procedures Manual or subsequent revisions, those state laws, regulations, and administrative rules will take precedence. ##### [944-20-05-10](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:98392b4c57c61d948d5c5b2067a3a45583cd35eeae24b7a45fba284d83147165 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Permitted statutory accounting practices include practices not prescribed by the domiciliary state as described in the preceding paragraph, but allowed by the domiciliary state regulatory authority. An insurance entity may request permission from the domiciliary state regulatory authority to use a specific accounting practice in the preparation of the entity's statutory financial statements in either of the following circumstances: 1. a If it wishes to depart from the prescribed statutory accounting practices 2. b If prescribed statutory accounting practices do not address the accounting for the transaction. Accordingly, permitted accounting practices differ from state to state, may differ from entity to entity within a state, and may change in the future. ##### [944-20-05-11](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:828561af9b4d860f58837136aa3add5189aff79d63c6b76f3c1c41e7c283f4ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subtopic 944-505 provides guidance to insurance entities on disclosure about statutory accounting practices. ### Short-Duration Contracts ##### [944-20-05-12](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:050cc82f21dc9348ec4dc8abe56eae9e01d26a4f381a1d781d3c2f983069e3bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Short-Duration Contracts Subsections provide guidance on accounting for and financial reporting of short-duration insurance contracts. ##### [944-20-05-13](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:62cfefcc6cebb96dc8d676fb332e127f2d70115c30d6058075dab9d1cb39dd41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Premiums from short-duration insurance contracts, such as most property and liability insurance contracts, are intended to cover expected [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") costs resulting from insured events that occur during a fixed period of short duration. The insurance entity ordinarily has the ability to cancel the contract or to revise the premium at the beginning of each [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.") to cover future insured events. ### Long-Duration Contracts ##### [944-20-05-14](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:301fd2ab463d2f53b2221815c021f124f89fd4bbbe252a112efd2020e23c6d42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections provide guidance on accounting for and financial reporting of long-duration insurance contracts. This section is organized as follows: 1. a Traditional fixed and variable annuity and life insurance contracts 2. b Universal life-type contracts 3. c Nontraditional fixed and variable annuity and life insurance contracts 4. d Participating life insurance contracts 5. e Group participating pension contracts. #### Traditional Fixed and Variable Annuity and Life Insurance Contracts ##### [944-20-05-15](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:164f1d5c90a2ca50a2d5752d6066de5de5aa173ec50092beb56aff6ccda86386 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Traditional fixed annuity and life insurance contracts, typically offered through an insurance entity's [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)."), provide for a fixed rate of interest over some specified period, with the insurance entity bearing the investment risk associated with the invested assets. ##### [944-20-05-16](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:7a30905cad3998fe63c74b5101d1f766249bd11bce548e3f4febc40401bdbe6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [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.") and variable life insurance contracts, by contrast, offered through an insurance entity's [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."), provide that all investment risks associated with the separate account assets are passed through to the contract holder, with no guarantees of return of principal, minimum crediting rates, or (for annuity contracts) minimum death benefits. ##### [944-20-05-17](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:096c10511a5ee4c78b635c545cc87af8e0f2b3b36f6bec7750879e91016c5f65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, in a traditional variable annuity, the contract holder directs the allocation of the account value among various investment alternatives and bears the investment risk. The units may be surrendered for their current value in cash (usually less a surrender charge) or applied to purchase annuity income. The insurance entity periodically deducts [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place.") and expense charges from the account. ##### [944-20-05-18](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:dea4475ce565392f1492a2d6dbb213d7b7e97c23355543b43f2a449a306c4338 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A traditional variable annuity product structure, as that term is used in this Subtopic, includes the following attributes: 1. a The policyholder's payments, after deduction of specified sales and administrative charges, are used to purchase units of a separate investment account (a separate account). 2. b The policyholder directs the allocation of the account value among various investment options (typically various mutual funds). The policyholder bears the investment risk (that is, the account value is based entirely on the performance of the directed investments). 3. c The units may be surrendered for their current value in cash, although there is often a small surrender charge, or the units may be applied to purchase annuity income. 4. d The insurer guarantees mortality and maximum expense charges, and amounts are deducted periodically from the separate account to cover these charges. 5. e Deferred annuity contracts typically provide a death benefit during the accumulation period under which the policyholder may receive the greater of the sum of premiums paid or the value of total units to the credit of the account at time of the policyholder's death. ##### [944-20-05-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:fe3b09a1a52c68be22e2329538dd148caf395134e1587d9fa9aa9cd444168699 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Premiums from long-duration insurance contracts, including many life insurance contracts, generally are level even though the expected policy benefits and services do not occur evenly over the periods of the contracts. Functions and services provided by the insurer include insurance protection, sales, premium collection, [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") payment, investment, and other services. No single function or service is predominant over the periods of most types of long-duration contracts. Premium revenue from long-duration contracts generally exceeds expected policy benefits in the early years of the contracts. #### Limited-Pay Insurance Contracts ##### [944-20-05-19A](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-19A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:b7963168f24552fe2fcdb23edd950d8d8b2f6636dd8a1e87f90c09d6c6b8cfba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some long-duration insurance contracts have terms that are fixed and guaranteed but lack either level premiums (as discussed in paragraph [944-20-05-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-19)) or insurance protection characteristics. #### Universal Life-Type Contracts ##### [944-20-05-20](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:dea583be9501086caee305fba432bedffa529d8a98be7595b3fca8d026a8c81e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The differences between universal life-type insurance contracts and other long-duration contracts is that universal life-type insurance contracts lack the fixed and guaranteed terms that are typical for other long-duration contracts. Policyholders are frequently granted significant discretion over the amount and timing of premium payments. Insurers are frequently granted significant discretion over amounts that accrue to and that are assessed against policyholders. ##### [944-20-05-21](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:604a75220917f6d444b455e025596ab6dc2b87c0b7eaca62f0ec7b71bd73944b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Nontraditional Fixed and Variable Annuity and Life Insurance Contracts ##### [944-20-05-22](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:d22f57a1eb23ad7b8c4f61d63f0735ec8e3e63ef52af154543696c1e53f3cf6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Annuity and life products with nontraditional terms may combine fixed and variable features and are sold as general account or separate account products. The features of such contracts are many and complex, and may be offered in different combinations, such that there are numerous variations of the same basic products being sold in the marketplace. ##### [944-20-05-23](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:6c9aa6aba79d38809d1ac83d04e88e86a37930659384ecbf624b36f1b3fafe16 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/). ##### [944-20-05-24](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:7ffa0302bebc380060b1e24b629dd18244d1c28b15d6e69be4efa81535711ce7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance entities have developed a wide range of variable annuity contracts with nontraditional features. Nontraditional features of traditional variable annuity contracts result in a sharing of investment risk between the issuer and the holder. Nontraditional variable annuity contracts provide for some sort of minimum guarantee of the account value at a specified date. This minimum guarantee may be guaranteed through a minimum accumulation benefit or a guaranteed account value floor. For example, the floor guarantee might be that, at a specified anniversary date, the contract holder will be credited with the greater of the following: 1. a The account value, as determined by the separate account assets 2. b All deposits that are made, plus 3 percent interest compounded annually. ##### [944-20-05-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:d1920138689d1c5ca480780f2f8fef6ed2ae2a7b58f7489f6c0c49cebf3e8bbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. While these nontraditional variable annuity contracts have distinguishing features, they possess a common characteristic: the investment risk associated with the assets backing the contract is shared by the issuer and the policyholder. That is, in contrast to traditional variable annuity contracts, the investment risk is, by virtue of the nontraditional product features, allocated between the two parties and not borne entirely by only one of the parties (the holder in the case of a traditional variable annuity contract). ##### [944-20-05-26](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:6f0746fdb62b0d385070d0d2739b38872f4e61a77651960566c9ae217fc45eff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Variable annuity contracts](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.") and variable life insurance contracts provide the contract holder with a number of investment alternatives. Many of those investment alternatives will be separate account funds, such as equity, aggressive equity, high-grade corporate bond, mortgage loan, real estate, and similar funds. Other investment alternatives could include [guaranteed investment options](https://asc.understandingaccounting.org/glossary/g/#guaranteed-investment-option "Component of a variable contract that guarantees a specific rate of performance.") and market value adjusted separate accounts as well as a general account fixed interest rate option. ##### [944-20-05-27](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:b89fd3f8cff38cf7bed4d293d2ff3a7f2d9ae2f60338a0ee2d5ef91e0ed1c817 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remainder of this guidance addresses the following annuity contracts and features: 1. a Market value annuities 2. b Minimum guaranteed death benefit 3. c Minimum guaranteed income benefit 4. d No-lapse guarantee 5. e Sales inducements to contract holders 6. f Other features. ##### [944-20-05-28](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:aead9dfa8be2e895eb95e9f1070add235d92112761a9180157618354c2ca0273 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [market value annuity](https://asc.understandingaccounting.org/glossary/m/#market-value-annuity "An annuity that provides for a return of principal plus a fixed rate of return (that is, book value) if held to maturity or, alternatively, a market-adjusted value if surrendered before maturity.") provides for a return of principal plus a fixed rate of return if held to maturity (book value), or, alternatively, a market-adjusted value if surrendered before maturity. The product is also sometimes referred to as a market value adjusted annuity or a modified guaranteed annuity. The product typically provides for a single premium that may be invested for a specified term, with typical terms of 1 to 10 years. A fixed interest rate is specified in the contract based on the term selected. The contract contains surrender values that are based on a market value adjustment formula if held for shorter periods. The formula typically is based on current crediting rates being offered for new market value annuity purchases with terms equal to the remaining term to maturity. The market value adjustment may be positive or negative, depending on crediting rates at surrender. ##### [944-20-05-29](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:99eb926171937fb98d2d412c08282bdec88b36a819a579961f222ef46315ac2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A common feature in variable annuities is 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."), such as a [return of premium death benefit](https://asc.understandingaccounting.org/glossary/r/#return-of-premium-death-benefit "A death benefit equal to the total deposits made by the contract holder less any withdrawals.") or basic minimum guaranteed death benefit. Although the return-of-premium minimum guaranteed death benefit has become increasingly common in variable annuities, the trend has been for insurers to offer minimum guaranteed death benefits with more extensive benefit guarantees, such as any of the following: 1. a [Roll-up death benefit](https://asc.understandingaccounting.org/glossary/r/#roll-up-death-benefit "A death benefit equal to the total of deposits made to the contract less an adjustment for partial withdrawals, accumulated at a specified interest rate."). A death benefit equal to the total of deposits made to the contract less an adjustment for partial withdrawals, accumulated at a specified interest rate. 2. b Reset death benefit. A death benefit equal to the account balance on a specified anniversary date adjusted for deposits less partial withdrawals since the specified anniversary date. 3. c [Ratchet death benefit](https://asc.understandingaccounting.org/glossary/r/#ratchet-death-benefit "A death benefit equal to the highest account balance among prior specified anniversary dates adjusted for deposits less partial withdrawals since the specified anniversary date."). A death benefit equal to the highest account balance among prior specified anniversary dates adjusted for deposits less partial withdrawals since the specified anniversary date. ##### [944-20-05-30](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:a4bac908a9c3e3bfebed7f524705492de8a5d5caede6855cf9f1d2d148240ab6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some annuities may provide for potential benefits in addition to the account balance, payable only if annuitization is elected. For example, some deferred variable annuities provide that, regardless of separate account performance, a guaranteed minimum amount is available to annuitize after a specified period, thereby providing 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.") if the contract holder elects to annuitize. This benefit is in addition to the guaranteed minimum annuity interest rate traditionally offered. ##### [944-20-05-31](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:6de4a6482cfa6224f7a7570d032ee9b18333be492a8dc0c9bbd34fbdb897beaf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Another insurance benefit feature is a no-lapse guarantee, in which the insurance entity agrees to keep the insurance policy [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.") even if the account balance is not sufficient to pay the [cost of insurance](https://asc.understandingaccounting.org/glossary/c/#cost-of-insurance "Amounts expected to be assessed for mortality."). ##### [944-20-05-32](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:6e388c048173d40609e4ad7967229b193d438d9260b399541149d8e6dcd59f3a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [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.") to contract holders may be offered with fixed and variable life insurance and annuity contracts. Sales inducements to contract holders typically can be characterized as one of the following types: 1. a Immediate bonuses. In the case of the [immediate bonus](https://asc.understandingaccounting.org/glossary/i/#immediate-bonus "A sales inducement that the insurance entity is obligated to credit to the contract holder's account as a result of signing the contract, thus increasing the account value at inception."), the insurance entity is obligated to credit to the contract holder's account the sales inducement as a result of signing the contract. The contract holder account balance is increased for the full amount of the immediate bonus on the date that the bonus is contractually granted. 2. b Persistency bonuses. A [persistency bonus](https://asc.understandingaccounting.org/glossary/p/#persistency-bonus "A sales inducement credited to the contract holder account balance at the end of a specified period if the contract remains in force at that date, thus increasing the account value at the end of the specified period.") is credited to the contract holder account balance at the end of a specified period if the contract remains in force at that date. 3. c [Enhanced-crediting-rate bonuses](https://asc.understandingaccounting.org/glossary/e/#enhanced-crediting-rate-bonus "A sales inducement in which the insurance entity offers customers a crediting rate for a stated period in excess of that currently being offered for other similar contracts."). In an enhanced crediting rate sales inducement, the insurance entity offers customers a crediting rate for a stated period in excess of that currently being offered by the entity for other similar contracts. Pursuant to the contract, the enhanced crediting rate is applicable for a limited period of time, after which the rate is reset under the contractual provisions, typically at the discretion of the insurance entity. ##### [944-20-05-33](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:c4d38ca877550a5e842e9e09177013a13ff09d509123bbc320fe2a756fd1906c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A deferred annuity may provide multiple crediting rates throughout the life of the contract depending on whether the contract holder elects to terminate or annuitize the contract. An example is a contract that applies a lower rate to funds deposited if the contract holder elects to surrender the contract for cash, and a higher rate if the contract holder elects to annuitize, often referred to as a [two-tier annuity](https://asc.understandingaccounting.org/glossary/t/#two-tier-annuity "An annuity having two crediting rates applied to funds deposited into the contract. One rate is used to calculate the account balance if the contract holder elects to surrender the contract for cash, and is referred to as the lower tier. A second rate, typically higher, is used to calculate the account balance, but only if the contract holder elects to annuitize the contract, and is referred to as the upper tier."). ##### [944-20-05-34](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:1b9da615915ff22363789691c3b08037981deefe23ef2e0fc5df9de92e2bbee0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contracts also exist that potentially may be viewed as providing multiple account balances; for example, a contract that provides a return based on a contractually referenced pool of real estate assets owned by the insurance entity but also provides for minimum investment return guarantees. ##### [944-20-05-35](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:365518e6a0e70eff77bab65d3ce1ab8401a70d1d0b7a1c071daad61fe20b0f7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Participating Life Insurance Contracts ##### [944-20-05-36](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:a84e548c48aabe5e8538cbf52f91371b020960aa27f194d3180b36e932ac7039 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Mutual life insurance entities primarily issue participating life insurance contracts. Those contracts provide policyholders with certain guaranteed benefits and allow policyholders to share in the experience of the entity through dividends. Dividends are paid periodically and generally reflect the experience and performance of the entity for investment activity, mortality experience, and contract administration for each particular class of contracts. The determination and distribution of dividends distinguish participating life insurance contracts from nonparticipating life insurance contracts. #### Group Participating Pension Contracts ##### [944-20-05-37](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:4bb0698959dbf3970181e9c25a5e404d7bb6ba034ba11b903a75ddbce68c638d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Group participating pension contracts](https://asc.understandingaccounting.org/glossary/g/#group-participating-pension-contracts "Contracts between insurance entities and pension plans that have account balance crediting provisions that give the contract holder the total return based on a referenced pool of assets over the life of the contract either through crediting rates or termination adjustments.") between insurance entities and pension plans have account balance crediting provisions that give the contract holder the total return based on a referenced pool of assets over the life of the contract either through crediting rates or [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.") adjustments. The ongoing crediting to the account balance may be based on statutory, cash basis, or book value returns. The contracts may not have a maturity date but specify that upon surrender any remaining return on the referenced pool of assets on the termination date not yet credited will be a termination adjustment. The referenced pool of assets may include mortgage loans, real estate, and equity and debt securities. ### Reinsurance Contracts ##### [944-20-05-38](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:2029e30dda00542aa60b49395a2d4184ecdde70c496a5e18576548ce60e0e5b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections provide guidance on accounting for and financial reporting 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.") contracts, including those that reinsure short-duration insurance contracts and long-duration insurance contracts. ##### [944-20-05-39](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:41cdc8da04894e8c24f4e44ce56f4e0b0b9b5651cd2d42a9a9016de82acc2532 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurers may enter into various types of contracts described as reinsurance, including those commonly referred to as [fronting arrangements](https://asc.understandingaccounting.org/glossary/f/#fronting-arrangements "Reinsurance arrangements in which the ceding entity issues a policy and reinsures all or substantially all of the insurance risk with the assuming entity."). ##### [944-20-05-39A](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-39A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:8b9331e75847d3cdaa69fd15d575cb91fb630a25194d2017d44ad507d5827125 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity may purchase reinsurance to reduce exposure to losses from the events it has agreed to insure, similar to a direct insurance contract purchased by an individual or noninsurance entity. The insurance entity also may contract with a reinsurer to facilitate the writing of contracts larger than those normally accepted, to obtain or provide assistance in entering new types of business, or to accomplish tax or regulatory objectives. ##### [944-20-05-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:3f43e93b234a89ff54f7865792e6dee15f4026529e2af62cac74b4bf9eac8b69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance provides indemnification against loss or liability from specified events and circumstances that may occur or be discovered during a specified period. In exchange for a payment from the policyholder, an insurance entity agrees to pay the policyholder if specified events occur or are discovered. Similarly, the insurance entity may obtain indemnification against claims associated with contracts it has written by entering into a reinsurance contract with another insurance entity (the [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") or assuming entity). The insurer (or [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.")) pays (cedes) an amount to the reinsurer, and the reinsurer agrees to reimburse the insurer for a specified portion of claims paid under the reinsured contracts. However, the policyholder usually is unaware of the reinsurance arrangement, and the insurer ordinarily is not relieved of its obligation to the policyholder. The reinsurer may, in turn, enter into reinsurance contracts with other reinsurers, a process known as [retrocession](https://asc.understandingaccounting.org/glossary/r/#retrocession "The circumstance in which a reinsurer, in turn, enters into reinsurance contracts with other reinsurers."). #### Multiple-Year Retrospectively Rated Reinsurance Contract ##### [944-20-05-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:63ded72f09a435693f535a2403fe5d3f9cf0d402fbc0c52250c9bdd25906f19f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many short-duration insurance and reinsurance contracts have retrospective rating provisions. A retrospectively rated contract is a multiple-year contract in which events in one period of the contract create rights and obligations in another. For example, if losses above a certain level occur in one contract year, premiums increase in future years unless the ceding entity compensates the reinsurer through a settlement adjustment. The ceding entity has an obligation because it must pay either the settlement adjustment or the higher future premiums. ##### [944-20-05-42](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:12887aed0ef20ce3f2ff94d36fce37a1155aac44bf461e1797866e1a55dcf521 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurer (ceding entity) may enter into a multiple-year retrospectively rated reinsurance contract with a reinsurer (assuming entity). Examples of these contracts may include transactions referred to as funded catastrophe covers. These contracts include a retrospective rating provision that provides for at least one of the following based on contract experience: 1. a Changes in the amount or timing of future contractual cash flows, including premium adjustments, settlement adjustments, or refunds to the ceding entity 2. b Changes in the contract's future [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."). ##### [944-20-05-43](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:0c6e2f896d963ae21c39b17ed212690e40f76e8ccbd45256d61947485ace8de4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A critical distinguishing feature of these contracts is that part or all of the retrospective rating provision is obligatory such that the retrospective rating provision creates future rights and obligations as a result of past events. Therefore, a retrospectively rated contract that could be cancelled without further obligation (because it does not create rights and obligations that will be realized in a future period) is excluded. ### Financial Guarantee Insurance Contracts ##### [944-20-05-44](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:e708085962b8ab555c768d98e0ea6d5382adca09e78ff682506083905c46bc7e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Financial Guarantee Insurance Contracts Subsections of this Subtopic provide guidance on accounting for and financial reporting of [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 contracts](https://asc.understandingaccounting.org/glossary/f/#financial-guarantee-reinsurance-contract "See Financial Guarantee Insurance Contract"). Examples of such financial obligations include a municipal bond or an asset-backed security. ##### [944-20-05-45](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:44e7badf1975196832db14398a7fd108be62df4ba418ff471be99ce06d17f8ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although the direct or indirect beneficiary of the contract is the holder of the insured financial obligation, the holder of the financial guarantee insurance contract (policyholder) will vary. In some cases, the policyholder will be the issuer (for example, a municipality or a corporation) of the insured financial obligation because it is seeking to increase the marketability of the insured financial obligation while reducing future interest costs (by attaining a higher credit standing for the insured financial obligation through the financial guarantee insurance contract). In other cases, the policyholder will be both the holder of the insured financial obligation and beneficiary because it has purchased a financial obligation in the secondary market and seeks to protect itself from a financial loss in the event of a default. Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:1ae652847566b948252b4d33852a0ffeb946793338c504dfb5bc98f51a809459 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/944/20/#10-objectives) SEC content: no ##### [944-20-10-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:ddc7827471389197bc3162dc6038c8d8c26936581ef363844128b2d81d31c2c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic establishes a framework for accounting by insurance entities based on the nature of insurance contracts rather than type of insurance entity. ##### [944-20-10-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:5375270b19ab6e147950de867cea09185e2ff7b949cef6bd058a8e3f5bccef25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Life insurance [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.") encompasses the concepts of amounts at risk and the relative probability of [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place.") and [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment.") events. ##### [944-20-10-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:63ffa8ec89664925a4d4acd75b27906ce3f73b2002a053411eb6bd9b65f678f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The insurance model does not override, nor is it inconsistent with, the basic recognition and measurement principles of Subtopic 450-20. Rather, the insurance model is a specialized application of those principles that estimates and allocates revenues and costs that have a future economic benefit over the period in which services are provided or received. For example, that Subtopic prohibits recognition of a loss unless it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that a loss has been incurred, and requires recognition of the full amount of a loss that has been incurred in the period of the loss. Likewise, paragraphs [944-40-25-32](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-32), [944-60-25-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-2), [944-60-25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-9), [944-60-30-1 through 30-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-30-1) , and [944-60-35-3 through 35-5](https://asc.understandingaccounting.org/asc/944/60/#944-60-35-3) require recognition of losses in the period the loss occurs. ### Reinsurance Contracts #### Overall ##### [944-20-10-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:40a598138921f56e79a73facfe0f0d95bcebe3705b6c528bfe98b6a61e880a80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A principal objective of the Reinsurance Contracts Subsections of this Subtopic is to account for an agreement with a [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") according to its substance. Difficulty in evaluating a contract under the Reinsurance Contracts Subsections of this Subtopic is an indication that the contract's form and substance may differ. For example, if complicated adjustable features or options are present in a contract, close analysis may be required to determine the effect of those contractual provisions on risk transfer. #### Multiple-Year Retrospectively Rated Contracts ##### [944-20-10-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:4206394b8a33f6d4a5d084d6b9baf2a2f1288a82a1a5e7c618b1c621d0de8b01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A retrospectively rated contract is a multiple-year contract in which events in one period of the contract create rights and obligations in another. The principal issues in accounting for a multiple-year retrospectively rated contract involve how to recognize and measure assets and liabilities resulting from the obligatory retrospective rating provisions. While it may be difficult for some types of retrospectively rated contracts to pass the risk transfer test, the recognition and measurement questions are present regardless of whether the contract transfers risk. In fact, the questions become clearly evident with contracts that meet the risk transfer test and are accounted for as [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."). 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. Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:e4bf310dcbece3cd17576744767538be6f1e0ba4dea1b817cff585da917015e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/944/20/#25-recognition) SEC content: no ### Short-Duration Contracts #### Multiple-Year Retrospectively Rated Insurance Contracts ##### [944-20-25-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:a5d6d9eb8c9efc060f2325c603bfaadde232c32d46ddc760fac441b72d910cc3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To be accounted for as insurance, a multiple-year retrospectively rated insurance contract must indemnify the insured as required by paragraph [944-20-15-1B](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-1B). ##### [944-20-25-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:5f2ef915bf741ea9efa1e98cb57720480366c493d1557d89d6b99e917a1fa286 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a multiple-year retrospectively rated insurance contract accounted for as insurance, the insurer shall both: 1. a Recognize an asset to the extent that the insured has an obligation to pay cash (or other consideration) to the insurer that would not have been required absent experience under the contract 2. b Recognize a liability to the extent that any cash (or other consideration) would be payable by the insurer to the insured based on experience to date under the contract. ##### [944-20-25-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:8d56a442f1c51060da3457078c3746866db6a2b0913b6130c4bc15c7d5b27fd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Deposit accounting shall not be used to avoid loss recognition that would otherwise be required (for example, if the insured has no future [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.") relating to the deposit with the insurer and, therefore, the deposit is not recoverable). ### Reinsurance Contracts #### Multiple-Year Retrospectively Rated Contracts by Ceding and Assuming Entities ##### [944-20-25-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:fada681e1563a514063d93e5157bb76366730d9acb068d117c5b21719297fc6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contracts that meet all of the conditions described in paragraph [944-20-15-55](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-55): 1. a 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.") shall recognize a liability and the assuming entity shall recognize an asset to the extent that the ceding entity has an obligation to pay cash (or other consideration) to the [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") that would not have been required absent experience under the contract (for example, payments that would not have been required if losses had not been experienced). 2. b The ceding entity shall recognize an asset and the assuming entity shall recognize a liability to the extent that any cash (or other consideration) would be payable from the assuming entity to the ceding entity based on experience to date under the contract. ##### [944-20-25-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:aa002c2fde0efd7b29552595356c884573ecef053222521545688c4a9fbb9c8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [944-20-25-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:235b1da43586d3eb231889c66a97b2348726d8826ee7744d08a8639ee8994b23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T02:15:13.179Z to 2026-09-10T02:15:13.179Z Record version: sha256:0155f01b7f3426f6ab4940ae0705066759b85b4090c07a21e1fd85415c5557e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/944/20/#30-initial-measurement) SEC content: no ### Reinsurance Contracts #### Multiple-Year Retrospectively Rated Contracts by Ceding and Assuming Entities ##### [944-20-30-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:13.179Z to 2026-09-10T02:15:13.179Z Record version: sha256:d31437bc72030c42b806729cc2fecef5c8600471c9850bf34bb6afc2b8366a0b 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 rate 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. Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:2b5b64e8dc9e8ca7fc10785105cd62e4835fc4245d10dd62583f8e6b78733e53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/944/20/#35-subsequent-measurement) SEC content: no ### Short-Duration Contracts #### Multiple-Year Retrospectively Rated Insurance Contracts ##### [944-20-35-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:78dfd59decafce3d2f756802eed5e8846e542256f472204c53371f578276e856 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [944-20-25-2(a)](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-2), certain amounts are recognized by the insurer and insured to the extent that the insured has an obligation to pay cash (or other consideration) to the insurer that would not have been required absent the experience under the contract.The amount recognized in the current period shall be computed, using a with-and-without method, as the difference between the insured's total contract costs before and after the experience under the contract as of the reporting date, including costs such as premium adjustments, settlement adjustments, and impairments of [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."). The amount of premium expense related to impairments of coverage shall be measured in relation to the [original contract](https://asc.understandingaccounting.org/glossary/o/#original-contract "A contract that was initially entered into by the contract holder before any potential internal replacement activity.") terms. Future experience under the contract (that is, future losses and future premiums that would be paid regardless of past experience) shall not be considered in measuring the amount to be recognized. ##### [944-20-35-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:f9c84c9668abf456cc5df916d8bbcce5dde6e8db06dfbd67d754f783ad4f2248 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurer shall account for changes in coverage in the same manner as changes in other contract costs. For example, the effects of decreases in coverage without a commensurate reduction in premium shall be recognized as a gain by the insurer when the event causing the decrease in coverage takes place. ### Reinsurance Contracts #### Multiple-Year Retrospectively Rated Contracts by Ceding and Assuming Entities ##### [944-20-35-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:1facf9b8938220ac1f5426a345d2d2da2b58a8645d8bbde15753381a07f394af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount recognized under paragraph [944-20-25-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-4) in the current period shall be computed, using a with-and-without method, as the difference between the ceding entity's total contract costs before and after the experience under the contract as of the reporting date, including costs such as premium adjustments, settlement adjustments, and impairments of [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."). ##### [944-20-35-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:0d862d0381bc5884be2aeb127cee8c56a9f145f2aa165a80b508136790f20b77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of premium expense related to impairments of coverage shall be measured in relation to the [original contract](https://asc.understandingaccounting.org/glossary/o/#original-contract "A contract that was initially entered into by the contract holder before any potential internal replacement activity.") terms. Future experience under the contract (that is, future losses and future premiums that would be paid regardless of past experience) shall not be considered in measuring the amount to be recognized. ##### [944-20-35-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:0be4df6da523ebd991c81ed849fcd9520d52fd8ed92a9023307035393ed5c1e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 1 (see paragraph [944-20-55-60](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-60)) illustrates the application of this guidance. ##### [944-20-35-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:22d2879a54aace31c431e0eb4d5ad74142b750fc2f873f624ed89a2958da00d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of the asset to be recognized may be affected by credit risk, and appropriate valuation allowances shall be established for any amounts deemed uncollectible. However, 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.") shall not consider the likelihood of future losses in evaluating whether the asset is realizable at the financial reporting date. The effect of those future losses on the asset, if any, shall be recognized in the period of the loss. Potential future unfavorable development on the incurred losses covered by the contract shall not be considered in measuring the asset at the financial reporting date. The relevant recorded [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") liability at that date represents the ceding entity's best estimate of the expected ultimate claim liability, and is the liability that must be used in measuring the refundable amount based on contract experience to date. ##### [944-20-35-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:3303ad6bf9264a9ce2aa46314c4dc76e7dc5811953384878bbd3b244f38b80fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Recognizing a smaller asset based on potential unfavorable loss development implies that claim liabilities are understated at the financial reporting date. Accordingly, changes in estimates of claim liabilities shall not be recognized in measuring the related asset until the change in estimate takes place. ##### [944-20-35-8](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:f23170701d570b45989d59d99dafc306de0f862df3aa31e7bcfee5bc78d23a11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remainder of this Subsection addresses the following matters: 1. a Changes in coverage 2. b Loss recognition 3. c With-and-without method 4. d Multiple contingent contractual features 5. e Payment for continuation of contract 6. f Contract cancellation. ##### [944-20-35-9](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:774b6cf977257f46667901b7884dc408b81ef444f73cfce124c1e1203a6e503d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The ceding entity and the assuming entity shall account for changes in coverage in the same manner as changes in other contract costs. ##### [944-20-35-10](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:1285d74e01f0a6971acf142c29d84bfffd9ae4708b663344ecd803a8580844a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, the effects of decreases in coverage without a commensurate reduction in premium shall be recognized as a loss by the ceding entity and as a gain by the assuming entity when the event causing the decrease in coverage takes place. ##### [944-20-35-11](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:8ef6e8cff68034be764fbce1d1772e7698a15c8084256e2bdf35140433be3370 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Changes in either the probability or amount of potential future recoveries are considered a change in coverage. For example, if the contract limit stayed the same, but the ceding entity could not receive any recoveries unless losses for the industry as a whole reached a certain level, coverage has been reduced. What matters is not the specific contract provisions regarding coverage, but whether the probability or amount of potential future recoveries has increased or decreased as a result of those provisions. ##### [944-20-35-12](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:9650faf06e52effa36c13bbed85dc16e7c5b47227787b75df760047664b054c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Deposit accounting shall not be used to avoid loss recognition that would otherwise be required; for example, if the ceding entity has no future coverage relating to the deposit with the [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") and therefore the deposit is not recoverable. ##### [944-20-35-13](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:bfbca1549af128b215ee3db3dd2e64a48731fde2e422d80ff162403688e8205e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [944-20-35-14](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:b4f645a56b31d93c0466cd4ad31157d5a415fa9298c00941abb8460659a62510 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some circumstances, the ceding entity will be relieved of its obligation if the reinsurer cancels the contract, and only has to pay additional amounts if either: 1. a The contract remains [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."). 2. b The ceding entity cancels before the end of the contract term. Unless the reinsurer has terminated the contract, the ceding entity has an obligation for the additional amounts and must recognize the related liability. The effect of termination, which is to relieve the ceding entity of its liability, shall not be recognized until termination takes place. ##### [944-20-35-15](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:9d5198e2124cca51bd4d2975fe2b1fd2ad9ae7c3658f19eff1d07716ab87434f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash or other compensation equal to all or part of the positive fund balance received from the reinsurer if the ceding entity's contract continues in force shall be recognized as an asset because the ceding entity controls whether termination takes place and, thus, controls realization of the future economic benefit. ##### [944-20-35-16](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:19e756cdb26427b6dcbebaee619d05d0130ecb0cd091957a247301cbd4a82cf3 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 entity entering into a new contract in consideration for canceling a retrospectively rated contract would not have agreed to cancel the existing retrospectively rate 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. #### Multiple-Year Retrospectively Rated Contract Terminated by the Ceding Entity ##### [944-20-35-17](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:e5a5a59c39d0d8f2be3517fa176b077b7d3c55f1d281d03e6b0ee00b5233a8ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following paragraph applies to contracts having both of the following characteristics: 1. a The ceding entity could terminate the contract before the end of its term. 2. b Termination would change the amounts paid—for example, if terminating the contract would cost less than continuing the contract in force. ##### [944-20-35-18](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:91e6fa26a6910ad12a06f11cb3a55dcf66c3306f5a9eedde3009dbbca54f1abf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability resulting from a contract having the characteristics in the preceding paragraph shall be measured as follows: 1. a If a decision to terminate has been made, the measurement shall be based on an assumption of termination and experience to date. 2. b If a decision to terminate has not been made, the measurement shall be based on the lesser of the following: 1. 1 The total incremental cost that would be paid based on the with-and-without calculation assuming experience to date and assuming termination—that is, excluding the effects of future losses and future premiums that would have been paid regardless of experience to date 2. 2 The total incremental cost that would be paid based on the with-and-without calculation assuming experience to date and assuming no termination—that is, excluding the effects of future losses and future premiums that would have been paid regardless of experience to date. ##### [944-20-35-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:fc80ad91f2ab8626165644d6a2fc4ade147e6a91fa5fd240b671e1b7ec9bad6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [944-20-35-18](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-18), if a decision to terminate a contract has been made, the measurement of the liability shall be based on the assumption of [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.") and experience to date. Otherwise, the measurement of the liability shall be based on the lesser of the following: 1. a The total incremental cost that would be paid based on the with-and-without method assuming experience to date and assuming termination 2. b The total incremental cost that would be paid based on the with-and-without method assuming experience to date and assuming no termination. The effects of future losses and future premiums that would have been paid regardless of experience to date shall be excluded from both calculations. Costs associated with the decision not to terminate shall be recognized in the period in which the future coverage is provided because those costs are associated with that future coverage. 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. Source downloaded (UTC): 2026-09-10T02:15:22.645Z to 2026-09-10T02:15:22.645Z Record version: sha256:15cbc8cff263b85cea5582a00c2a9a313c10c7b07e1394e0e2073d1ff230549c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/944/20/#45-other-presentation-matters) SEC content: no ### Long-Duration Contracts #### Statement of Earnings—Universal Life-Type Contracts ##### [944-20-45-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:22.645Z to 2026-09-10T02:15:22.645Z Record version: sha256:7706a8ef3496cb733f0d230f3ef9d4976e5174b93eac9368dbf916b9e71cfed7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Payments to policyholders that represent a return of policyholder balances are not expenses of the insurance entity and shall not be reported as such in the statement of earnings. ##### [944-20-45-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:22.645Z to 2026-09-10T02:15:22.645Z Record version: sha256:7d881c0617645f57937bd94291121030ed6aa79107909e42b20fc7c9d93d409d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts reported as expenses shall include all of the following: 1. a Benefit claims in excess of the related policyholder balances 2. b Expenses of contract administration 3. c Interest accrued to policyholders 4. d Amortization of capitalized [acquisition costs](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts.") (see Subtopic 944-30). ##### [944-20-45-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:22.645Z to 2026-09-10T02:15:22.645Z Record version: sha256:717fca06d91759157fe82924047f808084b63ffc78b1943553889855348eb064 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Various other paragraphs in this Topic address presentation-related matters associated with universal life-type contracts as follows: 1. a Premiums collected—see paragraph [944-605-25-5](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-5) 2. b Amounts assessed for compensation—see paragraph [944-605-25-6](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-6) 3. c Amounts assessed against policyholders for initiation or front end fees—see paragraph [944-605-25-5](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-5) 4. d Unearned revenue—see paragraph [944-605-35-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-2) 5. e Amounts that may be assessed against policyholders in future periods—see paragraph [944-40-30-17](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-17) 6. f Cash values—see paragraph [944-40-30-18](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-18). Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:8dfcd6636d1285d9c0479cea4a3cce9b5a66e602535660585a8662281246b353 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/20/#50-disclosure) SEC content: no ### Long-Duration Contracts #### Limited-Payment and Universal Life-Type Contracts ##### [944-20-50-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:e4bec3807d7f2970069ec9f3197ca07674ce68f293ff8db8952295f4edac2589 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For financial statement disclosures about limited-payment and universal life-type contracts, see paragraphs [944-605-50-1 through 50-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-50-1) . #### Certain Participating Life Insurance Contracts ##### [944-20-50-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:d1d83edcc484114ee09434ab19cb43ba82c9cf0c7cc9e9f6d16ac7eb476cb808 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosure of the specific accounting policy applied to participating life insurance contracts that meet the criteria in paragraph [944-20-15-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-3) shall be made in accordance with Section 235-10-50. ### Reinsurance Contracts ##### [944-20-50-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:a80de5bf995691d45e5b75dd44666e4c3cef2ed33b6cba3b78605b7af1db4e68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All insurance entities shall disclose the nature, purpose, and effect of ceded [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.") transactions on the insurance entity's operations. ##### [944-20-50-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:ffe9f8ab7ef071fffbbb37f2120ce67512d9cf9637376e9ff0ba2f64dba87a5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Ceding entities also shall disclose the fact that the insurer is not relieved of its primary obligation to the policyholder in a reinsurance transaction. ##### [944-20-50-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:2d15ceeca825dcb13a059d09a585c1149b78b0ad3a9a3f61c6d7f7cf4ccaca10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-310-45-6](https://asc.understandingaccounting.org/asc/310/944/#310-944-45-6) states that, although amounts recoverable on unasserted claims shall be reported as [reinsurance recoverables](https://asc.understandingaccounting.org/glossary/r/#reinsurance-recoverable "All amounts recoverable from reinsurers for paid and unpaid claims and claim settlement expenses, including estimated amounts receivable for unsettled claims, claims incurred but not reported, or policy benefits."), details of the amounts comprising reinsurance recoverables may be presented separately. ##### [944-20-50-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:27d9dcea63f58caa7996d0dcf52cd49047d30019cf04ba05e808c00889532c1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Separate presentation or disclosure of servicing carrier activity is not precluded. ### Financial Guarantee Insurance Contracts ##### [944-20-50-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:c1e342028d3b4e3f166bf11e6eeba375043c6195616a00e93b78eb5989194908 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall disclose information that enables users of its financial statements to understand the factors affecting the present and future recognition and measurement of financial guarantee insurance contracts. Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:2e94b5c26e6d0b6c253abd399d322ddfc0f147dc026a4d3228aaa8e0827f3277 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/944/20/#55-implementation-guidance-and-illustrations) SEC content: no ### Short-Duration Contracts #### Implementation Guidance ##### [944-20-55-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:5e41b07bfe794409b56113de79e71e22ecd5a572a9f6d63c88264c3a9ddd9616 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of short-duration contracts within the scope of the Short-Duration Contracts Subsections of this Subtopic include both of the following: 1. a Most property and liability insurance contracts 2. b Certain [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, such as [credit life insurance](https://asc.understandingaccounting.org/glossary/c/#credit-life-insurance "Life insurance, generally in the form of decreasing term insurance, that is issued on the lives of borrowers to cover payment of loan balances in case of death."). ##### [944-20-55-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:696d568d8872fa23a7ba1f30f0a16fcbe3e58e6745f11bf0b5d8a2bcce5b6716 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-55-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-5) states that accident and health insurance contracts may be short-duration or long-duration 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. ### Long-Duration Contracts ##### [944-20-55-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:748ab516d9a3c899cea59f91292fed5a9508ebb48b5881c80fcf45aa97df761f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of long-duration contracts within the scope of the Long-Duration Contracts Subsections of this Subtopic include all of the following: 1. a Whole-life contracts 2. b Guaranteed renewable term life contracts 3. c [Endowment contracts](https://asc.understandingaccounting.org/glossary/e/#endowment-contract "An insurance contract that provides insurance from inception of the contract to the maturity date (endowment period). The contract specifies that a stated amount, adjusted for items such as policy loans and dividends, if any, will be paid to the beneficiary if the insured dies before the maturity date. If the insured is still living at the maturity date, the policyholder will receive the maturity amount under the contract after adjustments, if any. Endowment contracts generally mature at a specified age of the insured or at the end of a specified period.") 4. d Annuity contracts 5. e Title insurance contracts. ##### [944-20-55-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:de5d1db3684c317135e0d2b92367f90e715062692f33aaf827214b6a6d173e92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Title insurance contracts provide protection for an extended period and therefore are considered long-duration contracts. ##### [944-20-55-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:f17eafe314a339f36abd6b2c89256adfc35797b85e8375e6d432c395845338d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accident and health insurance contracts may be short-duration or long-duration 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. For example, individual and [group insurance](https://asc.understandingaccounting.org/glossary/g/#group-insurance "Insurance protecting a group of persons, usually employees of an entity and their dependents. A single insurance contract is issued to their employer or other representative of the group. Individual certificates often are given to each insured individual or family unit. The insurance usually has an annual renewable contract period, although the insurer may guarantee premium rates for two or three years. Adjustments to premiums relating to the actual experience of the group of insured persons are common.") contracts that are noncancelable or guaranteed renewable (renewable at the option of the insured), or collectively renewable (individual contracts within a group are not cancelable), ordinarily are long-duration contracts. ##### [944-20-55-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:db06babb47e60ce854c3732126eb5384d7823f0d52ad34136ffb9e37c3342d01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance discusses the nature 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."). ##### [944-20-55-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:a1164d21db640031a197c3707b65d238d661260912f6fc5f691250f3708a584d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The risk that the guaranteed price of an annuity may prove to be unfavorable to the guaranteeing entity if the annuity is purchased is a price risk not unlike a guaranteed price of any commodity and does not create a mortality risk. ##### [944-20-55-8](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:48624540d0ca7f0af373fc4d9b2b95cbfb9bb43ede9d94563b48828961134b0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A mortality risk does not arise until the purchase provision is executed and the obligation to make [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.") is present in an [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."). ##### [944-20-55-9](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:e55e3fb92b3cbd3de1bcaec9ff7d30c537038660316ab8750d84aee0cb55f5fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A nominal mortality risk—a risk of insignificant amount or of [remote](https://asc.understandingaccounting.org/glossary/r/#remote "The chance of the future event or events occurring is slight.") probability—is not sufficient to permit that a contract be accounted for as an insurance contract. ##### [944-20-55-10](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:f8621115d371f8a0877543b4c291a077660e23b5cec559341b371995ab39e37c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assets and liabilities related to market value adjusted annuities should be accounted for and reported as [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).") assets and liabilities because the insurance entity provides a fixed return for a specified period, market value adjusted annuities written through a [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.") do not meet the criteria in paragraph [944-80-25-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-2). Under that paragraph, all investment performance, net of contract fees, must be required to be passed through to the contract holder to qualify for separate account treatment. ##### [944-20-55-11](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:b96393e0f700383b3fdcfa160f353c3e756ecc721a906454fef276e8d6d1fca4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the model described in paragraphs [944-40-25-13 through 25-25](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-13) , the liability to be held for market value adjusted annuities is the accrued account balance using the contractually specified rate. The market value adjusted amount generally is available at surrender only and is not available at contract maturity; therefore, the market value adjustment is considered a surrender charge or credit. ##### [944-20-55-12](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:bbc0843059ca199ed2a7e8b61232bc0a7860155660ab8c6e6c81e64e4675a710 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [group participating pension contracts](https://asc.understandingaccounting.org/glossary/g/#group-participating-pension-contracts "Contracts between insurance entities and pension plans that have account balance crediting provisions that give the contract holder the total return based on a referenced pool of assets over the life of the contract either through crediting rates or termination adjustments.") not accounted for under the provisions of Subtopic 815-10, the liability for the contract holder account balance should be based on the [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.") of the referenced pool of assets without regard to the accounting under generally accepted accounting principles (GAAP) for the assets in the referenced pool of assets, with any change in the liability recognized through earnings. ##### [944-20-55-13](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:7559b8393e2ca5625bdc6dcf540e4eb6f84fe3d62d9c337df371ff0f8986911f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [long-term care benefit](https://asc.understandingaccounting.org/glossary/l/#long-term-care-benefit "A feature of a deferred annuity in which, if during the accumulation phase, the contract holder has an insurable event (for example, disability, loss of activities of daily living) that meets the criteria specified in the contract, additional benefits in excess of the account balance will be available.") should be evaluated and accounted for in accordance with paragraphs [944-20-15-20 through 15-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-20) , [944-40-25-35 through 25-39](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-35) , [944-40-30-20 through 30-24](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-20) , [944-40-35-9 through 35-10](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-9) , [944-40-35-17 through 35-18](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-17) , and [944-605-30-1 through 30-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-30-1) . ##### [944-20-55-14](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:c0304fc442fc4185529ce5c6b7bc05306b032f7fbacbfc6572b23661ab162050 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [earnings protection benefit](https://asc.understandingaccounting.org/glossary/e/#earnings-protection-benefit "A feature of an annuity under which, in the event of death, the beneficiary will receive a benefit in addition to the account balance equal to a percentage (for example, 40 percent) of the difference between the account balance and the deposits less withdrawals.") is a death benefit and should be evaluated and accounted for in accordance with paragraph [944-40-25-25B](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25B). ##### [944-20-55-15](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:010c74e9465548b7b0682b67f389fe1ac087116a2975ec0f54d7cc4dec940a99 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/). ##### [944-20-55-16](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:38da72e238f86b7aaa8a5544cd35291897e7953e65c679f19933b57a07582071 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/). ##### [944-20-55-17](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:5cc0d946639043bcf8a5bfc71101d644976e4d124e0c76709bfb4040f0b2c049 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/). ##### [944-20-55-18](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:0a84f2f70a648042d89d18c5966c5e0b12d31784cbd540f72a16bd5e6f4ea635 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/). ##### [944-20-55-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:f060ee24b48c8b39d3fc5d0253d165f5d930d0a634c75a686dcf8fe45d1db94c 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/). ##### [944-20-55-20](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:ec43d5b63c4ecf4eb7eb0ecb247ba5820477bf0dc76de3a21a05b3938004fd54 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/). ##### [944-20-55-21](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:524a2031dae2a763415e8196472f5745406cc1725162ce5495dd485caac1f13e 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/). ##### [944-20-55-22](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:14c18220b702b642681fbade713efee3834e68122c20b6701f46620f3aab121d 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/). ##### [944-20-55-23](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:c478d79427bfb988d156b47824b7d062b6b50ac9eecb7d273bec732655edcf11 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/). ##### [944-20-55-24](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:a8b96e4c3677bfdda80f5af5598950d3d14f95a5ab135c175c9f4d493184682e 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/). ##### [944-20-55-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:df5c75c783fa282e645662344e6716c3613fcaf92c4d486e15b46e4283f42783 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/). ##### [944-20-55-26](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:88d150cbf7ab60a787bb7b9926b67c83861d1f8802358b6e9ef3307d31bdc73e 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/). ### Reinsurance Contracts ##### [944-20-55-27](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:7d7d2c5a2fe6686d82e5e6dd91a6b6a3f91b7a9c78110493aba09d3307f09e94 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance discusses, for purposes of evaluating whether a contract with a [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") transfers risk, what constitutes a contract, which is essentially a question of substance. It may be difficult in some circumstances to determine the boundaries of a contract. ##### [944-20-55-28](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:e52aa68a37127ddb67a19f1ba81093a0750f35b529153bf490a1d16c3e611f6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For instance, the profit-sharing provisions of one contract may refer to experience on other contracts and, therefore, raise the question of whether, in substance, one contract rather than several contracts exist. ##### [944-20-55-29](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:faeaefea63303ea845165ea4026982999e4701f889544c8c333e56391ffe1e07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Financial Services—Insurance Topic on [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.") limits the inconsistency that could result from varying interpretations of the term contract by requiring that features of the contract or other contracts or agreements that directly or indirectly compensate the reinsurer or related reinsurers for losses be considered in evaluating whether a particular contract transfers risk. Therefore, if agreements with the reinsurer or related reinsurers, in the aggregate, do not transfer risk, the individual contracts that make up those agreements also would not be considered to transfer risk, regardless of how they are structured. ##### [944-20-55-30](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:b886b8dd66781cb17edc60991c2e0e862f469f227b190d36cd07a71187537e21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain guidance relevant to determining the boundaries of a contract is provided in the accounting literature. ##### [944-20-55-31](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:cc57e508f2b694f643d58bec87a3daa3a3588bd905dd7241abf619c93a5b9c3e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40) states that provisions of other related contracts may be considered part of the subject contract under certain circumstances. ##### [944-20-55-32](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:699e5f5b0b59caa4f4432035cc6da7aad2b29fd69f7f249120ef0de771fca4c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Different kinds of exposures combined in a program of reinsurance shall not 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. ##### [944-20-55-33](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:85a3723e202af34c0a8b593b43e8cf176869bbaf26107e40418a1672a72ef478 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition, paragraph [944-20-15-65](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-65) refers to the fact that an amendment of a contract may create a new contract. ##### [944-20-55-34](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:681992477f18960b8b6690afc51f3407f4f64e22aa36158ff8113bb45792b7b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The legal form and substance of a reinsurance contract generally will be the same, so that the risks reinsured under a single legal document would constitute a single contract for accounting purposes. However, that may not always be the case. Accordingly, careful judgment may be required to determine the boundaries of a contract for accounting purposes. ##### [944-20-55-35](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:e9efe97dd68cc4abea6c4bf22f22dafdd599ba351e1fd4b924c20f66db82d228 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-56](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-56) states that, 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 shall be considered separately for accounting purposes. ##### [944-20-55-36](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:04c9b95d997a6497f7e8fa9c0b828cccf0a4982a56d68534d8de660129b6a5d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance discusses how the guidance on multiple-year retrospectively rated contracts in the Reinsurance Contracts Subsections of this Subtopic is based on the concept that there is a substantive difference between a contract that contains an obligatory retrospective rating provision and one that does not. This distinction derives from Subtopic 450-20, which requires recognition of liabilities (which are defined as present obligations) as of a financial reporting date, but prohibits recognition of losses and expenses that will result from future events. For example, it may be a virtual certainty that an entity will pay employee salaries next year. But because there is no present obligation to pay those salaries, they are not recognized today. ##### [944-20-55-37](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:78eb338c505f2f150ceca9d0a940ef3531aef6bf10c106eee8e242c55b302ad0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance on multiple-year retrospectively rated contracts in the Reinsurance Contracts Subsections of this Subtopic does not permit recognition of the effects of retrospective rating provisions unless those provisions are obligatory. ##### [944-20-55-38](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:1554c9b0bfad8f25bc6404790ddfeae34cb813a41c3f8f041dedf07c4e01772a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses circumstances in which the assessment of risk transfer changes after the initial assessment at contract inception. ##### [944-20-55-39](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:65f61d2b00e5ef9c5ba13e51617e24fc4006b001bf9f2dd54dc7a88e25efd13b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-43](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-43) states that the status of a contract should be determinable at inception and, absent amendment, subsequent changes shall be very rare. ##### [944-20-55-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:9d588ed174bdf76dfdcfaed9dc680ef1121c2f3fe248a2e1717e751df6e6f0e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the risk of significant loss was not deemed [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.") at inception, and a significant loss subsequently occurred, the initial assessment was not necessarily wrong, because [remote](https://asc.understandingaccounting.org/glossary/r/#remote "The chance of the future event or events occurring is slight.") events do occur. Likewise, once a reasonable possibility of significant loss has been established, such loss need not occur to maintain the contract's status as reinsurance. ##### [944-20-55-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:7af1e48fbe2a32857da34ea23ede909d6f01078f6a6bc9d1dc4f3077f56c7c61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not preclude reclassification if the initial assessment is later deemed incorrect. However, careful consideration would need to be given to whether the reclassification represents the correction of an error (see Subtopic 250-10). ##### [944-20-55-42](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:e6636e7e60c9766a29b2ff1e5e44c70902e42296d4e99f06f2cf057222a47d96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance discusses the definition of past insurable events that governs whether reinsurance [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.") of short-duration insurance policies is prospective or retroactive. As described in paragraph [944-20-15-34B](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34B), 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.") is based on whether a contract reinsures future or past insured events covered by the underlying insurance contracts. The form of the reinsurance—whether claims-made or occurrence-based—does not determine whether the reinsurance is prospective or retroactive. ##### [944-20-55-43](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:4d65d3dfb86d6192f1f9ce07eec8dc07f814cb4963e3868e88622167a4d96e6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Most reinsurance contracts covering calendar-year incurred losses combine coverage for insured events that occurred before entering into the reinsurance contract with coverage for future insured events and, therefore, include both prospective and retroactive elements. ##### [944-20-55-44](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:915d345bf102179857e24c7cc35fb87e8c0ac76789b48e861e1c08c2b8db38ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract may be considered to have been substantively entered into even though regulatory approval of that contract has not taken place. The absence of agreement on significant terms, or the intention to establish or amend those terms at a later date based on experience or other factors, generally indicates that the parties to the contract have not entered into a reinsurance contract, but rather have agreed to enter into a reinsurance contract at a future date. If contractual provisions under a contract substantively entered into at a future date cover insurable events before that date, that coverage is retroactive. ##### [944-20-55-45](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:95f872a28c1ddddaaf947d798920044079db3ce92eb3c8db720d3a4bf84b781f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of this guidance, assume a reinsurance contract covers losses from asbestos and pollution claims on occurrence-based insurance policies effective during previous periods and for which the reinsurance coverage is triggered by a court interpretation that a loss is covered within the terms of the underlying insurance policies. In this instance, the insured event is the occurrence of loss within the coverage of the underlying insurance contracts, not the finding of a court. Therefore, the fact that the asbestos exposure or pollution is covered under insurance policies effective during prior periods makes the reinsurance coverage in this instance retroactive. ##### [944-20-55-46](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:6ea751c8fbc11d1b84d0d4ee62030e3f12f391386dec918d37f73902e72a632f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses classification of a contract to reinsure short-duration policies entered into after the contract's effective date. The portion of the contract related to the period of time between the effective date of the contract and the date the contract was entered into is retroactive because it covers insured events that occurred before entering into the reinsurance contract. ##### [944-20-55-47](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:e239c87e31cb2d0fff85be1756353723e62701b20d3aaf9e11fa1a6c77cc2ee7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance explains that adjustments to future premiums or coverage may affect the accounting for a reinsurance contract. As discussed in paragraph [944-20-15-34B](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34B), whenever an adjustment results in a reinsurer providing new or additional coverage for past insurable events, that coverage is retroactive. ##### [944-20-55-48](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:1320b099616542f6b881e5311e7e380ffd9f90c67d2ced9c9237644a0cf7f440 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, if subsequent years' premiums under a multiple accident year contract create additional coverage for previous accident years, the additional coverage is retroactive, even if the original coverage provided in the contract for those accident years was prospective. ##### [944-20-55-49](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:3017449ce43daa0458088be9ae81be1a89753d613b58944e2fe7197de4d1a144 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Likewise, if current losses under a multiple-year contract eliminate coverage in future periods, some or all of the premiums to be paid in those future periods should be charged to the current period. ##### [944-20-55-50](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:4ddff54ff6ceb1b43eaae9b9e9ce8a45f02e669bc76cf449787606f5584d7086 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance discusses the application of the scope guidance for reinsurance of short-duration contracts beginning in paragraph [944-20-15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41). ##### [944-20-55-51](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:7546421d18545587857b68b71eda59ea12a0a5478ae5b1bbaa5f621025517c98 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reasonable possibility of significant loss to the reinsurer does not necessarily indicate underwriting risk has been transferred. The tests are independent and the methods and assumptions used in the significant loss test in paragraph [944-20-15-41(b)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41), such as comparing present value of cash flows to ceded premiums, are not relevant to the other test. ##### [944-20-55-52](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:060c3f3c72dc95d1d6607101eeafc680436012a1e42e48e2e4f1bf6f9f7f7a16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It would be possible to demonstrate the reasonable possibility of significant loss on a contract that does not transfer underwriting risk for two reasons. First, if sufficient timing risk is present, the loss could be generated from timing risk alone. Second, judgments about what is significant and what is reasonably possible could differ. ##### [944-20-55-53](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:ffdadd0234872c5acc0cdedbe1763a5e9a608f32b5d4590e27179b71316a3b6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some features that can delay timely reimbursement violate the condition in paragraph [944-20-15-41(a)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41)but could still result in the reasonable possibility of significant loss to the reinsurer. Examples are a payment schedule or accumulating retention. Because both the condition in (a) in that paragraph and the condition in (b) in that paragraph must be met, failure to transfer significant timing and underwriting risk is not overcome by the possibility of significant loss to the reinsurer. ##### [944-20-55-54](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:3367dde0a3c1aba0e4abce64c60a4bd88c26d4431b5c18fc3323d6272dc8b3b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40) refers to contractual features inherently designed to delay the timing of reimbursement to 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."). Regardless of what a particular feature might be called, paragraphs [944-20-15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41) and [944-20-15-46](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-46) state that any feature that can delay timely reimbursement violates the conditions for reinsurance accounting. As indicated in those paragraphs, transfer of [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.") requires that the reinsurer's payments to the ceding entity depend on and directly vary with the amount and timing of claims settled under the reinsured contracts. Contractual features that can delay timely reimbursement prevent that condition from being met. Therefore, any feature that may affect the timing of the reinsurer's reimbursement to the ceding entity should be closely scrutinized. ##### [944-20-55-55](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:00f9d562a452057a2df8e6deda8b3233964fb010333f5352716722d3daab0160 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under very limited circumstances, the reinsurer need not be exposed to the reasonable possibility of significant loss for a contract to meet the conditions for reinsurance accounting. For example, applying the reasonable possibility of significant loss condition is problematic if the underlying insurance contracts themselves do not result in the reasonable possibility of significant loss to the ceding entity. If the reinsurer has assumed substantially all of the insurance risk in the reinsured portions of the underlying policies, even if that risk does not result in the reasonable possibility of significant loss, the transaction meets the conditions for reinsurance accounting. In this narrow circumstance, the reinsurer's economic position is virtually equivalent to having written the insurance contract directly. The risks retained by the ceding entity are insignificant, so that the reinsurer's exposure to loss is essentially the same as the insurer's. Most commonly, such a situation arises if an individual risk or insurance contract, rather than a group of risks or contracts, is reinsured. The probability of loss from any individual short-duration insurance contract generally is considered to be remote. Therefore, outcomes that would expose the assuming entity to risk of significant loss ordinarily could not be characterized as reasonably possible. ##### [944-20-55-56](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:8c86c7f8e51f31411c58406ed2269a1e2c502b0197d7ace6d3c8939f04033e88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assessing the economic position of the reinsurer in relation to that of the ceding entity under paragraph [944-20-15-53](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-53)may be relatively easy for reinsurance of individual risks or for unlimited-risk quota-share reinsurance, because the premiums and losses on these types of reinsurance generally are the same as the premiums and losses on the reinsured portions of the underlying insurance policies. In other types of reinsurance, determining the reinsurer's net cash flows relative to the insurer is likely to be substantially more difficult. For example, it generally would be difficult to demonstrate that the ceding entity's premiums and losses for a particular layer of insurance are the same as the reinsurer's premiums and losses related to that layer. That paragraph states that, if the economic position of the reinsurer relative to the insurer cannot be determined, the contract would not qualify under the exception in that paragraph. ##### [944-20-55-57](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:b2adb89ba6185a166e0d0913baf7bd06cac8a727a64616faee308aee7f7d481b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A structured settlement transaction that does not legally replace one insurer by another and thereby extinguish the primary insurer's liability to the policyholder is accounted for as reinsurance if the annuity funding the settlement meets the conditions for reinsurance accounting. Otherwise, the transaction is accounted for as a deposit in accordance with paragraph [340-30-05-1](https://asc.understandingaccounting.org/asc/340/30/#340-30-05-1). ##### [944-20-55-58](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:5e2b976f6924b5c305a1cf4b7c14647df23c17478f5cf7dbc2e3b8e226f1474f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract does not meet the conditions for reinsurance accounting if features of the reinsurance contract or other contracts or agreements directly or indirectly compensate the reinsurer or related reinsurers for losses. That compensation may take many forms, and an understanding of the substance of the contracts or agreements is required to determine whether the ceding entity has been indemnified against loss or liability relating to insurance risk. For example, contractual features may limit the reinsurer's exposure to insurance risk or delay the reimbursement of claims so that investment income mitigates exposure to insurance risk. Examples of those contractual features, noted in paragraph [944-20-15-40(a) through (b)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40), are not all-inclusive. ##### [944-20-55-59](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:86097a10549ca5a53435ae3e99e7161bc487178a743fad37c8c24b5604e01527 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses a circumstance in which, under a multiple-year retrospectively rated reinsurance contract, the ceding entity has to make additional payments to the reinsurer, but the ceding entity also receives expanded coverage. The single payment is allocated to the two separate transactions. In one transaction, the ceding entity has acquired an asset by making a payment to the reinsurer in exchange for expanded coverage. In the other, the ceding entity has incurred a loss or liability to the extent that it is reimbursing the reinsurer for past losses. Because a variety of factors may affect the value of reinsurance coverage at any point in time, the most appropriate measure of the value of additional coverage generally is the price of the initial coverage. For example, if coverage of $6.00 was acquired for a $1.00 premium, and the ceding entity would pay $4.00 more for another $6.00 of coverage if a loss occurs, the most relevant measure of the amount of premium that relates to the new coverage would be $1.00. The other $3.00 presumably is a reimbursement for the loss that has been incurred. #### Illustrations ##### [944-20-55-60](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:a717a4c15b79b7f5107c4e5ed52f33a86b767057cab1bf8ff38a4ee7ba71e0e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the application of the with-and-without method under paragraph [944-20-35-13](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-13). This Example assumes all of the following: 1. a The retrospectively rated contract reinsures risks arising from short-duration contracts. 2. b The three-year contract prohibits cancellation during 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."). 3. c Cash settlement is required upon [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.") of the contract. 4. d The contract provides for deposit premiums of $1.00 per year for $6.00 of coverage in excess of a stipulated retention. 5. e Coverage is limited to one catastrophic event each year (that is, the ceding entity will not collect more than $6.00 per year from the reinsurer). 6. f If one or more losses occur, the ceding entity owes the reinsurer a single premium adjustment of $4.00 spread proportionately over the remaining contract term. 7. g If the ceding entity incurs a loss of $6.00 in the first year, the results in the fund balance will be negative $5.00 ($1.00 of premium to date less $6.00 of losses to date). 8. h In Years 2 and 3, the ceding entity must pay the assuming entity $3.00 each year ($1.00 of deposit premium and $2.00 of the premium adjustment). ##### [944-20-55-61](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:cc8116cfc978b94445345f49529af61a21386c12543dfb8de3ee21a86b25e052 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the with-and-without method, the ceding entity would recognize a liability as the difference between the ceding entity's total contract costs before and after the experience under the contract loss ($4.00). ##### [944-20-55-62](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:2c924c4b4f511359f73ca9f31c20f785dc28fbbe9c1f4f5cb50ac7796f42f106 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the effect of termination. Assume a ceding entity enters into a three-year contract with an assuming entity. ##### [944-20-55-63](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-63) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:d0259f1f4f7e45ec9f51c22f7995d43a117f7ede7998fee370cea262fe998c16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a loss occurs in the first year, the ceding entity is required to pay either of the following: 1. a An additional $2.00 premium adjustment in each subsequent year that the contract is [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.") 2. b If the ceding entity terminates the contract before the end of the third year, 90% of any remaining premium adjustment. ##### [944-20-55-64](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-64) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:140a046e522baef35b537b741fdf13f3b66d7fbb0d48b49cdebd3b4bc39bd097 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the guidance in this Subtopic, the ceding entity would recognize a liability at the end of the first year equal to the difference in the total contract costs before and after the loss unless the ceding entity has decided to terminate the contract at that time. In this Example, if the ceding entity decided to terminate the contract, it would recognize the cost of termination ($3.60). Otherwise, it would recognize the lesser of the amount assuming termination ($3.60) or the amount assuming no termination ($4.00). Source downloaded (UTC): 2026-09-10T02:15:30.760Z to 2026-09-10T02:15:30.760Z Record version: sha256:d36380b4e2b0827a06538f6b99cc6e9b98b9f82e1c14fa4cedcfcd8143561250 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/944/20/#65-transition-and-open-effective-date-information) SEC content: no ##### [944-20-65-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:30.760Z to 2026-09-10T02:15:30.760Z Record version: sha256:b11532c2140d8768fa7a1832143c9a7af6ed385eae204068b7d27688ebafbbb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/01/2010 after the end of the transition period stated in FASB Statement No. 163, _Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60_. Source downloaded (UTC): 2026-09-10T02:15:37.433Z to 2026-09-10T02:15:37.433Z Record version: sha256:e71e27bbd00ab7603b6be6efd6735d2a5fa344000ef51f87324f2f48b7a9937d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/20/#sec-00-status) SEC content: yes ##### [944-20-S00-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:37.433Z to 2026-09-10T02:15:37.433Z Record version: sha256:32f721ae7447e8e179e1d7659075074d857dec4dbb2d275a46c986505c23a1d9 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
944-20-S99-1AmendedAccounting Standards Update No. 2012-0308/27/2012
944-20-S99-2AmendedAccounting Standards Update No. 2010-0401/15/2010
Source downloaded (UTC): 2026-09-10T02:15:39.545Z to 2026-09-10T02:15:39.545Z Record version: sha256:69ab92097fe1aadd770013deb18fcc4941a80c07a9ba339c887482846d0154d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-S30: SEC 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/944/20/#sec-30-initial-measurement) SEC content: yes #### Discounting Claims Liabilities Related to Short-Duration Contracts ##### [944-20-S30-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:39.545Z to 2026-09-10T02:15:39.545Z Record version: sha256:51e0da71f22b3c82c13e77125d65a237073e694028fa9cebf7fb805c39927f44 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [944-20-S99-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S99-1), SAB Topic 5.N, for SEC Staff views on discounting claims liabilities related to short-duration insurance contracts. Source downloaded (UTC): 2026-09-10T02:15:41.464Z to 2026-09-10T02:15:41.464Z Record version: sha256:f011b1ac2bb4a68382ae5f8eba8015ec6c2c005c151277485e4a85eb198ec223 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-S35: SEC 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/944/20/#sec-35-subsequent-measurement) SEC content: yes #### Discounting Claims Liabilities Related to Short-Duration Contracts ##### [944-20-S35-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:41.464Z to 2026-09-10T02:15:41.464Z Record version: sha256:746934ccdd3223f3bdfbbc3111bd87d84b49e07675e804c8caedd81d057fb140 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [944-20-S99-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S99-1), SAB Topic 5.N, for SEC Staff views on discounting claims liabilities related to short-duration insurance contracts. Source downloaded (UTC): 2026-09-10T02:15:43.227Z to 2026-09-10T02:15:43.227Z Record version: sha256:f7293834c5b51e9a23f09cfdf1ce1f1868f3ebdbc6e2a9d867f0956872e3845f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/20/#sec-50-disclosure) SEC content: yes #### Present Value of Future Profits ##### [944-20-S50-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:43.227Z to 2026-09-10T02:15:43.227Z Record version: sha256:ba9f0cbdb7c53e8b128674cc0f7de4341a2a854269e39b601c17ad12e52d37ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [944-20-S99-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-S99-2), SEC Observer Comment: Accounting for the Present Value of Future Profits Resulting from the Acquisition of a Life Insurance Company, for SEC Staff views on disclosures regarding present value of future profit assets. Source downloaded (UTC): 2026-09-10T02:15:47.018Z to 2026-09-10T02:15:47.018Z Record version: sha256:404a8a58b38f92ee212df49ada3a6c5a63f7c42e7702d268f07850dde365326a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/944/20/#sec-99-sec-materials) SEC content: yes #### SEC Staff Guidance ##### [944-20-S99-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:47.018Z to 2026-09-10T02:15:47.018Z Record version: sha256:7ecfc12b4f4dcb7a8e098681126a2e060578e8aeee94a00d30dd099f79dbf973 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.N, Discounting by Property-Casualty Insurance Companies. - Facts: A registrant which is an insurance company discounts certain unpaid claims liabilities related to short-duration FN9 insurance contracts for purposes of reporting to state regulatory authorities, using discount rates permitted or prescribed by those authorities ("statutory rates") which approximate 3 1/2 percent. The registrant follows the same practice in preparing its financial statements in accordance with GAAP. It proposes to change for GAAP purposes, to using a discount rate related to the historical yield on its investment portfolio ("investment related rate") which is represented to approximate 7 percent, and to account for the change as a change in accounting estimate, applying the investment related rate to claims settled in the current and subsequent years while the statutory rate would continue to be applied to claims settled in all prior years. - FN9 The term "short-duration" refers to the period of coverage (see FASB ASC paragraph [944-20-15-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-7) (Financial Services—Insurance Topic), not the period that the liabilities are expected to be outstanding. - Question 1: What is the staff's position with respect to discounting claims liabilities related to short-duration insurance contracts? - Interpretive Response: The staff is aware of efforts by the accounting profession to assess the circumstances under which discounting may be appropriate in financial statements. Pending authoritative guidance resulting from those efforts however, the staff will raise no objection if a registrant follows a policy for GAAP reporting purposes of: - Discounting liabilities for unpaid claims and claim adjustment expenses at the same rates that it uses for reporting to state regulatory authorities with respect to the same claims liabilities, or - Discounting liabilities with respect to settled claims under the following circumstances: - (1) The payment pattern and ultimate cost are fixed and determinable on an individual claim basis, and - (2) The discount rate used is reasonable on the facts and circumstances applicable to the registrant at the time the claims are settled. - Question 2: Does the staff agree with the registrant's proposal that the change from a statutory rate to an investment related rate be accounted for as a change in accounting estimate? - Interpretive Response: No. The staff believes that such a change involves a change in the method of applying an accounting principle, i.e., the method of selecting the discount rate was changed. The staff therefore believes that the registrant should reflect the cumulative effect of the change in accounting by applying the new selection method retroactively to liabilities for claims settled in all prior years, in accordance with the requirements of FASB ASC Topic 250, Accounting Changes and Error Corrections. Initial adoption of discounting for GAAP purposes would be treated similarly. In either case, in addition to the disclosures required by FASB ASC Topic 250 concerning the change in accounting principle, a preferability letter from the registrant's independent accountant is required. ##### [944-20-S99-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:47.018Z to 2026-09-10T02:15:47.018Z Record version: sha256:85682a33dfcbec7ff1e08c955f4fe8f59a5abadc96499b2eaaf196dc952c19c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SEC Observer Comment: Accounting for Intangible Assets Arising from Insurance Contracts Acquired in a Business Combination. - The SEC staff will require registrants to provide the following disclosures about intangible assets arising from insurance contracts acquired in a business combination in filings with the Commission: - 1\. A description of the registrant's accounting policy - 2\. An analysis of the intangible assets arising from insurance contracts acquired in a business combination account for each year for which an income statement is presented—that analysis should include the intangible assets arising from insurance contracts acquired in a business combination balance at the beginning of the year, the amount of additions during the year arising from acquisitions of insurance companies, the amount of amortization during the year, the amount of any write-offs during the year due to impairment and how those write-offs were determined, and the balance at the end of the year - 3\. The estimated amount or percentage of the end-of-the-year balance of intangible assets arising from insurance contracts acquired in a business combination to be amortized during each of the next five years.