A liability for expected costs relating to most types of long-duration contracts shall be accrued over the current and expected renewal periods of the contracts.
A liability for future policy benefits relating to long-duration contracts other than title insurance contracts shall be accrued when premium revenue is recognized.
Amounts determined for other adjustments shall not be reduced for future fees and charges.
A loss shall be recognized in the statement of operations to the extent an asset reported in the general account is designated as part of a contractually referenced pool of assets and on that designation date has an unrealized loss.
For contracts that have features that may result in more than one potential account balance, the accrued account balance shall be based on the highest contractually determinable balance that will be available in cash or its equivalent at contractual maturity or the reset date, before reduction for future fees and charges.
An example of a contract subject to the preceding paragraph is 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.
For contracts in which amounts credited as interest to the contract holder are reset periodically, the accrued balance shall be based on the highest crediting rate guaranteed or declared through the reset date.
Death and surrender benefits incurred shall be recognized as expenses in the statement of earnings.
The reinsurer shall determine the classification of the reinsurance contract as an investment contract or as an insurance contract at the inception of the reinsurance contract.
For reinsurance contracts, the mortality or morbidity risk could be deemed other than nominal even if the original issuer did not determine mortality or morbidity to be other than nominal.
There is a rebuttable presumption that a contract has significant mortality risk where the additional insurance benefit would vary significantly in response to capital markets volatility.
An insurance entity shall recognize a claim liability on a financial guarantee insurance contract when the insurance entity expects that a claim loss will exceed the unearned premium revenue for that contract based on the present value of expected net cash outflows to be paid under the insurance contract.