# ASC 944-40-25: Financial Services—Insurance — Claim Costs and Liabilities for Future Policy Benefits — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/944/40/#25-recognition) 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): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:33643539047cd44b2a1091902237e4167582c4c53fe15b90dfdc935c87d47189 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/944/40/#25-recognition) SEC content: no #### Claim Costs ##### [944-40-25-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:53815f5d6115572e36b1167bd077e9d6682bbd17c2f47c03fffdad861b9a2aac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Both of the following shall be accrued when insured events occur: 1. a A [liability for unpaid claims](https://asc.understandingaccounting.org/glossary/l/#liability-for-unpaid-claims "The amount needed to provide for the estimated ultimate cost of settling claims relating to insured events that have occurred on or before a particular date (ordinarily, the balance sheet date).") (including estimates of costs for claims relating to insured events that have occurred but have not been reported to the insurer) 2. b A [liability for claim adjustment expenses](https://asc.understandingaccounting.org/glossary/l/#liability-for-claim-adjustment-expenses "The amount needed to provide for the estimated ultimate cost required to investigate and settle claims relating to insured events that have occurred on or before a particular date (ordinarily, the balance sheet date), whether or not reported to the insurer at that date."); that is a liability for all costs expected to be incurred in connection with the settlement of unpaid claims. ##### [944-40-25-2](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:52d00f025971b540de14bd1f63f6382844068d24f765ea25b225e245753bd2ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The estimated liability for unpaid claims includes the amount of money that will be required for future payments on both of the following: 1. a Claims that have been reported to the insurer 2. b Claims relating to insured events that have occurred but have not been reported to the insurer as of the date the liability is estimated. ##### [944-40-25-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:babcbc992b5e1906236eb9fcecd73cdabc1bc964ff487c1950594b134bc787b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Claim adjustment expenses](https://asc.understandingaccounting.org/glossary/c/#claim-adjustment-expenses "Expenses incurred in the course of investigating and settling claims.") include any legal and adjusters' fees, and the costs of paying claims and all related expenses. ##### [944-40-25-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:3f3d7ca39982feeba96b18386d126c6cc4149bfc800f2ebfeb3bc80f4418c4c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [944-40-25-5](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:3c88228cf6124f6177f49ce6637c685330a6641cbe99491cb4c661b19946671c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Catastrophe Losses ##### [944-40-25-6](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:9e982b3b9febb7435a4017cbeda030fd5a2d1e1baa5af4367bdf970349e50654 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The conditions in paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) shall be considered with respect to the risk of loss assumed by an insurance entity for catastrophes that may occur during the terms of policies [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.") to determine whether accrual of a loss is appropriate. ### Long-Duration Contracts #### Overall ##### [944-40-25-7](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:83a3a8ce357122ad12df22bcd2e003cd358c16d2d4b7576cb7bb7079c1027c52 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [944-40-25-8](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:d59aa150cc0ae92a3e3cd31bdc06d6cee9e6b0e2b67b0ec6b563dc6e1cc01d8b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The present value of estimated future policy benefits to be paid to or on behalf of policyholders less the present value of estimated future [net premiums](https://asc.understandingaccounting.org/glossary/n/#net-premiums "For traditional and limited-payment long-duration insurance contracts, the net premium is that portion of the gross premium required to provide for all benefits and expenses, excluding acquisition costs or any costs that are required to be charged to expense as incurred. For long-duration participating life insurance contracts that meet the criteria in paragraph 944-20-15-3, the net premium is a constant ratio of guaranteed maximum gross premiums. The ratio is calculated at issue, so that the present value of all guaranteed death and endowment benefits is equal to the present value of all net premiums.") to be collected from policyholders—that is, a [liability for future policy benefits](https://asc.understandingaccounting.org/glossary/l/#liability-for-future-policy-benefits "An accrued obligation to policyholders that relates to insured events, such as death or disability.")—shall be accrued when premium revenue is recognized. ##### [944-40-25-9](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:5600a81fa8b135fd745ac2d0eae7e92a8f4c7bfe01748505b5c91a3a1f2f7017 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition, as discussed in paragraph [944-40-25-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-1) liabilities for unpaid claims and [claim adjustment expenses](https://asc.understandingaccounting.org/glossary/c/#claim-adjustment-expenses "Expenses incurred in the course of investigating and settling claims.") shall be accrued when insured events occur. ##### [944-40-25-10](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:d4aff4072cccc73a226314b069414485127dc78ebc8a2020ad45e302054a4f1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A liability for future policy benefits relating to long-duration contracts other than title insurance contracts shall be accrued when premium revenue is recognized. #### Traditional and Limited-Payment Long-Duration Contracts ##### [944-40-25-11](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:b4c2f11b3dfb9f976a9a22adfb1dd27925c419788f9c5870d74e64066b4f7011 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability for future policy benefits represents the present value of future benefits to be paid to or on behalf of policyholders and certain related expenses less the present value of future net premiums receivable under the insurance contracts. In no event shall net premiums exceed gross premiums. 1. a [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). #### Universal Life-Type Contracts and Nontraditional Contract Benefits ##### [944-40-25-12](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:ef4e8fb90252d2b446db49a53386d69b152d898235e55723ba8c5edf40e96b99 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.") provided to the contract holder, whether for universal life-type contracts (or [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.")) shall be recognized as part of the liability for policy benefits over the period in which the contract must 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 the contract holder to qualify for the inducement or at the crediting date, if earlier, in accordance with paragraphs [944-40-25-13 through 25-16](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-13) . No adjustments shall be made to reduce the liability related to the sales inducements for anticipated [surrender charges](https://asc.understandingaccounting.org/glossary/s/#surrender-charges "Amounts expected to be assessed against policyholder balances at contract redemption, whole or partial, regardless of how the charges are labeled, such as contingent deferred sales charges."), [persistency](https://asc.understandingaccounting.org/glossary/p/#persistency "The complement of the termination rate, persistency is the renewal quality of insurance contracts, that is, the number of insureds that keep their insurance in force during a period. Persistency varies by plan of insurance, age at issue, year of issue, frequency of premium payment, and other factors."), or early withdrawal contractual features. ##### [944-40-25-13](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:b832179410f26b4eab5ed4ce7c938a4f164d5e4153339ad26a5f276b6c82091a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The balance that accrues to the benefit of the contract holder for a long-duration insurance contract that is subject to paragraph [944-40-30-16](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-16) (or an investment contract that is subject to paragraphs [944-20-15-14](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-14) and [944-825-25-1 through 25-2](https://asc.understandingaccounting.org/asc/825/944/#825-944-25-1) ) is the accrued account balance. The liability for the contract is the combination of amounts recorded in [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.") liabilities and [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).") policyholder liabilities. ##### [944-40-25-14](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:f5b90a95e0c55689a94a7e98d3e6cb051126123a5c7f437ca3f2052eb3162653 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accrued account balance equals: 1. a Deposit(s) net of withdrawals 2. b Plus amounts credited pursuant to the contract 3. c Less fees and charges assessed 4. d Plus additional interest (for example, [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.")) 5. e Other adjustments (for example, appreciation or depreciation recognized in accordance with paragraphs [944-40-25-18 through 25-21](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-18) to the extent not already credited and included in \[b\]). For purposes of item (d), additional interest is an amount that is required to be accrued under the liability valuation model that has not yet been credited to the contract holder's account. ##### [944-40-25-15](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:fe62b54f7fbf5d21522e410070bc651b6c2f05cc7ccc5b739f874f80f8473a23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Additional interest, if any, shall be accrued through the balance sheet date at the rate that would accrue to the balance available in cash, or its equivalent, before reduction for future fees and charges, at the earlier of the date that the interest rate credited to the contract is reset (the [reset date](https://asc.understandingaccounting.org/glossary/r/#reset-date "The date at which the existing contractually declared investment return expires.")) or contractual maturity. ##### [944-40-25-16](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:e10cfbeaa3ab93eac3fadc942747c8d0df77b870ffafa0ce435149bbd4f991d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of the preceding paragraph, an asset or contract is the equivalent of cash if it has both of the following characteristics: 1. a It has a [readily determinable fair value](https://asc.understandingaccounting.org/glossary/r/#readily-determinable-fair-value "An equity security has a readily determinable fair value if it meets any of the following conditions: The fair value of an equity security is readily determinable if sales prices or bid-and-asked quotations are currently available on a securities exchange registered with the U.S. Securities and Exchange Commission (SEC) or in the over-the-counter market, provided that those prices or quotations for the over-the-counter market are publicly reported by the National Association of Securities Dealers Automated Quotations systems or by OTC Markets Group Inc. Restricted stock meets that definition if the restriction terminates within one year. The fair value of an equity security traded only in a foreign market is readily determinable if that foreign market is of a breadth and scope comparable to one of the U.S. markets referred to above. The fair value of an equity security that is an investment in a mutual fund or in a structure similar to a mutual fund (that is, a limited partnership or a venture capital entity) is readily determinable if the fair value per share (unit) is determined and published and is the basis for current transactions."). 2. b It can be converted to cash without incurring significant transaction costs. ##### [944-40-25-17](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:1a4afaa56fe7d25bfd6c0b645b72796c2d5cbc5ce7f09e19671fb0c6ad2a9cfd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any changes in the accrued account balance resulting from the application of the guidance in paragraphs [944-40-25-13 through 25-25](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-13) shall be reflected in net income in the period of the changes. ##### [944-40-25-18](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:0badf68c902eb79faad0c03cd75317edf5c59d0b735c42cb047dbe4fd735c78a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some contracts, such as variable life and annuity and certain group pension participating and other experience-rated contracts, provide for a return through periodic crediting rates, surrender adjustments, 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 based on the total return of a contractually referenced pool of assets owned by the insurance entity. Insurance entities shall first determine whether such contracts are required to be accounted for under the provisions of Subtopic 815-10 or 815-15. ##### [944-40-25-19](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:8b906709822e872e3aa1b7b5aff99734759d1ba56cc979942c62962f94ab4ba4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To the extent a contract described in the preceding paragraph is not required to be accounted for under the provisions of Subtopic 815-10 or 815-15, the amount of other adjustments described in paragraph [944-40-25-13 through 25-16](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-13) shall 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 at the balance sheet date, even if the related assets are not recognized at fair value, to the extent not already credited to the accrued account balance and included in paragraph [944-40-25-14(b)](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-14). ##### [944-40-25-20](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:5f799a5ec012bb50acfd237ad395fb0a495b141ce4b19729cf04d822b87ae857 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts determined for other adjustments shall not be reduced for future fees and charges. ##### [944-40-25-21](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:12870330fed68858872cd5ab41fdf44246589b734d816d2fe023c42d6c025378 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [944-40-25-22](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:60fc5c01e5da9255773354fba2b63e35b8484e54f31df507aca0069576949c29 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [944-40-25-23](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:7dbebe4b99a6fd2bb513c5b6852130f55a60ce7ffdd10e4046784ea585665caf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [944-40-25-24](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:31713fa1105cca2d774e4ef9e70fb9628cbae355cf7d56cb7d9e72929e36a3ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [944-40-25-25](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:201eff59d682eaf7939e2ab9f68c1b768ec09489358bd2f33b41121f01765f2c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accrued account balance shall not reflect surrender adjustments (for example, [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.") adjustments, surrender charges, or credits). For a description of a market value annuity and market value annuity adjustments, see paragraph [944-20-05-28](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-28). ##### [944-40-25-25A](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:2b510dd399e65a775933d51fb7f7d7e37278aa266d116951a97ca7c9646334f8 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/). ##### [944-40-25-25B](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:3519bd2ce33d9e59ca086c116ae35653fce7121446333d5135a28c29fc269576 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses contracts or contract features that provide for potential benefits in addition to the account balance: 1. a An insurance entity shall first determine at contract inception whether such benefits should be accounted for under the provisions of paragraph [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C). 2. b For benefits that are not accounted for under the provisions of paragraph [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C), an insurance entity shall then determine whether such benefits should be accounted for under the provisions of Subtopic 815-10 or 815-15. 3. c All other benefits shall be accounted for under the provisions of paragraphs [944-40-25-26 through 25-27A](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-26), as applicable. ##### [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:44577f1942e87cb708c06da8e510d79287a6d5392f617176f143d6d9725ae5e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract or contract feature that both provides protection to the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk shall be recognized as a [market risk benefit](https://asc.understandingaccounting.org/glossary/m/#market-risk-benefit "A contract or contract feature in a long-duration contract issued by an insurance entity that both protects the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk."). ##### [944-40-25-25D](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25D) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:cd62f07ba2fb6f3dbb01a9f56de8f75934ea718d632eeea0407f36ca25e56752 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In evaluating whether a contract or contract feature meets the conditions in paragraph [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C), an insurance entity shall consider that: 1. a Protection refers to the transfer of a loss in, or shortfall (that is, the difference between the account balance and the benefit amount) of, the contract holder's account balance from the contract holder to the insurance entity, with such transfer exposing the insurance entity to capital market risk that would otherwise have been borne by the contract holder (or beneficiary). 2. b Protection does not include the death benefit component of a life insurance contract (that is, the difference between the account balance and the death benefit amount). This condition does not apply to an investment contract or an annuity contract (including an annuity contract classified as an insurance contract). 3. c A nominal risk, as explained in paragraph [944-20-15-21](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-21), is a risk of insignificant amount or a risk that has a remote probability of occurring. A market risk benefit is presumed to expose the insurance entity to other-than-nominal capital market risk if the benefit would vary more than an insignificant amount in response to capital market volatility. ##### [944-40-25-26](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:4148d80303f40d17a4eea2a608e766386147b45691d5c650498b903491ae2941 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses contract features that provide for potential benefits in addition to the account balance that are payable only upon [annuitization](https://asc.understandingaccounting.org/glossary/a/#annuitization "Annuitization refers to the policyholder receiving periodic payments under various payment options, including their remaining life or for a term-certain period."), such as annuity purchase guarantees or [guaranteed minimum income benefits](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.") that are not market risk benefits, and two-tier annuities. ##### [944-40-25-27](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:d7dea3ae48c4702c76da0b834958f1743c2a1991110771568dbb17af1e23fec9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the contract feature is not required to be accounted for under paragraph [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C) or the provisions of Topic 815 on derivatives and hedging, an additional liability for the contract feature shall be established if the present value of expected annuitization payments at the expected annuitization date exceeds the expected account balance at the expected annuitization date. ##### [944-40-25-27A](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-27A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:c4ec811c239c058321890e9769a667969a562f395b74f162dd164840f3d30d6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the contract feature is not required to be accounted for under paragraph [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C) or the provisions of Topic 815 on derivatives and hedging and if the amounts assessed against the contract holder each period for the insurance benefit feature of an insurance contract are assessed in a manner that is expected to result in profits in earlier years and losses in subsequent years from the insurance benefit function, a liability for death or other insurance benefits shall be recognized in addition to the account balance. ##### [944-40-25-28](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:9e7bd47394c50ead296066e83b406b3a4abd28b790daf63da122358ef38bf9f1 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/). #### Certain Participating Life Insurance Contracts ##### [944-40-25-29](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:fedba88af90bd0d8cc13dd59aacea0ddcb08bd4867094240b9acf9f1749af2f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A liability for future policy benefits relating 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 equal to the sum of all of the following: 1. a The [net level premium reserve](https://asc.understandingaccounting.org/glossary/n/#net-level-premium-reserve "The excess, if any, of the present value of future guaranteed death and endowment benefits over the present value of future net premiums.") for death and endowment policy benefits 2. b The liability for [terminal dividends](https://asc.understandingaccounting.org/glossary/t/#terminal-dividends "Dividends to policyholders calculated and paid upon termination of a contract, such as on death, surrender, or maturity.") 3. c Any [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") loss (premium deficiency) as described in paragraphs [944-60-25-7 through 25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-7) . ##### [944-40-25-30](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:3af81640b50220f7616840cfcab0da0d6798f91b6fe2c7d486dc1ef0a58d0211 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Terminal dividends shall be accrued in the liability for future policy benefits if both of the following conditions are met: 1. a Payment of the dividend is probable. 2. b The amount can be reasonably estimated. These conditions should be used in the same sense that they are used in Subtopic 450-20. ##### [944-40-25-31](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:49b41dcef1d914977069adc1450bcfffd1a16d6bc68cabec6bcdaa4d156d25ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Death and surrender benefits incurred shall be recognized as expenses in the statement of earnings. #### Title Insurance Contracts ##### [944-40-25-32](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:0b874db418cb0ed4e0cf93b8bde7248ae9b6677eec304921e0a3d2e42f9ab1a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A liability for estimated [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 relating to title insurance contracts, including estimates of costs relating to [incurred-but-not-reported claims](https://asc.understandingaccounting.org/glossary/i/#incurred-but-not-reported-claims "Claims relating to insured events that have occurred but have not yet been reported to the insurer or reinsurer as of the date of the financial statements."), shall be accrued when title insurance premiums are recognized as revenue under Section 944-605-25. Estimated claim costs shall be recognized when premium revenue is recognized because the insurance provides protection against claims caused by problems with title to real estate arising out of ascertainable insured events that generally exist at that time. ### Reinsurance Contracts ##### [944-40-25-33](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:0eabbc1db7be05026f13d50a850b9f64029884c88889ac14f78f93ce48b8ccde 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 do not result in immediate recognition of gains unless the reinsurance contract is a legal replacement of one insurer by another and thereby extinguishes the ceding entity's liability to the policyholder. ##### [944-40-25-34](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:3b1c2e4bee11bbf60fb97142cdef43569cefb356dc6dd42910f9b6ca1f9f2b56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [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.") shall be recognized in a manner consistent with the liabilities (including estimated amounts for claims incurred but not reported and future policy benefits) relating to the underlying reinsured contracts. Assumptions used in estimating reinsurance recoverables shall be consistent with those used in estimating the related liabilities. ##### [944-40-25-35](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:ed2ec154df9f3f823003d082394cee68955d7c0a843c5a05458d04d30a71c860 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") assumes an insurance benefit feature, the reinsurer shall assess the significance of [mortality](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.") and [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment.") risk within the reinsurance contract following the guidance in paragraphs [944-20-15-20 through 15-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-20) regardless of whether there is an account balance. ##### [944-40-25-36](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:335da70aa1a473f1ab912df3a500eb8503f9d37c6628a9a021c98ef2ba4ccef5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [944-40-25-37](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:5438477c8035f9c7b1f3a163aca6d005f7ee4466d8b21b7383b5c32fc49ba874 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [944-40-25-38](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:0e97f1ab88c03a863b8386d444fef7af097fe2ac5d811191ac018481a6fa3856 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [944-40-25-39](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:b29b73a1b747170a4d42cf21140085aeb6255d8b278aa6884e4f5aa3bab85be5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Similarly, the issuer of a contract that provides only an insurance benefit feature that [wraps](https://asc.understandingaccounting.org/glossary/w/#wrap "The practice of adding an insurance benefit feature to a separate noninsurance contract generally from a different issuer.") a noninsurance contract, for example, a guaranteed minimum death benefit related to a mutual fund balance, shall evaluate its contract in the same manner as described in paragraphs [944-40-25-35 through 25-38](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-35) . ##### [944-40-25-40](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:7b554033f7e79953c795187a7909b4a7a67d29c160d288419d8e5794a27dc589 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reinsurer may agree to reinsure all or a portion of certain [annuitization](https://asc.understandingaccounting.org/glossary/a/#annuitization "Annuitization refers to the policyholder receiving periodic payments under various payment options, including their remaining life or for a term-certain period.")or death or other insurance benefits (see paragraphs [944-40-25-25B through 25-27A](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25B)). Both 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.") and the reinsurer shall first determine whether such a reinsurance contract should be accounted for under the [market risk benefit](https://asc.understandingaccounting.org/glossary/m/#market-risk-benefit "A contract or contract feature in a long-duration contract issued by an insurance entity that both protects the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk.")provisions of paragraph [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C). For reinsurers, the reference to the account balance in paragraph [944-40-25-25D](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25D) refers to the underlying contract between the direct writer and the contract holder. If the reinsurance contract is not accounted for under the market risk benefit provisions of paragraph [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C), both the ceding entity and the reinsurer shall then determine whether such a reinsurance contract should be accounted for under the provisions of Subtopic 815-10 or 815-15. ##### [944-40-25-41](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:297c75a0b8ccebbcc573ecd9ccf0baf4308963d19bea6e5cd0fa10b8c123111d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the reinsurance contract is not required to be accounted for under the provisions of paragraph [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C) or Subtopic 815-10 or 815-15, the entity shall apply the guidance in paragraphs [944-40-25-26 through 25-27A](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-26). ### Financial Guarantee Insurance Contracts ##### [944-40-25-42](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:37.798Z to 2026-09-10T02:16:37.798Z Record version: sha256:a086ab3758396b9098e4a1c7c739e129b4b64128d37f3c6c07e393ac2ecb5537 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.