# ASC 944-40: Financial Services—Insurance — Claim Costs and Liabilities for Future Policy Benefits Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/944/40/) 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): 2026-09-10T02:16:26.116Z to 2026-09-10T02:17:13.308Z Record version: sha256:433c54b1c32330aefe8bc8bc6fba13557357af64423ddfeb529346ea94e189b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40: Financial Services—Insurance — Claim Costs and Liabilities for Future Policy Benefits ### Machine-generated study aids ```json { "summary": "ASC 944-40 governs how insurance entities recognize and measure claim costs and liabilities for future policy benefits, with separate subsections for short-duration contracts, long-duration contracts, reinsurance contracts, and financial guarantee insurance contracts. Its core rules are that liabilities for unpaid claims (including IBNR) and claim adjustment expenses are accrued when insured events occur, and that a liability for future policy benefits—the present value of future benefits and related expenses less the present value of future net premiums—is accrued when premium revenue is recognized. Post-ASU 2018-12, cash flow assumptions are updated at least annually with remeasurement gains/losses in net income, the discount rate is an upper-medium grade (low-credit-risk) fixed-income yield updated each reporting date through OCI, and market risk benefits are measured at fair value.", "key_points": [ "A liability for unpaid claims (including IBNR) and a liability for claim adjustment expenses shall be accrued when insured events occur, measured at the estimated ultimate cost of settling claims using past experience adjusted for current trends, less estimated recoveries such as salvage and subrogation (944-40-25-1, 944-40-30-1 through 30-3).", "For long-duration contracts, the liability for future policy benefits—the present value of future benefits and related expenses less the present value of future net premiums (net premiums never exceeding gross premiums)—is accrued when premium revenue is recognized, using assumptions for mortality, morbidity, terminations, and expenses with no provision for adverse deviation (944-40-25-8, 25-11, 944-40-30-7, 30-19).", "The liability for future policy benefits is discounted at an upper-medium grade (low-credit-risk) fixed-income instrument yield reflecting the liability's duration, and contracts may not be grouped across issue years but must be grouped into quarterly or annual cohorts (944-40-30-9, 944-40-30-7).", "Cash flow assumptions are reviewed and updated annually at the same time each year (and in interim periods if evidence suggests revision); net premiums are recalculated using actual historical plus updated expected experience, producing a liability remeasurement gain or loss in net income, while discount rate changes go directly to other comprehensive income and do not change net premiums (944-40-35-5, 35-6A, 944-40-45-4).", "A contract or feature that both protects the contract holder from other-than-nominal capital market risk and exposes the insurer to other-than-nominal capital market risk is a market risk benefit, measured at fair value with changes in net income except instrument-specific credit risk changes, which go to OCI, and presented separately on the balance sheet (944-40-25-25C, 25-25D, 944-40-30-19C, 944-40-35-8A, 944-40-45-3).", "For universal life-type contracts the liability equals the accrued account balance plus amounts assessed for future services, refundable assessments, and any premium deficiency; future assessments and surrender charges may not be anticipated, and additional liabilities for annuitization or death benefits use a benefit ratio of expected excess payments to expected assessments (944-40-30-16 through 30-18, 944-40-25-27, 25-27A, 944-40-30-20, 30-26).", "A claim liability on a financial guarantee insurance contract is recognized when expected claim loss exceeds unearned premium revenue, measured at the present value of expected net cash outflows discounted at a current risk-free rate updated each reporting period (944-40-25-42, 944-40-30-31 through 30-33, 944-40-35-26)." ], "categories": [ "Recognition", "Subsequent measurement", "Disclosure", "Industry-specific" ], "audience_level": "advanced", "student_note": "This is the heart of insurance liability accounting and was overhauled by ASU 2018-12 (LDTI): the most common misunderstanding is thinking assumptions are \"locked in\" at issue—cash flow assumptions are now unlocked annually (remeasurement to net income) while discount rate changes run through OCI without touching net premiums. Also remember the subtopic's split personality: short-duration contracts accrue claims when insured events occur, while long-duration contracts accrue a future policy benefit liability when premium revenue is recognized.", "related_topics": [ "944-20", "944-30", "944-60", "944-605", "944-80", "450-20" ], "key_concepts": [ "liability for unpaid claims", "claim adjustment expenses", "incurred but not reported claims", "liability for future policy benefits", "market risk benefit", "accrued account balance", "benefit ratio", "claims development disclosure" ] } ``` Source downloaded (UTC): 2026-09-10T02:16:26.116Z to 2026-09-10T02:16:26.116Z Record version: sha256:a53a2b3bd8ed0c4397f77632b05b195a54f2063fd948948dac9229fe261786c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/40/#00-status) SEC content: no ##### [944-40-00-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:26.116Z to 2026-09-10T02:16:26.116Z Record version: sha256:06406e2cd9de5f7c64a8eed1bdb692677a02569e2419e8d3754049ca34a0324d 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
Accident YearAddedAccounting Standards Update No. 2015-0905/21/2015
Acquisition CostsAmendedAccounting Standards Update No. 2010-2610/13/2010
AnnuitizationAddedAccounting Standards Update No. 2018-1208/15/2018
Annuitization PhaseSupersededAccounting Standards Update No. 2014-0603/14/2014
Block of New Insurance ContractsSupersededAccounting Standards Update No. 2018-1208/15/2018
Cash Surrender ValueAddedAccounting Standards Update No. 2018-1208/15/2018
Contract RateAddedAccounting Standards Update No. 2018-1208/15/2018
Enhanced-Crediting-Rate BonusAddedAccounting Standards Update No. 2014-0603/14/2014
Enhanced-Yield BonusSupersededAccounting Standards Update No. 2014-0603/14/2014
Guaranteed Minimum Accumulation BenefitAddedAccounting Standards Update No. 2018-1208/15/2018
Guaranteed Minimum Income BenefitAddedAccounting Standards Update No. 2018-1208/15/2018
Guaranteed Minimum Withdrawal BenefitAddedAccounting Standards Update No. 2018-1208/15/2018
Health Insurance ClaimsAddedAccounting Standards Update No. 2015-0905/21/2015
Involuntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
Lock-In ConceptSupersededAccounting Standards Update No. 2018-1208/15/2018
Maintenance CostsAddedAccounting Standards Update No. 2018-1208/15/2018
Market Risk BenefitAddedAccounting Standards Update No. 2018-1208/15/2018
Minimum Guaranteed Death BenefitSupersededAccounting Standards Update No. 2018-1208/15/2018
Net Amount at Risk (Relating to Variable Annuity Contracts)AddedAccounting Standards Update No. 2018-1208/15/2018
Net PremiumsAmendedAccounting Standards Update No. 2018-1208/15/2018
Payout PhaseAmendedAccounting Standards Update No. 2014-0603/14/2014
Policy Account BalanceAddedAccounting Standards Update No. 2018-1208/15/2018
Public Business EntityAmendedMaintenance Update 2017-06 (PDF)04/07/2017
Public Business EntityAmendedMaintenance Update 2016-11 (PDF)06/27/2016
Readily Determinable Fair ValueAmendedAccounting Standards Update No. 2015-1006/12/2015
Readily Determinable Fair ValueAmendedAccounting Standards Update No. 2014-0603/14/2014
Reinsurance RecoverableAddedAccounting Standards Update No. 2016-1912/14/2016
Risk of Adverse DeviationAmendedAccounting Standards Update No. 2018-1208/15/2018
Sales InducementsAmendedAccounting Standards Update No. 2014-0603/14/2014
Securities and Exchange Commission (SEC) FilerAddedAccounting Standards Update No. 2019-0911/15/2019
TerminationAmendedAccounting Standards Update No. 2014-0603/14/2014
Voluntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
944-40-05-1AmendedAccounting Standards Update No. 2016-1912/14/2016
944-40-15-6AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-25-11AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-25-13AmendedAccounting Standards Update No. 2012-0410/01/2012
944-40-25-25AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-25-25ASupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-25-25AAddedAccounting Standards Update No. 2012-0410/01/2012
944-40-25-25B through 25-25D
AddedAccounting Standards Update No. 2018-1208/15/2018
944-40-25-26AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-25-27AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-25-27AAddedAccounting Standards Update No. 2018-1208/15/2018
944-40-25-28SupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-25-34AmendedAccounting Standards Update No. 2016-1912/14/2016
944-40-25-40AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-25-41AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-6SupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-30-7AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-7AAddedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-8AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-9AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-10SupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-30-13 through 30-16
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-19AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-19ASupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-30-19AAddedAccounting Standards Update No. 2012-0410/01/2012
944-40-30-19B through 30-19D
AddedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-20AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-20AmendedAccounting Standards Update No. 2012-0410/01/2012
944-40-30-22AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-22AAddedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-24AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-25SupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-30-26AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-26AmendedAccounting Standards Update No. 2014-0603/14/2014
944-40-30-27AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-29AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-29AAddedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-30AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-30-32AmendedAccounting Standards Update No. 2016-1912/14/2016
944-40-35-5AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-35-6AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-35-6AAddedAccounting Standards Update No. 2018-1208/15/2018
944-40-35-7SupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-35-7AAddedAccounting Standards Update No. 2018-1208/15/2018
944-40-35-7BAddedAccounting Standards Update No. 2018-1208/15/2018
944-40-35-8SupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-35-8AAddedAccounting Standards Update No. 2018-1208/15/2018
944-40-35-8BAddedAccounting Standards Update No. 2018-1208/15/2018
944-40-35-9AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-35-11SupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-35-12AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-35-15 through 35-18
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-35-20 through 35-23
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-35-24SupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-45-1AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-45-2AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-45-3AddedAccounting Standards Update No. 2018-1208/15/2018
944-40-45-4AddedAccounting Standards Update No. 2018-1208/15/2018
944-40-50-1AmendedAccounting Standards Update No. 2015-0905/21/2015
944-40-50-2SupersededAccounting Standards Update No. 2015-0905/21/2015
944-40-50-3AmendedAccounting Standards Update No. 2016-1912/14/2016
944-40-50-3 through 50-5
AmendedAccounting Standards Update No. 2015-0905/21/2015
944-40-50-4AAmendedAccounting Standards Update No. 2025-1112/08/2025
944-40-50-4A through 50-4I
AddedAccounting Standards Update No. 2015-0905/21/2015
944-40-50-4BAmendedAccounting Standards Update No. 2016-1912/14/2016
944-40-50-4CAmendedAccounting Standards Update No. 2016-1912/14/2016
944-40-50-5AAddedAccounting Standards Update No. 2018-1208/15/2018
944-40-50-6AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-50-7AmendedAccounting Standards Update No. 2025-1112/08/2025
944-40-50-7AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-50-7A through 50-7C
AddedAccounting Standards Update No. 2018-1208/15/2018
944-40-50-7CAmendedAccounting Standards Update No. 2025-1112/08/2025
944-40-50-9AmendedAccounting Standards Update No. 2016-1912/14/2016
944-40-55-6AmendedAccounting Standards Update No. 2016-1912/14/2016
944-40-55-9A through 55-9G
AddedAccounting Standards Update No. 2015-0905/21/2015
944-40-55-9DAmendedAccounting Standards Update No. 2016-1912/14/2016
944-40-55-13AmendedAccounting Standards Update No. 2014-0603/14/2014
944-40-55-13A through 55-13K
AddedAccounting Standards Update No. 2018-1208/15/2018
944-40-55-14 through 55-17
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-55-18SupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-55-20 through 55-23
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-55-24SupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-55-25 through 55-28
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-40-55-29SupersededAccounting Standards Update No. 2018-1208/15/2018
944-40-55-29A through 55-29U
AddedAccounting Standards Update No. 2018-1208/15/2018
944-40-55-30AmendedAccounting Standards Update No. 2016-1912/14/2016
944-40-65-1AddedAccounting Standards Update No. 2015-0905/21/2015
944-40-65-2AmendedAccounting Standards Update No. 2022-0512/15/2022
944-40-65-2AmendedAccounting Standards Update No. 2020-1111/05/2020
944-40-65-2AmendedAccounting Standards Update No. 2019-0911/15/2019
944-40-65-2AddedAccounting Standards Update No. 2018-1208/15/2018
Source downloaded (UTC): 2026-09-10T02:16:29.572Z to 2026-09-10T02:16:29.572Z Record version: sha256:b84da01027041fc240d620ef151bc66e39a93831cfad7704a6d092ba0320dce7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/944/40/#05-overview-and-background) SEC content: no ##### [944-40-05-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:29.572Z to 2026-09-10T02:16:29.572Z Record version: sha256:3480840bfe5b987b065b0e6b4890e9859fb6d312f43646e353d1a3527a6b299f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to insurance entities on accounting for and financial reporting of claims costs and liabilities for future policy benefits. 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](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 5. e Financial Guarantee Insurance Contracts. ##### [944-40-05-2](https://asc.understandingaccounting.org/asc/944/40/#944-40-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:29.572Z to 2026-09-10T02:16:29.572Z Record version: sha256:9e7318da973504b63211e0cde70acc722e767420b43ef1635359f4172c0e7bd1 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 costs incurred in the [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") settlement process such as all of the following: 1. a Legal fees 2. b Outside adjuster fees 3. c Costs to record, process, and adjust claims. ### Short-Duration Contracts ##### [944-40-05-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:29.572Z to 2026-09-10T02:16:29.572Z Record version: sha256:2f0788522a7c431e9f5be14cb663778ac914b78d5b3d81e30677d0c54cb967d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Short-Duration Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of short-duration contracts. ### Long-Duration Contracts ##### [944-40-05-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:29.572Z to 2026-09-10T02:16:29.572Z Record version: sha256:9cc28574ccb7a10f24de9d4ce51488baaf9587fbb6a00010a6fa7fff0ffbbd9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of the expected cost related to long-duration insurance contracts. ### Reinsurance Contracts ##### [944-40-05-5](https://asc.understandingaccounting.org/asc/944/40/#944-40-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:29.572Z to 2026-09-10T02:16:29.572Z Record version: sha256:666dba26b898ea6a8b96c5e8be435419c0b918b5b009f33b20771a1380192587 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections of this Subtopic provide insurance entities 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. ### Financial Guarantee Insurance Contracts ##### [944-40-05-6](https://asc.understandingaccounting.org/asc/944/40/#944-40-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:29.572Z to 2026-09-10T02:16:29.572Z Record version: sha256:736d11fd93bda6ebc0fd0d49454b950075c1c857ec6d320cdcc05c2e366c0d10 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 claim liabilities for financial guarantee insurance contracts. #### Information about Insured Financial Obligations ##### [944-40-05-7](https://asc.understandingaccounting.org/asc/944/40/#944-40-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:29.572Z to 2026-09-10T02:16:29.572Z Record version: sha256:21d47dd5d977aa6173b6c01c09c3ea524db895cda674c405e6da072967dc9622 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance entities often aggregate information related to the credit standing of their insured financial obligations in a watch list or surveillance list to evaluate credit deterioration in those insured financial obligations. Those lists often are separated into groupings or categories to assist management in identifying varying degrees of credit deterioration of insured financial obligations in its portfolios. Source downloaded (UTC): 2026-09-10T02:16:31.680Z to 2026-09-10T02:16:31.680Z Record version: sha256:aa87efc631a7ca4e71b8a16bc898fb4c4243d5713201caa8e11c9d6eba836456 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/944/40/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [944-40-15-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:31.680Z to 2026-09-10T02:16:31.680Z Record version: sha256:45410c6d7ece42d9c1ca1975685e37f1c86370075a0ff50743faaced07d51346 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 specific entity exceptions noted below. #### Entities ##### [944-40-15-2](https://asc.understandingaccounting.org/asc/944/40/#944-40-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:31.680Z to 2026-09-10T02:16:31.680Z Record version: sha256:eed64611baea3a662943e12dcdba09d534704587251f4527378514c154704787 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not apply to [mortgage guaranty insurance entities](https://asc.understandingaccounting.org/glossary/m/#mortgage-guaranty-insurance-entity "An insurance entity that issues insurance contracts that guarantee lenders, such as savings and loan associations, against nonpayment by mortgagors."). ### Short-Duration Contracts #### Overall Guidance ##### [944-40-15-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:31.680Z to 2026-09-10T02:16:31.680Z Record version: sha256:49778b2e58d2c42667d816f032441cfab1dd9674707aa2ba7f439a686a233bf4 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/944/40/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-40-15-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:31.680Z to 2026-09-10T02:16:31.680Z Record version: sha256:021b1a2b42eec4790599383ada6001175bf099954121904fc054a13c4037f1c4 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. See the [Short-Duration Contracts Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15 for a discussion of what constitutes a short-duration contract. ### Long-Duration Contracts #### Overall Guidance ##### [944-40-15-5](https://asc.understandingaccounting.org/asc/944/40/#944-40-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:31.680Z to 2026-09-10T02:16:31.680Z Record version: sha256:f8ab9293fd1c0a2d01338b6cfb9f9b040482018ae203fdcf7bd4948db1a360eb 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/944/40/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-40-15-6](https://asc.understandingaccounting.org/asc/944/40/#944-40-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:31.680Z to 2026-09-10T02:16:31.680Z Record version: sha256:a67fedebd3225dc8d9cc0cb6f2c69fbd12de663c22b463a716a2daabc68c1881 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Long-Duration Contracts Subsections of this Subtopic applies to long-duration contracts, including [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.") with respect to nontraditional contract benefits referenced in paragraph [944-40-25-25B](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25B). See the [Long-Duration Contracts Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15 for a discussion of what constitutes a long-duration contract. ### Reinsurance Contracts #### Overall Guidance ##### [944-40-15-7](https://asc.understandingaccounting.org/asc/944/40/#944-40-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:31.680Z to 2026-09-10T02:16:31.680Z Record version: sha256:9186cbeefdbaa876f83f66a90aa22db8cdfd3863d0ac9a590055712febc14a70 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections of this Subtopic follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/40/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-40-15-8](https://asc.understandingaccounting.org/asc/944/40/#944-40-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:31.680Z to 2026-09-10T02:16:31.680Z Record version: sha256:7bb88b21439fd2b7198b8a8867b165d54801744d986d9138b57bf13506954cb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Reinsurance Contracts Subsections of this Subtopic applies only to [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. For guidance on identifying a reinsurance contract, see the [Reinsurance Contracts Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15. ### Financial Guarantee Insurance Contracts ##### [944-40-15-9](https://asc.understandingaccounting.org/asc/944/40/#944-40-15-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:31.680Z to 2026-09-10T02:16:31.680Z Record version: sha256:08d0b89864e05bd8e4e7ec91dcf338807c06b8ef6e1c6c74aed6e1478be5bd57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Financial Guarantee Insurance Contracts Subsections of this Subtopic applies only to [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"). 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. Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:ba4814551405c67671930e30f6a2977ef51dd3e2e3723cedc89ceb24b303a110 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/944/40/#30-initial-measurement) SEC content: no #### Liability for Unpaid Claims ##### [944-40-30-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:717dadc48cb88a23d4190f69030af06700547ba9a9a37de2e61cddba55fcd330 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [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).") shall be based on the estimated ultimate cost of settling the claims (including the effects of inflation and other societal and economic factors), using past experience adjusted for current trends, and any other factors that would modify past experience. ##### [944-40-30-2](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:16f49f7831cee74e3b8e4a84219b32970eb080db7a6462c4f83325c5a8589c59 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimated recoveries on unsettled claims, such as [salvage](https://asc.understandingaccounting.org/glossary/s/#salvage "The amount received by an insurer from the sale of property (usually damaged) on which the insurer has paid a total claim to the insured and has obtained title to the property."), [subrogation](https://asc.understandingaccounting.org/glossary/s/#subrogation "The right of an insurer to pursue any course of recovery of damages, in its name or in the name of the policyholder, against a third party who is liable for costs relating to an insured event that have been paid by the insurer."), or a potential ownership interest in real estate, shall be evaluated in terms of their estimated realizable value and deducted from the liability for unpaid claims. ##### [944-40-30-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:48addcc84548cacc821e69a345152d3a61471a69945bd81970498c954d049986 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimated recoveries on settled claims other than mortgage guaranty and title insurance claims also shall be deducted from the liability for unpaid claims. ##### [944-40-30-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:aaeca60c2ac5b172ee092c0bf49a3246542db01877777b2854cce41e61605745 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 costs associated directly with specific claims paid or in the process of settlement, such as legal and adjusters' fees. Claim adjustment expenses also include other costs that cannot be associated with specific claims but are related to claims paid or in the process of settlement, such as internal costs of the claims function. ##### [944-40-30-5](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:2806b80139ce0b5052215d3397f9271f017c26c44aa78e599c7849100d69910a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The initial measurement attributes of items recognized under the [General Subsection](https://asc.understandingaccounting.org/asc/944/40/#25-recognition) of Section 944-40-25 are the same as stated for subsequent measurement, see the [General Subsection](https://asc.understandingaccounting.org/asc/944/40/#35-subsequent-measurement) of Section 944-40-35. ### Long-Duration Contracts #### Overall ##### [944-40-30-6](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:09d0a99c6eb0b2bfb03c0cbdf784f14e1db0b11e8faf36c4193134d8c320d1db 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/). #### Traditional and Limited-Payment Long-Duration Contracts ##### [944-40-30-7](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:c3669e8b67ddbff67e6857d219bbdfbc4bd51bfd22e5a5e326893287a1a5435d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [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.") accrued under paragraph [944-40-25-8](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-8) shall be the present value of future benefits to be paid to or on behalf of policyholders and related expenses less the present value of 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.") (portion of [gross premium](https://asc.understandingaccounting.org/glossary/g/#gross-premium "The premium charged to a policyholder for an insurance contract. See also Net Premiums.") required to provide for all benefits and expenses, excluding [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.") or costs that are required to be charged to expense as incurred). That liability shall be estimated using methods that include assumptions, such as discount rate, [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place."), [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment."), [terminations](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 expenses (see paragraphs [944-40-30-9](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-9) and [944-40-30-11 through 30-15](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-11) ). The liability also shall consider other assumptions relating to guaranteed contract benefits, such as coupons, annual endowments, and conversion privileges. The assumptions shall not include a provision for the [risk of adverse deviation](https://asc.understandingaccounting.org/glossary/r/#risk-of-adverse-deviation "A concept (also referred to as risk load) used by insurance entities that allows for possible unfavorable deviations from assumptions."). In determining the level of aggregation at which reserves are calculated, an insurance entity shall not group contracts together from different issue years but shall group contracts into quarterly or annual groups. ##### [944-40-30-7A](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-7A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:02eed694d2720e8cb19bf1c73ec29aae4eeb1ea844b267b1fe3833022a79dcdd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To the extent the present value of future benefits and expenses exceeds the present value of future gross premiums, an immediate charge shall be recognized in net income (see paragraph [944-40-45-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-4)) such that net premiums are set equal to gross premiums. In no event shall the liability for future policy benefits balance be less than zero for the level of aggregation at which reserves are calculated. Assumptions shall be updated in subsequent accounting periods as described in paragraphs [944-40-35-5 through 35-6A](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-5) and [944-40-35-7A through 35-7B](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-7A) . ##### [944-40-30-8](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:251fdbee0100cb799996c45a255c210672b4737d8c936369e4c4623a54a3f66e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance discusses the following assumptions: 1. a Discount rate 2. b Mortality 3. c Morbidity 4. d Termination 5. e Expense. ##### [944-40-30-9](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:9fee33e759911853c1f1903f7f78125de67591f2e59d743c39cd1382aadc81ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability for future policy benefits shall be discounted using an upper-medium grade (low-credit-risk) fixed-income instrument yield. An insurance entity shall consider reliable information in estimating the upper-medium grade (low-credit-risk) fixed-income instrument yield that reflects the duration characteristics of the liability for future policy benefits (see paragraph [944-40-55-13E](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13E)). An insurance entity shall maximize the use of relevant observable inputs and minimize the use of unobservable inputs in determining the discount rate assumption. ##### [944-40-30-10](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:9de8ceb64a2184cdb0f349077ea045f05fcf6c3a26ba259d49e4354df23740f3 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/). ##### [944-40-30-11](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:a160b53846d004f3cbd1cf5dbbc5dd1d204d81c36f82a077e1416c70f0879aa6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Mortality assumptions used in estimating the liability for future policy benefits shall be based on estimates of expected mortality. ##### [944-40-30-12](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:531f738d9563e5fecbbdb1c671565faeabf10b2c003729a3b5dca4efbcb45aac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Morbidity assumptions used in estimating the liability for future policy benefits shall be based on estimates of expected incidences of disability and [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. ##### [944-40-30-13](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:cecd7af859cb17f6c3b43d2a269d8c172949a3e2677778430c3c20ba4a27cd61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Expected incidences of disability and claim costs for various types of insurance (for example, noncancelable and guaranteed renewable accident and health insurance contracts) and other factors, such as occupational class, waiting period, sex, age, and [benefit period](https://asc.understandingaccounting.org/glossary/b/#benefit-period "The period over which benefits are provided. The benefit period includes the periods during which the insurance entity is subject to risk from policyholder mortality and morbidity and during which the insurance entity is responsible for administration of the contract. The benefit period does not include the subsequent period over which the policyholder or beneficiary may elect to have settlement proceeds disbursed."), shall be considered in making morbidity assumptions. The [risk of antiselection](https://asc.understandingaccounting.org/glossary/r/#risk-of-antiselection "The tendency for lower terminations of poor risks.") or adverse selection also shall be considered in making morbidity assumptions. ##### [944-40-30-14](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:9772b24228339980254c2a0021ea163f2bb7560c7aa6992b6a316abd18949d39 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Termination assumptions used in estimating the liability for future policy benefits shall be based on estimates of expected terminations and [nonforfeiture benefits](https://asc.understandingaccounting.org/glossary/n/#nonforfeiture-benefits "Those benefits in a life insurance contract that the policyholder does not forfeit, even for failure to pay premiums. Nonforfeiture benefits usually include cash value, paid-up insurance value, or extended-term insurance value."), using expected [termination rates](https://asc.understandingaccounting.org/glossary/t/#termination-rate "The rate at which insurance contracts fail to renew. Termination rates usually are expressed as a ratio of the number of contracts on which insureds failed to pay premiums during a given period to the total number of contracts at the beginning of the period from which those terminations occurred.") and contractual nonforfeiture benefits. Termination rates may vary by plan of insurance, age at issue, year of issue, frequency of premium payment, and other factors. If composite rates are used, the rates shall be representative of the entity's actual mix of business. Termination assumptions shall be made for long-duration insurance contracts without termination benefits because of the effects of terminations on expected premiums and claim costs. ##### [944-40-30-15](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:be810971fccbfaa5b1c146971aa4f706b7bf85370a8c635d801e24e824677211 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Expense assumptions used in estimating the liability for future policy benefits shall be based on estimates of expected nonlevel costs, such as termination or settlement costs, and costs after the premium-paying period. Renewal expense assumptions shall consider the possible effect of inflation on those expenses. However, expense assumptions shall not include acquisition costs or any costs that are required to be charged to expense as incurred, such as those relating to investments, general administration, policy [maintenance costs](https://asc.understandingaccounting.org/glossary/m/#maintenance-costs "Costs associated with maintaining records relating to insurance contracts and with the processing of premium collections and commissions."), product development, market research, and general overhead (see paragraph [944-720-25-2](https://asc.understandingaccounting.org/asc/720/944/#720-944-25-2)). #### Universal Life-Type Contracts and Nontraditional Contract Benefits ##### [944-40-30-16](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:06f15261af694299a2cdfd4d4e0897adfd126d6e39b21168fdb49a4b6d4eba53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability for policy benefits for universal life-type contracts shall be equal to the sum of the following: 1. a The balance that accrues to the benefit of policyholders at the date of the financial statements 2. b Any amounts that have been assessed to compensate the insurance entity for services to be performed over future periods (see Subtopic 944-605 on insurance—revenue recognition) 3. c Any amounts previously assessed against policyholders that are refundable on termination of the contract 4. d 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) . ##### [944-40-30-17](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:1a83e2896037828926cf8a94873a2ce74295c10cb55e2fdca07c34a38a9dfed1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts that may be assessed against policyholders in future periods, including [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."), shall not be anticipated in determining the liability for policy benefits. ##### [944-40-30-18](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:07cf4fc24b30747cf94d06532a88ce2a49c41249fdbb916b9e81767160c7342c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the absence of a stated account balance or similar explicit or implicit contract value, the cash value, measured at the date of the financial statements, that could be realized by a policyholder upon surrender shall represent the element of liability described in paragraph [944-40-30-16(a)](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-16). ##### [944-40-30-19](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:5636a0ff29d7875291fc0d790e8211fe50a8ada7ad52570277c3b6196a54640a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Provisions for risk of adverse deviation shall not be made. ##### [944-40-30-19A](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-19A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:95c684d0b911ee5af36f347fec9ab4941e1060aff9a226e74e440c62b54c253a 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/). ##### [944-40-30-19B](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-19B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:d1d6b08cc97944e5d2ceed8ad960443d79a30aabd42b8a30f9a1f2e5ff3a03e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in paragraphs [944-40-30-19C through 30-24](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-19C) and [944-40-30-26 through 30-29A](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-26) addresses contracts or contract features that provide for potential benefits in addition to the account balance that accrues to the benefit of the policyholders. ##### [944-40-30-19C](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-19C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:0537cb27131f36faee2d2fa913209f036c60a01c10aef04bc90b43d6105c286e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") shall be measured at [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."). Total attributed fees used to calculate the fair value of the market risk benefit shall not be negative or exceed total contract fees and assessments collectible from the contract holder. ##### [944-40-30-19D](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-19D) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:21647c2a04e518580c0b165bb3e853a77ce1891c5aee205c40108fa764218c7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In determining the terms of the market risk benefit, the insurance entity shall consider guidance on determining the terms of an embedded derivative that is required to be accounted for separately under Subtopic 815-15 on embedded derivatives, including the following: 1. a Consistent with paragraph [815-15-30-4](https://asc.understandingaccounting.org/asc/815/15/#815-15-30-4), if a nonoption valuation approach is used, the terms of the market risk benefit shall be determined in a manner that results in its fair value generally being equal to zero at the inception of the contract. 2. b Consistent with paragraph [815-15-30-6](https://asc.understandingaccounting.org/asc/815/15/#815-15-30-6), if an option-based valuation approach is used, the terms of the market risk benefit shall not be adjusted to result in the market risk benefit being equal to zero at the inception of the contract. 3. c Consistent with paragraph [815-15-25-7](https://asc.understandingaccounting.org/asc/815/15/#815-15-25-7), if a contract contains multiple market risk benefits, those market risk benefits shall be bundled together as a single compound market risk benefit. ##### [944-40-30-20](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:5d2c4931b3465bfba5f3e17beea1e317a8e2812f85c541242ddac6eae14d3f95 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of the additional liability recognized under paragraph [944-40-25-27A](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-27A) shall be determined based on the ratio (benefit ratio) of the following: 1. a Numerator. The present value of total expected excess payments over the life of the contract, discounted at the [contract rate](https://asc.understandingaccounting.org/glossary/c/#contract-rate "The rate of interest that accrues to policyholder balances."). 2. b Denominator. The present value of total expected assessments over the life of the contract, discounted at the contract rate. Total expected assessments are the aggregate of all charges, including those for administration, mortality, expense, and surrender, regardless of how characterized. The contract rate used to compute present value shall be either the rate in effect at the inception of the book of contracts or the latest revised rate applied to the remaining benefit period. The approach selected to compute the present value of revised estimates shall be applied consistently in subsequent revisions to computations of the benefit ratio. ##### [944-40-30-21](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:fc7b952d0677c81a6d855485103f516a739f6c7e85ff92010843e2345bbe3158 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The benefit ratio as determined in paragraph [944-40-30-20](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-20) may exceed 100 percent, resulting in a liability that exceeds cumulative assessments. ##### [944-40-30-22](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:53aaabfaddbf0c5846418478f956c6951b126b2e13d1aa6ccb0b4d9b63fc60b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contracts in which the assets are reported in the [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)."), the investment margin (that is, the amounts expected to be earned from the investment of policyholder balances less amounts credited to policyholder balances \[see paragraph [944-40-25-14](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-14)\]) shall be included with any other assessments for purposes of determining total expected assessments that are referenced in paragraph [944-40-30-20](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-20). ##### [944-40-30-22A](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-22A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:c40447b41ba37de2e67de9549cde3262cff75b4fd7e3485b83dd0c067c0fdc23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An increase during a period in an unearned revenue liability (that is, deferral of revenue) established in paragraphs [944-605-25-6 through 25-7](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-6) shall be excluded from the amounts assessed against the contract holder's account balance for that period and a decrease in (that is, amortization of) an unearned revenue liability in accordance with paragraph [944-605-35-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-2) during a period shall be included with the assessments for that period. ##### [944-40-30-23](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:078adf7d3a9213f1a890f25f30922637ab5356bb0b3a6dc170970ee9bc30ad10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The insurance entity shall calculate the present value of total expected excess payments and total assessments and investment margins, as applicable, based on expected experience. ##### [944-40-30-24](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:4a9904786f0fb84bb31ad835fad8b44b915708c7ae675a41f260e5b39b7e7c7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Expected experience shall be based on a range of scenarios that considers the volatility inherent in the assumptions rather than a single set of best estimate assumptions. ##### [944-40-30-25](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:b98e57a0f4dc1eeda07a5ff00cf3e6a17c5d4ce0d022dda664e15636df815c03 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/). ##### [944-40-30-26](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:6ae338384f37baf21679f2dc2dc07fefa38d49d37a3d19188d8d9547ccded20d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The additional liability required under paragraph [944-40-25-27](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-27) shall be measured initially based on the benefit ratio determined by the following numerator and denominator: 1. a Numerator. The present value of expected [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.") payments to be made 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."), discounted at an upper-medium grade (low-credit-risk) fixed-income instrument yield applicable to the [payout phase](https://asc.understandingaccounting.org/glossary/p/#payout-phase "The period during which the contract holder is receiving periodic payments from an annuity, also referred to as the annuitization phase.") of the contract, minus the expected accrued account balance at the expected annuitization date (the excess payments). The excess of the present value payments to be made during the payout phase of the contract over the expected accrued account balance at the expected annuitization date shall be discounted at the contract rate. 2. b Denominator. The present value of total expected assessments 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, discounted at the contract rate. Total expected assessments are the aggregate of all charges, including those for administration, mortality, expense, and surrender, regardless of how characterized. ##### [944-40-30-27](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:50e045faa3d702940f7526e9da300a013f613fa8fba30882fc5fe517b120503f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contracts whose assets are reported in the general account, the investment margin (that is, the amounts expected to be earned from the investment of policyholder balances less amounts credited to policyholder balances \[see paragraph [944-40-25-14](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-14)\]) shall be included with any other assessments for purposes of determining total expected assessments that are referenced in paragraph [944-40-30-26](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-26). ##### [944-40-30-28](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:944eef4efc9f7b8dcb3d363b41c4f6b5621b4b5cd6906f638cf9def7667c7b23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The insurance entity shall calculate the present value of total expected excess payments and total assessments and investment margins, as applicable, based on expected experience. Expected experience shall be based on a range of scenarios that considers the volatility inherent in the assumptions rather than a single set of best estimate assumptions. When determining expected excess payments, the expected annuitization rate is one of the assumptions that needs to be estimated. ##### [944-40-30-29](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:e3dd8e22cba60e1633cae08d7d3bc4d088ae8c1318eb917e4c0302c3bbde0d56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In calculating the additional liability for the additional benefit feature, the contract rate used to compute present value shall be either the rate in effect at the inception of the book of contracts or the latest revised rate applied to the remaining benefit period. The approach selected to compute the present value of revised estimates shall be applied consistently in subsequent revisions to computations of the benefit ratio. ##### [944-40-30-29A](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-29A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:78b2800dc166b3287b319d7e3ccdeffd3b7d7d5d23e73b5fbac6b038aae49313 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") or issuer of the insurance benefit features of a contract shall calculate a liability for the portion of premiums collected each period that represents compensation to the insurance entity for benefits that are assessed in a manner that is expected to result in current profits and future losses from the insurance benefit function. That liability shall be calculated using the methodology described in paragraphs [944-40-30-19B through 30-24](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-19B) and [944-40-30-26 through 30-29](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-26) . #### Certain Participating Life Insurance Contracts—Net Level Premium Reserve ##### [944-40-30-30](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:d9fcfacd240e0bf05d27c784dc41b99b3ffd877ac1a508df68b87dbaef4093da Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") shall be calculated based on the [dividend fund interest rate](https://asc.understandingaccounting.org/glossary/d/#dividend-fund-interest-rate "The interest rate determined at policy issuance used to determine the amount of the dividend fund. It is the rate used to credit interest to the dividend fund, and against which experience is measured to determine the amount of the interest portion of dividends paid to individual policyholders."), if determinable, and mortality rates guaranteed in calculating the [cash surrender values](https://asc.understandingaccounting.org/glossary/c/#cash-surrender-value "The amount of cash that may be realized by the owner of a life insurance contract or annuity contract upon discontinuance and surrender of the contract before its maturity. The cash surrender value may be different from the policy account balance due to outstanding loans (including accrued interest) and surrender charges. (Note: The use of this glossary term is not consistent among legal contracts. When determining the applicability of this term, the economic substance of the item shall be taken into consideration.)") described in the contract. If the dividend fund interest rate is not determinable, the [guaranteed interest rate](https://asc.understandingaccounting.org/glossary/g/#guaranteed-interest-rate "The interest rate guaranteed in a policy's cash surrender value or nonforfeiture value calculation.") used in calculating cash surrender values described in the contract shall be used. If the dividend fund interest rate is not determinable and there is no guaranteed interest rate, the interest rate used in determining guaranteed nonforfeiture values shall be used. Finally, if none of the above rates exists, then the interest rate used to determine minimum cash surrender values—as set by the National Association of Insurance Commissioners' model standard nonforfeiture law—for the year of issue of the contract should be used. Regardless of the rate used, net premiums shall be calculated as a constant percentage of the gross premiums. ### Financial Guarantee Insurance Contracts ##### [944-40-30-31](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:36637e7415cdf762310efbb414b4c585832955fd0972bdf3771eb5632a42ed1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall measure a claim liability equal to the present value of expected net cash outflows to be paid under the insurance contract discounted using a current risk-free rate. That current risk-free rate shall be based on the remaining period (contract or expected, as applicable) of the insurance contract. #### Expected Net Cash Outflows ##### [944-40-30-32](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:d4a64018405deec63c9e99dfd1c65cb855a88c8b38b54915494c11d814431ed3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Expected net cash outflows (cash outflows, net of potential recoveries, expected to be paid to the holder of the insured financial obligation, excluding [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.")) are probability-weighted cash flows that reflect the likelihood of all possible outcomes. For purposes of this Subtopic, the expected net cash outflows shall be developed using the insurance entity's own assumptions about the likelihood of all possible outcomes based on all information available to the insurance entity (including relevant market information). Those assumptions shall consider all relevant facts and circumstances and, where applicable, be consistent with the information tracked and monitored through the insurance entity's risk-management activities and used to assist in making operational decisions. ##### [944-40-30-33](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:39.886Z to 2026-09-10T02:16:39.886Z Record version: sha256:dbfeae528a2b6e250f0131ac724fe0293c2a6de2e0fcf5f883da79a7547fb8ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At initial recognition of a claim liability, an insurance entity shall discount the expected net cash outflows under the insurance contract using the current risk-free rate at that date based on the remaining period (contract or expected, as applicable) of the insurance contract. Example 1 (see paragraph [944-40-55-30](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-30)) illustrates the application of this guidance. Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:367d0f4ba5ea6772bc4fc4c7990093d89b1c822e4a837d207e1fda4c39504ac8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/944/40/#35-subsequent-measurement) SEC content: no #### Claim Costs ##### [944-40-35-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:8c037db83c4b5cd727dee2e684cd7247417559d6aff3f7e2d9831760176033cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Changes in estimates of [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 the continuous review process and differences between estimates and payments for claims shall be recognized in income of the period in which the estimates are changed or payments are made. ##### [944-40-35-2](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:e4951d46057aa43901e25af6e827948b5ceda6d8cbeb3bc7fbc2edfddcda4a72 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As discussed in paragraph [944-40-30-2](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-2), estimated recoveries on unsettled claims, such as [salvage](https://asc.understandingaccounting.org/glossary/s/#salvage "The amount received by an insurer from the sale of property (usually damaged) on which the insurer has paid a total claim to the insured and has obtained title to the property."), [subrogation](https://asc.understandingaccounting.org/glossary/s/#subrogation "The right of an insurer to pursue any course of recovery of damages, in its name or in the name of the policyholder, against a third party who is liable for costs relating to an insured event that have been paid by the insurer."), or a potential ownership interest in real estate, shall be evaluated in terms of their estimated realizable value and deducted from the [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)."). ##### [944-40-35-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:74ca565179372c896012fd68be8a43b424414eea311bde0222cca29920fe66b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As discussed in paragraph [944-40-30-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-3), estimated recoveries on settled claims other than mortgage guaranty and title insurance claims also shall be deducted from the liability for unpaid claims. ##### [944-40-35-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:1b28e3c9fa71ef43d3440e367ddf0190602a87288ea02d4760c8c29f657ef3f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subsequent reductions in the reported amount and realized gains and losses on the sale of real estate acquired in settling claims shall be recognized as an adjustment to claim costs incurred. ### Long-Duration Contracts #### Traditional and Limited-Payment Long-Duration Contracts ##### [944-40-35-5](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:dd9b2e12d49f5b4ff762a6b8ef5271df70ba7bddd46238dcd35471111afef98d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assumptions shall be updated in subsequent accounting periods as follows to determine changes in the [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."): 1. a Cash flow assumptions (that is, the assumptions used to derive estimated cash flows, including the [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place."), [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment."), [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 expense assumptions referenced in paragraphs [944-40-30-11 through 30-15](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-11) ) shall be reviewed—and if there is a change, updated—on an annual basis, at the same time every year. 1. 1 Cash flow assumptions shall be updated in interim reporting periods if evidence suggests that cash flow assumptions should be revised. 2. 2 An insurance entity may make an entity-wide election not to update the expense assumption referenced in paragraph [944-40-30-15](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-15). 2. b The discount rate assumption referenced in paragraph [944-40-30-9](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-9) shall be updated for annual and interim reporting periods, as of the reporting date. ##### [944-40-35-6](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:4e34e8ab5101c90fe155d8a53c0dad14d484920ab1e28bc5108df1825518a035 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Actual experience shall be recognized in the period in which that experience arises. The liability for future policy benefits shall then be updated for actual experience at least on an annual basis as described in paragraph [944-40-35-5(a)](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-5) (and for limited-payment contracts, see paragraph [944-605-35-1B](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-1B) for guidance on updating any corresponding deferred profit liability). An insurance entity need not update the liability for future policy benefits for actual experience more often than on an annual basis, unless cash flow assumptions are updated as described in paragraph [944-40-35-5(a)(1)](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-5). ##### [944-40-35-6A](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-6A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:e970540c698b2ba79bf2bf2e82ea1c8976f9cf70aee4cd3cb8ce404d2a7d3d21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A related charge or credit to net income (see paragraph [944-40-45-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-4)) or other comprehensive income as a result of updating assumptions at the level of aggregation at which reserves are calculated (that is, for a group of contracts) shall be determined as follows: 1. a Cash flow assumptions. [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.") shall be updated for cash flow changes. An insurance entity shall update its estimate of cash flows expected over the entire life of a group of contracts using actual historical experience and updated future cash flow assumptions. An insurance entity shall recalculate net premiums by comparing the present value of actual historical benefits and related actual (if applicable) historical expenses plus updated remaining expected benefits and related expenses, less the liability carryover basis (if applicable), with the present value of actual historical gross premiums plus the updated remaining expected gross premiums (see Examples 6 and 7 in paragraphs [944-40-55-29H through 55-29U](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29H) ). The revised ratio of net premiums to gross premiums shall not exceed 100 percent (see paragraph [944-40-35-7A](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-7A)). 1. 1 Liability remeasurement gain or loss. The revised net premiums shall be used to derive an updated liability for future policy benefits as of the beginning of the current reporting period, discounted at the original (that is, contract issuance) discount rate. The updated liability for future policy benefits as of the beginning of the current reporting period shall then be compared with the carrying amount of the liability as of that date (that is, before the updating of cash flow assumptions) to determine the current period change in liability estimate (that is, the liability remeasurement gain or loss) to be recognized in net income for the current reporting period (see paragraph [944-40-45-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-4) for presentation requirements). 2. 2 Current-period benefit expense. The revised net premiums shall be applied as of the beginning of the current reporting period to derive the benefit expense for the current reporting period (see paragraph [944-40-45-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-4) for presentation requirements). 3. 3 Subsequent periods. In subsequent periods, the revised net premiums shall be used to measure the liability for future policy benefits, subject to future revisions. 2. b Discount rate assumptions. Net premiums shall not be updated for discount rate assumption changes. 1. 1 The difference between the updated carrying amount of the liability for future policy benefits (that is, the present value of future benefits and expenses less the present value of future net premiums based on updated cash flow assumptions) measured using the updated discount rate assumption and the original discount rate assumption shall be recognized directly to other comprehensive income (that is, on an immediate basis). 2. 2 The interest accretion rate shall remain the original discount rate used at contract issue date. ##### [944-40-35-7](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:eb83813994f5f52d605d0f96604894eafa77aba02728e43386daf665515f2849 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/). ##### [944-40-35-7A](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-7A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:f542230432965b4fded6fdc6ca926ef1b605989ab5e1fcf43613ece082d9ba63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the updating of cash flow assumptions results in the present value of future benefits and expenses exceeding the present value of future gross premiums, an insurance entity shall: 1. a Set net premiums equal to gross premiums 2. b Increase the liability for future policy benefits 3. c Recognize a corresponding charge to net income for the current reporting period (see paragraph [944-40-45-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-4)) such that net premiums are set equal to gross premiums. In subsequent periods (that is, until assumptions are subsequently updated), the liability for future policy benefits shall be accrued with net premiums set equal to gross premiums. ##### [944-40-35-7B](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-7B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:cb241b9ffd633b72be1094bde4ffce5c8fe14863538bb5644b872588684f96a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In no event shall the liability for future policy benefits balance be less than zero at the level of aggregation at which reserves are calculated. #### Universal Life-Type Contracts and Nontraditional Contract Benefits ##### [944-40-35-8](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:bb7f1c5082a383c353a0b67098dcd80a34dc1ab203a200ce65b1b4e340ec70e7 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/). ##### [944-40-35-8A](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-8A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:73a81b792a8f4d17add2ef8b09ae78d33109d42790fdf26c81f0eec0edc36e12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") may be positive (that is, an asset) or negative (that is, a liability). Changes in [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.") related to market risk benefits shall be recognized in net income, with the exception of fair value changes attributable to a change in the instrument-specific credit risk of market risk benefits in a liability position. The portion of a fair value change attributable to a change in the instrument-specific credit risk of market risk benefits in a liability position shall be recognized in other comprehensive income (see paragraph [944-40-45-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-3)). ##### [944-40-35-8B](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-8B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:dc56292014d075412f3bbc77b082863737f00b71966c720644d8fe10e8237d5c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Upon derecognition of a market risk benefit, an insurance entity shall derecognize any related amount included in accumulated other comprehensive income. An insurance entity only shall include in net income any gain or loss that is realized as a result of the insurance entity's nonperformance (that is, the settlement or extinguishment of an obligation for an amount less than the contractual obligation amount). On the date of [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.") (for annuitization benefits) or upon extinguishment of the account balance (for withdrawal benefits) the balance related to the market risk benefit shall be derecognized, and the amount deducted (after derecognition of any related amount included in accumulated other comprehensive income) shall be used in the calculation of the liability for future policy benefits for the payout annuity (including the establishment of a deferred profit liability to the extent that the market risk benefit amount deducted exceeds the amount of the liability for future policy benefits or the recognition of an immediate loss to the extent that the amount of the liability for future policy benefits exceeds the market risk benefit amount deducted). ##### [944-40-35-9](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:9f0925c3ac48bb3dece028cb41ae6cc90ad4ae03233e66f76f5e671e14b12fc3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall regularly evaluate estimates used and adjust the additional liability balance, with a related charge or credit to benefit expense (see paragraph [944-40-45-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-1)), if actual experience or other evidence suggests that earlier assumptions should be revised. In making such revised estimates, both the present value of total excess payments and the present value of total expected assessments and investment margins shall be calculated as of the balance sheet date using historical experience from the issue date to the balance sheet date and estimated experience thereafter. ##### [944-40-35-10](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:8ccc269c1dcbe4efed57f9585b8f131909640329b06c981470522eeeb1423144 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The additional liability at the balance sheet date shall be equal to: 1. a The current benefit ratio multiplied by the cumulative assessments (cumulative assessments shall be calculated as actual cumulative assessments, including investment margins, if applicable, recorded from contract inception through the balance sheet date) 2. b Less the cumulative excess payments (including amounts reflected in claims payable liabilities) 3. c Plus accreted interest. However, in no event shall the additional liability balance be less than zero. ##### [944-40-35-11](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:860714104f88fe0ddbe0ee77682f70741a71cbb1195509834a68524b1e6e2eb8 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/). ##### [944-40-35-12](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:454e5d12b78d2522fb55453ded88973b18a3bc40dd0ca7f7f62a1ddb82ba4d37 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The insurance entity shall regularly evaluate estimates used and adjust the additional liability balance recognized under paragraph [944-40-25-27](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-27) with a related charge or credit to benefit expense (see paragraph [944-40-45-2](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-2)), if actual experience or other evidence suggests that earlier assumptions should be revised. ##### [944-40-35-13](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:7615171df1044a3464d9673c6a575f8f6d42baa10f9cd08b92ff69859d507c58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In making such revised estimates, both the present value of total excess payments and the present value of total expected assessments or investment margins shall be calculated as of the balance sheet date using historical experience from the issue date to the balance sheet date and estimated experience thereafter. ##### [944-40-35-14](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:60e37f240b47ffec79eca2f2abfcdfea6913a02df23dcf6eba5a2eb18f18fab2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The additional liability at the balance sheet date shall be equal to the sum of the following: 1. a The current benefit ratio multiplied by the cumulative assessments 2. b Accreted interest (an addition) 3. c At time of annuitization, the cumulative excess payments determined at annuitization (a deduction). However, in no event shall the additional liability balance be less than zero. ##### [944-40-35-15](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:0916bee403424228aa76a20eb3773473c0f9353b8112fa945c7c465bfcb98e42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cumulative excess payments determined at annuitization in paragraph [944-40-35-14(c)](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-14) is the amount that shall be deducted at the actual date of annuitization. That amount shall be calculated as the present value of expected annuity payments and related [claim adjustment expenses](https://asc.understandingaccounting.org/glossary/c/#claim-adjustment-expenses "Expenses incurred in the course of investigating and settling claims.") discounted at an upper-medium grade (low-credit-risk) fixed-income instrument yield minus the accrued account balance at the actual annuitization date. ##### [944-40-35-16](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:e27ffce8a9625f896427f5ad5e37e4fa1032e64097ea0f3a75c5298f38ac453b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. On the date of annuitization or extinguishment of the account balance, the additional liability related to the cumulative excess benefits will be derecognized and the amount deducted will be used in the calculation of the liability for the payout annuity. ##### [944-40-35-17](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:ba828271caaa3f0b2bbc9a95b723c559e7645484668c678efcdc8b85f380cfa4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") or issuer of the insurance benefit features of a contract shall calculate a liability for the portion of premiums collected each period that represents compensation to the insurance entity for benefits that are assessed in a manner that is expected to result in current profits and future losses from the insurance benefit function. ##### [944-40-35-18](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:9931fda9da0ec25dbd5dede4009a504399e4886d168db8570449d22d6288f7bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. That liability shall be calculated using the methodology described in paragraphs [944-40-35-8A through 35-10](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-8A) and [944-40-35-12 through 35-16](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-12) . ##### [944-40-35-19](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:295a8441cc011e8be7641aaf638741c71582930815c02212e53ba40267261b2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accrued account balance for 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.") 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.") shall be calculated using the lower-tier rate because the account balance accumulated at the lower tier is the amount that would be available in cash at maturity if the contract holder elects not to annuitize the contract. ##### [944-40-35-20](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:4b78e832ccdcd1aef3899eaf3e1b47087b5f8d66c4831aef753180f2471d580b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An additional liability recognized in accordance with paragraphs [944-40-25-26 through 25-27](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-26) or a market risk benefit, as applicable, shall be recognized during the accumulation phase for the annuitization benefit in excess of the accrued account balance. ##### [944-40-35-21](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:458a8c7cc1020bff07e2cdaea74d1a2daf3cd0b1765af0bfef82edf1c4651a7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If there is an additional liability for the annuitization benefit and a contract holder elects to annuitize, the present value of annuitization payments, including related incremental claims adjustment expenses, discounted using an upper-medium grade (low-credit-risk) fixed-income instrument yield would represent the single premium used to purchase the annuitization benefit. #### Certain Participating Life Insurance Contracts ##### [944-40-35-22](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:8feabff9d90faa91d549e165284b5975b2fdada7cff8dc0fb39036ac419133fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [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.") accrued under paragraph [944-40-25-30](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-30) shall be recognized as an expense over the life of a book of participating life insurance contracts, at a constant rate based on the present value of the base used for the amortization of deferred [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."). ##### [944-40-35-23](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:191477e89198d80ce70d60cad927dce6554249ed7ab6aee03adb34a3cad6d9c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The present value of the amortization base shall be computed using the expected [investment yield](https://asc.understandingaccounting.org/glossary/i/#investment-yield "The interest rate the entity expects to earn on the assets supporting policies, net of investment expense.") (net of related investment expenses). Accordingly, interest shall accrue on the balance of terminal dividends. ##### [944-40-35-24](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:94ea97e8447fa2e83a3a07c5de5f5407493d81757f36d56d0ebbde7314a8f7c2 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/). ##### [944-40-35-25](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:bf473fa4ed8f987076673a353083b86e30164e646ec084edfff1c8eb854fb181 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Increases in the liability for future policy benefits shall be reported as an expense in the statement of earnings. ### Financial Guarantee Insurance Contracts ##### [944-40-35-26](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:270d0eb2017e22ecb410c219f8a98a43ace2b97a45a21eb286fed2331dced985 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall update the discount rate on a claim liability recognized under [944-40-25-42](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-42) each reporting period. An insurance entity also shall revise expected net cash outflows when increases (or decreases) in the likelihood of a default (insured event) (and related amounts of net cash outflows) and potential recoveries occur. The claim liability shall not be reduced below zero. The discount amount shall be accreted on the claim liability through earnings. ##### [944-40-35-27](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:4c5abef2f2a0f2988568832dce0e27301a6db231d28604717c3a78b8a68278bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Revisions to the claim liability shall be recognized as claim expense in the period of the change as a change in accounting estimate. ##### [944-40-35-28](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:42.663Z to 2026-09-10T02:16:42.663Z Record version: sha256:6c3dc5e8e9805fa2e32f557e1965c45fbea106a7869469c6872f92d2e64d8b67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-605-25-25](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-25) states that the unearned premium revenue represents the insurance entity's stand-ready obligation under a financial guarantee insurance contract at initial recognition. If the likelihood of a default (insured event) increases so that the present value of the expected net cash outflows expected to be paid under the insurance contract exceeds the unearned premium revenue, the insurance entity shall recognize a claim liability (in addition to the unearned premium revenue) in accordance with paragraph [944-40-25-42](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-42). Source downloaded (UTC): 2026-09-10T02:16:46.680Z to 2026-09-10T02:16:46.680Z Record version: sha256:36e740cff588237d8dfe950a3ee53b22a91211b391eb95e860705f536b53dd48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/944/40/#45-other-presentation-matters) SEC content: no ### Long-Duration Contracts #### Universal Life-Type Contracts and Nontraditional Contract Benefits ##### [944-40-45-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:46.680Z to 2026-09-10T02:16:46.680Z Record version: sha256:13ef5f242390a4d8b57a9e88ac6cfdd4df6078d2fa6fde2f3484386079103902 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The change in the estimate of the additional liability for death or other insurance benefits recognized under the guidance in paragraph [944-40-25-27A](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-27A) as of the beginning of the current period (that is, the liability remeasurement gain or loss as a result of applying the revised benefit ratio) shall be presented as a separate component of total benefit expense in the statement of operations, either parenthetically or as a separate line item. The liability remeasurement gain or loss may be reported together with the liability remeasurement gain or loss related to [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.") benefits and traditional and [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."). ##### [944-40-45-2](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:46.680Z to 2026-09-10T02:16:46.680Z Record version: sha256:f9cce829a60de080b927f660959c5fc151a9502ba74e437d1375fc66c9af0d94 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The change in the estimate of the additional liability for annuitization benefits recognized under the guidance in paragraph [944-40-25-27](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-27) as of the beginning of the current period (that is, the liability remeasurement gain or loss as a result of applying the revised benefit ratio) shall be presented as a separate component of total benefit expense in the statement of operations, either parenthetically or as a separate line item. The liability remeasurement gain or loss may be reported together with the liability remeasurement gain or loss related to death or other insurance benefits and traditional and limited-payment contracts. ##### [944-40-45-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:46.680Z to 2026-09-10T02:16:46.680Z Record version: sha256:b054ef9278493479809077bebcc9cb341af5c5ea1076f6f68ecde55506c72001 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The carrying amount of [market risk benefits](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.") shall be presented separately in the statement of financial position. The change in [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.") related to market risk benefits shall be presented separately in net income, except fair value changes attributable to a change in the instrument-specific credit risk of market risk benefits in a liability position. The portion of a fair value change attributable to a change in the instrument-specific credit risk of market risk benefits in a liability position shall be presented separately in other comprehensive income. #### Traditional and Limited-Payment Contracts ##### [944-40-45-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:46.680Z to 2026-09-10T02:16:46.680Z Record version: sha256:99060b0b352f8d6afc10029b655059a2978fdc1dd4ac091821617c438b855a6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The current-period change in estimate of the liability for future policy benefits (that is, the liability remeasurement gain or loss) calculated under paragraph [944-40-35-6A(a)(1)](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-6A) shall be presented as a separate component of total benefit expense in the statement of operations, either parenthetically or as a separate line item. For limited-payment contracts, the corresponding current-period change in estimate of the deferred profit liability (that is, the liability remeasurement gain or loss) calculated under paragraph [944-605-35-1C](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-1C) shall be presented separately in net income, either parenthetically or as a separate line item. The liability remeasurement gain or loss for traditional and limited-payment contracts may be reported together with the liability remeasurement gain or loss related to annuitization benefits and death or other insurance benefits. Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:75b3f9614af71749ad4fac1ab019b92f01d3ca7d03a42f45c9eba7c9dca497cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/40/#50-disclosure) SEC content: no ##### [944-40-50-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:9fe18c02dadcef090b286c6b74ece425469694ed8a326437b610df90c20e41a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall disclose in its financial statements the basis for estimating the liabilities for unpaid [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 adjustment expenses](https://asc.understandingaccounting.org/glossary/c/#claim-adjustment-expenses "Expenses incurred in the course of investigating and settling claims."). ##### [944-40-50-2](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:378a016f625ac4bb9003db50092b7ac9207ccd00b70f79ab0967ae49e298fd50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-09](https://asc.understandingaccounting.org/updates/asu-2015-09/). ##### [944-40-50-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:763fa9c1baa71390db875756a6b13daa316465efa9b078dc2c8072ac68485583 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual and interim reporting periods, all of the following information about the [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).") 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 presented in a tabular rollforward: 1. a The balance in the liability for unpaid [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 adjustment expenses at the beginning of each fiscal year presented in the statement of income, and the related amount of [reinsurance recoverable](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.") on unpaid claims 2. b Year-to-date incurred claims and claim adjustment expenses with separate disclosure of the provision for insured events of the current fiscal year and of increases or decreases in the provision for insured events of prior fiscal years 3. c Year-to-date payments of claims and claim adjustment expenses with separate disclosure of payments of claims and claim adjustment expenses attributable to insured events of the current fiscal year and to insured events of prior fiscal years 4. cc The ending balance in the liability for unpaid claims and claim adjustment expenses and the related amount of reinsurance recoverable. 5. d [Subparagraph superseded by Accounting Standards Update No. 2015-09](https://asc.understandingaccounting.org/updates/asu-2015-09/). In addition, an insurance entity shall disclose the reasons for the change in incurred claims and claim adjustment expenses recognized in the income statement attributable to insured events of prior fiscal years and indicate whether additional premiums or return premiums have been accrued as a result of the prior-year effects. ##### [944-40-50-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:339be07be793977e8262fa67ead7704b9607a0e5078b096216bea9897efff05f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual reporting periods, an insurance entity shall disclose management's policies and methodologies for estimating the liability for unpaid claims and claim adjustment expenses for difficult-to-estimate liabilities, such as any of the following: 1. a Claims for toxic waste cleanup 2. b Asbestos-related illnesses 3. c Other environmental remediation exposures. ### Short-Duration Contracts #### Information about the Liability for Unpaid Claims and Claim Adjustment Expenses ##### [944-40-50-4A](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4A) Pending content: yes Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:9d05b739354ee49dce45b761d0afb8a1ce905f56c3f0e8c66876e3c3d46545dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [health insurance claims](https://asc.understandingaccounting.org/glossary/h/#health-insurance-claims "Claims related to the cost of medical treatments (other than claims related to liability insurance that covers claims against the insured for injury of or by others, such as, but not limited to, workers' compensation, disability, and general liability insurance)."), an insurance entity shall aggregate or disaggregate the information in paragraph [944-40-50-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-3) so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have significantly different characteristics (see paragraphs [944-40-55-9A through 55-9C](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9A) ). Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)For [health insurance claims](https://asc.understandingaccounting.org/glossary/h/#health-insurance-claims "Claims related to the cost of medical treatments (other than claims related to liability insurance that covers claims against the insured for injury of or by others, such as, but not limited to, workers' compensation, disability, and general liability insurance)."), an insurance entity shall aggregate or disaggregate the information disclosed in interim and annual reporting periods in accordance with paragraph [944-40-50-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-3) so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have significantly different characteristics (see paragraphs [944-40-55-9A through 55-9C](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9A) ). ##### [944-40-50-4B](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:b61711eec0cbbb2515cee13b3bbab8547e3f1d640c02338e76b5a8ef2bdd2b56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual reporting periods, an insurance entity shall disclose in a tabular format, as of the date of the latest statement of financial position presented, undiscounted information about claims development by [accident year](https://asc.understandingaccounting.org/glossary/a/#accident-year "The year in which a covered event (as defined by the terms of the contract) occurs."), including separate information about both of the following on a net basis after risk mitigation through [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."): 1. a Incurred claims and allocated [claim adjustment expenses](https://asc.understandingaccounting.org/glossary/c/#claim-adjustment-expenses "Expenses incurred in the course of investigating and settling claims.") 2. b Paid claims and allocated claim adjustment expenses. The disclosure about claims development by accident year should present information for the number of years for which claims incurred typically remain outstanding, but need not exceed 10 years including the most recent reporting period presented. All periods presented in the disclosure about claims development that precede the most recent reporting period shall be considered supplementary information. For the most recent reporting period presented, the disclosure about claims development shall include the total net outstanding claims for accident years not separately presented as part of the claims development (see paragraph [944-40-55-9E](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9E)). ##### [944-40-50-4C](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:472d8d8ba28777c27456d6e84473e2a5add5acb99f854e63a8311160af8b57f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual reporting periods, an insurance entity shall reconcile the disclosure about incurred and paid claims development information to the aggregate carrying amount of the [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).") and claim adjustment expenses for the most recent reporting period presented, with separate disclosure of [reinsurance recoverable](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.") on unpaid claims (see paragraph [944-40-55-9E](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9E)). ##### [944-40-50-4D](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4D) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:ab253fd1a42d68e5ed4b9412f17aa8e758f313e97b057f8d025ea2a79770e2c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual reporting periods, an insurance entity shall quantitatively disclose the following for each accident year presented in the disclosures about incurred claims development (see paragraph [944-40-55-9E](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9E)) for the most recent reporting period presented: 1. a The total of incurred-but-not-reported liabilities plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses 2. b Cumulative claim frequency information, unless it is impracticable to do so. If it is impracticable to disclose claim frequency information, where the term _impracticable_ has the same meaning as impracticability in paragraph [250-10-45-9](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9), an insurance entity shall disclose that fact and explain why the disclosure is impracticable. ##### [944-40-50-4E](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4E) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:f78bfa4c1b9954f98335344b11087e8e25fe7254d80fbd9962e388bd0a0329ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For interim and annual reporting periods, for health insurance claims, an insurance entity shall disclose the total of incurred-but-not-reported liabilities plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses. ##### [944-40-50-4F](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4F) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:d3153e50d39b0e42419d1212c8fe00fd2ec20bbba999a2ebf91e62ec10380867 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall describe both of the following: 1. a Its methodologies for: 1. 1 Determining the presented amounts of both incurred-but-not-reported liabilities and expected development on reported claims required by paragraphs [944-40-50-4D through 50-4E](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4D) 2. 2 Calculating cumulative claim frequency information required by paragraph [944-40-50-4D](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4D) 2. b Significant changes to those methodologies. When describing (2) above the insurance entity also shall include whether frequency is measured by claim event or individual claimant and how the insurance entity considers claims that do not result in a liability (see paragraph [944-40-55-9D](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9D)). ##### [944-40-50-4G](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4G) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:2b7b0ea19a19a80773cefeeaf4259a8991cfa16e4d043ba9526641538ac518b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual reporting periods, for all claims except health insurance claims, an insurance entity shall disclose as supplementary information the historical average annual percentage payout of incurred claims by age, net of reinsurance (that is, history of claims duration by age), as of the most recent reporting period. This information shall be disclosed for the same number of accident years presented in the disclosures required by paragraph [944-40-50-4B](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4B) (see paragraphs [944-40-55-9F through 55-9G](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9F) ). ##### [944-40-50-4H](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4H) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:2b93c3875efeee73a958c282fbd41f3f895f484d3039559d8142f5d16291d272 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall disclose the information required by paragraphs [944-40-50-4B through 50-4G](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4B) and [944-40-50-5](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-5) in a manner that allows users to understand the amount, timing, and uncertainty of cash flows arising from the liabilities. An insurance entity shall aggregate or disaggregate the disclosures in paragraphs [944-40-50-4B through 50-4G](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4B) and [944-40-50-5](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-5) so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have significantly different characteristics (see paragraphs [944-40-55-9A through 55-9C](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9A) ). An insurance entity need not provide disclosures about claims development for insignificant categories; however, balances for insignificant categories shall be included in the reconciliation required by paragraph [944-40-50-4C](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4C). ##### [944-40-50-4I](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4I) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:f2565ffdae46e319e7cde13f84497a97eb3b703b087fe65c4d433a67ec5a55a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual reporting periods, an insurance entity shall disclose information about significant changes in methodologies and assumptions used in calculating the liability for unpaid claims and claim adjustment expenses, including reasons for the change and the effects on the financial statements for the most recent reporting period presented. ##### [944-40-50-5](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:e73ae92b05a129bda2e58647dad5cabfc52c7a42c450b87e0b9f96594d00a1f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For liabilities for unpaid claims and claim adjustment expenses that are presented at present value in the financial statements, an insurance entity shall disclose all of the following in its annual financial statements: 1. a For each period presented in the statement of financial position, the [carrying amount](https://asc.understandingaccounting.org/glossary/c/#carrying-amount "The amount of an item as displayed in the financial statements.") of liabilities for unpaid claims and claim adjustment expenses relating to short-duration contracts that are presented at present value 2. b The range of interest rates used to discount the liabilities disclosed in (a). 3. c The aggregate amount of discount related to the time value of money deducted to derive the liabilities disclosed in (a) 4. d For each period presented in the statement of income, the amount of interest accretion recognized 5. e The line item(s) in the statement of income in which the interest accretion is classified. ### Long-Duration Contracts ##### [944-40-50-5A](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-5A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:106be1319ab7b0782374a408a76ea0d808699defe9708204b9f9b53b51c65d10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall disclose the information required by paragraphs [944-40-50-6 through 50-7C](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-6) in a manner that allows users to understand the amount, timing, and uncertainty of future cash flows arising from the liabilities. An insurance entity shall aggregate or disaggregate the disclosures in paragraphs [944-40-50-6 through 50-7C](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-6) so that useful information is not obscured by the inclusion of a large amount of insignificant detail or by the aggregation of items that have significantly different characteristics (see paragraphs [944-40-55-13F through 55-13H](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13F) ). An insurance entity need not provide disclosures about liabilities for insignificant categories; however, balances for insignificant categories shall be included in the reconciliations. #### Liability for Future Policy Benefits and Additional Liability for Annuitization, Death, or Other Insurance Benefits ##### [944-40-50-6](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:d9bf97ece5e7fe94cc171946feba18db25ede593b80950c99c77226315c7f92e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual and interim reporting periods, an insurance entity shall disclose the following information about the [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.") for traditional and limited-payment contracts described in paragraph [944-40-25-11](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-11) and the additional liability for annuitization, death, or other insurance benefits described in paragraphs [944-40-25-26 through 25-27A](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-26), as applicable to each of those liabilities: 1. a A year-to-date disaggregated tabular rollforward of the beginning balance to the ending balance (see paragraph [944-40-55-13I](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13I)). Amounts shall be presented gross of any related [reinsurance recoverable](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."). For the liability for future policy benefits for traditional and limited-payment contracts, the insurance entity shall present expected 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.") separate from expected future benefits. 2. b For each disaggregated rollforward presented, either as a component of the rollforward or as accompanying information: 1. 1 For traditional and limited-payment contracts, the undiscounted and discounted ending balance of expected future [gross premiums](https://asc.understandingaccounting.org/glossary/g/#gross-premium "The premium charged to a policyholder for an insurance contract. See also Net Premiums.") and expected future benefits and expenses 2. 2 Actual experience during the period for mortality, morbidity, and lapses, compared with what was expected for the period 3. 3 The amount of revenue and interest recognized in the statement of operations 4. 4 The amount of any related reinsurance recoverable 5. 5 The weighted-average duration of the liability 6. 6 The weighted-average interest rate, a description of the technique(s) used to determine the interest rate assumption, and information about any adjustments to observable market information. 3. c A reconciliation of the disaggregated rollforwards to the aggregate ending carrying amount of the liability for future policy benefits and the additional liability in the statement of financial position and the total revenue and interest recognized in the statement of operations. 4. d For traditional and limited-payment contracts, qualitative and quantitative information about adverse development that resulted in an immediate charge to current-period net income because of net premiums exceeding gross premiums. ##### [944-40-50-7](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-7) Pending content: yes Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:dce7db436a685c9187b09dd68d9fb0a9f0d8693121aea6ccec9d07886847801e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual reporting periods, and to the extent required by Topic 270 on interim reporting, an insurance entity shall disclose information about: 1. a The significant inputs, judgments, assumptions, and methods used in measuring the liability for future policy benefits and the additional liability 2. b Changes in those significant inputs, judgments, and assumptions during the period, and the effect of those changes on the measurement of the liability. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)For interim and annual reporting periods, an insurance entity shall disclose information about: 1. a The significant inputs, judgments, assumptions, and methods used in measuring the liability for future policy benefits and the additional liability 2. b Changes in those significant inputs, judgments, and assumptions during the period, and the effect of those changes on the measurement of the liability. #### Liability for Policyholders' Account Balances ##### [944-40-50-7A](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-7A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:45f074a52e045c1988e825375bebab7619d14de4c8c77ff73ca98f78143205a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual and interim reporting periods, an insurance entity shall disclose the following information about the liability for policyholders' account balances described in paragraph [944-40-25-14](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-14) (excluding separate accounts described in paragraph [944-80-25-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-2)): 1. a A year-to-date disaggregated tabular rollforward of the beginning balance to the ending balance (see paragraph [944-40-55-13J](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13J)). 2. b For each disaggregated rollforward: 1. 1 The weighted-average crediting rate 2. 2 The guaranteed benefit amounts in excess of the current account balances 3. 3 [Cash surrender value](https://asc.understandingaccounting.org/glossary/c/#cash-surrender-value "The amount of cash that may be realized by the owner of a life insurance contract or annuity contract upon discontinuance and surrender of the contract before its maturity. The cash surrender value may be different from the policy account balance due to outstanding loans (including accrued interest) and surrender charges. (Note: The use of this glossary term is not consistent among legal contracts. When determining the applicability of this term, the economic substance of the item shall be taken into consideration.)"). 3. c A reconciliation of the disaggregated rollforwards to the aggregate ending carrying amount of the liability for policyholders' account balances in the statement of financial position. 4. d A tabular presentation of policyholders' account balances by range of guaranteed minimum crediting rates and the related range of the difference between rates being credited to policyholders and the respective guaranteed minimums. #### Market Risk Benefits ##### [944-40-50-7B](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-7B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:470fc7f04e1012b296eac74239a27583b7b6ecf922a6a466a6c6ed7aa726bd7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual and interim reporting periods, an insurance entity shall disclose the following information about [market risk benefits](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."): 1. a A year-to-date disaggregated tabular rollforward of the beginning balance to the ending balance (see paragraph [944-40-55-13K](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13K)) 2. b For each disaggregated rollforward, the guaranteed benefit amounts in excess of the current account balances (for example, the [net amount at risk](https://asc.understandingaccounting.org/glossary/n/#net-amount-at-risk-relating-to-variable-annuity-contracts "The guaranteed benefit in excess of the current account balance. For guarantees in the event of death, the net amount at risk is the minimum guaranteed amount available to the contract holder upon death in excess of the contract holder's account balance at the balance sheet date. For guarantees of amounts at annuitization, the net amount at risk is defined as the present value of the minimum guaranteed annuity payments available to the contract holder determined in accordance with the terms of the contract in excess of the current account balance.")) and weighted-average attained age of contract holders 3. c A reconciliation of the disaggregated rollforwards to the aggregate ending carrying amount in the statement of financial position, disaggregated between market risk benefits that are in an asset position and those that are in a liability position. ##### [944-40-50-7C](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-7C) Pending content: yes Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:1d79c3285f960aac1b4dbc0e7b3c04effe2e18df3d0c49fa8c073bb87b9c93bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For annual reporting periods, and to the extent required by Topic 270 on interim reporting, an insurance entity shall disclose information about: 1. a The significant inputs, judgments, assumptions, and methods used in measurement 2. b Changes in those significant inputs, judgments, and assumptions during the period and the effect of those changes on the measurement of market risk benefits. Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)For interim and annual reporting periods, an insurance entity shall disclose information about: 1. a The significant inputs, judgments, assumptions, and methods used in measurement 2. b Changes in those significant inputs, judgments, and assumptions during the period and the effect of those changes on the measurement of market risk benefits. #### Participating Contracts ##### [944-40-50-8](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:6982ef15da8bc1df97bbb54f8c44879655dfa8afd3776f16f2673bb977bab3d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall disclose in the financial statements, with respect to long-duration 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), the methods and assumptions used in estimating the liability for future policy benefits. ### Financial Guarantee Insurance Contracts ##### [944-40-50-9](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:48.542Z to 2026-09-10T02:16:48.542Z Record version: sha256:fde7bc74c942e0567cf52ce3da0ac138489df8cb66e4248b11c60ba64a7c9eee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To meet the disclosure objective in paragraph [944-20-50-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-7), an insurance entity shall disclose all of the following information for each annual period (and in an interim period if a significant change has occurred in that interim period) unless otherwise indicated below: 1. a For the claim liability: 1. 1 The weighted-average risk-free rate used to discount the claim liability. 2. 2 The significant component(s) of the change in the claim liability for the period, including all of the following: 1. i Changes in the discount rate 2. ii The accretion of the discount on the claim liability 3. iii Changes in the timing 4. iv Changes in the likelihood of default. 3. 3 The amount relating to the component(s) in item (2). 4. 4 The line item in the statement of income where the amount or amounts in item (2) are reported (unless separately disclosed). 5. 5 For each interim period, a schedule of insured financial obligations at the end of each interim period detailing, at a minimum, all of the following for each category or grouping of these financial obligations: 1. i Number of issued and outstanding financial guarantee insurance contracts 2. ii Remaining weighted-average contract period 3. iii Insured contractual payments outstanding, segregating principal and interest 4. iv Gross claim liability 5. v Gross potential recoveries 6. vi Discount, net (both claim liability and potential recoveries) 7. vii Net claim liability 8. viii [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.") 9. ix Unearned premium revenue. 2. b A description of the insurance entity's risk-management activities used to track and monitor deteriorating insured financial obligations, including all of the following: 1. 1 A description of each grouping or category used to track and monitor deteriorating insured financial obligations 2. 2 The insurance entity's policies for placing an insured financial obligation in, and monitoring, each grouping or category 3. 3 The insurance entity's policies for avoiding or mitigating claim liabilities 4. 4 The related expense and liability reported during the period for risk mitigation activities (not including [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.")) 5. 5 A description of where the risk mitigation activities expense and liability are reported in the statement of income and the statement of financial position, respectively. Example 2 (see paragraph [944-40-55-32](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-32)) illustrates the application of the requirement in items (a)(5) and (b)(1) through (5). Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:ffa8533ad0929b0a2ad919b88d27d250ba724eb060b9333950e84d2932dbda6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/944/40/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [944-40-55-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:3ae90a45025c475492b8a27146e5c2afb349eae5596301749421de8b76588e67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses paragraph [944-40-25-6](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-6), which states that 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. ##### [944-40-55-2](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:b5027a0a95966c7c81e14b8c639fd3b5b574259ed3052ccd6d1cc5e46e1b8786 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the time that a property and casualty insurance entity 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.") entity issues an insurance policy covering risk of loss from catastrophes, a contingency arises. The contingency is the risk of loss assumed by the insurance entity; that is, the risk of loss from catastrophes that may occur during the term of the policy. The insurance entity has not assumed risk of loss for catastrophes that may occur beyond the term of the policy. Clearly, therefore, no asset has been impaired or liability incurred with respect to catastrophes that may occur beyond the terms of policies in force. ##### [944-40-55-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:e269843f883765a4b31f345756590f4d08c33cdb8a081a5f3c9fe7fad6edcf3f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To satisfy the condition in paragraph [450-20-25-2(a)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) that it be [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that a liability has been incurred to existing policyholders, the occurrence of catastrophes (that is, the confirming future events) would have to be reasonably predictable within the terms of policies in force. Further, to satisfy the condition in (b) in that paragraph, the amounts of losses therefrom would have to be reasonably estimable. Actuarial techniques are employed by insurance entities to predict the rate of occurrence of and amounts of losses from catastrophes over long periods of time for insurance rate-setting purposes. Predictions over relatively short periods of time, such as an individual accounting period or the terms of a large number of existing insurance policies in force, are subject to substantial deviations. Consequently, assumption of risk of loss from catastrophes by property and casualty insurance entities and reinsurance entities fails to satisfy the conditions for accrual in paragraph [450-20-25-2(a) through (b)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2). Moreover, deferral of unearned premiums within the terms of policies in force represents the unknown liability for loss (including catastrophe losses) on unexpired policies, making an accrual inappropriate. Recognition of premium income as earned revenue within the terms of policies in force is discussed in Subtopic 944-605. ##### [944-40-55-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:02ca16250543e5231e644813fce405f050314cb8bc83f0b5ab86c3790fa532f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Deferral of any portion of premium income beyond the terms of policies in force is, in substance, similar to premature accrual of catastrophe losses and, therefore, also does not meet the conditions of paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2). ##### [944-40-55-5](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:f1590c22d0ae7e5f036efd4eea752931e347aabf801fae92b03bd5f48a2ae35d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The conditions for accrual in paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) do not prohibit a property and casualty insurance entity from accruing probable catastrophe losses that have been incurred on or before the date of its financial statements but that have not been reported by its policyholders as of that date. If the amount of loss can be reasonably estimated, that paragraph requires accrual of those incurred-but-not-reported losses. #### Illustrations ##### [944-40-55-6](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:545a4563ac5aa45bdf3e1c9adbabe9fdb35efc77fc4e820667715183048811e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates information an insurance entity would disclose to meet the requirements of paragraph [944-40-50-3](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-3). This Example presents amounts incurred and paid net of reinsurance. The information may also be presented before the effects of reinsurance with separate analysis of reinsurance recoveries and [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.") related to the incurred and paid amounts. ##### [944-40-55-7](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:2ebbb661b890aa71a20723408262988582a3c762608a87460aab672bebeffb74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An illustrative disclosure of 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).") and [claim adjustment expenses](https://asc.understandingaccounting.org/glossary/c/#claim-adjustment-expenses "Expenses incurred in the course of investigating and settling claims.") follows. - Note X. Liability for Unpaid Claims and Claim Adjustment Expenses - Activity in the liability for unpaid claims and claim adjustment expenses is summarized as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-E6F35FC9-2313-4C40-986F-A08A6C29DFFA-low.gif) 20X2 20X1 Balance at January 1 " $7,030 " " $6,687 " Less reinsurance recoverables " 1,234 " 987 Net balance at January 1 " 5,796 " " 5,700 " Incurred related to: Current year " 2,700 " " 2,600 " Prior years (171) 96 Total incurred " 2,529 " " 2,696 " Paid related to: Current year 781 800 Prior years " 2,000 " " 1,800 " Total paid " 2,781 " " 2,600 " Net balance at December 31 " 5,544 " " 5,796 " Plus reinsurance recoverables " 1,255 " " 1,234 " Balance at December 31 " $6,799 " " $7,030 " As a result of changes in estimates of insured events in prior years, the claims and claim adjustment expenses (net of reinsurance recoveries of $X and $X in 20X2 and 20X1, respectively) decreased by $171 million in 20X2 reflecting lower-than-anticipated losses on Hurricane Howard, and increased by $96 million in 20X1 reflecting higher-than-anticipated losses and related expenses for claims for asbestos-related illnesses, toxic waste cleanup, and workers' compensation. ##### [944-40-55-8](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:e7f1c87cadaee0fe433345cd77f2bab572e367fa9d6a6987e7cf85d88c331843 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates an insurance entity disclosure designed to meet the requirements of paragraph [944-40-50-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4). Additional disclosures about the liabilities for unpaid claims and claim adjustment expenses may be required under Section 450-20-50 or 275-10-50. ##### [944-40-55-9](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:5c2f6269099d3f3760dfe1c3e0fd75cec31b7eb5fdebb7c0f2421375c13fbb9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An illustrative disclosure of environmental-related claims follows. - Note X. Environmental-Related Claims - In establishing the liability for unpaid claims and claim adjustment expenses related to asbestos-related illnesses and toxic waste cleanup, management considers facts currently known and the current state of the law and [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.") litigation. Liabilities are recognized for known claims (including the cost of related litigation) when sufficient information has been developed to indicate the involvement of a specific insurance policy, and management can reasonably estimate its liability. In addition, liabilities have been established to cover additional exposures on both known and unasserted claims. Estimates of the liabilities are reviewed and updated continually. Developed case law and adequate [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") history do not exist for such claims, especially because significant uncertainty exists about the outcome of coverage litigation and whether past claim experience will be representative of future claim experience. ### Short-Duration Contracts #### Implementation Guidance ##### [944-40-55-9A](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:c4bc90709bae7c4d8626b204b9e20f3020d67075a1720ed04382007e5177a3ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [944-40-50-4A](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4A) and [944-40-50-4H](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4H) require an insurance entity to aggregate or disaggregate certain disclosures so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have significantly different characteristics to allow users to understand the amount, timing, and uncertainty of cash flows arising from contracts issued by insurance entities. Consequently, the extent to which an insurance entity's information is aggregated or disaggregated for the purposes of those disclosures depends on the facts and circumstances that pertain to the characteristics of the [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).") and [claim adjustment expenses](https://asc.understandingaccounting.org/glossary/c/#claim-adjustment-expenses "Expenses incurred in the course of investigating and settling claims."). ##### [944-40-55-9B](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:60105ec3abb0b086a963f038ded8b994665fd763f122f9de1059fb41dd740fba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When selecting the type of category to use to aggregate or disaggregate disclosures, an insurance entity should consider how information about the insurance entity's liability for unpaid claims and claim adjustment expenses has been presented for other purposes, including all of the following: 1. a Disclosures presented outside the financial statements (for example, in earnings releases, annual reports, statutory filings, or investor presentations) 2. b Information regularly viewed by the chief operating decision maker for evaluating financial performance 3. c Other information that is similar to the types of information identified in (a) and (b) and that is used by the insurance entity or users of the insurance entity's financial statements to evaluate the insurance entity's financial performance or make resource allocation decisions. ##### [944-40-55-9C](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:40a88d8ea8a5b4737ffc42945218dee3ff81003a6e2b40c4a9e8a3bfc391eae2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of categories that might be appropriate include any of the following: 1. a Type of coverage (for example, major product line) 2. b Geography (for example, country or region) 3. c Reportable segment as defined in Topic 280 on segment reporting 4. d Market or type of customer (for example, personal or commercial lines of business) 5. e Claim duration (for example, claims that have short settlement periods or claims that have long settlement periods). When applying the guidance in paragraphs [944-40-50-4A](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4A) and [944-40-50-4H](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4H), an insurance entity should not aggregate amounts from different reportable segments according to Topic 280. ##### [944-40-55-9D](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9D) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:d232294dc5b959516ea5028d0c4939bcf00f9593a05b417346339bd2c9b8b28a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Claim frequency information may be tracked and analyzed by an insurance entity in a variety of ways. For example, an insurance entity may track claim frequency by claim event (such as a car accident), while another entity may track claim frequency by individual claimant (such as the number of individual claimants in a car accident). Also, certain types of insurance coverage, such as excess-of-loss insurance or supplemental insurance, can experience claim activity that does not result in a liability to the insurance entity. This Subtopic does not require a particular methodology. Therefore, to allow users to understand the context of the information presented, an insurance entity should describe qualitatively the methodologies used to determine the quantitative claim frequency information presented. In certain circumstances, such as providing [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.") on short-duration contracts or participating in residual market pools, an insurance entity may not have access to claim frequency information, in which case it may be impracticable to disclose this information. The insurance entity should disclose that fact and explain why the disclosure is impracticable. #### Illustrations ##### [944-40-55-9E](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9E) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:181679a89112a3264448f9ea3c8c29b9abcc4656ee7ad50f7a3236a9fd2a06a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Example illustrates the information that an insurance entity with one major short-duration product line (homeowners' insurance) would disclose in its 20Y6 financial statements to meet the requirements of paragraphs [944-40-50-4B through 50-4D](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4B) . - Note X: Liability for Unpaid Claims and Claim Adjustment Expenses - The following is information about incurred and paid claims development as of December 31, 20Y6, net of reinsurance, as well as cumulative claim frequency and the total of incurred-but-not-reported liabilities plus expected development on reported claims included within the net incurred claims amounts. - The information about incurred and paid claims development for the years ended December 31, 20X7, to 20Y5, is presented as supplementary information. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-DADFD572-3F7F-4BE8-A2C8-DBF2AEE5C2F1-low.gif) Homeowners' Insurance in thousands "Accident Year" "Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance" "As of December 31, 20Y6" Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims "For the Years Ended December 31," 20X7 20X8 20X9 20Y0 20Y1 20Y2 20Y3 20Y4 20Y5 20Y6 20X7 " $10,000 " " $9,900 " " $9,700 " " $9,800 " " $9,750 " " $9,750 " " $9,600 " " $9,650 " " $9,575 " " $9,550 " $5 39 20X8 " 10,950 " " 11,000 " " 10,500 " " 10,750 " " 10,850 " " 10,600 " " 10,250 " " 10,150 " " 10,250 " 30 37 20X9 " 12,000 " " 11,750 " " 11,500 " " 10,900 " " 10,900 " " 10,850 " " 10,750 " " 10,500 " 90 38 20Y0 " 12,250 " " 12,500 " " 12,550 " " 12,400 " " 12,200 " " 12,150 " " 12,000 " 300 36 20Y1 " 12,300 " " 12,500 " " 12,650 " " 12,750 " " 12,800 " " 12,850 " 900 35 20Y2 " 12,800 " " 12,900 " " 12,750 " " 12,700 " " 12,700 " " 1,100 " 34 20Y3 " 13,000 " " 13,250 " " 13,100 " " 13,150 " " 1,500 " 31 20Y4 " 13,150 " " 13,250 " " 13,300 " " 2,100 " 29 20Y5 " 13,500 " " 13,250 " " 3,100 " 26 20Y6 " 13,750 " " 5,000 " 22 Total " $121,300 " - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-62216048-8BE3-404B-8F2B-C0AA575061E8-low.gif) Homeowners' Insurance in thousands "Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance" "Accident Year" "For the Years Ended December 31," 20X7 20X8 20X9 20Y0 20Y1 20Y2 20Y3 20Y4 20Y5 20Y6 20X7 " $3,000 " " $5,000 " " $5,500 " " $6,000 " " $6,800 " " $7,500 " " $8,500 " " $9,000 " " $9,050 " " $9,075 " 20X8 " 3,500 " " 5,750 " " 6,500 " " 7,500 " " 7,750 " " 8,250 " " 8,500 " " 9,000 " " 9,500 " 20X9 " 3,750 " " 6,000 " " 6,500 " " 7,500 " " 7,900 " " 8,250 " " 8,950 " " 9,700 " 20Y0 " 3,750 " " 6,250 " " 7,250 " " 7,750 " " 8,900 " " 9,700 " " 9,950 " 20Y1 " 4,250 " " 5,500 " " 6,750 " " 8,000 " " 8,950 " " 9,250 " 20Y2 " 4,125 " " 5,250 " " 7,000 " " 8,000 " " 9,000 " 20Y3 " 4,500 " " 5,750 " " 7,250 " " 7,750 " 20Y4 " 4,600 " " 6,000 " " 6,950 " 20Y5 " 4,750 " " 6,125 " 20Y6 " 4,850 " Total " $82,150 " "All outstanding liabilities before 20X7, net of reinsurance" " 1,400 " "Liabilities for claims and claim adjustment expenses, net of reinsurance" " $40,550 " - **Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses** - The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated statement of financial position is as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-69C43639-CBE0-4CC5-990B-2B23F89DCEF7-low.gif) "December 31, 20Y6" 20X4 Net outstanding liabilities Homeowners' insurance " $40,550 " Other short-duration insurance lines " 1,976 " " 1,596 " 1976 "Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance" " 42,526 " Reinsurance recoverable on unpaid claims Homeowners' insurance " 13,880 " Other insurance lines 283 Total reinsurance recoverable on unpaid claims " 14,163 " "14,163" Insurance lines other than short-duration " 3,315 " "3,315" Unallocated claims adjustment expenses " 2,420 " "2,420" Other 10 " 5,745 " "Total gross liability for unpaid claims and claim adjustment expense " " $62,434 " ##### [944-40-55-9F](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9F) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:179924c5cc16993f30d48945110e016d2f816aa0931db27f89fc111c6d9c70fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An illustrative Example of the supplementary information that an insurance entity would disclose to meet the requirements in paragraph [944-40-50-4G](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-4G) is as follows. - Note X: Liability for Unpaid Claims and Claim Adjustment Expenses - The following is supplementary information about average historical claims duration as of December 31, 20Y6. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-9EE6915C-D0D5-4B05-BE8D-4F626CDD9D79-low.gif) "Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance" Years 1 2 3 4 5 6 7 8 9 10 Homeowners' insurance 33.8% 14.9% 8.5% 7.2% 6.6% 4.9% 5.4% 5.7% 2.7% 0.3% ##### [944-40-55-9G](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9G) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:af8dffacd3cf71c0fbe30f6314757fbaa01ac56cc347b87e1b4cf828a10d1205 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For this illustrative Example, the approach selected by the insurance entity to compute historical claims duration using the information about claims development included in paragraph [944-40-55-9F](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-9F) is as follows. These calculations are for illustrative purposes only and would not be included in the disclosure. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-AC11C486-D40F-4E1C-9381-576500BE7F68-low.gif) Percentage of Claims Paid in Year 1 Percentage of Claims Paid in Year 2 Accident Year "Claims Paid in Year 1 (A)" "Most Recently Re-estimated Incurred Claims (B)" "Percentage of Claims Paid in Year 1 (A) / (B) = (C) " Accident Year "Total Claims Paid End of Year 2 (D)" "Claims Paid in Year 2 (D) - (A) = (E)" "Percentage of Claims Paid in Year 2 (E) / (B)" 20X7 " $3,000 " " $9,550 " 31.4% 20X7 " $5,000 " " $2,000 " 20.9% 20X8 " 3,500 " " 10,250 " 34.1% 20X8 " 5,750 " " 2,250 " 22.0% 20X9 " 3,750 " " 10,500 " 35.7% 20X9 " 6,000 " " 2,250 " 21.4% 20Y0 " 3,750 " " 12,000 " 31.3% 20Y0 " 6,250 " " 2,500 " 20.8% 20Y1 " 4,250 " " 12,850 " 33.1% 20Y1 " 5,500 " " 1,250 " 9.7% 20Y2 " 4,125 " " 12,700 " 32.5% 20Y2 " 5,250 " " 1,125 " 8.9% 20Y3 " 4,500 " " 13,150 " 34.2% 20Y3 " 5,750 " " 1,250 " 9.5% 20Y4 " 4,600 " " 13,300 " 34.6% 20Y4 " 6,000 " " 1,400 " 10.5% 20Y5 " 4,750 " " 13,250 " 35.8% 20Y5 " 6,125 " " 1,375 " 10.4% 20Y6 " 4,850 " " 13,750 " 35.3% Average 33.8% Average 14.9% - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-21739473-BE7E-468D-907E-E8F1CF822954-low.gif) Percentage of Claims Paid in Year 3 Percentage of Claims Paid in Year 4 Accident Year "Total Claims Paid End of Year 3 (F)" "Claims Paid in Year 3 (F) - (D) = (G)" "Percentage of Claims Paid in Year 3 (G) / (B)" Accident Year "Total Claims Paid End of Year 4 (H)" "Claims Paid in Year 4 (H) - (F) = (I)" "Percentage of Claims Paid in Year 4 (I) / (B)" 20X7 " $5,500 " $500 5.2% 20X7 " $6,000 " $500 5.2% 20X8 " 6,500 " 750 7.3% 20X8 " 7,500 " " 1,000 " 9.8% 20X9 " 6,500 " 500 4.8% 20X9 " 7,500 " " 1,000 " 9.5% 20Y0 " 7,250 " " 1,000 " 8.3% 20Y0 " 7,750 " 500 4.2% 20Y1 " 6,750 " " 1,250 " 9.7% 20Y1 " 8,000 " " 1,250 " 9.7% 20Y2 " 7,000 " " 1,750 " 13.8% 20Y2 " 8,000 " " 1,000 " 7.9% 20Y3 " 7,250 " " 1,500 " 11.4% 20Y3 " 7,750 " 500 3.8% 20Y4 " 6,950 " 950 7.1% Average 8.5% Average 7.2% - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-A2AD46AB-8CE0-490A-BD9F-52511BD720C5-low.gif) Percentage of Claims Paid in Year 5 Percentage of Claims Paid in Year 6 Accident Year "Total Claims Paid End of Year 5 (J)" "Claims Paid in Year 5 (J) - (H) = (K)" "Percentage of Claims Paid in Year 5 (K) / (B)" Accident Year "Total Claims Paid End of Year 6 (L)" "Claims Paid in Year 6 (L) - (J) = (M)" "Percentage of Claims Paid in Year 6 (M) / (B)" 20X7 " $6,800 " $800 8.4% 20X7 " $7,500 " $700 7.3% 20X8 " 7,750 " 250 2.4% 20X8 " 8,250 " 500 4.9% 20X9 " 7,900 " 400 3.8% 20X9 " 8,250 " 350 3.3% 20Y0 " 8,900 " " 1,150 " 9.6% 20Y0 " 9,700 " 800 6.7% 20Y1 " 8,950 " 950 7.4% 20Y1 " 9,250 " 300 2.3% 20Y2 " 9,000 " " 1,000 " 7.9% Average 6.6% Average 4.9% - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-96D07659-1259-4A94-ACBC-6635118AF734-low.gif) Percentage of Claims Paid in Year 7 Percentage of Claims Paid in Year 8 Accident Year "Total Claims Paid End of Year 7 (N)" "Claims Paid in Year 7 (N) - (L) = (O)" "Percentage of Claims Paid in Year 7 (O) / (B)" Accident Year "Total Claims Paid End of Year 8 (P)" "Claims Paid in Year 8 (P) - (N) = (Q)" "Percentage of Claims Paid in Year 8 (Q) / (B)" 20X7 " $8,500 " " $1,000 " 10.5% 20X7 " $9,000 " $500 5.2% 20X8 " 8,500 " 250 2.4% 20X8 " 9,000 " 500 4.9% 20X9 " 8,950 " 700 6.7% 20X9 " 9,700 " 750 7.1% 20Y0 " 9,950 " 250 2.1% Average 5.4% Average 5.7% - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-816BEDB8-1F8C-4C78-8BF5-0C9E1FF6E2D7-low.gif) Percentage of Claims Paid in Year 9 Percentage of Claims Paid in Year 10 Accident Year "Total Claims Paid End of Year 9 (R)" "Claims Paid in Year 9 (R) - (P) = (S)" "Percentage of Claims Paid in Year 9 (S) / (B)" Accident Year "Total Claims Paid End of Year 10 (T)" "Claims Paid in Year 10 (T) - (R) = (U)" "Percentage of Claims Paid in Year 10 (U) / (B)" 20X7 " $9,050 " $50 0.5% 20X7 " $9,075 " $25 0.3% 20X8 " 9,500 " 500 4.9% Average 2.7% Average 0.3% ### Long-Duration Contracts #### Implementation Guidance ##### [944-40-55-10](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:440e46138c4fb29d42d48ffbee1ffa060e7440145f0efdd8407b44e8266c19ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance discusses application of paragraphs [944-30-25-6 through 25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-6) to the following types of [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."): 1. a Immediate bonuses 2. b Persistency bonuses 3. c Enhanced crediting rate bonuses. ##### [944-40-55-11](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:741fd5a501833898bfb5cfc291225d27e156b55eac37a0c7225d0b2de79cdc80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As defined in this Subtopic, in an [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. If the criteria in paragraphs [944-30-25-6 through 25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-6) are met, an asset should be established for the same amount. Even if an entity were to impose a prepayment penalty designed to recover the sales inducement, paragraphs [944-40-30-16 through 30-19](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-16) specify that amounts assessed against policyholders in future periods cannot be considered in determining the liability for policy benefits. The prepayment penalty for the sales inducement would be treated no differently than any other surrender charge. ##### [944-40-55-12](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:68fd077d52dd985de251d3c59625a0c5a04ce5d0fa41b72fdcd6c32d661d9338 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As defined in this Subtopic, 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](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.") at that date. The amount that will be credited in accordance with the terms of the contract should be accrued as a component of the contract holder account balance ratably over the vesting period. If the criteria in paragraphs [944-30-25-6 through 25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-6) are met, an asset should be established. While it may not become payable by the insurance entity until some future vesting or crediting date, the insurance entity is prohibited from anticipating surrenders and must assume the contract holder will persist to earn the bonus. ##### [944-40-55-13](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:b9e49757a38b5e0063945d1a8fe5795f8ec361211b45226d970fa23b221117e4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As defined in this Subtopic, in an [enhanced-crediting-rate bonus](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."), 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. The liability for an enhanced-crediting-rate bonus should be accrued ratably over the bonus crediting period. If the criteria in paragraphs [944-30-25-6 through 25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-6) are met, an asset should be established for the same amount. ##### [944-40-55-13A](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:0a404f54d3d7d90c2676b965ee966aa08856216f5d52df39237157546825114a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [944-40-35-5 through 35-6A](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-5) and [944-40-35-7A through 35-7B](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-7A) require an insurance entity to review—and if there is a change, update—cash flow assumptions used in estimating the [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.") at the level of aggregation at which reserves are calculated. Example 6 (beginning in paragraph [944-40-55-29H](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29H)) illustrates the calculation of the liability, including subsequent changes in the estimate of the liability. ##### [944-40-55-13B](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:6997db70218e387f16d56c75a7caa604c57bb0d02a6eed4f2fa29aa4a6b58596 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the adjustment related to updating cash flow assumptions is an unfavorable adjustment because of expected [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.") exceeding expected [gross premiums](https://asc.understandingaccounting.org/glossary/g/#gross-premium "The premium charged to a policyholder for an insurance contract. See also Net Premiums.") (that is, expected benefits and related expenses exceed expected gross premiums), the insurance entity should: 1. a Set net premiums equal to gross premiums 2. b Increase the estimate of the liability for future policy benefits as of the beginning of the current reporting period 3. c Recognize a corresponding adjustment to net income for the current reporting period (see paragraph [944-40-45-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-4)) 4. d Disclose qualitative and quantitative information related to adverse development (see paragraph [944-40-50-6(d)](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-6)) 5. e Accrue the liability for future policy benefits with net premiums being set equal to gross premiums (that is, a ratio of net premiums to gross premiums equal to 100 percent) until assumptions are subsequently updated. ##### [944-40-55-13C](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:00c1454ebac2c4831d811f873d37b46a12ffb43ba7bdd138ca17beaf783e179f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the adjustment related to updating cash flow assumptions is an unfavorable adjustment but does not result in net premiums exceeding gross premiums, then the insurance entity should: 1. a Increase the estimate of the liability for future policy benefits as of the beginning of the current reporting period 2. b Recognize a corresponding change in estimate adjustment to net income for the current reporting period (see paragraph [944-40-45-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-4)) 3. c Accrue the liability for future policy benefits with the revised ratio of net premiums to gross premiums until assumptions are subsequently updated. ##### [944-40-55-13D](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13D) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:260dc976c3ee7e928fef642d0f52c34ba8755364d0b9463b0d91fe17a7cf7b07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the adjustment related to updating cash flow assumptions is a favorable adjustment—including the reversal of previously recognized unfavorable adjustment described in paragraph [944-40-55-13B](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13B) or [944-40-55-13C](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13C)—the insurance entity should: 1. a Decrease the estimate of the liability for future policy benefits as of the beginning of the current reporting period 2. b Recognize a corresponding change in estimate adjustment to net income for the current reporting period (see paragraph [944-40-45-4](https://asc.understandingaccounting.org/asc/944/40/#944-40-45-4)) 3. c Accrue the liability for future policy benefits with the revised ratio of net premiums to gross premiums until assumptions are subsequently updated. ##### [944-40-55-13E](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13E) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:857bdec38b01f87530c79bd91f40f175d337a4c62c0bfbb5c0cb7611532ff676 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity should maximize the use of current observable market prices of upper-medium-grade (low-credit-risk) fixed-income instruments with durations similar to the liability for future policy benefits. 1. a An insurance entity should not substitute its own estimates for observable market data unless the market data reflect transactions that are not orderly (see paragraphs [820-10-35-54I through 35-54J](https://asc.understandingaccounting.org/asc/820/10/#820-10-35-54I) for additional guidance on determining whether transactions are not orderly). 2. b In determining points on the yield curve for which there are limited or no observable market data for upper-medium-grade (low-credit-risk) fixed-income instruments, an insurance entity should use an estimate that is consistent with existing guidance on [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.") measurement in Topic 820, particularly for Level 3 fair value measurement. ##### [944-40-55-13F](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13F) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:2b6f7f4dd68500d3a7aa43c6650367ac485de12d758704ba84e8660f994ff42c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To allow financial statement users to understand the amount, timing, and uncertainty of cash flows arising from contracts issued by insurance entities, paragraph [944-40-50-5A](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-5A) requires that an insurance entity aggregate or disaggregate certain disclosures so that useful information is not obscured by the inclusion of a large amount of insignificant detail or by the aggregation of items that have significantly different characteristics. Consequently, the extent to which an insurance entity's information is aggregated or disaggregated for the purpose of those disclosures depends on the facts and circumstances that pertain to the characteristics of the liability for future policy benefits, the additional liability, the liability for policyholders' account balances, [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, [market risk benefits](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."), or deferred [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.") (and balances amortized on a basis consistent with deferred acquisition costs). ##### [944-40-55-13G](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13G) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:d1e5c84963d24fce4f979883c9361f9973f758ccef8df7dcf6affe19df45b1d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition, when selecting the type of category to use to aggregate or disaggregate disclosures, an insurance entity should consider how information about the disclosed items has been presented for other purposes, including the following: 1. a Disclosures presented outside the financial statements (for example, in statutory filings) 2. b Information regularly viewed by the chief operating decision maker for evaluating financial performance 3. c Other information that is similar to the types of information identified in (a) and (b) and that is used by the insurance entity or users of the insurance entity's financial statements to evaluate the insurance entity's financial performance or make resource allocation decisions. ##### [944-40-55-13H](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13H) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:eca084a29519f1f0ab6836d55327167bfb2ae9fd58c7b8a7c0014bb47f6773cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of categories that might be appropriate to consider to aggregate or disaggregate disclosures include the following: 1. a Type of coverage (for example, major product line) 2. b Geography (for example, country or region) 3. c Market or type of customer (for example, individual or group lines of business). When applying the guidance in paragraphs [944-30-50-2A through 50-2B](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-2A) , [944-40-50-6 through 50-7C](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-6), and [944-80-50-1 through 50-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-50-1) , an insurance entity should not aggregate amounts from different reportable segments according to Topic 280, if applicable. ##### [944-40-55-13I](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13I) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:ce6de63d0898a26f235f2f84d0572bbcd5615d5e46c0d8785ee1749975a74598 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The tabular rollforward of the beginning to the ending balance related to the liability for future policy benefits or the additional liability as required in paragraph [944-40-50-6](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-6) could include the following line items: 1. a Issuances 2. b Interest accrual 3. c Net premiums or assessments collected 4. d Benefit payments 5. e Derecognition (lapses or withdrawals) 6. f Effect of actual variances from expected experience 7. g Effect of changes in cash flow assumptions 8. h Effect of changes in discount rate assumptions. ##### [944-40-55-13J](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13J) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:9d7142e4e951a81ca0df2edc9b1e0459106c44c4316c1736199b6cfa0a882a03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The tabular rollforward of the beginning to the ending balance related to the liability for policyholders' account balances as required in paragraph [944-40-50-7A](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-7A) could include the following line items: 1. a Issuances 2. b Premiums received 3. c Policy charges 4. d Surrenders and withdrawals 5. e Benefit payments 6. f Transfers from or to separate accounts 7. g Interest credited. ##### [944-40-55-13K](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-13K) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:cbb30dec1429e46e1fdc17463d0025a78af0682bf664ee6c9da9e5eace6c79ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The tabular rollforward of the beginning to the ending balance related to market risk benefits as required in paragraph [944-40-50-7B](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-7B) could include the following line items: 1. a Issuances 2. b Interest accrual 3. c Attributed fees collected 4. d Benefit payments 5. e Effect of changes in interest rates 6. f Effect of changes in equity markets 7. g Effect of changes in equity index volatility 8. h Actual policyholder behavior different from expected behavior 9. i Effect of changes in future expected policyholder behavior 10. j Effect of changes in other future expected assumptions 11. k Effect of changes in the instrument-specific credit risk. To the extent that the tabular rollforward of the beginning to the ending balance related to market risk benefits achieves the fair value disclosure requirements described in Section 820-10-50, an insurance entity need not duplicate the related fair value disclosure. #### Illustrations ##### [944-40-55-14](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:70e9beb7b5400c1b0cdd8a873ae0d7ef470b2d2e9b9dc02503e1ad3116c9b856 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates how to calculate an additional liability for universal life-type contracts as discussed in paragraph [944-40-25-27A](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-27A)(for example, a variable universal life insurance contract no-lapse guarantee that would meet the condition in paragraph [944-40-25-25D(b)](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25D) and not be accounted for as a market risk benefit). This Example assumes that the guidance in paragraphs [944-20-15-20 through 15-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-20) has been followed, with the conclusion that the [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.") risk associated with insurance benefit features is other than nominal. ##### [944-40-55-15](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:cba03c0f5516ad210855d2ae0600585be8467382bacd6486dfc053cb1e5da89b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example assumes the following for the contracts discussed: 1. a The contracts have no front-end loads. 2. b The mortality assessments include any explicit assessments for enhanced death benefit feature. 3. c The [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.") are calculated based on a percentage of premiums. 4. d The expense assessments are a fixed annual charge. 5. e The discount rate is 8 percent 6. f The contracts do not include market risk benefits. ##### [944-40-55-16](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:c2b1eb09c964867eb4854fd8dffdc7d172d4e5b3ea0d31406b1c8695dae541ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [944-40-55-25 through 55-28](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-25) contain the same basic assumptions as paragraph [944-40-55-20](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-20), but with the effect on the components of the additional liability of a 10 percent increase in account balances (not shown in schedules) in Year 2. ##### [944-40-55-17](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:be15b7cfee75f07ac17efd1345495b6857ea844482f1ece044449771b3cb8689 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates computations involved in the following: 1. a [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). 2. b Benefit ratio 3. c Additional liability 4. d [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). ##### [944-40-55-18](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:592424e71daed5ab4736b5eeaad407a3f273ab764d9a70a00dce2ed9e6d9dcfd 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/). ##### [944-40-55-19](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:b7ca654da5aa176ae421324627262685aa3fa35c58baaf2c95175afcdb26b446 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Columns in the computations that follow do not cross-foot due to rounding. ##### [944-40-55-20](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:de03a98340208f271fbc10fd7c498f708906db9153e059fba81f14a32794b742 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Computation of components of the additional liability follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-A787453F-39C8-456A-962E-A819C303B78F-low.gif) Year Expense Assessments + Mortality Assessments + "Surrender Charges" = Total Assessments (a) Excess Payments 1 $30.00 $820.50 $17.50 $868.00 $- 2 29.75 871.65 44.62 946.02 12.20 3 29.48 919.29 61.42 " 1,010.19 " 20.61 4 29.20 969.80 68.12 " 1,067.12 " 25.94 5 28.89 " 1,034.77 " 64.99 " 1,128.65 " 31.58 6 28.55 " 1,086.61 " 95.16 " 1,210.32 " 44.05 7 28.18 " 1,143.53 " 58.71 " 1,230.42 " 49.53 8 27.78 " 1,086.61 " - " 1,114.39 " 52.00 9 27.34 " 1,268.91 " - " 1,296.25 " 65.93 10 26.87 " 1,333.10 " - " 1,359.97 " 76.78 11 26.35 " 1,382.93 " - " 1,409.28 " 93.75 12 25.79 " 1,433.09 " - " 1,458.88 " 104.76 13 25.18 " 1,487.10 " - " 1,512.28 " 120.67 14 24.52 " 1,539.66 " - " 1,564.18 " 142.22 15 23.81 " 1,597.88 " - " 1,621.69 " 151.25 16 23.06 " 1,662.23 " - " 1,685.29 " 153.64 17 22.25 " 1,691.70 " - " 1,713.95 " 210.92 18 21.39 " 1,723.70 " - " 1,745.09 " 236.72 19 20.48 " 1,751.22 " - " 1,771.70 " 270.72 20 19.52 " 1,788.11 " - " 1,807.63 " 270.82 Present Value " $12,304.07 " $724.88 (a) "If the product had investment margins, they would be included in the schedule in an additional column." ##### [944-40-55-21](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:2974902b8cd6870144743fe1420e63c58523f2de83369c0f0ff81a846b638a7e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Computation of the benefit ratio follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-5E9A5664-F3FF-44F0-A5F7-9F854682136C-low.gif) Present value of total expected excess payments over the life of the contract $724.88 Divided by present value of total expected assessments over the life of the contract " 12,304.07 " Equals benefit ratio 5.8914% ##### [944-40-55-22](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:37a4da1a5f375702b50b51779024f58a8d8ce958152eb52b91aa6f5232d14491 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Computation of the Year 1 additional liability follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-A4CC9438-89D9-44DD-935E-8F09E6B8986B-low.gif) Cumulative assessments $868.00 Multiplied by benefit ratio 5.8914% Equals Year 1 additional liability ($) 51.14 ##### [944-40-55-23](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:1134028e6dfb20d6c5b9e2497a9b498a6c832b6933a8e9538d1c8465e1bb8cba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The additional liability schedule follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-0DF86CAD-B47E-460E-BB78-6F10C9BC3F2F-low.gif) Year "(A) Beginning Additional Liability" Interest "Total Assessments × Benefit Ratio" "(B) Benefit Expense Incurred" "(C) Excess Payments" "(A) + (B) - (C) Ending Additional Liability" Change in Additional Liability 1 $- $- $51.14 $51.14 $- $51.14 $51.14 2 51.14 4.09 55.73 59.82 12.20 98.76 47.62 3 98.76 7.90 59.51 67.42 20.61 145.57 46.81 4 145.57 11.65 62.87 74.51 25.94 194.15 48.57 5 194.15 15.53 66.49 82.02 31.58 244.59 50.45 6 244.59 19.57 71.30 90.87 44.05 291.41 46.82 7 291.41 23.31 72.49 95.80 49.53 337.69 46.28 8 337.69 27.02 65.65 92.67 52.00 378.35 40.66 9 378.35 30.27 76.37 106.63 65.93 419.06 40.70 10 419.06 33.52 80.12 113.65 76.78 455.92 36.86 11 455.92 36.47 83.03 119.50 93.75 481.67 25.75 12 481.67 38.53 85.95 124.48 104.76 501.39 19.72 13 501.39 40.11 89.09 129.21 120.67 509.93 8.54 14 509.93 40.79 92.15 132.95 142.22 500.65 (9.27) 15 500.65 40.05 95.54 135.59 151.25 484.99 (15.66) 16 484.99 38.80 99.29 138.09 153.64 469.44 (15.55) 17 469.44 37.56 100.98 138.53 210.92 397.05 (72.39) 18 397.05 31.76 102.81 134.57 236.72 294.91 (102.14) 19 294.91 23.59 104.38 127.97 270.72 152.16 (142.75) 20 152.16 12.17 106.49 118.67 270.82 - (152.16) ##### [944-40-55-24](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:61eb3d17f4de211472185e53e9afb83fb442e67874b90721b9ad3e518b5b7191 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/). ##### [944-40-55-25](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:41a93953557ec7c1940de671f1bc719294c3524b56ffad5cdbc49e664bbe3f5d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Computation of components of the additional liability with a 10 percent increase in the account balance in Year 2 follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-D0DC7801-34D6-4A9E-8D1D-502EBC0A1E6B-low.gif) Year Expense Assessments + Mortality Assessments + Surrender Charges = Total Assessments Excess Payments 1 $30.00 $820.50 $17.50 $868.00 $- 2 29.75 952.20 44.62 " 1,026.58 " - 3 29.48 " 1,004.82 " 61.42 " 1,095.72 " 14.70 4 29.20 " 1,060.59 " 68.12 " 1,157.91 " 23.32 5 28.89 " 1,131.90 " 64.99 " 1,225.78 " 30.43 6 28.55 " 1,189.01 " 95.16 " 1,312.72 " 44.65 7 28.18 " 1,251.32 " 58.71 " 1,338.21 " 51.02 8 27.78 " 1,189.01 " - " 1,216.79 " 54.23 9 27.34 " 1,389.04 " - " 1,416.38 " 68.42 10 26.87 " 1,456.89 " - " 1,483.76 " 82.24 11 26.35 " 1,511.61 " - " 1,537.96 " 101.42 12 25.79 " 1,568.05 " - " 1,593.83 " 112.70 13 25.18 " 1,626.63 " - " 1,651.81 " 131.08 14 24.52 " 1,683.48 " - " 1,708.00 " 154.93 15 23.81 " 1,747.40 " - " 1,771.22 " 163.02 16 23.06 " 1,814.73 " - " 1,837.79 " 167.79 17 22.25 " 1,845.71 " - " 1,867.96 " 232.38 18 21.39 " 1,878.58 " - " 1,899.97 " 261.62 19 20.48 " 1,909.07 " - " 1,929.54 " 296.86 20 19.52 " 1,950.07 " - " 1,969.58 " 296.31 Present value " $13,326.45 " $759.24 ##### [944-40-55-26](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:71bc98e1d70f510c5bbad99f27f4f81b362d990a15d80499263f1f7d5ba00792 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Computation of the benefit ratio at Year 2 follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-C9ED0F5B-6EEA-4FA3-8CD0-F4FBEFDCC93C-low.gif) Present value of total expected excess payments over the life of the contract $759.24 Divided by present value of total expected assessments over the life of the contract " 13,326.45 " Equals benefit ratio 5.6972% ##### [944-40-55-27](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:e70bf1e08606e90af6fa448f7fa76ddf94da3727f8e7b4c20a77cad5b8cc8ba9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Computation of the Year 2 additional liability follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-E5FB9FFE-CC81-45EF-9645-0959645D8DDE-low.gif) Cumulative assessments Year 1 $868.00 Year 2 " 1,026.58 " Total " 1,894.58 " Multiplied by benefit ratio 5.6972% Equals Year 2 additional liability (a) ($) 107.94 (a) "Excludes interest, any deduction for actual claim expenses, and accrued interest related to cumulative adjustment to benefits expense (which amounts to $.13)." ##### [944-40-55-28](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:39a8718803a5e9aae61da776d610a578a8cdcd9d77967fb7a4e3acefe19f3f05 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The updated additional liability schedule follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-4C5E3298-1218-4AA0-9629-0923A8368520-low.gif) Year "(A) Beginning Additional Liability" Interest "Total Assessments × Benefit Ratio" Cumulative Adjustments to Benefit Expense "(B) Benefit Expense Incurred" "(C) Excess Payments" "(A) + (B) - (C) Ending Additional Liability" Change in Additional Liability 1 $- $- $51.14 $- $51.14 $- $51.14 (a) $51.14 2 51.14 4.09 58.49 (1.82) (b) 60.76 - 111.89 (c) 60.76 3 111.89 8.95 62.43 - 71.38 14.70 168.57 56.68 4 168.57 13.49 65.97 - 79.45 23.32 224.71 56.13 5 224.71 17.98 69.84 - 87.81 30.43 282.09 57.38 6 282.09 22.57 74.79 - 97.36 44.65 334.79 52.71 7 334.79 26.78 76.24 - 103.02 51.02 386.80 52.00 8 386.80 30.94 69.32 - 100.27 54.23 432.83 46.04 9 432.83 34.63 80.69 - 115.32 68.42 479.73 46.90 10 479.73 38.38 84.53 - 122.91 82.24 520.40 40.67 11 520.40 41.63 87.62 - 129.25 101.42 548.24 27.83 12 548.24 43.86 90.80 - 134.66 112.70 570.20 21.96 13 570.20 45.62 94.11 - 139.72 131.08 578.84 8.64 14 578.84 46.31 97.31 - 143.62 154.93 567.53 (11.31) 15 567.53 45.40 100.91 - 146.31 163.02 550.82 (16.71) 16 550.82 44.07 104.70 - 148.77 167.79 531.80 (19.02) 17 531.80 42.54 106.42 - 148.97 232.38 448.38 (83.41) 18 448.38 35.87 108.25 - 144.12 261.62 330.88 (117.50) 19 330.88 26.47 109.93 - 136.40 296.86 170.42 (160.46) 20 170.42 13.63 112.21 - 125.84 296.31 - (170.42) (a) This represents the end-of-year liability using the original expense in Year 1. (b) The difference of 1.82 between the actual Year 1 liability (51.14) and the recomputed amount (49.32) will be the true-up adjustment included in the Year 2 benefit expense. (c) "Year 1 (51.14) plus Year 2 (58.49) plus interest (4.09), less Year 2 cumulative adjustment to benefit expense (1.82), equals an ending additional liability balance of 111.89. Rounding results in a .01 difference." ##### [944-40-55-29](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:8d80eaa369881d4d706d223f986e2a91137e9da3d187c378460e37844340419b 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/). ##### [944-40-55-29A](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:9455dc1ac09cfe8a83f9ff435f5a961734a71d0b5956d03900afb043bb700797 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract holder deposits $100,000 in a deferred annuity (either fixed or variable) that provides for 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.") that guarantees that at a specified anniversary date (for example, 5 years) the contract holder's account balance will be the greater of the following: 1. a The account value 2. b Deposits less partial withdrawals accumulated at 3 percent interest compounded annually. ##### [944-40-55-29B](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:b0f3b60da2ff56bbf37c7ab6ff0276c236d6ccb98f231cec0a00ca26b3f8535a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contract holder's account balance is exposed to stock market performance. At the specified anniversary date the contract holder's account balance has declined to $80,000 due to stock market declines. The guaranteed minimum value of the $100,000 deposit compounded annually at 3 percent interest is $115,930. The contract holder's account balance will be increased to the greater amount, resulting in an account balance of $115,930. In this Example, the guaranteed minimum accumulation benefit meets the criteria for a market risk benefit in accordance with paragraph [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C) because the guaranteed minimum accumulation benefit protects the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk. Specifically, the insurance entity compensates the contract holder for the shortfall (due to stock market declines) between the account balance amount of $80,000 and the guaranteed amount of $115,930. The guaranteed minimum accumulation benefit should be measured at fair value in accordance with paragraph [944-40-30-19C](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-19C). Similarly, if on the date of the death of the contract holder the deferred annuity provides a guaranteed minimum death benefit amount of $115,930 while the account balance is $80,000, the guaranteed minimum death benefit meets the criteria for a market risk benefit in accordance with paragraph [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C) because the insurance entity provides compensation for the shortfall (due to stock market declines) between the account balance amount of $80,000 and the guaranteed amount of $115,930. ##### [944-40-55-29C](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:24a3a712b66111e9497e5658bd6624e3c4d82c1ef98ae13fce18c390cce30fb0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract holder deposits $100,000 in a deferred annuity (either fixed or variable) that provides 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."). The contract specifies that if the contract holder elects to annuitize, the amount available to annuitize will be the higher of the then account balance or the sum of deposits less withdrawals. The contract holder's account balance is exposed to stock market performance. At the date that the contract holder chooses to annuitize, the account balance has declined to $80,000 due to stock market declines. ##### [944-40-55-29D](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29D) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:3c16d2c38e731e8ecce1fb3d93bbd8e74df10f3b8881699b4b2ed656aab8dcad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, the guaranteed minimum income benefit meets the criteria for a market risk benefit in accordance with paragraph [944-40-25-25C](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25C) because the guaranteed minimum income benefit protects the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk. Specifically, the insurance entity compensates the contract holder for the shortfall (due to stock market declines) between the account balance amount of $80,000 and the $100,000 guaranteed amount at the [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.") date. 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."), the guaranteed minimum income benefit feature should be measured at fair value in accordance with paragraph [944-40-30-19C](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-19C). Similarly, if the deferred annuity provides a [guaranteed minimum withdrawal benefit](https://asc.understandingaccounting.org/glossary/g/#guaranteed-minimum-withdrawal-benefit "A benefit that provides a contract holder a guarantee that a minimum amount (usually stated as a percentage of premiums) will be available for withdrawal over a specific period. Regardless of the contract value, the contract holder is guaranteed the right to periodic withdrawals from the contract until the amount of premiums deposited into the contract is withdrawn.") or a guaranteed minimum lifetime withdrawal benefit that protects the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk, the guaranteed minimum withdrawal benefit or the guaranteed minimum lifetime withdrawal benefit meets the criteria for a market risk benefit. ##### [944-40-55-29E](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29E) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:a2fa38389a5476690d3f4935dee4e675409d85dfc42e545332082f5cec1a9531 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the information that an insurance entity with two major long-duration product lines (term life and whole life) should disclose in its 20X2 financial statements to meet certain requirements of paragraph [944-40-50-6](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-6). - Note X: Liability for Future Policy Benefits - The balances of and changes in the liability for future policy benefits follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-35F0EF5A-D89C-4DEE-B2D0-D1033BAC4932-low.gif) "December 31, " 20X2 20X1 Term Life Whole Life Term Life Whole Life Present Value of Expected Net Premiums "Balance, beginning of year" $VVV $VVV $XXX $XXX Beginning balance at original discount rate WWW WWW XXX XXX Effect of changes in cash flow assumptions XXX XXX XXX XXX Effect of actual variances from expected experience XXX XXX XXX XXX Adjusted beginning of year balance XXX XXX XXX XXX Issuances XXX XXX XXX XXX Interest accrual XXX XXX XXX XXX Net premiums collected (a) (XXX) (XXX) (XXX) (XXX) Derecognition (lapses) (XXX) (XXX) (XXX) (XXX) Ending balance at original discount rate YYY YYY WWW WWW Effect of changes in discount rate assumptions XXX XXX XXX XXX "Balance, end of year" $ZZZ $ZZZ $VVV $VVV Present Value of Expected Future Policy Benefits "Balance, beginning of year" $VVV $VVV $XXX $XXX Beginning balance at original discount rate WWW WWW XXX XXX Effect of changes in cash flow assumptions XXX XXX XXX XXX Effect of actual variances from expected experience XXX XXX XXX XXX Adjusted beginning of year balance XXX XXX XXX XXX Issuances XXX XXX XXX XXX Interest accrual XXX XXX XXX XXX Benefit payments (XXX) (XXX) (XXX) (XXX) Derecognition (lapses) (XXX) (XXX) (XXX) (XXX) Ending balance at original discount rate YYY YYY WWW WWW Effect of changes in discount rate assumptions XXX XXX XXX XXX "Balance, end of year" $ZZZ $ZZZ $VVV $VVV Net liability for future policy benefits $CCC $DDD $AAA $BBB Less: Reinsurance recoverable XXX XXX XXX XXX "Net liability for future policy benefits, after reinsurance recoverable " $XXX $XXX $XXX $XXX (a) Net premiums collected represent the portion of gross premiums collected from policyholders that is used to fund expected benefit payments. - The reconciliation of the net liability for future policy benefits to the liability for future policy benefits in the consolidated statement of financial position follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-419FE406-D36C-4F39-9FCB-2653B8C1CB7F-low.gif) "December 31, "20X2 20X1 Term life $CCC $AAA Whole life DDD BBB Other XXX XXX Total $XXX $XXX - The amount of undiscounted expected gross premiums and expected future benefit payments follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-7F44E33A-9E11-45BA-8F8A-578941C856A4-low.gif) "December 31, " 20X2 20X1 Term life Expected future benefit payments $XXX $XXX Expected future gross premiums $XXX $XXX Whole life Expected future benefit payments $XXX $XXX Expected future gross premiums $XXX $XXX - The amount of revenue and interest recognized in the statement of operations follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-2A8DD6B5-5D7C-4765-9909-CB3D2395946F-low.gif) Gross Premiums or Assessments Interest Expense " December 31, " " December 31, " 20X2 20X1 20X2 20X1 Term life $XXX $XXX $XXX $XXX Whole life XXX XXX XXX XXX Other XXX XXX XXX XXX Total $XXX $XXX $XXX $XXX - The weighted-average interest rate follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-F41707A9-2B58-41A1-8AA4-86F2CBB30322-low.gif) "December 31, " 20X2 20X1 Term life Interest accretion rate XXX% XXX% Current discount rate XXX% XXX% Whole life Interest accretion rate XXX% XXX% Current discount rate XXX% XXX% ##### [944-40-55-29F](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29F) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:346fbaca95a7c0906e4d1098bb4023f310db4bd998ec43c8321599bae1512ccb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the information that an insurance entity with two major long-duration products with policyholders' account balances (universal life and fixed annuities) should disclose in its 20X2 financial statements to meet certain requirements of paragraph [944-40-50-7A](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-7A). - Note X: Policyholders' Account Balances - The balance of account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B89788F2-16F3-40FA-BE32-362071666512-low.gif) "December 31, 20X2" Range of Guaranteed Minimum Crediting Rate At Guaranteed Minimum "1 Basis Point- 50 Basis Points Above " "51 Basis Points- 150 Basis Points Above " Greater Than 150 Basis Points Above Total Universal Life X.XX%-X.XX% $XXX $XXX $XXX $XXX $XXX X.XX%-X.XX% XXX XXX XXX XXX XXX Greater than X.XX% XXX XXX XXX XXX XXX Total $XXX $XXX $XXX $XXX $CCC Fixed Annuity X.XX%-X.XX% $XXX $XXX $XXX $XXX $XXX X.XX%-X.XX% XXX XXX XXX XXX XXX Greater than X.XX% XXX XXX XXX XXX XXX Total $XXX $XXX $XXX $XXX $DDD "December 31, 20X1" Range of Guaranteed Minimum Crediting Rate At Guaranteed Minimum "1 Basis Point- 50 Basis Points Above " "51 Basis Points- 150 Basis Points Above " Greater Than 150 Basis Points Above Total Universal Life X.XX%-X.XX% $XXX $XXX $XXX $XXX $XXX X.XX%-X.XX% XXX XXX XXX XXX XXX Greater than X.XX% XXX XXX XXX XXX XXX Total $XXX $XXX $XXX $XXX $AAA Fixed Annuity X.XX%-X.XX% $XXX $XXX $XXX $XXX $XXX X.XX%-X.XX% XXX XXX XXX XXX XXX Greater than X.XX% XXX XXX XXX XXX XXX Total $XXX $XXX $XXX $XXX $BBB - The balances of and changes in policyholders' account balances follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-AB546096-3440-4C2D-8444-1A29A474E52D-low.gif) "December 31," 20X2 20X1 Universal Life Fixed Annuity Universal Life Fixed Annuity "Balance, beginning of year" $AAA $BBB $XXX $XXX Issuances XXX XXX XXX XXX Premiums received XXX XXX XXX XXX Policy charges (a) (XXX) (XXX) (XXX) (XXX) Surrenders and withdrawals (XXX) (XXX) (XXX) (XXX) Benefit payments (XXX) (XXX) (XXX) (XXX) Net transfers from (to) separate account XXX XXX XXX XXX Interest credited XXX XXX XXX XXX Other XXX XXX XXX XXX "Balance, end of year" $CCC $DDD $AAA $BBB Weighted-average crediting rate X.XX% X.XX% X.XX% X.XX% Net amount at risk (b) $XXX $XXX $XXX $XXX Cash surrender value $XXX $XXX $XXX $XXX (a) Contracts included in the policyholder account balances are generally charged a premium and/or monthly assessments on the basis of the account balance. (b) "For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. " - The reconciliation of policyholders' account balances to the policyholders' account balances' liability in the consolidated statement of financial position follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-5CDC5934-0512-4078-9F6B-663A3956DB7C-low.gif) "December 31, " 20X2 20X1 Universal life $CCC $AAA Fixed annuity DDD BBB Other XXX XXX Total $XXX $XXX ##### [944-40-55-29G](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29G) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:e626fbbe43c522e409a338a055878c08bc2468ea49d7bef757c48eeeb9fcd4a5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the information that an insurance entity with market risk benefits should disclose in its 20X2 financial statements to meet certain requirements of paragraph [944-40-50-7B](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-7B). - Note X: Market Risk Benefits - The balances of and changes in guaranteed minimum withdrawal benefits associated with variable annuities and indexed annuities follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-960CA14B-325D-461B-81C7-B73DFA7B6C63-low.gif) "December 31, 20X2" "December 31, 20X1" Variable Indexed Variable Indexed Annuities Annuities Annuities Annuities "Balance, beginning of year" $AAA $FFF $XXX $XXX "Balance, beginning of year, before effect of changes in the instrument-specific credit risk" XXX XXX XXX XXX Issuances XXX XXX XXX XXX Interest accrual XXX XXX XXX XXX Attributed fees collected XXX XXX XXX XXX Benefit payments (XXX) (XXX) (XXX) (XXX) Effect of changes in interest rates XXX XXX XXX XXX Effect of changes in equity markets XXX XXX XXX XXX Effect of changes in equity index volatility XXX XXX XXX XXX Actual policyholder behavior different from expected behavior XXX XXX XXX XXX Effect of changes in future expected policyholder behavior XXX XXX XXX XXX Effect of changes in other future expected assumptions XXX XXX XXX XXX "Balance, end of year, before effect of changes in the instrument-specific credit risk" XXX XXX XXX XXX Effect of changes in the instrument-specific credit risk XXX XXX XXX XXX "Balance, end of year" $GGG $LLL $AAA $FFF "Reinsurance recoverable, end of year" $XXX $XXX $XXX $XXX "Balance, end of year, net of reinsurance" $XXX $XXX $XXX $XXX - The reconciliation of market risk benefits by amounts in an asset position and in a liability position to the market risk benefits amount in the consolidated statement of financial position follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-88177750-577C-4ED4-97E5-A1294EF53D91-low.gif) "December 31, " 20X2 20X1 Asset Liability Net Asset Liability Net Variable annuities $XXX $XXX $GGG $XXX $XXX $AAA Indexed annuities XXX XXX LLL XXX XXX FFF $XXX $XXX $NNN $XXX $XXX $MMM ##### [944-40-55-29H](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29H) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:76c26264e210cef877781a6c2d2c1151892af6871c1a91d6dcf0bec96a695e03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates an approach to updating assumptions used to measure the liability for future policy benefits related to traditional life insurance contracts. ##### [944-40-55-29I](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29I) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:70f6329282a157911d7f248fd1ea6625f54c4cd91f8c7454551a66715731adb3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example assumes the following for the contracts discussed: 1. a At contract inception: 1. 1 The insurance entity issues 1,000 guaranteed-renewable 20-year term life insurance contracts that are grouped into a single cohort for purposes of measuring the liability for future policy benefits. 2. 2 Face amount per contract: $200,000. 3. 3 Annual premium per contract: $500. 4. 4 Discount rate: 0 percent. 5. 5 [Lapse rate](https://asc.understandingaccounting.org/glossary/l/#lapse-rate "The rate at which insurance contracts terminate through failure of the insureds to continue required premium payments. The lapse rate may also be considered a rate of nonpersistence. It is usually expressed as a ratio of the number of contracts that terminated by reason of failure of insureds to make premium payments during a given period, to the total number of contracts at the beginning of the period from which those lapses occurred."): 5 percent for all years. 6. 6 Mortality rate: 0.1 percent in Year 1, increasing linearly to 0.29 percent in Year 20. 7. 7 For ease of illustration, no expenses are assumed, benefit payments and premium receipts occur at the end of the year, and annual periods are presented. 2. b During Year 6: The insurance entity experiences unfavorable mortality that is 20 percent higher than expected. The insurance entity determines that it does not need to change its future mortality or lapse assumptions. 3. c During Year 9: After experiencing continued unfavorable mortality (20 percent higher than expected in Years 7 through 9), the insurance entity increases its mortality assumption by 20 percent for Years 10 through 20. 4. d During Year 10: The current upper-medium grade (low-credit-risk) fixed-income instrument yield increases from 0 percent to 2 percent. The insurance entity does not change its future mortality or lapse assumptions. ##### [944-40-55-29J](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29J) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:dcf4680b1d027dc2c6b5b1963b9f39578342b86fc5a92cf57b688776760c45f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates computations involved in the following: 1. a Net premiums 2. b Liability remeasurement adjustments. ##### [944-40-55-29K](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29K) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:fefcf6cf1ad1ea5b80efa0ffa71e2d82c2c870e024d67a440a89d3042603a928 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The computation of the original net premium ratio at the issue date of the portfolio of contracts follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-A24731B4-D6B0-42EF-BE1B-9194A640B5FC-low.gif) Original Cash Flow Estimate Year Benefits Gross Premiums 1 $200.0 $500.0 2 208.8 474.5 3 216.1 450.3 4 222.2 427.3 5 227.0 405.4 6 230.7 384.6 7 233.5 364.8 8 235.3 346.0 9 236.3 328.1 10 236.5 311.2 11 236.0 295.1 12 235.0 279.7 13 233.4 265.2 14 231.3 251.4 15 228.7 238.3 16 225.8 225.8 17 222.5 214.0 18 219.0 202.8 19 215.1 192.1 20 211.1 182.0 Total " $4,504.4 " " $6,338.4 " Present value (a) " $4,504.4 " " $6,338.4 " Net premium ratio (b) 71.1% (a) 0% discount rate. (b) Present value of benefits/present value of gross premiums (for Years 1-20). ##### [944-40-55-29L](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29L) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:fb1face0487d2ff12f376d05f1f38151f784c1d95da13d1b65c8cd9654f37884 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The computation of the liability for future policy benefits at the end of Year 1 follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-D481E37D-3983-40B0-AE88-A1D71C88CE8F-low.gif) Liability for Future Policy Benefits (End of Year 1) Year Benefits Gross Premiums Net Premiums (a) 2 $208.8 $474.5 $337.2 3 216.1 450.3 320.0 4 222.2 427.3 303.6 5 227.0 405.4 288.1 6 230.7 384.6 273.3 7 233.5 364.8 259.2 8 235.3 346.0 245.9 9 236.3 328.1 233.2 10 236.5 311.2 221.1 11 236.0 295.1 209.7 12 235.0 279.7 198.8 13 233.4 265.2 188.5 14 231.3 251.4 178.6 15 228.7 238.3 169.3 16 225.8 225.8 160.5 17 222.5 214.0 152.1 18 219.0 202.8 144.1 19 215.1 192.1 136.5 20 211.1 182.0 129.3 Total " $4,304.4 " " $5,838.4 " " $4,149.0 " Present value (b) " $4,304.4 " " $5,838.4 " " $4,149.0 " (a) Gross premiums × 71.1% net premium ratio. (b) 0% discount rate. Present value of future benefits (for Years 2-20) " $4,304.4 " Less: Present value of future net premiums (for Years 2-20) " 4,149.0 " Liability for future policy benefits $155.4 - ![](https://asc.understandingaccounting.org/asc-img/GUID-31339085-BC43-4019-917E-D3A4BCEAD7A7-low.gif) Accounting Entries (Year 1) Cash (a) $300.0 Benefits expense (b) 355.4 Premium income $500.0 Liability for future policy benefits 155.4 (a) "Premiums collected of $500.0, less benefits paid of $200.0." (b) "Benefits paid of $200.0, plus change in reserve of $155.4." ##### [944-40-55-29M](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29M) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:33e4c69f6aed8ad924157f1a154fa26fd48f48085d230abac8a84f1349c218f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. - At the end of Year 6, the Entity updates its mortality assumption to reflect the unfavorable experience in that year (that is, the true-up from expected experience to actual experience) and its effect on estimated cash flows. However, as specified in paragraph [944-40-35-5(a)](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-5), the Entity reviewed its future cash flow assumptions and determined that its future mortality and lapse assumptions did not need to be adjusted. - The following table provides information about the estimated cash flow effects of updating cash flow assumptions and the corresponding adjustment to the liability for future policy benefits and current-period benefit expense. - ![](https://asc.understandingaccounting.org/asc-img/GUID-4A1B682F-73F3-475E-AC8E-B6D5BD30844F-low.gif) Original Cash Flow Estimate Updated Cash Flow Estimate (a) Change Year Benefits Gross Premiums Benefits Gross Premiums Benefits Gross Premiums 1 $200.0 $500.0 $200.0 $500.0 $- $- 2 208.8 474.5 208.8 474.5 - - 3 216.1 450.3 216.1 450.3 - - 4 222.2 427.3 222.2 427.3 - - 5 227.0 405.4 227.0 405.4 - - 6 230.7 384.6 276.9 384.6 46.1 - 7 233.5 364.8 233.4 364.7 (0.1) (0.1) 8 235.3 346.0 235.2 345.9 (0.1) (0.1) 9 236.3 328.1 236.2 328.0 (0.1) (0.1) 10 236.5 311.2 236.4 311.1 (0.1) (0.1) 11 236.0 295.1 236.0 295.0 (0.1) (0.1) 12 235.0 279.7 234.9 279.7 (0.1) (0.1) 13 233.4 265.2 233.3 265.1 (0.1) (0.1) 14 231.3 251.4 231.2 251.3 (0.1) (0.1) 15 228.7 238.3 228.7 238.2 (0.1) (0.1) 16 225.8 225.8 225.7 225.7 (0.1) (0.1) 17 222.5 214.0 222.5 213.9 (0.1) (0.1) 18 219.0 202.8 218.9 202.7 (0.1) (0.1) 19 215.1 192.1 215.1 192.0 (0.1) (0.1) 20 211.1 182.0 211.0 181.9 (0.1) (0.1) Total " $4,504.4 " " $6,338.4 " " $4,549.6 " " $6,337.3 " $45.2 $(1.1) Present value (b) " $4,504.4 " " $6,338.4 " " $4,549.6 " " $6,337.3 " $45.2 $(1.1) Net premium ratio (c) 71.1% 71.8% (a) Benefits and gross premiums for Years 1-6 represent actual (historical) cash flows. Years 7-20 represent expected (future) cash flows. (b) 0% discount rate. (c) Present value of benefits/present value of gross premiums (for Years 1-20). - ![](https://asc.understandingaccounting.org/asc-img/GUID-98896B0C-27E2-4865-9367-AB829667789C-low.gif) Remeasurement of Liability for Future Policy Benefits (Beginning of Year 6) Original Estimate Updated Estimate Year Benefits Gross Premiums Net Premiums (a) Benefits Gross Premiums Net Premiums (b) 6 $230.7 $384.6 $273.3 $276.9 $384.6 $276.1 7 233.5 364.8 259.2 233.4 364.7 261.8 8 235.3 346.0 245.9 235.2 345.9 248.3 9 236.3 328.1 233.2 236.2 328.0 235.5 10 236.5 311.2 221.1 236.4 311.1 223.3 11 236.0 295.1 209.7 236.0 295.0 211.8 12 235.0 279.7 198.8 234.9 279.7 200.8 13 233.4 265.2 188.5 233.3 265.1 190.3 14 231.3 251.4 178.6 231.2 251.3 180.4 15 228.7 238.3 169.3 228.7 238.2 171.0 16 225.8 225.8 160.5 225.7 225.7 162.1 17 222.5 214.0 152.1 222.5 213.9 153.6 18 219.0 202.8 144.1 218.9 202.7 145.5 19 215.1 192.1 136.5 215.1 192.0 137.9 20 211.1 182.0 129.3 211.0 181.9 130.6 Total " $3,430.2 " " $4,081.0 " " $2,900.1 " " $3,475.4 " " $4,079.8 " " $2,928.9 " Present value (c) " $3,430.2 " " $4,081.0 " " $2,900.1 " " $3,475.4 " " $4,079.8 " " $2,928.9 " (a) Gross premiums × 71.1% net premium ratio. (b) Gross premiums × 71.8% net premium ratio. (c) 0% discount rate. Original Estimate Updated Estimate Change Present value of future benefits (for Years 6-20) " $3,430.2 " " $3,475.4 " $45.2 Less: Present value of future net premiums (for Years 6-20) " 2,900.1 " " 2,928.9 " 28.8 Liability for future policy benefits $530.1 $546.5 $16.4 - ![](https://asc.understandingaccounting.org/asc-img/GUID-AC2EC29D-83C9-4420-9938-1328A733F4F6-low.gif) Liability for Future Policy Benefits (End of Year 6) Year Benefits Gross Premiums Net Premiums (a) 7 $233.4 $364.7 $261.8 8 235.2 345.9 248.3 9 236.2 328.0 235.5 10 236.4 311.1 223.3 11 236.0 295.0 211.8 12 234.9 279.7 200.8 13 233.3 265.1 190.3 14 231.2 251.3 180.4 15 228.7 238.2 171.0 16 225.7 225.7 162.1 17 222.5 213.9 153.6 18 218.9 202.7 145.5 19 215.1 192.0 137.9 20 211.0 181.9 130.6 Total " $3,198.5 " " $3,695.3 " " $2,652.8 " Present value (b) " $3,198.5 " " $3,695.3 " " $2,652.8 " (a) Gross premiums × 71.8% net premium ratio. (b) 0% discount rate. Present value of future benefits (for Years 7-20) " $3,198.5 " Less: Present value of future net premiums (for Years 7-20) " 2,652.8 " Liability for future policy benefits $545.7 - ![](https://asc.understandingaccounting.org/asc-img/GUID-F648E0D0-1A4C-4FCB-BC44-3B7CDCB69A39-low.gif) Accounting Entries (Year 6) Cash (a) $107.7 Benefits expense (b) 276.1 Liability remeasurement loss (c) 16.4 Premium income $384.6 Liability for future policy benefits (d) 15.6 (a) "Premiums collected of $384.6, less benefits paid of $276.9." (b) "Benefits paid of $276.9, less change in reserve of $0.8 using current net premium ratio of 71.8%." (c) Separately presented in the statement of operations. (d) "Liability remeasurement of $16.4, less current period change in reserve of $0.8." ##### [944-40-55-29N](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29N) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:225435fd5cbc3182bab1b98986689010d7035769f88494d81563519208293074 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. - At the end of Year 9, the Entity reviews and updates its mortality assumption to reflect the unfavorable experience in that year and an increase in expected mortality in Years 10 through 20. - The following tables provide information about the estimated cash flow effects of updating the mortality assumption and the corresponding adjustment to the liability for future policy benefits and current-period benefit expense. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B39BD239-97F5-49C8-A49E-138C80E147FD-low.gif) Prior Cash Flow Estimate Updated Cash Flow Estimate (a) Change Year Benefits Gross Premiums Benefits Gross Premiums Benefits Gross Premiums 1 $200.0 $500.0 $200.0 $500.0 $- $- 2 208.8 474.5 208.8 474.5 - - 3 216.1 450.3 216.1 450.3 - - 4 222.2 427.3 222.2 427.3 - - 5 227.0 405.4 227.0 405.4 - - 6 276.9 384.6 276.9 384.6 - - 7 280.1 364.7 280.1 364.7 - - 8 282.2 345.8 282.2 345.8 - - 9 236.0 327.8 283.2 327.8 47.2 - 10 236.3 310.9 283.4 310.8 47.2 (0.1) 11 235.8 294.8 282.8 294.6 47.0 (0.2) 12 234.8 279.5 281.4 279.2 46.6 (0.3) 13 233.1 264.9 279.3 264.5 46.2 (0.4) 14 231.1 251.1 276.7 250.6 45.7 (0.5) 15 228.5 238.0 273.5 237.4 45.0 (0.6) 16 225.6 225.6 269.9 224.9 44.3 (0.7) 17 222.3 213.8 265.9 213.0 43.5 (0.7) 18 218.8 202.6 261.5 201.8 42.7 (0.8) 19 214.9 191.9 256.8 191.0 41.8 (0.9) 20 210.9 181.8 251.8 180.9 40.9 (0.9) Total " $4,641.4 " " $6,335.3 " " $5,179.5 " " $6,329.1 " $538.1 $(6.1) Present value (b) " $4,641.4 " " $6,335.3 " " $5,179.5 " " $6,329.1 " $538.1 $(6.1) Net premium ratio (c) 73.3% 81.8% (a) Benefits and gross premiums for Years 1-9 represent actual (historical) cash flows. Years 10-20 represent expected (future) cash flows. (b) 0% discount rate. (c) Present value of benefits/present value of gross premiums (for Years 1-20). - ![](https://asc.understandingaccounting.org/asc-img/GUID-03780749-7B6C-4F4F-8E32-4F02BA50AC47-low.gif) Remeasurement of Liability for Future Policy Benefits (Beginning of Year 9) Prior Estimate Updated Estimate Year Benefits Gross Premiums Net Premiums (a) Benefits Gross Premiums Net Premiums (b) 9 $236.0 $327.8 $240.2 $283.2 $327.8 $268.3 10 236.3 310.9 227.8 283.4 310.8 254.3 11 235.8 294.8 216.0 282.8 294.6 241.1 12 234.8 279.5 204.7 281.4 279.2 228.4 13 233.1 264.9 194.1 279.3 264.5 216.5 14 231.1 251.1 184.0 276.7 250.6 205.1 15 228.5 238.0 174.4 273.5 237.4 194.3 16 225.6 225.6 165.3 269.9 224.9 184.1 17 222.3 213.8 156.6 265.9 213.0 174.3 18 218.8 202.6 148.4 261.5 201.8 165.1 19 214.9 191.9 140.6 256.8 191.0 156.3 20 210.9 181.8 133.2 251.8 180.9 148.0 Total " $2,728.1 " " $2,982.7 " " $2,185.2 " " $3,266.2 " " $2,976.6 " " $2,435.9 " Present value (c) " $2,728.1 " " $2,982.7 " " $2,185.2 " " $3,266.2 " " $2,976.6 " " $2,435.9 " (a) Gross premiums × 73.3% net premium ratio. (b) Gross premiums × 81.8% net premium ratio. (c) 0% discount rate. Prior Estimate Updated Estimate Change Present value of future benefits (for Years 9-20) " $2,728.1 " " $3,266.2 " $538.1 Less: Present value of future net premiums (for Years 9-20) " 2,185.2 " " 2,435.9 " 250.7 Liability for future policy benefits $542.9 $830.3 $287.4 - ![](https://asc.understandingaccounting.org/asc-img/GUID-E4D153FA-1D2A-4573-A1A5-3A570345EEBC-low.gif) Liability for Future Policy Benefits (End of Year 9) Year Benefits Gross Premiums Net Premiums (a) 10 $283.4 $310.8 $254.3 11 282.8 294.6 241.1 12 281.4 279.2 228.4 13 279.3 264.5 216.5 14 276.7 250.6 205.1 15 273.5 237.4 194.3 16 269.9 224.9 184.1 17 265.9 213.0 174.3 18 261.5 201.8 165.1 19 256.8 191.0 156.3 20 251.8 180.9 148.0 Total " $2,983.0 " " $2,648.7 " " $2,167.6 " Present value (b) " $2,983.0 " " $2,648.7 " " $2,167.6 " (a) Gross premiums × 81.8% net premium ratio. (b) 0% discount rate. Present value of future benefits (for Years 10-20) " $2,983.0 " Less: Present value of future net premiums (for Years 10-20) " 2,167.6 " Liability for future policy benefits $815.4 - ![](https://asc.understandingaccounting.org/asc-img/GUID-E8BDA3E3-7F56-4BB0-BADA-706E82AF807C-low.gif) Accounting Entries (Year 9) Cash (a) $44.6 Benefits expense (b) 268.3 Liability remeasurement loss (c) 287.4 Premium income $327.8 Liability for future policy benefits (d) 272.5 (a) "Premiums collected of $327.8, less benefits paid of $283.2." (b) "Benefits paid of $283.2, less change in reserve of $14.9 using current net premium ratio of 81.8%." (c) Separately presented in the statement of operations. (d) "Liability remeasurement of $287.4, less current period change in reserve of $14.9." ##### [944-40-55-29O](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29O) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:b231968ef641d2fa11414fb7b7ec5ae0e97a15c30ea8470ee810d3b13035867b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. - At the end of Year 10, the Entity updates its discount rate assumption from 0 percent to 2 percent. - The following table provides information about the effect of updating the discount rate assumption and the adjustment to the liability for future policy benefits and other comprehensive income. - ![](https://asc.understandingaccounting.org/asc-img/GUID-B6FA8426-F769-420C-A40D-2BFD896DA8D6-low.gif) Liability for Future Policy Benefits (End of Year 10) Original Discount Rate 0% Current Discount Rate 2% Change Present value of future benefits (for Years 11-20) " $2,699.6 " " $2,430.0 " $(269.6) Less: Present value of future net premiums (for Years 11-20) " 1,913.3 " " 1,733.8 " (179.5) Liability for future policy benefits $786.3 $696.2 $(90.1) Decrease to Liability for Future Policy Benefits (End of Year 10) Liability for future policy benefits $90.1 Other comprehensive income $90.1 ##### [944-40-55-29P](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29P) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:b79f12a65f59f0472f107d6086463a8f5ad7ba5813a874b4f24b921234326f41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates an approach to updating assumptions used to measure the liability for future policy benefits with a carryover basis. ##### [944-40-55-29Q](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29Q) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:1115551b57d89869a21f556483d7d8999d2ea1ccf09ff28edd149b617865dd6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example assumes the following for the contracts discussed: 1. a The beginning of Year 4 carryover basis is $387.6, which will be used in subsequent recalculations of the net premium ratio. 2. b At the beginning of Year 4, the Entity updates cash flow assumptions and recalculates net premiums. 3. c A discount rate of 0 percent is used to compute the net premiums and the liability for future policy benefits. 4. d For ease of illustration, no expenses are assumed, benefit payments and premium receipts are made at the end of the year, and annual periods are presented. ##### [944-40-55-29R](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29R) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:55308b56591f8904ac79bf091d199a0b69c5fcac5b63d990ff312f933854175a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates computations that involve the following: 1. a Net premiums 2. b Updates of the net premium ratio. ##### [944-40-55-29S](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29S) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:b3faaf60e7a830326d173c55831837bb32206ff51df1b8a8195df7814ce7aced Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the beginning of Year 4, the Entity recalculates the net premiums as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-1C298EAB-8BB0-4E15-B2D7-DDD7C88C0866-low.gif) Net Premium Ratio Year Benefits Gross Premiums 4 $222.2 $427.3 5 227.0 405.4 6 276.9 384.6 7 233.4 364.7 8 235.2 345.9 9 236.2 328.0 10 236.4 311.1 11 236.0 295.0 12 234.9 279.7 13 233.3 265.1 14 231.2 251.3 15 228.7 238.2 16 225.7 225.7 17 222.5 213.9 18 218.9 202.7 19 215.1 192.0 20 211.0 181.9 Total " $3,924.6 " " $4,912.5 " Present value (a) " $3,924.6 " " $4,912.5 " (a) 0% discount rate. Present value of benefits (for Years 4-20) (A) " $3,924.6 " Carrying value of the liability for future policy benefits (end of Year 3) (B) 387.6 Expected remaining benefits (A) - (B) = (C) " 3,537.0 " Present value of gross premiums (for Years 4-20) (D) " $4,912.5 " Updated net premium ratio = (C)/(D) 72.0% ##### [944-40-55-29T](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29T) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:2839ee42c5dff8bcbe476dab221d92e44bcdd288965667fe4f1c0413f5de2fc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The computation of the liability for future policy benefits at the end of Year 4 using the revised net premiums follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-1454B1E6-AC8E-4578-81D6-1E802F50E777-low.gif) Liability for Future Policy Benefits (End of Year 4) Year Benefits Gross Premiums Net Premiums (a) 5 $227.0 $405.4 $291.9 6 276.9 384.6 276.9 7 233.4 364.7 262.6 8 235.2 345.9 249.0 9 236.2 328.0 236.2 10 236.4 311.1 224.0 11 236.0 295.0 212.4 12 234.9 279.7 201.4 13 233.3 265.1 190.9 14 231.2 251.3 180.9 15 228.7 238.2 171.5 16 225.7 225.7 162.5 17 222.5 213.9 154.0 18 218.9 202.7 145.9 19 215.1 192.0 138.3 20 211.0 181.9 131.0 Total " $3,702.4 " " $4,485.2 " " $3,229.4 " Present value (b) " $3,702.4 " " $4,485.2 " " $3,229.4 " (a) Gross premiums × 72.0% net premium ratio. (b) 0% discount rate. Present value of future benefits (for Years 5-20) " $3,702.4 " Less: Present value of future net premiums (for Years 5-20) " 3,229.4 " Liability for future policy benefits $473.0 ##### [944-40-55-29U](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29U) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:e043b8408aa6c6dcd2de28195ae9e235495663e208dc006a21254f6c82d1b782 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of Year 6, the Entity reviews and updates its mortality assumption as specified in paragraph [944-40-35-5(a)](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-5), which results in an adjustment to benefit expenses and the liability for future policy benefits. - ![](https://asc.understandingaccounting.org/asc-img/GUID-C9BB1FEF-FED9-48C4-B52C-C2D6FDB2FDF1-low.gif) Net Premium Ratio Year (a) Benefits Gross Premiums 4 $222.2 $427.3 5 227.0 405.4 6 276.9 384.6 7 280.1 364.7 8 282.2 345.8 9 283.2 327.8 10 283.4 310.8 11 282.8 294.6 12 281.4 279.2 13 279.3 264.5 14 276.7 250.6 15 273.5 237.4 16 269.9 224.9 17 265.9 213.0 18 261.5 201.8 19 256.8 191.0 20 251.8 180.9 Total " $4,554.6 " " $4,904.3 " Present value (b) " $4,554.6 " " $4,904.3 " (a) Benefits and gross premiums for Years 4-6 represent actual (historical) cash flows. Years 7-20 represent expected (future) cash flows. (b) 0% discount rate. Present value of benefits (for Years 4-20) (A) " $4,554.6 " Carrying value of the liability for future policy benefits (end of Year 3) (B) 387.6 Expected remaining benefits (A) - (B) = (C) " 4,167.0 " Present value of gross premiums (for Years 4-20) (D) " $4,904.3 " Updated net premium ratio = (C)/(D) 85.0% - ![](https://asc.understandingaccounting.org/asc-img/GUID-014AAE31-79BD-4E93-946E-6687683C884D-low.gif) Remeasurement of Liability for Future Policy Benefits (Beginning of Year 6) Original Estimate Updated Estimate Year Benefits Gross Premiums Net Premiums (a) Benefits Gross Premiums Net Premiums (b) 6 $276.9 $384.6 $276.9 $276.9 $384.6 $326.8 7 233.4 364.7 262.6 280.1 364.7 309.9 8 235.2 345.9 249.0 282.2 345.8 293.8 9 236.2 328.0 236.2 283.2 327.8 278.5 10 236.4 311.1 224.0 283.4 310.8 264.0 11 236.0 295.0 212.4 282.8 294.6 250.3 12 234.9 279.7 201.4 281.4 279.2 237.2 13 233.3 265.1 190.9 279.3 264.5 224.8 14 231.2 251.3 180.9 276.7 250.6 213.0 15 228.7 238.2 171.5 273.5 237.4 201.8 16 225.7 225.7 162.5 269.9 224.9 191.1 17 222.5 213.9 154.0 265.9 213.0 181.0 18 218.9 202.7 145.9 261.5 201.8 171.4 19 215.1 192.0 138.3 256.8 191.0 162.3 20 211.0 181.9 131.0 251.8 180.9 153.7 Total " $3,475.4 " " $4,079.8 " " $2,937.5 " " $4,105.4 " " $4,071.6 " " $3,459.5 " Present value (c) " $3,475.4 " " $4,079.8 " " $2,937.5 " " $4,105.4 " " $4,071.6 " " $3,459.5 " (a) Gross premiums × 72.0% net premium ratio. (b) Gross premiums × 85.0% net premium ratio. (c) 0% discount rate. Original Estimate Updated Estimate Change Present value of future benefits (for Years 6-20) " $3,475.4 " " $4,105.4 " $630.0 Less: Present value of future net premiums (for Years 6-20) " 2,937.5 " " 3,459.5 " 522.0 Liability for future policy benefits $537.9 $645.9 $108.0 - ![](https://asc.understandingaccounting.org/asc-img/GUID-A3733008-F6E8-4910-95E5-D1AC95DD4867-low.gif) Liability for Future Policy Benefits (End of Year 6) Year Benefits Gross Premiums Net Premiums (a) 7 $280.1 $364.7 $309.9 8 282.2 345.8 293.8 9 283.2 327.8 278.5 10 283.4 310.8 264.0 11 282.8 294.6 250.3 12 281.4 279.2 237.2 13 279.3 264.5 224.8 14 276.7 250.6 213.0 15 273.5 237.4 201.8 16 269.9 224.9 191.1 17 265.9 213.0 181.0 18 261.5 201.8 171.4 19 256.8 191.0 162.3 20 251.8 180.9 153.7 Total " $3,828.5 " " $3,687.1 " " $3,132.7 " Present value (b) " $3,828.5 " " $3,687.1 " " $3,132.7 " (a) Gross premiums × 85.0% net premium ratio. (b) 0% discount rate. Present value of future benefits (for Years 7-20) " $3,828.5 " Less: Present value of future net premiums (for Years 7-20) " 3,132.7 " Liability for future policy benefits $695.8 - ![](https://asc.understandingaccounting.org/asc-img/GUID-5C3872C9-99C6-4EC7-B2EA-25E2B5634AF4-low.gif) Accounting Entries (Year 6) Cash (a) $107.7 Benefits expense (b) 326.8 Liability remeasurement loss (c) 108.0 Premium income $384.6 Liability for future policy benefits (d) 157.9 (a) "Premiums collected of $384.6, less benefits paid of $276.9." (b) "Benefits paid of $276.9, plus change in reserve of $49.9 using current net premium ratio of 85.0%." (c) Separately presented in the statement of operations. (d) "Liability remeasurement of $108.0, plus current period change in reserve of $49.9." ### Financial Guarantee Insurance Contracts ##### [944-40-55-30](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:2f20ee924cbbac592f5d4fdbb79eeae549cedaf21c46102a1dc0b44620a89fbd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the measurement of the claim liability for a financial guarantee insurance contract as described in paragraph [944-40-30-33](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-33). An insurance entity determines that there is an expectation that a claim loss on an insured financial obligation (a bond) will exceed the unearned premium revenue for that contract. The present value of expected net cash outflows used to measure the claim liability considers the amount, timing, and probability of possible net cash outflows, that is, cash outflows, net of potential recoveries, to be paid to the holder of the insured financial obligation, excluding [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."). The present value of expected net cash outflows is developed using the insurance entity's own assumptions about the likelihood of all possible outcomes based on all information available to the insurance entity (including relevant market information). A calculation of the present value of expected net cash outflows follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-FD23324F-5C19-4202-A56B-CF208E4BE40A-low.gif) "Discounted Possible Net Cash Outflows (a)" Probability "Probability- Weighted Net Cash Outflows" " $70,000,000 " 5% " $3,500,000 " " 50,000,000 " 15% " 7,500,000 " " 40,000,000 " 20% " 8,000,000 " " 20,000,000 " 45% " 9,000,000 " " 10,000,000 " 10% " 1,000,000 " - 5% - Present value of expected net cash outflows " $29,000,000 " (a) Discounted Possible Net Cash Outflows includes different probabilities of realization related to potential recoveries. The discount factor is the current risk-free rate. ##### [944-40-55-31](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:baa7957b7d6f6ea93143ff0a1397e23096554dfebcae543fdbedb877163f39d8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the date the expected net cash outflows are calculated, the remaining unearned premium revenue is $1.2 million. Accordingly, a claim liability of $27.8 million is recognized in the statement of financial position ($29.0 million less $1.2 million). ##### [944-40-55-32](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:ae73703a7173b7b060e0811fe2ad4b97b4195ffb167b494f39a666f027ba50e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the disclosure of a schedule of insured financial obligations required in paragraph [944-40-50-9(a)(5)](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-9) and [944-40-50-9(b)(1) through (5)](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-9). This Example assumes the insurance entity uses a surveillance list with four surveillance categories to track and monitor its insured financial obligations. The surveillance list and four surveillance categories are used for illustrative purposes only. The surveillance categories in paragraph [944-40-55-33](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-33) describe the claim liability before the mitigating effects of potential recoveries. ##### [944-40-55-33](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:ee32c34e04941def11d0fa96348dda37a5ce5edc44631d4fc987f2840b5fcb13 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following are brief descriptions of each surveillance category to provide context to this Example: 1. a Category A. This category includes insured financial obligations that are still currently performing (that is, insured contractual payments are made on time but the likelihood of an event of default has increased since the financial guarantee insurance contract was first issued), but if economic conditions persist for an extended period of time, they may not be performing in the future. The issuer of the insured financial obligation may have experienced credit deterioration as a result of a general economic downturn. As a result, the present value of expected net cash outflows may exceed the unearned premium revenue of the financial guarantee insurance contract some time in the future. 2. b Category B. This category includes insured financial obligations that are currently characterized as potentially nonperforming and may require action by the insurance entity to avoid or mitigate an event of default. 3. c Category C. This category includes insured financial obligations that are characterized as nonperforming and for which actions to date by the insurance entity have not been successful in avoiding or mitigating an event of default. The insurance entity continues its efforts to cure the claim, but an event of default is imminent. 4. d Category D. This category includes insured financial obligations in which an event of default has occurred. ##### [944-40-55-34](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:51.609Z to 2026-09-10T02:16:51.609Z Record version: sha256:2f9cc81b5d636157935aea84e39c95fc063a1ddf26a17d5b7e39e59170b2d3a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For the insured financial obligations discussed in the preceding paragraph, the financial information might be presented as follows. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-C81D42A0-A2E1-409B-8759-254415D26589-low.gif) Surveillance Categories A B C D Total Number of policies 37 16 5 4 62 Remaining weighted-average contract period (in years) 16 14 11 12 Insured contractual payments outstanding: Principal " $656,000,000 " " $409,000,000 " " $196,000,000 " " $111,000,000 " " $1,372,000,000 " Interest " 478,000,000 " " 298,000,000 " " 150,000,000 " " 73,000,000 " " 999,000,000 " Total " $1,134,000,000 " " $707,000,000 " " $346,000,000 " " $184,000,000 " " $2,371,000,000 " Gross claim liability " $1,045,000,000 " " $690,000,000 " " $330,000,000 " " $184,000,000 " " $2,249,000,000 " Less: Gross potential recoveries " 752,000,000 " " 381,000,000 " " 29,000,000 " " 7,000,000 " " 1,169,000,000 " "Discount, net" " 159,000,000 " " 153,000,000 " " 125,000,000 " " 78,000,000 " " 515,000,000 " Net claim liability " $134,000,000 " " $156,000,000 " " $176,000,000 " " $99,000,000 " " $565,000,000 " Unearned premium revenue " $7,000,000 " " $4,000,000 " " $2,000,000 " $- (b) " $13,000,000 " Claim liability reported in the balance sheet (a) " $120,000,000 " " $148,000,000 " " $170,000,000 " " $99,000,000 " " $537,000,000 " Reinsurance recoverables " $10,000,000 " " $19,000,000 " " $25,000,000 " " $27,000,000 " " $81,000,000 " (a) "The claim liability is determined on a contract-by-contract basis. As such, instances may arise where the unearned premium revenue exceeds the present value of the expected net cash outflows (and therefore, the net claim liability less the unearned premium revenue may not equal the claim liability reported in the balance sheet)." (b) "In this instance, it is assumed that once an insured financial obligation is in Category D, the only remaining obligation of the insurance enterprise is making claim payments. As such, all related balances of the insured financial obligation are written off, including the unearned premium revenue." Source downloaded (UTC): 2026-09-10T02:16:54.570Z to 2026-09-10T02:16:54.570Z Record version: sha256:ba29766058730d332646f2015de83f6e528164c1e0aed7f4cad9789bb5b6dcdb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/944/40/#65-transition-and-open-effective-date-information) SEC content: no ##### [944-40-65-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:54.570Z to 2026-09-10T02:16:54.570Z Record version: sha256:e7e5daf0fb2bfdc70b3c795414cf48494d51d31fa87a1e6a328a7016fb25dd14 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/20/2018 after the end of the transition period stated in Accounting Standards Update No. 2015-09, _Financial Services—Insurance (Topic 944): Disclosures about Short-Duration Contracts_. ##### [944-40-65-2](https://asc.understandingaccounting.org/asc/944/40/#944-40-65-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:54.570Z to 2026-09-10T02:16:54.570Z Record version: sha256:5df1d1dba6a3e186030a1012da0b3beedf513f0e5598a655787551309ad47ddd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/02/2026 after the end of the transition period stated in Accounting Standards Updates No. 2018-12, _Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts,_ No. 2019-09, _Financial Services—Insurance (Topic 944): Effective Date,_ No. 2020-11, _Financial Services—Insurance (Topic 944): Effective Date and Early Application_, and No. 2022-05, _Financial Services—Insurance (Topic 944): Transition for Sold Contracts._ Source downloaded (UTC): 2026-09-10T02:17:00.178Z to 2026-09-10T02:17:00.178Z Record version: sha256:0ab404229cb5c10e2f5daa24120dc7b823d53c7bfb200dd095740f2efd8a12ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/40/#sec-00-status) SEC content: yes ##### [944-40-S00-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:00.178Z to 2026-09-10T02:17:00.178Z Record version: sha256:72d998f9eda9557c8caf7fdeca7bd59897987aa0a471ce368efacc54998c86fa 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
944-40-S99-1AmendedAccounting Standards Update No. 2012-0308/27/2012
Source downloaded (UTC): 2026-09-10T02:17:03.233Z to 2026-09-10T02:17:03.233Z Record version: sha256:e07fd25ce58052291aa99daa4cb20f0f8f726585962c74979ece2f799676bc42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-S30: SEC 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/944/40/#sec-30-initial-measurement) SEC content: yes #### Discounting Claims Liabilities Related to Short-Duration Contracts ##### [944-40-S30-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-S30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:03.233Z to 2026-09-10T02:17:03.233Z Record version: sha256:b41e4e8c6a06e3157c4bdcd7dab7ca9537bcde0c065cb8f27b54786f70f2980f 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 contracts. Source downloaded (UTC): 2026-09-10T02:17:06.077Z to 2026-09-10T02:17:06.077Z Record version: sha256:6c94a1fe994095b05b24e7fb09a08d7c586fcb79f6349247f511dc3bf4c61cf6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/40/#sec-50-disclosure) SEC content: yes #### Property-Casualty Insurance Reserves for Unpaid Claim Costs ##### [944-40-S50-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:06.077Z to 2026-09-10T02:17:06.077Z Record version: sha256:eca81e38b9dced3aabc6044680b2118931ed8910df1ca2a717ae9b1c6ba569dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [944-40-S99-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-S99-1), SAB Topic 5.W, for SEC Staff views on disclosures of property casualty insurance reserves for unpaid claim costs. Source downloaded (UTC): 2026-09-10T02:17:13.308Z to 2026-09-10T02:17:13.308Z Record version: sha256:72f576d767e1a60c4c60e76e017ba55119e09a0ecef168fd6ec630ace855e464 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-40-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/944/40/#sec-99-sec-materials) SEC content: yes #### SEC Staff Guidance ##### [944-40-S99-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:13.308Z to 2026-09-10T02:17:13.308Z Record version: sha256:41d324dbcc425debad5a2f911ad798d57d31fefee24acdbce80eb07fab5c5fbf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.W, Contingency Disclosures Regarding Property-Casualty Insurance Reserves for Unpaid Claim Costs. - Facts: A property-casualty insurance company (the "Company") has established reserves, in accordance with FASB ASC Topic 944, Financial Services—Insurance, for unpaid claim costs, including estimates of costs relating to claims incurred but not reported ("IBNR"). FN44 The reserve estimate for IBNR claims was based on past loss experience and current trends except that the estimate has been adjusted for recent significant unfavorable claims experience that the Company considers to be nonrecurring and abnormal. The Company attributes the abnormal claims experience to a recent acquisition and accelerated claims processing; however, actuarial studies have been inconclusive and subject to varying interpretations. Although the reserve is deemed adequate to cover all probable claims, there is a reasonable possibility that the abnormal claims experience could continue, resulting in a material understatement of claim reserves. - FN44 FASB ASC paragraph [944-40-30-1](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-1) prescribes that "\[t\]he liability for unpaid claims shall be based on the estimated ultimate cost of settling the claims (including the effects of inflation and other societal and economic factors), using past experience adjusted for current trends, and any other factors that would modify past experience." \[Footnote reference omitted\] - FASB ASC Topic 450, Contingencies, requires, among other things, disclosure of loss contingencies. FN45 However, FASB ASC paragraph [450-10-05-6](https://asc.understandingaccounting.org/asc/450/10/#450-10-05-6) notes that "\[n\]ot all uncertainties inherent in the accounting process give rise to contingencies." - FN45 FASB ASC paragraphs [450-20-50-3 through 50-4](https://asc.understandingaccounting.org/asc/450/20/#450-20-50-3) provide guidance that "\[i\]f no accrual is made for a loss contingency because one or both of the conditions in FASB ASC paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2) are not met, _or if an exposure to loss exists in excess of the amount accrued_ pursuant to the provisions of FASB ASC paragraph [450-20-25-2](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2), disclosure of the contingency shall be made when there is at least a reasonable possibility that a loss or an additional loss may have been incurred. The disclosure shall indicate the nature of the contingency and shall give an estimate of the possible loss or range of loss or state that such an estimate cannot be made." \[Footnote reference omitted and emphasis added.\] - FASB ASC Topic 275, Risks and Uncertainties, FN46 also provides disclosure guidance regarding certain significant estimates. - FN46 FASB ASC Topic 275 provides that disclosures regarding certain significant estimates should be made when certain criteria are met. The guidance provides that the disclosure shall indicate the nature of the uncertainty and include an indication that it is at least reasonably possible that a change in the estimate will occur in the near term. If the estimate involves a loss contingency covered by FASB ASC Topic 450, the disclosure also should include an estimate of the possible loss or range of loss, or state that such an estimate cannot be made. Disclosure of the factors that cause the estimate to be sensitive to change is encouraged but not required. - FASB ASC Topic 275 requires disclosures regarding current vulnerability due to certain concentrations which may be applicable as well. - Question 1: In the staff's view, do FASB ASC Topics 450 and 275 disclosure requirements apply to property-casualty insurance reserves for unpaid claim costs? If so, how? - Interpretive Response: Yes. The staff believes that specific uncertainties (conditions, situations and/or sets of circumstances) not considered to be normal and recurring because of their significance and/or nature can result in loss contingencies FN47 for purposes of applying FASB ASC Topics 450 and 275 disclosure requirements. General uncertainties, such as the amount and timing of claims, that are normal, recurring, and inherent to estimations of property-casualty insurance reserves are not considered subject to the disclosure requirements of FASB ASC Topic 450. Some specific uncertainties that may result in loss contingencies pursuant to FASB ASC Topic 450, depending on significance and/or nature, include insufficiently understood trends in claims activity; judgmental adjustments to historical experience for purposes of estimating future claim costs (other than for normal recurring general uncertainties); significant risks to an individual claim or group of related claims; or catastrophe losses. The requirements of FASB ASC Topic 275 apply when "\[i\]t is at least reasonably possible that the estimate of the effect on the financial statements of a condition, situation, or set of circumstances that existed at the date of the financial statements will change in the near term due to one or more future confirming events... \[and\] the effect of the change would be material to the financial statements." - FN47 The loss contingency referred to in this document is the potential for a material understatement of reserves for unpaid claims. - Question 2: Do the facts presented above describe an uncertainty that requires disclosures under FASB ASC Topics 450 and 275? - Interpretive Response: Yes. The staff believes the judgmental adjustments to historical experience for insufficiently understood claims activity noted above results in a loss contingency within the scope of FASB ASC Topics 450 and 275. Based on the facts presented above, at a minimum the Company's financial statements should disclose that for purposes of estimating IBNR claim reserves, past experience was adjusted for what management believes to be abnormal claims experience related to the recent acquisition of Company A and accelerated claims processing. It should also be disclosed that there is a reasonable possibility that the claims experience could be the indication of an unfavorable trend which would require additional IBNR claim reserves in the approximate range of $XX-$XX million (alternatively, if Company management is unable to estimate the possible loss or range of loss, a statement to that effect should be disclosed). - Additionally, the staff also expects companies to disclose the nature of the loss contingency and the potential impact on trends in their loss reserve development discussions provided pursuant to Property-Casualty Industry Guides 4 and 6. Consideration should also be given to the need to provide disclosure in MD&A. - Question 3: Does the staff have an example in which specific uncertainties involving an individual claim or group of related claims result in a loss contingency the staff believes requires disclosure? - Interpretive Response: Yes. A property-casualty insurance company (the "Company") underwrites product liability insurance for an insured manufacturer which has produced and sold millions of units of a particular product which has been used effectively and without problems for many years. Users of the product have recently begun to report serious health problems that they attribute to long term use of the product and have asserted claims under the insurance policy underwritten and retained by the Company. To date, the number of users reporting such problems is relatively small, and there is presently no conclusive evidence that demonstrates a causal link between long term use of the product and the health problems experienced by the claimants. However, the evidence generated to date indicates that there is at least a reasonable possibility that the product is responsible for the problems and the assertion of additional claims is considered probable, and therefore the potential exposure of the Company is material. While an accrual may not be warranted since the loss exposure may not be both probable and estimable, in view of the reasonable possibility of material future claim payments, the staff believes that disclosures made in accordance with FASB ASC Topics 450 and 275 would be required under these circumstances. - The disclosure concepts expressed in this example would also apply to an individual claim or group of claims that are related to a single catastrophic event or multiple events having a similar effect.