ASC

ASC 944-80

Separate Accounts

944 Financial Services—Insurance

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In brief

AdvancedIndustry-specificPresentationFair valueConsolidation

ASC 944-80 governs how an insurance entity accounts for and presents separate accounts — pools of assets and liabilities maintained to fund variable annuity, variable life, pension and similar contracts where the contract holder generally bears the investment risk. If a separate account arrangement meets the four criteria in 944-80-25-2 (legal recognition, legal insulation from general account liabilities, contract-holder-directed investment, and full pass-through of investment performance), the contract holder portion is measured at fair value and reported as a single summary total asset with an equivalent summary total liability, with investment performance and amounts credited offset to zero. If any criterion fails (e.g., guaranteed interest or market value adjusted "spread" products), the assets and liabilities are accounted for and presented as ordinary general account items.

Key points (7)
  • Separate account assets and liabilities are included in the financial statements of the insurance entity that owns the assets and is contractually obligated to pay the liabilities (944-80-25-1; 944-80-45-1).
  • Separate account accounting applies only if all four conditions in 944-80-25-2 are met: legal recognition, legal insulation from general account liabilities, contract-holder-directed investment, and pass-through of all investment performance net of fees (a minimum guarantee is permitted, but a ceiling is not).
  • When the criteria are met, the contract holder portion is measured initially and subsequently at fair value (944-80-30-1; 944-80-35-2), presented as summary totals (944-80-45-2), and related investment performance and amounts credited to contract holders are offset within the same statement of operations line netting to zero (944-80-45-3); minimum guarantee and insurance benefit liabilities in excess of separate account fair value are general account liabilities (944-80-25-3(b)).
  • If the criteria are not met — as with fixed account options, market value adjusted contracts, guaranteed investment contracts, and indexed contracts — the assets, liabilities, revenues, and expenses are measured and presented as general account items (944-80-25-4 through 25-5; 944-80-55-20).
  • The insurer's own proportionate interest (seed money) does not qualify for separate account accounting; the insurer looks through and accounts for those underlying assets as if held directly by the general account (944-80-25-6 through 25-7), unless its interest is under 20 percent and all underlying investments are securities or cash equivalents, in which case it may report an equity security investment under Subtopic 321-10 (944-80-25-11).
  • For consolidation, a qualifying separate account is treated as a subsidiary for retention of specialized investment accounting (810-10-25-15); separate account interests held for policy holders are not treated as the insurer's interests and are not combined with general account interests, except for related-party policy holders under the VIE Subsections (944-80-25-3(d) through (f)).
  • Assets transferred from the general account to a qualifying separate account are recognized at fair value to the extent of third-party contract holders' proportionate interests, with the related gain recognized immediately in general account earnings only if risks and rewards have transferred (944-80-40-1; a guarantee or repurchase commitment precludes gain under 944-80-35-5); disclosures include contract nature and minimum guarantees, basis of presentation, aggregate fair value by major asset category, transfer gains and losses (944-80-50-1), and a disaggregated liability rollforward with cash surrender values and reconciliation (944-80-50-2).

For students. The exam trap is assuming that anything a regulator labels a "separate account" gets separate account presentation — it does not; guaranteed interest, market value adjusted, and indexed options fail the full pass-through test in 944-80-25-2(d) and are reported as general account assets and liabilities. Also remember the insurer's own seed money never gets separate account treatment; it is looked through and accounted for as if held directly in the general account.

separate accountcontract holder fundspass-through of investment performancelegal insulationseed money proportionate interestsummary total presentationminimum guarantees and market risk benefitsvariable annuity contracts

Machine-generated study aid for ASC 944-80. Check the source paragraphs below.

944-80-00Status

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944-80-00-1
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Cash Surrender ValueAddedAccounting Standards Update No. 2018-1208/15/2018
Guaranteed Minimum Accumulation BenefitSupersededAccounting Standards Update No. 2018-1208/15/2018
Guaranteed Minimum Income BenefitSupersededAccounting 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)SupersededAccounting Standards Update No. 2018-1208/15/2018
Policy Account BalanceAddedAccounting Standards Update No. 2018-1208/15/2018
Surrender ChargeAddedAccounting Standards Update No. 2018-1208/15/2018
944-80-25-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-80-25-3AmendedAccounting Standards Update No. 2010-1504/21/2010
944-80-25-9AmendedAccounting Standards Update No. 2016-1306/16/2016
944-80-25-9 through 25-11
AmendedAccounting Standards Update No. 2016-0101/05/2016
944-80-25-12AddedAccounting Standards Update No. 2010-1504/21/2010
944-80-35-1AmendedAccounting Standards Update No. 2016-1912/14/2016
944-80-35-1AmendedAccounting Standards Update No. 2012-0410/01/2012
944-80-35-2AmendedAccounting Standards Update No. 2012-0410/01/2012
944-80-35-4SupersededAccounting Standards Update No. 2014-0905/28/2014
944-80-35-10AmendedAccounting Standards Update No. 2012-0410/01/2012
944-80-50-1AmendedAccounting Standards Update No. 2025-1112/08/2025
944-80-50-1AmendedAccounting Standards Update No. 2018-1208/15/2018
944-80-50-2AddedAccounting Standards Update No. 2018-1208/15/2018
944-80-55-7SupersededAccounting Standards Update No. 2010-1504/21/2010
944-80-55-8AmendedAccounting Standards Update No. 2016-0101/05/2016
944-80-55-9AmendedAccounting Standards Update No. 2016-0101/05/2016
944-80-55-11AmendedAccounting Standards Update No. 2016-1306/16/2016
944-80-55-11AmendedAccounting Standards Update No. 2016-0101/05/2016
944-80-55-16AmendedAccounting Standards Update No. 2016-1306/16/2016
944-80-55-16AmendedAccounting Standards Update No. 2016-0101/05/2016
944-80-55-17 through 55-21
AddedAccounting Standards Update No. 2018-1208/15/2018
944-80-65-1AddedAccounting Standards Update No. 2010-1504/21/2010

944-80-05Overview and Background

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944-80-05-1
This Subtopic provides insurance entities guidance on accounting for and financial reporting of separate accounts, including an insurance entity's accounting for separate account assets and liabilities related to contracts for which all or a portion of the investment risk is borne by the insurer.
944-80-05-2
Separate accounts represent assets and liabilities that are maintained by an insurance entity for purposes of funding fixed-benefit or variable annuity contracts, pension plans, and similar activities. The contract holder generally assumes the investment risk, and the insurance entity receives a fee for investment management, certain administrative expenses, and mortality and expense risks assumed.
944-80-05-3
Often for administrative purposes, separate account subaccounts with differing investment objectives are created within a single separate account. Examples include both of the following:
  1. a
    A variable life insurance contract offered through an insurance entity's high return separate account
  2. b
    A contract holder's allocation of a portion of the contract holder's deposit in a deferred variable annuity to a growth equity fund.

944-80-15Scope and Scope Exceptions

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Overall Guidance

944-80-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 944-10-15.

944-80-25Recognition

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Overall

944-80-25-1
Separate account assets and liabilities shall be included in the financial statements of the insurance entity that owns the assets and is contractually obligated to pay the liabilities.
944-80-25-2
The guidance in the following paragraph applies if the separate account arrangement meets all of the following conditions:
  1. a
    The separate account is recognized legally; that is, the separate account is established, approved, and regulated under special rules such as state insurance laws, federal securities laws, or similar foreign laws.
  2. b
    The separate account assets supporting the contract liabilities are insulated legally from the general account liabilities of the insurance entity; that is, the contract holder is not subject to insurer default risk to the extent of the assets held in the separate account.
  3. c
    The insurer must, as a result of contractual, statutory, or regulatory requirements, invest the contract holder's funds within the separate account as directed by the contract holder in designated investment alternatives or in accordance with specific investment objectives or policies.
  4. d
    All investment performance, net of contract fees and assessments, must as a result of contractual, statutory, or regulatory requirements be passed through to the individual contract holder. Contracts may specify conditions under which there may be a minimum guarantee, but not a ceiling, as a ceiling would prohibit all investment performance from being passed through to the contract holder.
944-80-25-3
All of the following guidance applies if a separate account arrangement meets all of the conditions paragraph 944-80-25-2:
  1. a
    The portion of separate account assets representing contract holder funds shall be reported in the insurance entity's financial statements as a summary total, with an equivalent summary total reported for related liabilities.
  2. b
    Any liabilities related to minimum guarantees (including market risk benefits) and insurance benefit liabilities under the contracts in excess of the fair value of separate account assets representing contract holder funds shall be recognized as general account liabilities.
  3. c
    Contract fees and assessments shall be reported in accordance with paragraph 944-605-25-5.
  4. d
    For the purpose of evaluating the retention of specialized accounting for investments in consolidation as described in paragraph 810-10-25-15, a separate account arrangement shall be considered a subsidiary. An insurer is not required to consolidate an investment in which a separate account holds a controlling financial interest if the investment is not or would not be consolidated in the standalone financial statements of the separate account.
  5. e
    Except as described in paragraph (f), the insurer shall not do either of the following when assessing whether the insurer is required to consolidate an investment held by a separate account:
    1. 1
      Consider any separate account interests held for the benefit of policy holders to be the insurer's interests
    2. 2
      Combine any separate account interests held for the benefit of policy holders with the insurer's general account interest in the same investment.
  6. f
    Separate account interests held for the benefit of a related party policy holder shall be combined with the insurer's general account interest when the Variable Interest Entities Subsections of Subtopic 810-10 require the consideration of related parties. For this purpose, a related party includes any party identified in paragraph 810-10-25-43 other than:
    1. 1
      An employee of the decision maker or service provider (and its other related parties), except if the employee is used in an effort to circumvent the provisions of Subtopic 810-10
    2. 2
      An employee benefit plan of the decision maker or service provider (and its other related parties), except if the employee benefit plan is used in an effort to circumvent the provisions of Subtopic 810-10.
944-80-25-4
All of the following guidance applies if a separate account arrangement does not meet all of the criteria in paragraph
944-80-25-2 through 25-3
:
  1. a
    Assets representing contract holder funds under the arrangement shall be measured and presented the same as other general account assets as prescribed in this Topic.
  2. b
    Any related liability shall be accounted for as a general account liability.
  3. c
    Revenue and expenses related to such arrangements shall be recognized within the respective revenue and expense lines in the statement of operations.
944-80-25-5
Arrangements in which contract holders' funds are maintained in separate accounts to fund fixed account options of variable contracts, market value adjusted contracts, guaranteed investment contracts, and indexed contracts are examples of separate account arrangements that would not meet the criteria in paragraphs
944-80-25-2 through 25-3
because all of the investment performance on these investments is not passed through to the contract holder.

Proportionate Interest in a Separate Account

944-80-25-6
Assets underlying an insurance entity's proportionate interest in a separate account (seed money or other investment) do not represent contract holder funds, and thus do not qualify for separate account accounting and reporting.
944-80-25-7
The insurance entity shall look through the separate account for purposes of accounting for its interest therein, and account for and classify the assets of the separate account underlying that interest based on their nature as if the assets of the separate account underlying the insurance entity's proportionate interest were held directly by the general account rather than through the separate account structure. Example 2 (see paragraph 944-80-55-4) illustrates the application of this guidance.
944-80-25-8
The guidance in the following paragraph applies if a separate account arrangement meets the criteria in paragraphs
944-80-25-2 through 25-3
and either of the following conditions exists:
  1. a
    The terms of the contract allow the contract holder to invest in additional units in the separate account.
  2. b
    The insurance entity is marketing contracts that permit funds to be invested in the separate account.
944-80-25-9
If the conditions in the preceding paragraph are met, the assets of the separate account underlying the insurance entity's proportionate interest in the separate account shall be accounted for in a manner consistent with the accounting for similar assets held by the general account that the insurance entity may be required to sell. For example:
  1. a
    For a debt security, the guidance in Topic 326 shall be followed for the measurement of credit losses.
  2. b
    The guidance in Subtopic 360-10 shall be followed for both real estate that is held for sale and real estate that is not held for sale. For real estate that does not meet that Subtopic's held-for-sale criteria, the impairment test shall be performed solely using undiscounted cash flows assuming immediate disposition.
944-80-25-10
The guidance in paragraphs
944-80-25-6 through 25-9
shall be applied also if either of the following conditions exists:
  1. a
    An insurance entity's interest in the separate account represents 20 percent or greater of the separate account interest.
  2. b
    The underlying investments are other than those that meet the definition of any of the following:
    1. 1
      Securities under Subtopic 320-10 or 321-10
    2. 2
      Subparagraph superseded by Accounting Standards Update No. 2016-01.
    3. 3
      Cash and cash equivalents.
944-80-25-11
An insurance entity may report its portion of the separate account value as an investment in equity securities under Subtopic 321-10 if both of the following conditions are met:
  1. a
    The insurance entity's proportionate interest in the separate account is less than 20 percent of the separate account.
  2. b
    All of the underlying investments of the separate account meet the definition of any of the following:
    1. 1
      Securities under Subtopic 320-10 or 321-10
    2. 2
      Subparagraph superseded by Accounting Standards Update No. 2016-01
    3. 3
      Cash and cash equivalents.

Consolidation of an Investment Fund When Separate Accounts Are Involved

944-80-25-12
If an insurer concludes that an investment fund should be consolidated and a portion of the fund is owned by the insurer's separate accounts, the insurer should consolidate the investment fund in the following manner:
  1. a
    The portion of the fund assets representing the contract holder's interests shall be included as separate account assets and liabilities in accordance with paragraph 944-80-25-3.
  2. b
    The remaining portion of the fund assets (including the portion owned by any other investors) shall be included in the general account of the insurer on a line-by-line basis. For example, if the consolidated fund held debt and equity securities, those amounts would be included in the debt and securities lines.
  3. c
    Noncontrolling interests should not be included in the separate account liability but rather classified as a liability or equity based on other applicable guidance.

944-80-30Initial Measurement

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944-80-30-1
The portion of separate account assets representing contract holder funds recognized under paragraph 944-80-25-3 shall be measured initially at fair value.

944-80-35Subsequent Measurement

Source downloaded: .Record version 10019b5d8023. Effective date must be checked in the source.

Overall

944-80-35-1
Investments in separate accounts shall be reported at fair value except for separate account contracts with guaranteed investment returns. For those separate accounts, the related assets shall be reported in accordance with paragraph 944-80-25-4.
944-80-35-2
The portion of separate account assets representing contract holder funds recognized under paragraph 944-80-25-3 shall be measured subsequently at fair value.

Transfers to Separate Accounts

944-80-35-3
Paragraph 944-80-40-1 states that assets transferred from the general account to a separate account shall be recognized at fair value to the extent of the third-party contract holders' proportionate interests in the separate account if the separate account arrangement meets the criteria in paragraph 944-80-25-2. That paragraph states that any resulting gain related to the third-party contract holders' proportionate interest shall be recognized immediately in earnings of the general account of the insurance entity provided that the risks and rewards of ownership have been transferred to contract holders using the fair value of the asset at the date of the contract holders' assumption of risks and rewards.
944-80-35-5
A guarantee of the asset's value or minimum rate of return or a commitment to repurchase the asset would not transfer the risks of ownership, and no gain shall be recognized.
944-80-35-6
If the separate account arrangement does not meet the criteria in paragraph 944-80-25-2, the transfer shall have no financial reporting effect; that is, general account classification and carrying amounts shall be retained.
944-80-35-7
The insurance entity shall recognize an impairment loss on an asset transferred from the general account to a separate account not meeting the criteria in paragraph 944-80-25-2 if the terms of the arrangement with the contract holder are such that the insurance entity will not be able to recover the asset's carrying value.
944-80-35-8
The insurance entity shall recognize an impairment loss on its proportionate interest in a separate account arrangement meeting the criteria in paragraph 944-80-25-2 in a situation where the current fair value of the insurance entity's proportionate interest in the separate account assets is less than its carrying amount.
944-80-35-9
If third-party contract holders' proportionate interests in the separate account are subsequently increased, or the insurance entity otherwise reduces its proportionate interest in the separate account arrangement that meets the criteria in paragraph 944-80-25-2, the reduction in the insurance entity's proportionate interest may result in additional gain.
944-80-35-10
If an insurance entity's proportionate interest subsequently increases as a result of transactions executed at fair value, the increase is considered a purchase from the contract holder and shall be recognized at fair value.

944-80-40Derecognition

Source downloaded: .Record version 4210e6f79421. Effective date must be checked in the source.

Transfers to Separate Accounts

944-80-40-1
Assets transferred from the general account to a separate account shall be recognized at fair value to the extent of the third-party contract holders' proportionate interests in the separate account if the separate account arrangement meets the criteria in paragraph 944-80-25-2. Any resulting gain related to the third-party contract holders' proportionate interest shall be recognized immediately in earnings of the general account of the insurance entity provided that the risks and rewards of ownership have been transferred to contract holders using the fair value of the asset at the date of the contract holders' assumption of risks and rewards.
944-80-40-2
If the transferred asset is subsequently sold by the separate account, any remaining unrecognized gain related to the insurance entity's proportionate interest shall be recognized immediately in the earnings of the general account of the insurance entity.
944-80-40-3
If third-party contract holders' proportionate interests in the separate account are subsequently increased, or the insurance entity otherwise reduces its proportionate interest in the separate account arrangement that meets the criteria in paragraph 944-80-25-2, the reduction in the insurance entity's proportionate interest may result in additional gain.

944-80-45Other Presentation Matters

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Overall

944-80-45-1
Separate account assets and liabilities shall be included in the financial statements of the insurance entity that owns the assets and is contractually obligated to pay the liabilities as summary totals in the financial statements of the insurance entity.
944-80-45-2
The portion of separate account assets representing contract holder funds shall be reported in the insurance entity's financial statements as a summary total, with an equivalent summary total reported for related liabilities, if the separate account arrangement meets all of the criteria in paragraph 944-80-25-2.
944-80-45-3
For the portion of separate account arrangements meeting those criteria, the related investment performance (including interest, dividends, realized gains and losses, and changes in unrealized gains and losses) and the corresponding amounts credited to the contract holder shall be offset within the same statement of operations line item netting to zero.

944-80-50Disclosure

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944-80-50-1
The following information shall be disclosed in the financial statements of the insurance entity:
  1. a
    The general nature of the contracts reported in separate accounts, including the extent and terms of minimum guarantees (including market risk benefits)
  2. b
    The basis of presentation for both of the following:
    1. 1
      Separate account assets and liabilities
    2. 2
      Related separate account activity.
  3. c
    Subparagraph superseded by Accounting Standards Update No. 2018-12.
  4. d
    Subparagraph superseded by Accounting Standards Update No. 2018-12.
  5. e
    The aggregate fair value of assets, by major investment asset category, supporting separate accounts as of each date for which a statement of financial position is presented
  6. f
    The amount of gains and losses recognized on assets transferred to separate accounts for the periods presented.
Transition date:(P) December 16, 2027; (N) December 16, 2028Transition guidance:
270-10-65-1The following information shall be disclosed in the interim and annual financial statements of the insurance entity:
  1. a
    The general nature of the contracts reported in separate accounts, including the extent and terms of minimum guarantees (including market risk benefits)
  2. b
    The basis of presentation for both of the following:
    1. 1
      Separate account assets and liabilities
    2. 2
      Related separate account activity.
  3. c
  4. d
  5. e
    The aggregate fair value of assets, by major investment asset category, supporting separate accounts as of each date for which a statement of financial position is presented
  6. f
    The amount of gains and losses recognized on assets transferred to separate accounts for the periods presented.
944-80-50-2
For annual and interim reporting periods, an insurance entity shall disclose the following information about separate account liabilities described in paragraph 944-80-25-2:
  1. a
    A year-to-date disaggregated tabular rollforward of the beginning balance to the ending balance disaggregated in accordance with paragraph 944-40-50-5A
  2. b
    For each separate account liability rollforward presented, the related cash surrender values
  3. c
    A reconciliation of the separate account liability rollforwards to the aggregated ending carrying amount of the liability in the statement of financial position.

944-80-55Implementation Guidance and Illustrations

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Illustrations

944-80-55-1
This Example illustrates the application of the guidance in Sections 944-80-35 and 944-80-40 on accounting for transfers from a general account to a separate account.The general account transfers to the separate account arrangement, as seed money, a debt security with a book value of $60 and a fair value of $100. No gain is recognized on the initial transfer to the separate account arrangement.
944-80-55-2
Contract holders subsequently direct $100 to the separate account arrangement, reducing the general account's proportionate interest to 50 percent. Assuming the fair value of the debt security is still $100, the general account recognizes a gain of $20, as a result of the contract holder investment into the separate account arrangement.
944-80-55-3
In subsequent years, if the insurance entity reduces its interest in the separate account arrangement through withdrawal of cash or additional investment by contract holders, additional gains would be recognized if the fair value of the security continues to exceed the general account's basis in the security.
944-80-55-4
This Example illustrates the guidance in this Subtopic on the presentation in the financial statements of an insurance entity's proportionate interest in separate accounts.
944-80-55-5
An insurance entity has a separate account that consists of two subaccounts, Subaccount ABC and Subaccount XYZ. The insurance entity has a 10 percent interest in Subaccount XYZ, determined based on the fair value of Subaccount XYZ's investments.
944-80-55-6
Subaccount XYZ has debt securities, mutual fund investments, mortgage loans, and real estate. Subaccount XYZ carries its investments at fair value; if the general account held these investments, they would be accounted for at amortized cost or fair value, depending on the applicable generally accepted accounting principles (GAAP).
944-80-55-8
The assets of Subaccount XYZ follow.
  • Investment Separate Account at Fair Value Separate Account at General Account Value(a) Insurer's Interest Proportionate Interest Debt securities $400 $400 10% $40 Equity securities 300 300 10% 30 Mortgage loans 250 200 10% 20 Real estate 130 100 10% 10 Total assets " $1,080 " " $1,000 " 10% $100 (a) Underlying investments valued in a manner similar to any other general account asset as prescribed in Subtopics 944-310 and 944-360.
944-80-55-9
Balances presented in the insurer's statement of financial condition follow.
  • Assets: Debt securities(a) 40 "Equity securities(a), (b)" 30 Mortgage loans 20 Real estate 10 Total investments 100 Separate account—Assets $972 (c) Liabilities: Separate account—Liabilities $972 (a) Debt securities need to be designated as either trading or available-for-sale. (b) "If Subaccount XYZ separate account held an investment in a mutual fund, a typical situation would be that the insurance entity's investment would represent less than a 20 percent ownership and the interest would be reported as an equity security under Topic 321." (c) "Separate account assets at fair value of $1,080 x 90% (contract holders' proportionate interest)."
944-80-55-10
The applicable disclosures for the insurer's proportionate interest in these specific assets would be included within the applicable disclosures for the general account invested assets.
944-80-55-11
The XYZ separate account's balances for net investment income and gains and losses follow.
  • XYZ Separate Account Total Insurer's Interest Apportioned Values General Account Classification Net investment income $65 10% 6.5 Revenue Realized gains and losses 20 10% 2.0 Revenue Unrealized gains and losses: Debt securities 8 10% 0.8 Revenue or other comprehensive income (a) Equity securities 25 10% 2.5 Revenue Mortgage loans 5 10% 0.5 Not recognized (b) Real estate 2 10% 0.2 Not recognized (b) Total net investment income and gains and losses $125 12.5 (a) "Unrealized gains shall be included in revenue or other comprehensive income depending on security classification as trading or available for sale. Credit losses, as noted in paragraph 944-80-25-9(a), shall be measured in accordance with Topic 326. " (b) Unrealized gains are not recognized.
944-80-55-12
Assume the following in the second year:
  1. a
    Insurer interest is lowered to 5 percent on the last day of the first quarter.
  2. b
    At the time of dilution:
    1. 1
      Separate account at fair value was $ 1,090.
    2. 2
      Separate account at general account value was $ 1,007.
  3. c
    Fair value of each investment increases 1 percent.
944-80-55-13
Assets of Subaccount XYZ at the end of first quarter follow.
  • Investment Separate Account at Fair Value Separate Account at General Account Value Insurer's Interest Proportionate Interest After Dilution Debt securities $404 $404 5% 20 Equity securities 303 303 5% 15 Mortgage loans 252 200 5% 10 Real estate 131 100 5% 5 Total assets " $1,090 " " $1,007 " 50
944-80-55-14
Balances presented in the insurer's statement of financial condition follow.
  • Assets: Debt securities 20 Equity securities 15 Mortgage loans 10 Real estate 5 Total investments 50 Separate account—Assets " $1,036 " (a) (a) "$1,090 x 95%"
944-80-55-15
The Subaccount XYZ separate account's balances for net investment income and gains and losses for the quarter follow.
  • XYZ Separate Account Total Insurer's Interest Apportioned Values Net investment income $16.3 10% 1.6 Unrealized gains and losses: Debt securities 4.0 10% 0.4 Equity securities 3.0 10% 0.3 Mortgage loans 2.5 10% 0.3 Real estate 1.2 10% 0.1 Total net investment income and gains and losses $27 2.7
944-80-55-16
The accounting for the seed money change for the quarter follows.
  • Amount due to proportionate interest in revenue 2.3 Gain recognition on dilution of interest 4.2 (a) (a) "Fair value of separate account less general account value of separate account multiplied by dilution, ($1,090 - $1,007) × 5%. This is the gain on mortgage loans and real estate, assuming debt securities have been classified as trading. If debt securities had been classified as available for sale, the gain or loss on dilution would also be calculated using the amortized cost basis of debt securities."
944-80-55-17
The aggregate fair value of assets, by major investment asset category, supporting separate accounts follows.
  • Asset Type "December 31, 20X1" "December 31, 20X2" U.S. Treasury securities and obligations of U.S. government corporations and agencies $ $ Obligations of states of the United States and political subdivisions of the states Corporate debt securities: —Investment grade —Noninvestment grade Foreign debt securities Mortgage-backed securities Equity securities (including mutual funds) (a) Real estate Mortgage loans Derivative financial instruments Cash and cash equivalents Total "$ X,XXX,XXX" "$ X,XXX,XXX" (a) The insurance entity may want to consider disclosing mutual funds by investment objective or other meaningful groupings that are useful in understanding the nature of the guarantee risk.
944-80-55-18
This Example illustrates the separate account liability information that an insurance entity should disclose to meet the requirements in paragraph 944-80-50-2.
  • Note X: Separate Account Liability
  • The balances of and changes in separate account liabilities follow.
    • "December 31," 20X2 20X1 Variable Universal Life Variable Annuities Variable Universal Life Variable Annuities "Balance, beginning of year" $BBB $AAA $XXX $XXX Premiums and deposits XXX XXX XXX XXX Policy charges (XXX) (XXX) (XXX) (XXX) Surrenders and withdrawals (XXX) (XXX) (XXX) (XXX) Benefit payments (XXX) (XXX) (XXX) (XXX) Investment performance XXX XXX XXX XXX Net transfers from (to) general account XXX XXX XXX XXX Other charges (XXX) (XXX) (XXX) (XXX) "Balance, end of year" $DDD $CCC $BBB $AAA Cash surrender value (a) $XXX $XXX $XXX $XXX (a) Cash surrender value represents the amount of the contract holder's account balances distributable at the balance sheet date less certain surrender charges.
  • The reconciliation of separate account liabilities to the separate account liability balance in the consolidated statement of financial position follows.
    • "December 31, " 20X2 20X1 Variable universal life $DDD $BBB Variable annuity CCC AAA Other XXX XXX Total $XXX $XXX
944-80-55-19
This Example illustrates a deferred variable annuity that provides the contract holder with a number of investment alternatives. The contract holder deposits $100,000 in a deferred variable annuity that has no front-end load. The contract holder directs the allocation of the deposit to the following: aggressive growth equity fund, $25,000; high-yield corporate bond fund, $25,000; 5-year guaranteed interest separate account, $25,000; and general account, $25,000.
944-80-55-20
Assets representing the contract holder's funds in the aggressive growth equity fund and high-yield corporate bond fund separate accounts satisfy all the criteria of paragraphs
944-80-25-2 through 25-3
, 944-80-30-1, 944-80-35-2, and
944-80-45-2 through 45-3
. The allocation to the guaranteed interest separate account does not satisfy the criterion in paragraph 944-80-25-2 for separate account treatment. Therefore, assets representing the contract holder's funds in the guaranteed interest separate account will be presented in the insurance entity's financial statements integrated with general account assets and liabilities. This reporting is appropriate even in those instances where the separate account arrangements with those contracts have been approved by regulatory authorities as separate account contracts.
944-80-55-21
The guaranteed interest separate account allocations are often referred to as spread products, where the insurer bears the investment risk and its profits are derived primarily from the excess of investment performance over net amounts credited to the contract holder. Amounts related to this contract that are directed to the general account option will be shown within general account balances.

944-80-65Transition and Open Effective Date Information

Source downloaded: .Record version 09e0393f7892. Effective date must be checked in the source.

944-80-65-1
Paragraph superseded on 06/18/2012 after the end of the transition period stated in Accounting Standards Update No. 2010-15, Financial Services—Insurance (Topic 944): How Investments Held through Separate Accounts Affect an Insurer's Consolidation Analysis of Those Investments.

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