# ASC 944-80-25: Financial Services—Insurance — Separate Accounts — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/944/80/#25-recognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:1e22b30b42dabae14533ba6a75c2dae9d6eb9858fd87f4e67ac73b8cfc517a82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/944/80/#25-recognition) SEC content: no #### Overall ##### [944-80-25-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:0926001e11e737ec2f363bf5b6c119d1e888fa09fada42b854e966d865f623b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [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.") 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:caa0ac2f5765cb48806ef70c372948c625c07859f46436ea029aea003f4a2a43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the following paragraph applies if the [separate account arrangement](https://asc.understandingaccounting.org/glossary/s/#separate-account-arrangement "An arrangement under which all or a portion of a contract holder's funds is allocated to a specific separate account maintained by the insurance entity.") 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](https://asc.understandingaccounting.org/glossary/g/#general-account "All operations of an insurance entity that are not reported in the separate account(s).") 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:6845d1aa37d4f1de7b093b26af21eaafc9ccb62ef1570c1c868c92e37bc3b9f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following guidance applies if a separate account arrangement meets all of the conditions paragraph [944-80-25-2](https://asc.understandingaccounting.org/asc/944/80/#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](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.")) and insurance benefit liabilities under the contracts in excess of 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 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](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-5). 4. d For the purpose of evaluating the retention of specialized accounting for investments in consolidation as described in paragraph [810-10-25-15](https://asc.understandingaccounting.org/asc/810/10/#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](https://asc.understandingaccounting.org/asc/810/10/#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](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:5f4b18b1d23e2e769732779575b7fabbb06dd15fe5967eb93301166fee1bd496 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-2) : 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:0237f9dc49e336e7dc876270cb3ead825a84884fe9a553accef063333ec1fbec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](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."), and indexed contracts are examples of separate account arrangements that would not meet the criteria in paragraphs [944-80-25-2 through 25-3](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-2) 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:d19f9d6fc84a05cdfde3848e203dc0cf03e00cbb6d86e1246bf1387945ad2f7e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assets underlying an insurance entity's proportionate interest in a separate account ([seed money](https://asc.understandingaccounting.org/glossary/s/#seed-money "An investment of non-contract-holder funds by an insurer in a separate account when it is established, to support the initial or ongoing operations of the separate account.") or other investment) do not represent contract holder funds, and thus do not qualify for separate account accounting and reporting. ##### [944-80-25-7](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:5ed1adad455abc358ea715b9331075f09f909d403ac97eef097191c4a927b1f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-4)) illustrates the application of this guidance. ##### [944-80-25-8](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:741cb430e41d65d512907ebe1b5711a6f4af6777c8e087d54c2026044d4e756b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the following paragraph applies if a separate account arrangement meets the criteria in paragraphs [944-80-25-2 through 25-3](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-2) 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:decbd643a13264d35c2550e17a83ea05034bc11b1b24685512bb99b12bcb1cf6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:c80fdae5eb575e7feaa005103a0b4f5c92cfec6cee21624d0f9c020bf4efd2b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in paragraphs [944-80-25-6 through 25-9](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-6) 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](https://asc.understandingaccounting.org/updates/asu-2016-01/). 3. 3 Cash and cash equivalents. ##### [944-80-25-11](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:bea4ce1c8b0f97200c390ca1d1128848be87711300471525a59993f155a40220 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/updates/asu-2016-01/) 3. 3 Cash and cash equivalents. #### Consolidation of an Investment Fund When Separate Accounts Are Involved ##### [944-80-25-12](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:19.980Z to 2026-09-10T02:18:19.980Z Record version: sha256:530fdec59d4c70489078cfda75eed7415aba9999ed2340b33fde781918b6fc2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#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.