# ASC Topic 944: Financial Services—Insurance Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/944/) 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): 2026-09-10T02:14:24.052Z to 2026-09-10T02:18:42.131Z Record version: sha256:12cff300a8a00fb1e911f827c0aa1ceb2c4412b6774d57aed190a9a37507fadf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## Machine-generated topic summary ASC 944 (Financial Services—Insurance) supplies incremental, industry-specific GAAP for insurance entities, organized around the nature of the contract rather than the type of entity: 944-10 sets the scope and roadmap, and 944-20 classifies contracts as short-duration or long-duration (with universal life-type, participating, reinsurance risk-transfer, and financial guarantee sub-models). The measurement subtopics then follow the contract life cycle: 944-30 capitalizes and amortizes acquisition costs (only costs "related directly to the successful acquisition," 944-30-25-1A; constant-level amortization for long-duration contracts, 944-30-35-3A), 944-40 accrues unpaid claim liabilities when insured events occur and liabilities for future policy benefits when premium revenue is recognized (with post-ASU 2018-12 annual assumption updates through net income, an upper-medium-grade discount rate through OCI, and fair value market risk benefits), 944-50 accrues policyholder dividends, 944-60 requires premium deficiency/loss recognition when expected costs exceed unearned premiums or existing liabilities plus future gross premiums, and 944-80 governs separate accounts. The unifying idea is that contract classification at inception drives every later recognition, measurement, amortization, and loss-recognition decision, and contracts lacking significant insurance risk fall out of insurance accounting entirely (deposit or investment contract accounting). Source downloaded (UTC): 2026-09-10T02:14:24.052Z to 2026-09-10T02:14:54.583Z Record version: sha256:48fbd38252723d45deac430453a144415eafce2fc4d4565e0bbcb12a219d898b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-10: Financial Services—Insurance — Overall ### Machine-generated study aids ```json { "summary": "ASC 944-10 is the Overall subtopic of the Financial Services—Insurance Topic; it serves as the roadmap and scope gate for all insurance-specific accounting guidance. It lists the Topic's Subtopics (acquisition costs, claim costs and liabilities for future policy benefits, policyholder dividends, premium deficiency, separate accounts, and the statement/disclosure subtopics) and identifies the four contract-type Subsections used throughout: short-duration, long-duration, reinsurance, and financial guarantee insurance contracts. The guidance is incremental industry-specific guidance—entities in scope must still apply all other applicable GAAP.", "key_points": [ "The Topic provides guidance on financial accounting and reporting by insurance entities and is organized into Subtopics including Insurance Activities, Acquisition Costs, Claim Costs and Liabilities for Future Policy Benefits, Policyholder Dividends, Premium Deficiency and Loss Recognition, and Separate Accounts (944-10-05-1).", "Guidance applying only to a specific type of contract is presented in four Subsections: Short-Duration Contracts, Long-Duration Contracts, Reinsurance Contracts, and Financial Guarantee Insurance Contracts (944-10-05-2).", "The Subtopics provide only incremental industry-specific guidance; entities in scope must also comply with applicable guidance outside this Topic (944-10-15-1).", "Scope covers life and health insurers (stock and mutual) and property and liability (property and casualty) insurers (stock and mutual) (944-10-15-2(a)-(b)).", "Scope also reaches title, assessment, mortgage guaranty, financial guaranty, and captive insurance entities, fraternal benefit societies, syndicates, reinsurance entities, and reciprocal or interinsurance exchanges (944-10-15-2(c)-(l)).", "Pools are within scope except public-entity risk pools, which are excluded (944-10-15-2(h)).", "Former subparagraphs 944-10-05-1(l) and (m) were superseded by ASU 2016-01, and the transition paragraph 944-10-65-1 was superseded after the ASU 2010-26 transition period ended." ], "categories": [ "Industry-specific", "Recognition", "Presentation" ], "audience_level": "introductory", "student_note": "This is the gateway subtopic: before applying any insurance accounting rule, confirm the entity is in scope and identify whether the contract is short-duration or long-duration, because that classification drives premium recognition, liability measurement, and acquisition cost accounting. A common misunderstanding is treating ASC 944 as a self-contained framework—it is only incremental guidance, so ordinary GAAP (e.g., financial instruments, income taxes) still applies.", "related_topics": [ "944-20", "944-30", "944-40", "944-60", "944-80", "944-805" ], "key_concepts": [ "insurance entity", "incremental industry-specific guidance", "short-duration contracts", "long-duration contracts", "reinsurance contracts", "financial guarantee insurance contracts", "scope of insurance accounting", "captive and reciprocal insurers" ] } ``` Source downloaded (UTC): 2026-09-10T02:14:24.052Z to 2026-09-10T02:14:24.052Z Record version: sha256:9bcd64472923cba63de91e5eceb97058a76f9970feffa92ed1586b7ff6bf72de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/10/#00-status) SEC content: no ##### [944-10-00-1](https://asc.understandingaccounting.org/asc/944/10/#944-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:24.052Z to 2026-09-10T02:14:24.052Z Record version: sha256:b1c881c35a8115c02430fc073c271cb0f4bd3d212915003de1291c6f6bbf1394 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
944-10-05-1AmendedAccounting Standards Update No. 2016-0101/05/2016
944-10-05-2AmendedAccounting Standards Update No. 2016-1912/14/2016
944-10-65-1AddedAccounting Standards Update No. 2010-2610/13/2010
Source downloaded (UTC): 2026-09-10T02:14:27.637Z to 2026-09-10T02:14:27.637Z Record version: sha256:201876223529c911a30b0bbfe34ff0ec98d01462414a5edd9ee3faaf440041f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/944/10/#05-overview-and-background) SEC content: no ##### [944-10-05-1](https://asc.understandingaccounting.org/asc/944/10/#944-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:27.637Z to 2026-09-10T02:14:27.637Z Record version: sha256:3a7e55f37b5ecbdde19abc472f5c46694d5ae7a5b76a3b286e7fb58f5353950f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Financial Services—Insurance Topic provides guidance on financial accounting and reporting by insurance entities. The Financial Services—Insurance Topic includes the following Subtopics: 1. a Overall 2. b Insurance Activities 3. c Acquisition Costs 4. d Claim Costs and Liabilities for Future Policy Benefits 5. e Policyholder Dividends 6. f Premium Deficiency and Loss Recognition 7. g Separate Accounts 8. h Balance Sheet 9. i Income Statement 10. j Notes to Financial Statements 11. k Receivables 12. l [Subparagraph superseded by Accounting Standards Update No. 2016-01](https://asc.understandingaccounting.org/updates/asu-2016-01/). 13. m [Subparagraph superseded by Accounting Standards Update No. 2016-01](https://asc.understandingaccounting.org/updates/asu-2016-01/). 14. n Other Assets and Deferred Costs 15. o Property, Plant, and Equipment 16. p Liabilities 17. q Debt 18. r Equity 19. s Revenue Recognition 20. t Other Expenses 21. u Income Taxes 22. v Business Combinations 23. w Derivatives and Hedging 24. x Financial Instruments. ##### [944-10-05-2](https://asc.understandingaccounting.org/asc/944/10/#944-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:27.637Z to 2026-09-10T02:14:27.637Z Record version: sha256:03c32665d37e33d8f1662d5a3838c1c30a35ba23d39fd1a093d68b192b6c8ada Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Guidance that applies only to a specific type of contract has been presented in the following four subsections: 1. a Short-Duration Contracts 2. b Long-Duration Contracts 3. c [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 4. d Financial Guarantee Insurance Contracts. ##### [944-10-05-3](https://asc.understandingaccounting.org/asc/944/10/#944-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:27.637Z to 2026-09-10T02:14:27.637Z Record version: sha256:364c575b2837adff7ea0ae68ed434eac40b6e64f4567c042fd4e7869ddd84071 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Each Subtopic provides background on the guidance provided. Each Subtopic identifies any additional Subsections used. Source downloaded (UTC): 2026-09-10T02:14:30.947Z to 2026-09-10T02:14:30.947Z Record version: sha256:885f21ef9cc80c91acf40591e3b1f93efd6af6da5444d773c48a0dd5482cb0f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/944/10/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [944-10-15-1](https://asc.understandingaccounting.org/asc/944/10/#944-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:30.947Z to 2026-09-10T02:14:30.947Z Record version: sha256:036a4c35d3391909f215e56a2a46d2f2eaaf27df2fdb07497f20a42f78f54e4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Subtopics within the Financial Services—Insurance Topic provide only incremental industry-specific guidance for the entities defined in this Scope Section, or as further defined in the Scope Sections of the individual Financial Services—Insurance Subtopics. Entities within the scope of this Topic shall also comply with the applicable guidance not included in this Topic. #### Entities ##### [944-10-15-2](https://asc.understandingaccounting.org/asc/944/10/#944-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:30.947Z to 2026-09-10T02:14:30.947Z Record version: sha256:41e07f356f408ffeff8f3c5192fe18b2aa13a394cd015caecbb816a73dc68787 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Financial Services—Insurance Topic applies to all of the following entities: 1. a Life and health insurance entities, including both: 1. 1 Stock life insurance entities 2. 2 Mutual life insurance entities. 2. b [Property and liability insurance entities](https://asc.understandingaccounting.org/glossary/p/#property-and-liability-insurance-entity "An entity that issues insurance contracts providing protection against either of the following: Damage to, or loss of, property caused by various perils, such as fire and theft Legal liability resulting from injuries to other persons or damage to their property. Property and liability insurance entities also can issue accident and health insurance contracts. The term property and liability insurance entity is the current terminology used to describe a fire and casualty insurance entity. Property and liability insurance entities may be either stock or mutual entities.") (also known as property and casualty insurance entities), which include all of the following entities: 1. 1 Stock entities 2. 2 Mutual entities. 3. 3 [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). 3. c [Title insurance entities](https://asc.understandingaccounting.org/glossary/t/#title-insurance-entity "An entity that issues title insurance contracts to real estate owners, purchasers, and mortgage lenders, indemnifying them against loss or damage arising out of defects in, liens on, or challenges to their title to real estate.") 4. d [Assessment entities](https://asc.understandingaccounting.org/glossary/a/#assessment-entities "An insurance entity that sells insurance to groups with similar interests, such as church denominations or professional groups. Some assessment entities also sell insurance directly to the general public. If funds are not sufficient to pay claims, then assessments may be made against members.") 5. e Fraternal benefit societies 6. f [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.") 7. g Financial guaranty insurance entities 8. h Pools other than public-entity risk pools 9. i Syndicates 10. j Captive insurance entities 11. k [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.") entities 12. l [Reciprocal exchange](https://asc.understandingaccounting.org/glossary/r/#reciprocal-exchange "A group of persons, firms, or corporations commonly referred to as subscribers that exchange insurance contracts through an attorney-in-fact.") or [interinsurance exchange](https://asc.understandingaccounting.org/glossary/i/#interinsurance-exchange "See Reciprocal Exchange."). Source downloaded (UTC): 2026-09-10T02:14:36.370Z to 2026-09-10T02:14:36.370Z Record version: sha256:31c833293bed8277931f382874d55de997adeaafe95dfee9a4a551359e9e3f87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-10-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/944/10/#65-transition-and-open-effective-date-information) SEC content: no ##### [944-10-65-1](https://asc.understandingaccounting.org/asc/944/10/#944-10-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:36.370Z to 2026-09-10T02:14:36.370Z Record version: sha256:e062cb40264f5fa80d7db3391054127da533fca6db6095809a0dfd981579d8b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/17/2013 after the end of the transition period stated in Accounting Standards Update No. 2010-26, _Financial Services—Insurance (Topic 944): Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts_. Source downloaded (UTC): 2026-09-10T02:14:42.098Z to 2026-09-10T02:14:42.098Z Record version: sha256:a14091e1c19d49d571ba273f74697eb6afb72749351d36e703b1ffab949a3723 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-10-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/10/#sec-00-status) SEC content: yes ##### [944-10-S00-1](https://asc.understandingaccounting.org/asc/944/10/#944-10-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:42.098Z to 2026-09-10T02:14:42.098Z Record version: sha256:d31ca1a90a3c78b179c9e9971bded2c415e6cefb6f93132d1c464fddcff066bb 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
944-10-S99-1 through S99-3
AmendedAccounting Standards Update No. 2019-0707/26/2019
944-10-S99-1AmendedAccounting Standards Update No. 2010-2108/02/2010
944-10-S99-3AmendedAccounting Standards Update No. 2010-2108/02/2010
Source downloaded (UTC): 2026-09-10T02:14:45.767Z to 2026-09-10T02:14:45.767Z Record version: sha256:3492384bfea7bf3ee5c3c51abc32be0f8e0188c3aa36956d56f360855516eaf4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-10-S15: SEC 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/944/10/#sec-15-scope-and-scope-exceptions) SEC content: yes #### Entities ##### [944-10-S15-1](https://asc.understandingaccounting.org/asc/944/10/#944-10-S15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:45.767Z to 2026-09-10T02:14:45.767Z Record version: sha256:bbf4eabf216d486461775cd261ebd9a7fef1581e3c6fc8753be71bd3c6cef8ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [944-10-S99-1](https://asc.understandingaccounting.org/asc/944/10/#944-10-S99-1), Regulation S-X Rule 7-01, for the entities required to comply with the SEC requirements in this Subtopic. Source downloaded (UTC): 2026-09-10T02:14:49.864Z to 2026-09-10T02:14:49.864Z Record version: sha256:dda3906d624f11abf4418864b1cd2f12914baf84fc31a411e4de00788f9f663a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-10-S45: SEC 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/944/10/#sec-45-other-presentation-matters) SEC content: yes ##### [944-10-S45-1](https://asc.understandingaccounting.org/asc/944/10/#944-10-S45-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:49.864Z to 2026-09-10T02:14:49.864Z Record version: sha256:8329473723c4ccc7a9aa8449e4083ea53b1588ea298052c1bfe7f0b45969302c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [944-10-S99-2](https://asc.understandingaccounting.org/asc/944/10/#944-10-S99-2), Regulation S-X Rule 7-02, for the requirements pertaining to the presentation of financial statements for insurance entities. Source downloaded (UTC): 2026-09-10T02:14:52.843Z to 2026-09-10T02:14:52.843Z Record version: sha256:00f69cce689143c0cfd6c9bcc45534bd29ddbbad511cfa98cd86f374ae9dead5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-10-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/10/#sec-50-disclosure) SEC content: yes #### Supplemental Schedules ##### [944-10-S50-1](https://asc.understandingaccounting.org/asc/944/10/#944-10-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:52.843Z to 2026-09-10T02:14:52.843Z Record version: sha256:2d1c991aadad6947b6c5df4c8932bf72e94cb821fe322a8ea84210e6e5c7262e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [944-10-S99-3](https://asc.understandingaccounting.org/asc/944/10/#944-10-S99-3), Regulation S-X Rule 7-05, for the required supplemental schedules in reports of insurance entities. Source downloaded (UTC): 2026-09-10T02:14:54.583Z to 2026-09-10T02:14:54.583Z Record version: sha256:6b5afe9d99918ccea1737ce74adceefabd3000b1aac4298cbda208c0a83d7071 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-10-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/944/10/#sec-99-sec-materials) SEC content: yes #### SEC Rules, Regulations, and Interpretations ##### [944-10-S99-1](https://asc.understandingaccounting.org/asc/944/10/#944-10-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:54.583Z to 2026-09-10T02:14:54.583Z Record version: sha256:b9a491419e8ed7cd33aba1c2ba95c168a5be2b8af7cb2e0014ffff65c155645d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 7-01, Application of §§210.7-01 to 210.7-05 (17 CFR 210.7-01). - This article shall be applicable to financial statements filed for insurance companies. ##### [944-10-S99-2](https://asc.understandingaccounting.org/asc/944/10/#944-10-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:54.583Z to 2026-09-10T02:14:54.583Z Record version: sha256:3fc14b9c34cd3e6f79d966b24979def47e991f62c5e81270096eefac6da36d41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 7-02, General Requirement (17 CFR 210.7-02). - (a) The requirements of the general rules in §§ 210.1-01 to 210.4-10 (Articles 1, 2, 3, 3A and 4) shall be applicable except where they differ from requirements of §§ 210.7-01 to 210.7-05. - (b) Financial statements filed for mutual life insurance companies and wholly owned stock insurance company subsidiaries of mutual life insurance companies may be prepared in accordance with statutory accounting requirements. Financial statements prepared in accordance with statutory accounting requirements may be condensed as appropriate, but the amounts to be reported for net gain from operations (or net income or loss) and total capital and surplus (or surplus as regards policyholders) shall be the same as those reported on the corresponding Annual Statement. ##### [944-10-S99-3](https://asc.understandingaccounting.org/asc/944/10/#944-10-S99-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:54.583Z to 2026-09-10T02:14:54.583Z Record version: sha256:c8878992c2572ccf1f73ad3a65aac8d1c67c809ad1a0551be16b89e3f9c4ce69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of Regulation S-X Rule 7-05, What Schedules Are to Be Filed (17 CFR 210.7-05). - (a) Except as expressly provided otherwise in the applicable form: - (1) The schedule specified below in this section as Schedules I shall be as of the date of the most recent audited balance sheet for each person or group. - (2) The schedules specified in this section as Schedule IV and V shall be filed for each period for which an audited statement of comprehensive income is required to be filed for each person or group. - (3) Schedules II, III and V shall be filed as of the date and for periods specified in the schedule. - (b) When information is required in schedules for both the registrant and the registrant and its subsidiaries consolidated it may be presented in the form of a single schedule: _Provided_, That items pertaining to the registrant are shown separately and that such single schedule affords a properly summarized presentation of the facts. If the information required by any schedule (including the notes thereto) may be shown in the related financial statement or in a note thereto without making such statement unclear or confusing, that procedure may be followed and the schedule omitted. - (c) The schedules shall be examined by the independent accountant. - Schedule I—Summary of investments—other than investments in related parties. The schedule prescribed by § 210.12-15 shall be filed in support of caption 1 of the most recent audited balance sheet. - Schedule II—Condensed financial information of registrant. The schedule prescribed by § 210.12-04 shall be filed when the restricted net assets (§ 210.102(dd)) of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. - Schedule III—Supplementary insurance information. The schedule prescribed by § 210.12-16 shall be filed giving segment detail in support of various balance sheet and statement of comprehensive income captions. The required balance sheet information shall be presented as of the date of each audited balance sheet filed, and the statement of comprehensive income information shall be presented for each period for which an audited statement of comprehensive income is required to be filed, for each person or group. - Schedule IV—Reinsurance. The schedule prescribed by § 210.12-17 shall be filed for reinsurance ceded and assumed. - Schedule V—Valuation and qualifying accounts. The schedule prescribed by § 210.12-09 shall be filed in support of valuation and qualifying accounts included in the balance sheet (see § 210.4-02). - Schedule VI—Supplemental Information Concerning Property-Casualty Insurance Operations. The information required by § 210.12-18 shall be presented as of the same dates and for the same periods for which the information is reflected in the audited consolidated financial statements required by §§ 210.3-01 and 3-02. The schedule may be omitted if reserves for unpaid property-casualty claims and claim adjustment expenses of the registrant and its consolidated subsidiaries, its unconsolidated subsidiaries and its 50%-or-less-owned equity basis investees did not in the aggregate, exceed one-half of common stockholders' equity of the registrant and its consolidated subsidiaries as of the beginning of the fiscal year. For purposes of this test, only the proportionate share of the registrant and its other subsidiaries in the reserves for unpaid claims and claim adjustment expenses of 50%-or-less-owned equity investees taken in the aggregate after intercompany eliminations shall be taken into account. Article 12—Form and Content of Schedules (17 CFR 210). - \[46 FR 54335, Nov. 2, 1981, as amended at 47 FR 29837, July 9, 1982; 49 FR 47598, Dec. 6, 1984; 59 FR 65637, Dec. 20, 1994; 74 FR 18615, Apr. 23, 2009; 83 FR 50203, Oct. 4, 2018\] Source downloaded (UTC): 2026-09-10T02:14:58.695Z to 2026-09-10T02:15:47.018Z Record version: sha256:0e1c1418b9d86542ae64a1cbe61762ca6d2c2c00cd39a0b672f94d9ded3ac35d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20: Financial Services—Insurance — Insurance Activities ### Machine-generated study aids ```json { "summary": "ASC 944-20 sets the framework for insurance accounting based on the nature of the contract rather than the type of entity: contracts are classified at inception as short-duration (fixed short coverage period, insurer can cancel or reprice each period, 944-20-15-7) or long-duration (not subject to unilateral change, services rendered over an extended period, 944-20-15-10), with sub-models for traditional, universal life-type, participating, and financial guarantee contracts. It also defines when a contract with a reinsurer actually transfers insurance risk (significant insurance risk plus reasonable possibility of significant loss, 944-20-15-41) and prescribes recognition and with-and-without measurement for multiple-year retrospectively rated contracts. Contracts lacking indemnification or significant insurance risk are accounted for under the deposit method (340-30) or as investment contracts.", "key_points": [ "Insurance contracts must be classified as short-duration or long-duration depending on whether they are expected to remain in force for an extended period (944-20-15-2, 15-7, 15-10); examples include property/liability and credit life as short-duration and whole-life, guaranteed renewable term, endowment, annuity, and title insurance as long-duration (944-20-55-1, 55-3).", "Classification as an investment contract or insurance contract is made at contract inception and is not reassessed during the accumulation phase; if mortality/morbidity risk is nominal (insignificant amount or remote probability) the contract is an investment contract (944-20-15-20 through 15-21), and significance is tested by comparing the present value of expected excess payments to the present value of assessments plus expected investment margin under a range of scenarios (944-20-15-24 through 15-25).", "A contract with other-than-nominal mortality/morbidity risk whose fees or benefits are not fixed and guaranteed is a universal life-type contract (944-20-15-22, 15-26); participating or nonguaranteed-premium contracts that are in substance universal life-type are also within that model (944-20-15-27 through 15-30).", "Reinsurance of short-duration contracts qualifies for reinsurance accounting only if the reinsurer assumes significant insurance risk (amount and timing of its payments directly vary with claims settled) and it is reasonably possible the reinsurer will realize a significant loss (944-20-15-41), with a narrow 'substantially all' exception when only insignificant risk is retained by the ceding entity (944-20-15-53 through 15-54).", "Risk transfer is assessed at contract inception based on all cash flows between the parties discounted at a single reasonable rate (944-20-15-49, 15-51); any amendment beyond trivial changes requires reassessment, and a failed contract is accounted for as a deposit under Subtopic 340-30 (944-20-15-62 through 15-64, 944-20-15-55).", "For multiple-year retrospectively rated contracts, an asset or liability is recognized for obligatory retrospective rating provisions created by past experience, measured using a with-and-without method excluding future losses and future premiums payable regardless of experience (944-20-25-2, 25-4, 944-20-35-1, 35-3 through 35-4); deposit accounting may not be used to avoid loss recognition (944-20-25-3, 944-20-35-12).", "Reinsurance that legally replaces one insurer with another (assumption and novation) extinguishes the ceding entity's liability and requires derecognition of related assets and liabilities; otherwise the ceding entity keeps them on its balance sheet and must disclose that it is not relieved of its primary obligation (944-20-40-3 through 40-4, 944-20-50-3 through 50-4)." ], "categories": [ "Industry-specific", "Recognition", "Subsequent measurement", "Contingencies and guarantees" ], "audience_level": "advanced", "student_note": "This subtopic is the gateway to all of ASC 944: get the short- vs. long-duration and insurance- vs. investment-contract classification wrong and every downstream revenue, liability, and DAC conclusion is wrong. The most common misunderstanding is assuming anything labeled 'reinsurance' gets reinsurance accounting—substance controls, and without significant insurance risk plus a reasonable possibility of significant loss to the reinsurer, deposit accounting under 340-30 applies.", "related_topics": [ "944-40", "944-605", "944-30", "340-30", "720-20", "815-15" ], "key_concepts": [ "short-duration contract", "long-duration contract", "universal life-type contract", "investment contract", "risk transfer", "reinsurance", "multiple-year retrospectively rated contract", "financial guarantee insurance" ] } ``` Source downloaded (UTC): 2026-09-10T02:14:58.695Z to 2026-09-10T02:14:58.695Z Record version: sha256:0ea86c8d4d7dbc8ee4f89ea515511f108c5eb9fc04856b3c5fc90152b2c5d669 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/20/#00-status) SEC content: no ##### [944-20-00-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:14:58.695Z to 2026-09-10T02:14:58.695Z Record version: sha256:ac9d11219395053a6a79fe315e69970e4f8a1231b13437fe6c5459662080d39e 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
Acquisition CostsAmendedAccounting Standards Update No. 2010-2610/13/2010
Contract PeriodAmendedAccounting Standards Update No. 2016-1912/14/2016
Dividends to PolicyholdersAddedAccounting Standards Update No. 2014-0603/14/2014
Enhanced-Crediting-Rate BonusAddedAccounting Standards Update No. 2014-0603/14/2014
Enhanced-Yield BonusSupersededAccounting Standards Update No. 2014-0603/14/2014
Guaranteed Minimum Income BenefitAmendedAccounting Standards Update No. 2018-1208/15/2018
Involuntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
Net Amount at Risk (Relating to Variable Annuity Contracts)SupersededAccounting Standards Update No. 2018-1208/15/2018
Reinsurance RecoverableAddedAccounting Standards Update No. 2016-1912/14/2016
Sales InducementsAmendedAccounting Standards Update No. 2014-0603/14/2014
TerminationAmendedAccounting Standards Update No. 2014-0603/14/2014
Voluntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
944-20-05-2AAmendedAccounting Standards Update No. 2016-1912/14/2016
944-20-05-23SupersededAccounting Standards Update No. 2018-1208/15/2018
944-20-05-32AmendedAccounting Standards Update No. 2014-0603/14/2014
944-20-10-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-15-1BAmendedAccounting Standards Update No. 2016-1912/14/2016
944-20-15-3AmendedAccounting Standards Update No. 2014-0603/14/2014
944-20-15-11AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-15-13AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-15-24AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-50-5AmendedAccounting Standards Update No. 2016-1912/14/2016
944-20-55-13AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-55-14AmendedAccounting Standards Update No. 2018-1208/15/2018
944-20-55-15 through 55-26
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-20-55-37AmendedAccounting Standards Update No. 2016-1306/16/2016
944-20-65-1AmendedAccounting Standards Update No. 2009-0207/01/2009
Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:4860d9c34438feb71236db500c68aa62a660bec0301a2b70fc047f18462cded8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/944/20/#05-overview-and-background) SEC content: no ##### [944-20-05-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:ec38065e14af20038813ae6f4c42a4a330e6a269772e1d67f3e79d125146f56c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Financial Services—Insurance Topic contains the following Subtopics unique to the accounting for and financial reporting of insurance activities and insurance contracts: 1. a Insurance Activities 2. b Acquisition Costs 3. c Claim Costs and Liabilities for Future Policy Benefits 4. d Policyholder Dividends 5. e Separate Accounts. ##### [944-20-05-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:4dc7fda123141bccb8a63d4cb5b8c8cbfcbef2988a2293a80328dd7a9d4028ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides a description of insurance activities and insurance contracts, provides guidance on accounting for multi-year retrospectively rated contracts, and contains other overarching industry-specific content. ##### [944-20-05-2A](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-2A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:a051af3c4726eb3cf239d74f7d348827042dfb9487072830f42733efe3231726 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some cases an insurance contract 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.") contract does not transfer [insurance risk](https://asc.understandingaccounting.org/glossary/i/#insurance-risk "The risk arising from uncertainties about both underwriting risk and timing risk. Actual or imputed investment returns are not an element of insurance risk. Insurance risk is fortuitous; the possibility of adverse events occurring is outside the control of the insured."). In those cases, Subtopic 340-30 provides guidance on applying the deposit method of accounting. ##### [944-20-05-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:72ac13e476311707ea4740ba961719c369b7039c30b045b9ad37995b41b18a1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Four methods of premium revenue and contract liability recognition for insurance contracts have developed: short-duration contract accounting and three methods of long-duration contract accounting—Traditional, Universal Life, and Participating Contracts. Generally, the four methods reflect the nature of the insurance entity's obligations and policyholder rights under the provisions of the contract. ##### [944-20-05-3A](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-3A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:8f5aae177bdd46b1f603c12d9d7cf5259ea2eaa3898309fd5a913c46e86508d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting model for financial guarantee insurance contracts incorporates attributes of both the short-duration and the long-duration models. Financial guarantee insurance contracts provide insurance protection to the holder of the insured financial obligation. Therefore, premium revenue recognition issues are addressed in the context of the short-duration insurance accounting model. The claim liability recognition and measurement approach for financial guarantee insurance contracts incorporates aspects of the long-duration insurance accounting model. ##### [944-20-05-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:8737c662043e376da072f1f67a3b3c2c8a3a7a894328a2187ffec8ee965ced83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 Contracts 5. e Financial Guarantee Insurance Contracts. #### Insurance Contracts ##### [944-20-05-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:1b3f04fa95a56655dffdf61117558d258bd347b0f509cffcbe1aa2510338da9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The primary purpose of insurance is to provide economic protection from identified risks occurring or discovered within a specified period. ##### [944-20-05-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:6db376133201932661a38a2f86896644056d74e35e14d9905c282755864e4898 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance transactions may be characterized generally by both of the following: 1. a The purchaser of an insurance contract makes an initial payment or deposit to the insurance entity in advance of the possible occurrence or discovery of an insured event. 2. b When the insurance contract is made, the insurance entity ordinarily does not know if, how much, or when amounts will be paid under the contract. ##### [944-20-05-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:cbec0d3ff2967bb6733754efa7241f94f02532243992902ed4f3b2f5e2d1816e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of insured events include all of the following: 1. a The death or disability of the insured 2. b The maturity of an endowment 3. c The incurrence of hospital or medical bills 4. d The destruction or damage of property and related deaths or injuries 5. e Defects in, liens on, or challenges to the title to real estate 6. f The occurrence of a surety loss 7. g Business interruption. #### Statutory Accounting Practices ##### [944-20-05-8](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:7050d5b6a25a0cbef98d3ea71eab6de40ac544b8bfed9e34a526feac9330e3e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The insurance laws and regulations of most states require insurance entities domiciled in those states to comply with the guidance provided in the National Association of Insurance Commissioners' Accounting Practices and Procedures Manual, except as prescribed or permitted by state law. ##### [944-20-05-9](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:9c3d9be2976a3a6fc07cdd7ec4e2bd938b6fb6b2b36284f9c7d3b02471ad9dda Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prescribed statutory accounting practices are those practices that are incorporated directly or by reference in state laws, regulations, and general administrative rules applicable to all insurance entities domiciled in a particular state. A state may adopt the revised Accounting Practices and Procedures Manual in whole, or in part, as an element of prescribed statutory accounting practices. If, however, the requirements of state laws, regulations, and administrative rules differ from the guidance provided in the revised Accounting Practices and Procedures Manual or subsequent revisions, those state laws, regulations, and administrative rules will take precedence. ##### [944-20-05-10](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:98392b4c57c61d948d5c5b2067a3a45583cd35eeae24b7a45fba284d83147165 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Permitted statutory accounting practices include practices not prescribed by the domiciliary state as described in the preceding paragraph, but allowed by the domiciliary state regulatory authority. An insurance entity may request permission from the domiciliary state regulatory authority to use a specific accounting practice in the preparation of the entity's statutory financial statements in either of the following circumstances: 1. a If it wishes to depart from the prescribed statutory accounting practices 2. b If prescribed statutory accounting practices do not address the accounting for the transaction. Accordingly, permitted accounting practices differ from state to state, may differ from entity to entity within a state, and may change in the future. ##### [944-20-05-11](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:828561af9b4d860f58837136aa3add5189aff79d63c6b76f3c1c41e7c283f4ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subtopic 944-505 provides guidance to insurance entities on disclosure about statutory accounting practices. ### Short-Duration Contracts ##### [944-20-05-12](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:050cc82f21dc9348ec4dc8abe56eae9e01d26a4f381a1d781d3c2f983069e3bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Short-Duration Contracts Subsections provide guidance on accounting for and financial reporting of short-duration insurance contracts. ##### [944-20-05-13](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:62cfefcc6cebb96dc8d676fb332e127f2d70115c30d6058075dab9d1cb39dd41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Premiums from short-duration insurance contracts, such as most property and liability insurance contracts, are intended to cover expected [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 insured events that occur during a fixed period of short duration. The insurance entity ordinarily has the ability to cancel the contract or to revise the premium at the beginning of each [contract period](https://asc.understandingaccounting.org/glossary/c/#contract-period "The period over which insured events that occur are covered by insurance or reinsurance contracts. Commonly referred to as the coverage period or period that the contracts are in force.") to cover future insured events. ### Long-Duration Contracts ##### [944-20-05-14](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:301fd2ab463d2f53b2221815c021f124f89fd4bbbe252a112efd2020e23c6d42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections provide guidance on accounting for and financial reporting of long-duration insurance contracts. This section is organized as follows: 1. a Traditional fixed and variable annuity and life insurance contracts 2. b Universal life-type contracts 3. c Nontraditional fixed and variable annuity and life insurance contracts 4. d Participating life insurance contracts 5. e Group participating pension contracts. #### Traditional Fixed and Variable Annuity and Life Insurance Contracts ##### [944-20-05-15](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:164f1d5c90a2ca50a2d5752d6066de5de5aa173ec50092beb56aff6ccda86386 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Traditional fixed annuity and life insurance contracts, typically offered through an insurance entity's [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)."), provide for a fixed rate of interest over some specified period, with the insurance entity bearing the investment risk associated with the invested assets. ##### [944-20-05-16](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:7a30905cad3998fe63c74b5101d1f766249bd11bce548e3f4febc40401bdbe6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Traditional variable annuity](https://asc.understandingaccounting.org/glossary/t/#traditional-variable-annuity "An insurance product in which all the contract holder's payments are used to purchase units of a separate account.") and variable life insurance contracts, by contrast, offered through an insurance entity's [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."), provide that all investment risks associated with the separate account assets are passed through to the contract holder, with no guarantees of return of principal, minimum crediting rates, or (for annuity contracts) minimum death benefits. ##### [944-20-05-17](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:096c10511a5ee4c78b635c545cc87af8e0f2b3b36f6bec7750879e91016c5f65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, in a traditional variable annuity, the contract holder directs the allocation of the account value among various investment alternatives and bears the investment risk. The units may be surrendered for their current value in cash (usually less a surrender charge) or applied to purchase annuity income. The insurance entity periodically deducts [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place.") and expense charges from the account. ##### [944-20-05-18](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:dea4475ce565392f1492a2d6dbb213d7b7e97c23355543b43f2a449a306c4338 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A traditional variable annuity product structure, as that term is used in this Subtopic, includes the following attributes: 1. a The policyholder's payments, after deduction of specified sales and administrative charges, are used to purchase units of a separate investment account (a separate account). 2. b The policyholder directs the allocation of the account value among various investment options (typically various mutual funds). The policyholder bears the investment risk (that is, the account value is based entirely on the performance of the directed investments). 3. c The units may be surrendered for their current value in cash, although there is often a small surrender charge, or the units may be applied to purchase annuity income. 4. d The insurer guarantees mortality and maximum expense charges, and amounts are deducted periodically from the separate account to cover these charges. 5. e Deferred annuity contracts typically provide a death benefit during the accumulation period under which the policyholder may receive the greater of the sum of premiums paid or the value of total units to the credit of the account at time of the policyholder's death. ##### [944-20-05-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:fe3b09a1a52c68be22e2329538dd148caf395134e1587d9fa9aa9cd444168699 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Premiums from long-duration insurance contracts, including many life insurance contracts, generally are level even though the expected policy benefits and services do not occur evenly over the periods of the contracts. Functions and services provided by the insurer include insurance protection, sales, premium collection, [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") payment, investment, and other services. No single function or service is predominant over the periods of most types of long-duration contracts. Premium revenue from long-duration contracts generally exceeds expected policy benefits in the early years of the contracts. #### Limited-Pay Insurance Contracts ##### [944-20-05-19A](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-19A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:b7963168f24552fe2fcdb23edd950d8d8b2f6636dd8a1e87f90c09d6c6b8cfba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some long-duration insurance contracts have terms that are fixed and guaranteed but lack either level premiums (as discussed in paragraph [944-20-05-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-19)) or insurance protection characteristics. #### Universal Life-Type Contracts ##### [944-20-05-20](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:dea583be9501086caee305fba432bedffa529d8a98be7595b3fca8d026a8c81e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The differences between universal life-type insurance contracts and other long-duration contracts is that universal life-type insurance contracts lack the fixed and guaranteed terms that are typical for other long-duration contracts. Policyholders are frequently granted significant discretion over the amount and timing of premium payments. Insurers are frequently granted significant discretion over amounts that accrue to and that are assessed against policyholders. ##### [944-20-05-21](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:604a75220917f6d444b455e025596ab6dc2b87c0b7eaca62f0ec7b71bd73944b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Nontraditional Fixed and Variable Annuity and Life Insurance Contracts ##### [944-20-05-22](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:d22f57a1eb23ad7b8c4f61d63f0735ec8e3e63ef52af154543696c1e53f3cf6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Annuity and life products with nontraditional terms may combine fixed and variable features and are sold as general account or separate account products. The features of such contracts are many and complex, and may be offered in different combinations, such that there are numerous variations of the same basic products being sold in the marketplace. ##### [944-20-05-23](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:6c9aa6aba79d38809d1ac83d04e88e86a37930659384ecbf624b36f1b3fafe16 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/). ##### [944-20-05-24](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:7ffa0302bebc380060b1e24b629dd18244d1c28b15d6e69be4efa81535711ce7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance entities have developed a wide range of variable annuity contracts with nontraditional features. Nontraditional features of traditional variable annuity contracts result in a sharing of investment risk between the issuer and the holder. Nontraditional variable annuity contracts provide for some sort of minimum guarantee of the account value at a specified date. This minimum guarantee may be guaranteed through a minimum accumulation benefit or a guaranteed account value floor. For example, the floor guarantee might be that, at a specified anniversary date, the contract holder will be credited with the greater of the following: 1. a The account value, as determined by the separate account assets 2. b All deposits that are made, plus 3 percent interest compounded annually. ##### [944-20-05-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:d1920138689d1c5ca480780f2f8fef6ed2ae2a7b58f7489f6c0c49cebf3e8bbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. While these nontraditional variable annuity contracts have distinguishing features, they possess a common characteristic: the investment risk associated with the assets backing the contract is shared by the issuer and the policyholder. That is, in contrast to traditional variable annuity contracts, the investment risk is, by virtue of the nontraditional product features, allocated between the two parties and not borne entirely by only one of the parties (the holder in the case of a traditional variable annuity contract). ##### [944-20-05-26](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:6f0746fdb62b0d385070d0d2739b38872f4e61a77651960566c9ae217fc45eff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Variable annuity contracts](https://asc.understandingaccounting.org/glossary/v/#variable-annuity-contract "An annuity in which the amount of payments to be made are specified in units, rather than in dollars. When payment is due, the amount is determined based on the value of the investments in the annuity fund.") and variable life insurance contracts provide the contract holder with a number of investment alternatives. Many of those investment alternatives will be separate account funds, such as equity, aggressive equity, high-grade corporate bond, mortgage loan, real estate, and similar funds. Other investment alternatives could include [guaranteed investment options](https://asc.understandingaccounting.org/glossary/g/#guaranteed-investment-option "Component of a variable contract that guarantees a specific rate of performance.") and market value adjusted separate accounts as well as a general account fixed interest rate option. ##### [944-20-05-27](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:b89fd3f8cff38cf7bed4d293d2ff3a7f2d9ae2f60338a0ee2d5ef91e0ed1c817 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remainder of this guidance addresses the following annuity contracts and features: 1. a Market value annuities 2. b Minimum guaranteed death benefit 3. c Minimum guaranteed income benefit 4. d No-lapse guarantee 5. e Sales inducements to contract holders 6. f Other features. ##### [944-20-05-28](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:aead9dfa8be2e895eb95e9f1070add235d92112761a9180157618354c2ca0273 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [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.") provides for a return of principal plus a fixed rate of return if held to maturity (book value), or, alternatively, a market-adjusted value if surrendered before maturity. The product is also sometimes referred to as a market value adjusted annuity or a modified guaranteed annuity. The product typically provides for a single premium that may be invested for a specified term, with typical terms of 1 to 10 years. A fixed interest rate is specified in the contract based on the term selected. The contract contains surrender values that are based on a market value adjustment formula if held for shorter periods. The formula typically is based on current crediting rates being offered for new market value annuity purchases with terms equal to the remaining term to maturity. The market value adjustment may be positive or negative, depending on crediting rates at surrender. ##### [944-20-05-29](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:99eb926171937fb98d2d412c08282bdec88b36a819a579961f222ef46315ac2e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A common feature in variable annuities is a [minimum guaranteed death benefit](https://asc.understandingaccounting.org/glossary/m/#minimum-guaranteed-death-benefit "A feature in an annuity, life insurance, or similar contract that provides that in the event of an insured's death, the beneficiary (or insurer in the case of a reinsurance contract) will receive the higher of the current account balance of the contract or another amount defined in the contract."), such as a [return of premium death benefit](https://asc.understandingaccounting.org/glossary/r/#return-of-premium-death-benefit "A death benefit equal to the total deposits made by the contract holder less any withdrawals.") or basic minimum guaranteed death benefit. Although the return-of-premium minimum guaranteed death benefit has become increasingly common in variable annuities, the trend has been for insurers to offer minimum guaranteed death benefits with more extensive benefit guarantees, such as any of the following: 1. a [Roll-up death benefit](https://asc.understandingaccounting.org/glossary/r/#roll-up-death-benefit "A death benefit equal to the total of deposits made to the contract less an adjustment for partial withdrawals, accumulated at a specified interest rate."). A death benefit equal to the total of deposits made to the contract less an adjustment for partial withdrawals, accumulated at a specified interest rate. 2. b Reset death benefit. A death benefit equal to the account balance on a specified anniversary date adjusted for deposits less partial withdrawals since the specified anniversary date. 3. c [Ratchet death benefit](https://asc.understandingaccounting.org/glossary/r/#ratchet-death-benefit "A death benefit equal to the highest account balance among prior specified anniversary dates adjusted for deposits less partial withdrawals since the specified anniversary date."). A death benefit equal to the highest account balance among prior specified anniversary dates adjusted for deposits less partial withdrawals since the specified anniversary date. ##### [944-20-05-30](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:a4bac908a9c3e3bfebed7f524705492de8a5d5caede6855cf9f1d2d148240ab6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some annuities may provide for potential benefits in addition to the account balance, payable only if annuitization is elected. For example, some deferred variable annuities provide that, regardless of separate account performance, a guaranteed minimum amount is available to annuitize after a specified period, thereby providing 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.") if the contract holder elects to annuitize. This benefit is in addition to the guaranteed minimum annuity interest rate traditionally offered. ##### [944-20-05-31](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:6de4a6482cfa6224f7a7570d032ee9b18333be492a8dc0c9bbd34fbdb897beaf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Another insurance benefit feature is a no-lapse guarantee, in which the insurance entity agrees to keep the insurance policy [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.") even if the account balance is not sufficient to pay the [cost of insurance](https://asc.understandingaccounting.org/glossary/c/#cost-of-insurance "Amounts expected to be assessed for mortality."). ##### [944-20-05-32](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:6e388c048173d40609e4ad7967229b193d438d9260b399541149d8e6dcd59f3a 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.") to contract holders may be offered with fixed and variable life insurance and annuity contracts. Sales inducements to contract holders typically can be characterized as one of the following types: 1. a Immediate bonuses. In the case of the [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. The contract holder account balance is increased for the full amount of the immediate bonus on the date that the bonus is contractually granted. 2. b Persistency bonuses. 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 at that date. 3. c [Enhanced-crediting-rate bonuses](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."). In an enhanced crediting rate sales inducement, 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. Pursuant to the contract, the enhanced crediting rate is applicable for a limited period of time, after which the rate is reset under the contractual provisions, typically at the discretion of the insurance entity. ##### [944-20-05-33](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:c4d38ca877550a5e842e9e09177013a13ff09d509123bbc320fe2a756fd1906c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A deferred annuity may provide multiple crediting rates throughout the life of the contract depending on whether the contract holder elects to terminate or annuitize the contract. An example is a contract that applies a lower rate to funds deposited if the contract holder elects to surrender the contract for cash, and a higher rate if the contract holder elects to annuitize, often referred to as 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."). ##### [944-20-05-34](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:1b9da615915ff22363789691c3b08037981deefe23ef2e0fc5df9de92e2bbee0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contracts also exist that potentially may be viewed as providing multiple account balances; for example, 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. ##### [944-20-05-35](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:365518e6a0e70eff77bab65d3ce1ab8401a70d1d0b7a1c071daad61fe20b0f7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). #### Participating Life Insurance Contracts ##### [944-20-05-36](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:a84e548c48aabe5e8538cbf52f91371b020960aa27f194d3180b36e932ac7039 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Mutual life insurance entities primarily issue participating life insurance contracts. Those contracts provide policyholders with certain guaranteed benefits and allow policyholders to share in the experience of the entity through dividends. Dividends are paid periodically and generally reflect the experience and performance of the entity for investment activity, mortality experience, and contract administration for each particular class of contracts. The determination and distribution of dividends distinguish participating life insurance contracts from nonparticipating life insurance contracts. #### Group Participating Pension Contracts ##### [944-20-05-37](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:4bb0698959dbf3970181e9c25a5e404d7bb6ba034ba11b903a75ddbce68c638d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Group participating pension contracts](https://asc.understandingaccounting.org/glossary/g/#group-participating-pension-contracts "Contracts between insurance entities and pension plans that have account balance crediting provisions that give the contract holder the total return based on a referenced pool of assets over the life of the contract either through crediting rates or termination adjustments.") between insurance entities and pension plans have account balance crediting provisions that give the contract holder the total return based on a referenced pool of assets over the life of the contract either through crediting rates 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. The ongoing crediting to the account balance may be based on statutory, cash basis, or book value returns. The contracts may not have a maturity date but specify that upon surrender any remaining return on the referenced pool of assets on the termination date not yet credited will be a termination adjustment. The referenced pool of assets may include mortgage loans, real estate, and equity and debt securities. ### Reinsurance Contracts ##### [944-20-05-38](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:2029e30dda00542aa60b49395a2d4184ecdde70c496a5e18576548ce60e0e5b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections provide 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, including those that reinsure short-duration insurance contracts and long-duration insurance contracts. ##### [944-20-05-39](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:41cdc8da04894e8c24f4e44ce56f4e0b0b9b5651cd2d42a9a9016de82acc2532 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurers may enter into various types of contracts described as reinsurance, including those commonly referred to as [fronting arrangements](https://asc.understandingaccounting.org/glossary/f/#fronting-arrangements "Reinsurance arrangements in which the ceding entity issues a policy and reinsures all or substantially all of the insurance risk with the assuming entity."). ##### [944-20-05-39A](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-39A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:8b9331e75847d3cdaa69fd15d575cb91fb630a25194d2017d44ad507d5827125 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity may purchase reinsurance to reduce exposure to losses from the events it has agreed to insure, similar to a direct insurance contract purchased by an individual or noninsurance entity. The insurance entity also may contract with a reinsurer to facilitate the writing of contracts larger than those normally accepted, to obtain or provide assistance in entering new types of business, or to accomplish tax or regulatory objectives. ##### [944-20-05-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:3f43e93b234a89ff54f7865792e6dee15f4026529e2af62cac74b4bf9eac8b69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance provides indemnification against loss or liability from specified events and circumstances that may occur or be discovered during a specified period. In exchange for a payment from the policyholder, an insurance entity agrees to pay the policyholder if specified events occur or are discovered. Similarly, the insurance entity may obtain indemnification against claims associated with contracts it has written by entering into a reinsurance contract with another insurance entity (the [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") or assuming entity). The insurer (or [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.")) pays (cedes) an amount to the reinsurer, and the reinsurer agrees to reimburse the insurer for a specified portion of claims paid under the reinsured contracts. However, the policyholder usually is unaware of the reinsurance arrangement, and the insurer ordinarily is not relieved of its obligation to the policyholder. The reinsurer may, in turn, enter into reinsurance contracts with other reinsurers, a process known as [retrocession](https://asc.understandingaccounting.org/glossary/r/#retrocession "The circumstance in which a reinsurer, in turn, enters into reinsurance contracts with other reinsurers."). #### Multiple-Year Retrospectively Rated Reinsurance Contract ##### [944-20-05-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:63ded72f09a435693f535a2403fe5d3f9cf0d402fbc0c52250c9bdd25906f19f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many short-duration insurance and reinsurance contracts have retrospective rating provisions. A retrospectively rated contract is a multiple-year contract in which events in one period of the contract create rights and obligations in another. For example, if losses above a certain level occur in one contract year, premiums increase in future years unless the ceding entity compensates the reinsurer through a settlement adjustment. The ceding entity has an obligation because it must pay either the settlement adjustment or the higher future premiums. ##### [944-20-05-42](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:12887aed0ef20ce3f2ff94d36fce37a1155aac44bf461e1797866e1a55dcf521 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurer (ceding entity) may enter into a multiple-year retrospectively rated reinsurance contract with a reinsurer (assuming entity). Examples of these contracts may include transactions referred to as funded catastrophe covers. These contracts include a retrospective rating provision that provides for at least one of the following based on contract experience: 1. a Changes in the amount or timing of future contractual cash flows, including premium adjustments, settlement adjustments, or refunds to the ceding entity 2. b Changes in the contract's future [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."). ##### [944-20-05-43](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:0c6e2f896d963ae21c39b17ed212690e40f76e8ccbd45256d61947485ace8de4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A critical distinguishing feature of these contracts is that part or all of the retrospective rating provision is obligatory such that the retrospective rating provision creates future rights and obligations as a result of past events. Therefore, a retrospectively rated contract that could be cancelled without further obligation (because it does not create rights and obligations that will be realized in a future period) is excluded. ### Financial Guarantee Insurance Contracts ##### [944-20-05-44](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:e708085962b8ab555c768d98e0ea6d5382adca09e78ff682506083905c46bc7e 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 [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"). Examples of such financial obligations include a municipal bond or an asset-backed security. ##### [944-20-05-45](https://asc.understandingaccounting.org/asc/944/20/#944-20-05-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:01.505Z to 2026-09-10T02:15:01.505Z Record version: sha256:44e7badf1975196832db14398a7fd108be62df4ba418ff471be99ce06d17f8ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although the direct or indirect beneficiary of the contract is the holder of the insured financial obligation, the holder of the financial guarantee insurance contract (policyholder) will vary. In some cases, the policyholder will be the issuer (for example, a municipality or a corporation) of the insured financial obligation because it is seeking to increase the marketability of the insured financial obligation while reducing future interest costs (by attaining a higher credit standing for the insured financial obligation through the financial guarantee insurance contract). In other cases, the policyholder will be both the holder of the insured financial obligation and beneficiary because it has purchased a financial obligation in the secondary market and seeks to protect itself from a financial loss in the event of a default. Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:1ae652847566b948252b4d33852a0ffeb946793338c504dfb5bc98f51a809459 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/944/20/#10-objectives) SEC content: no ##### [944-20-10-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:ddc7827471389197bc3162dc6038c8d8c26936581ef363844128b2d81d31c2c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic establishes a framework for accounting by insurance entities based on the nature of insurance contracts rather than type of insurance entity. ##### [944-20-10-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:5375270b19ab6e147950de867cea09185e2ff7b949cef6bd058a8e3f5bccef25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Life insurance [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.") encompasses the concepts of amounts at risk and the relative probability of [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.") events. ##### [944-20-10-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:63ffa8ec89664925a4d4acd75b27906ce3f73b2002a053411eb6bd9b65f678f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The insurance model does not override, nor is it inconsistent with, the basic recognition and measurement principles of Subtopic 450-20. Rather, the insurance model is a specialized application of those principles that estimates and allocates revenues and costs that have a future economic benefit over the period in which services are provided or received. For example, that Subtopic prohibits recognition of a loss unless it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that a loss has been incurred, and requires recognition of the full amount of a loss that has been incurred in the period of the loss. Likewise, paragraphs [944-40-25-32](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-32), [944-60-25-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-2), [944-60-25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-9), [944-60-30-1 through 30-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-30-1) , and [944-60-35-3 through 35-5](https://asc.understandingaccounting.org/asc/944/60/#944-60-35-3) require recognition of losses in the period the loss occurs. ### Reinsurance Contracts #### Overall ##### [944-20-10-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:40a598138921f56e79a73facfe0f0d95bcebe3705b6c528bfe98b6a61e880a80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A principal objective of the Reinsurance Contracts Subsections of this Subtopic is to account for an agreement with a [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") according to its substance. Difficulty in evaluating a contract under the Reinsurance Contracts Subsections of this Subtopic is an indication that the contract's form and substance may differ. For example, if complicated adjustable features or options are present in a contract, close analysis may be required to determine the effect of those contractual provisions on risk transfer. #### Multiple-Year Retrospectively Rated Contracts ##### [944-20-10-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:4206394b8a33f6d4a5d084d6b9baf2a2f1288a82a1a5e7c618b1c621d0de8b01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A retrospectively rated contract is a multiple-year contract in which events in one period of the contract create rights and obligations in another. The principal issues in accounting for a multiple-year retrospectively rated contract involve how to recognize and measure assets and liabilities resulting from the obligatory retrospective rating provisions. While it may be difficult for some types of retrospectively rated contracts to pass the risk transfer test, the recognition and measurement questions are present regardless of whether the contract transfers risk. In fact, the questions become clearly evident with contracts that meet the risk transfer test and are accounted for as [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."). Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a775426c09ddc2293e8ba943a69d825f8b8ff6de3021b719ed3cd9dde4497f25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [944-20-15-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:ec98564ef16b0f8d0977ee0d927d863c519610b1afeccabb9471abdae671648d 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 other considerations noted below. #### Other Considerations ##### [944-20-15-1A](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-1A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:77377e5b6c2af8361feb6cd414c0f7fe1cbf4a4b2173ee0d53e3ac39c491f56c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For instruments and transactions within its scope, the guidance in the Financial Guarantee Insurance Contracts Subsections take precedence to other guidance in this Subtopic. ##### [944-20-15-1B](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-1B) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:ed4ade5e9e2cba0c547c6e8c5446da9da2ed83a1508bd27e5a498e30cbbaa18e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [720-20-25-1](https://asc.understandingaccounting.org/asc/720/20/#720-20-25-1) states that, to the extent that an insurance contract 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.") contract does not, despite its form, provide for indemnification of the insured or 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.") by the issuer or reinsurer against loss or liability, the premium paid less the amount of the premium to be retained by the insurer or reinsurer shall be accounted for as a deposit by the insured or the ceding entity. See paragraph [340-30-05-1](https://asc.understandingaccounting.org/asc/340/30/#340-30-05-1) for guidance on applying the deposit method of accounting. For guidance on long-duration contracts that do not incorporate significant insurance risk, see paragraph [944-20-15-14](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-14). ##### [944-20-15-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:59d4be6cf2571dc48119286e077071c2946386057ace7b4903af2f9bc2fdef62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance contracts, for purposes of this Subtopic, shall be classified as short-duration contracts (see paragraph [944-20-15-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-7)) or long-duration contracts (see paragraph [944-20-15-10](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-10)) depending on whether the contracts are expected to 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 an extended period. ##### [944-20-15-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:4fa7235cc130b6de23b89a177c020334f9797fa584df2314f7b3cf67254a0efb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain guidance in the Long-Duration Subsections in this Subtopic (and other Subtopics within the Financial Services—Insurance Topic) applies only to certain long-duration participating life insurance contracts of mutual life insurance entities and certain stock life insurance entities. For purposes of that guidance: 1. a Mutual life insurance entities include [assessment entities](https://asc.understandingaccounting.org/glossary/a/#assessment-entities "An insurance entity that sells insurance to groups with similar interests, such as church denominations or professional groups. Some assessment entities also sell insurance directly to the general public. If funds are not sufficient to pay claims, then assessments may be made against members."), [fraternal benefit societies](https://asc.understandingaccounting.org/glossary/f/#fraternal-benefit-society "An entity that provides life or health insurance to its members and their beneficiaries. Policyholders normally participate in the earnings of the society, and insurance contracts stipulate that the society has the power to assess its members if the funds available for future policy benefits are not sufficient to provide for benefits and expenses."), and stock life insurance subsidiaries of mutual life insurance entities. 2. b Participating life insurance contracts denote those that have both of the following characteristics: 1. 1 They are long-duration participating contracts that are expected to pay [dividends to policyholders](https://asc.understandingaccounting.org/glossary/d/#dividend-to-policyholders "Nonguaranteed amounts distributable to policyholders of participating life insurance contracts and based on actual performance of the insurance entity as determined by the insurer. Under various state insurance laws, dividends are apportioned to policyholders on an equitable basis. The dividend allotted to any contract often is based on the amount that the contract, as one of a class of similar contracts, has contributed to the income available for distribution as dividends. Dividends to policyholders include annual policyholder dividends and terminal dividends.") based on actual experience of the insurance entity. 2. 2 [Annual policyholder dividends](https://asc.understandingaccounting.org/glossary/a/#annual-policyholder-dividends "Amount of dividends to policyholders calculated and paid each year, representing the policyholders' share of divisible surplus.") are paid in a manner that both: 1. a Identifies divisible surplus 2. b Distributes that surplus in approximately the same proportion as the contracts are considered to have contributed to divisible surplus (commonly referred to in actuarial literature as the contribution principle). ##### [944-20-15-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:3479de451f94a4c120d398c2e5817746708c6aca8daaeb00d57f844b7fc2ff27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-11](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-11) states that stock life insurance entities with participating life insurance contracts that meet certain conditions are permitted to account for those contracts in accordance with the Long-Duration Contracts Subsections of this Subtopic. That paragraph explains that the same accounting policy shall be applied consistently to all those participating life insurance contracts. ### Short-Duration Contracts #### Overall Guidance ##### [944-20-15-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:89ad6b1d8cc261fc0532599d5abc0bc6a9b1e6528a4ac81b35ae3789192bd1f0 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/944/20/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications and exceptions noted below. #### Instruments ##### [944-20-15-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a7db8cae3840863b9b9a78715ed2f747a90869357feece465eeee870a7bc6253 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. ##### [944-20-15-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:2e7f18c24f1946af6698f01d4a01ff2634e8ffc97006cb23c0d9f2313c484de2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-2) states that insurance contracts, for purposes of this Subtopic, shall be classified as short-duration contracts or long-duration contracts depending on whether the contracts are expected to 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 an extended period. The factors that shall be considered in determining whether a particular contract can be expected to remain in force for an extended period are as follows for a short-duration contract: 1. a The contract provides insurance protection for a fixed period of short duration. 2. b The contract enables the insurer to cancel the contract or to adjust the provisions of the contract at the end of any [contract period](https://asc.understandingaccounting.org/glossary/c/#contract-period "The period over which insured events that occur are covered by insurance or reinsurance contracts. Commonly referred to as the coverage period or period that the contracts are in force."), such as adjusting the amount of premiums charged or [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.") provided. ### Long-Duration Contracts #### Overall Guidance ##### [944-20-15-8](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:03aba7343d536348297d84eb8f4e738da1e60aeae7c6d5bb83461d3a905cadff 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/944/20/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications and exceptions and other considerations noted below. #### Instruments ##### [944-20-15-9](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:3c93d77c9bacc622a3c49de38168e0bdb6fa3e842e3821edc875adeefcefa0f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Long-Duration Contracts Subsections of this Subtopic applies only to long-duration contracts. ##### [944-20-15-10](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:0650b1685ea9cff5b9d88518f5aa2880284dd019e7d3206a7feb52a784635b1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-2) states that insurance contracts, for purposes of this Subtopic, shall be classified as short-duration contracts or long-duration contracts depending on whether the contracts are expected to 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 an extended period. The factors that shall be considered in determining whether a particular contract can be expected to remain in force for an extended period are as follows for a long-duration contract: 1. a The contract generally is not subject to unilateral changes in its provisions, such as a noncancelable or guaranteed renewable contract. 2. b The contract requires the performance of various functions and services (including insurance protection) for an extended period. ##### [944-20-15-11](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:6a3260125d1ccf60b78bb05f8a1c30a31402662a9e787ab9d2169ac273836fef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Long-Duration Contracts Subsections of this Subtopic applies, in part, to the following classes of long-duration contracts issued: 1. a Universal life-type contracts, that is, long-duration insurance contracts with terms that are not fixed and guaranteed 2. b [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."), including limited-payment participating and limited-payment nonguaranteed-premium contracts that are not, in substance, universal life-type contracts 3. c Except as noted in paragraph [944-20-15-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-3), participating life insurance contracts 4. d [Whole-life contracts](https://asc.understandingaccounting.org/glossary/w/#whole-life-contract "Insurance that may be kept in force for a person's entire life by paying one or more premiums. It is paid for in one of three different ways: Ordinary life insurance (premiums are payable as long as the insured lives) Limited-payment life insurance (premiums are payable over a specified number of years) Single-premium life insurance (a lump-sum amount paid at the inception of the insurance contract). The insurance contract pays a benefit (contractual amount adjusted for items such as policy loans and dividends, if any) at the death of the insured. Whole-life insurance contracts also build up nonforfeiture benefits."), that is, insurance contracts that may be kept in force for a person's entire life by paying one or more premiums 5. e [Term life insurance](https://asc.understandingaccounting.org/glossary/t/#term-life-insurance "Insurance that provides a benefit if the insured dies within the period specified in the contract. The insurance is for level or declining amounts for stated periods, such as 1, 5, or 10 years, or to a stated age. Term life insurance generally has no loan or cash value.") contracts, that is, insurance contracts that provide a benefit if the insured dies within the period specified in the contract. Stock life insurance entities with participating life insurance contracts described in (c) are permitted to account for those contracts in accordance with the Long-Duration Contracts Subsections of this Subtopic. The same accounting policy shall be applied consistently to all those participating life insurance contracts. ##### [944-20-15-12](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:caa98e2ed1e838894f6e81d8fb0dc71ecb3b4ae32992010a37b51b1e062f014d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If insurance contracts have characteristics significant to the contracts cited in (a) or (b) of the preceding paragraph those contracts are within the scope of the Long-Duration Contracts Subsections of this Subtopic. For example, universal disability contracts that have many of the same characteristics as universal life-type contracts, with the exception of providing disability benefits instead of life insurance benefits, shall be accounted for in a manner consistent with universal life-type contracts. ##### [944-20-15-13](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:bed2401f33d6ef120b45b603251ad87f2131184a626d9ccbbae716df62986d63 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Subsections of this Subtopic also apply to certain contracts or features not covered elsewhere in the Codification, including asset, liability, revenue, and expense recognition. Examples of such contracts or features include the following: 1. a Contracts offered through an insurance entity's separate accounts 2. b Variable annuities with a [minimum guaranteed death benefit](https://asc.understandingaccounting.org/glossary/m/#minimum-guaranteed-death-benefit "A feature in an annuity, life insurance, or similar contract that provides that in the event of an insured's death, the beneficiary (or insurer in the case of a reinsurance contract) will receive the higher of the current account balance of the contract or another amount defined in the contract.") or 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.") 3. c Variable annuities with 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.") 4. d Contracts providing multiple account balances 5. e Contracts with [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."). ##### [944-20-15-14](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:fead288f6982d371d20168c60ce747baacd28e7e1f7a06ecb937334be3ee0f53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Long-Duration Subsections of this Subtopic does not apply to [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.") issued by an insurance entity that do not incorporate significant [insurance risk](https://asc.understandingaccounting.org/glossary/i/#insurance-risk "The risk arising from uncertainties about both underwriting risk and timing risk. Actual or imputed investment returns are not an element of insurance risk. Insurance risk is fortuitous; the possibility of adverse events occurring is outside the control of the insured.") and shall not be accounted for as insurance contracts. See paragraph [944-825-25-2](https://asc.understandingaccounting.org/asc/825/944/#825-944-25-2) for investment contracts. #### Other Considerations ##### [944-20-15-15](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:141e9d0427a6e23f592f14b9bf652ef733b9f38674a6826795fa00141d7c6ea0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses the scope application of the Long-Duration Subsections of this Subtopic: 1. a Distinguishing investment contracts from universal life-type insurance contracts 2. b Universal life-type contracts 3. c Embedded derivatives. ##### [944-20-15-16](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:6f5e2125fcaded16c7bb122ce1e04d3f40c8384afa2e5011f2dd5035f14d6c23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place.") or [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment.") risk is present if, under the terms of the contract, the entity is required to make payments or forego required premiums contingent on the death or disability (in the case of life insurance contracts) or the continued survival (in the case of annuity contracts) of a specific individual or group of individuals. ##### [944-20-15-17](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:b867ec8ff3c8feeba896903b56103e5f191bac8b274db168b31f1c9992bcc2f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract provision that allows the holder of a long-duration contract to purchase an annuity at a guaranteed price on settlement of the contract does not entail a [mortality risk](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.") until the right to purchase is executed. If purchased, the annuity is a new contract to be evaluated on its own terms. ##### [944-20-15-18](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:8ee1bc4a4c60bc4f2315df10d11d82a7574989d2495921440aa4ff47795808fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Annuity contracts may require the insurance entity to make a number of payments that are not contingent on the survival of the beneficiary, followed by [life-contingent payments](https://asc.understandingaccounting.org/glossary/l/#life-contingent-payments "Payments that are made if the beneficiary is alive when the payments are due."). ##### [944-20-15-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:bee90753231b842b16d7de528e4cae3339c9adb88bafe99d71303c4f16fbeab7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Such contracts are considered insurance contracts under this Subtopic unless either of the following conditions exist: 1. a The probability that life-contingent payments will be made is [remote](https://asc.understandingaccounting.org/glossary/r/#remote "The chance of the future event or events occurring is slight."). 2. b The present value of the expected life-contingent payments relative to the present value of all expected payments under the contract is insignificant. ##### [944-20-15-20](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:8b471ed67a14127bf3cc4dc43148572454d0acbffbb8c72fcf890bcb796871cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To determine the scope application for a contract that contains death or other insurance benefit features, the insurance entity shall first determine whether the contract is an investment contract or insurance contract. Classification of a contract as an investment contract or as an insurance contract shall be made at contract inception, and the classification shall not be reassessed 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. ##### [944-20-15-21](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:82daef5fd6e0ef9865188c1aae01315fbce8edd3cb3bd3385e9f23c74d17745b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the mortality and morbidity risk associated with insurance benefit features offered in a contract is deemed to be nominal—that is, a risk of insignificant amount or remote probability—the contract shall be classified as an investment contract; otherwise, it shall be considered an insurance contract. There is a rebuttable presumption that a contract has significant mortality risk if the additional insurance benefit would vary significantly in response to capital markets volatility. ##### [944-20-15-22](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:4bfb7deed4fa75b5a4ddbab3cdc22a15db1880ff067f812507eee327375e8147 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the mortality or morbidity risk is other than nominal and the fees assessed or insurance benefits are not fixed and guaranteed, the contract should be classified as a universal life-type contract by the insurance entity. ##### [944-20-15-23](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:0e09f3e91303f0402466bfd2567d6a70427fbc7d779bdf3d458b30f2ce251ca3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the fees assessed on a contract and insurance benefits provided by the contract are fixed and guaranteed or if the contract is short duration, the contract should be classified as a traditional long-duration contract or short-duration contract, respectively. ##### [944-20-15-24](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a2bae51f5ea7e7b523ad67ed2c56eae2133c5de8288f978f9a92e9ecd9a806d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The determination of the significance of mortality or morbidity risk shall be based on a comparison of the following amounts: 1. a Excess payments. The present value of expected excess payments to be made under insurance benefit features—that is, insurance benefit amounts 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.") in excess of the account balances. 2. b Revenue. The present value of all amounts expected to be assessed against the contract holder and the expected investment margin. ##### [944-20-15-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:5fe5b95a925364da5d07b4f5671bfad5da07b9e8f98f89269140a7ef9fc5722d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In performing the analysis, an insurance entity shall consider both frequency and severity under a full range of scenarios that considers the volatility inherent in the assumptions, rather than making a best estimate using one set of assumptions. For example, if the [annuity contract](https://asc.understandingaccounting.org/glossary/a/#annuity-contract "A contract that provides fixed or variable periodic payments made from a stated or contingent date and continuing for a specified period, such as for a number of years or for life.") is a [variable annuity contract](https://asc.understandingaccounting.org/glossary/v/#variable-annuity-contract "An annuity in which the amount of payments to be made are specified in units, rather than in dollars. When payment is due, the amount is determined based on the value of the investments in the annuity fund."), the insurance entity shall consider a range of fund return scenarios. If considering a range of scenarios, the insurance entity shall consider historical investment returns, the volatility of those returns, and expected future returns, as applicable. ##### [944-20-15-26](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:95986c932648e12c214b101002f59ca239ab0a717ab14eceed3e7dab7541bb82 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of the scope application of the Long-Duration Subsections of this Subtopic, universal life-type contracts include contracts that provide either death or annuity benefits and are characterized by any of the following features: 1. a One or more of the amounts assessed by the insurer against the policyholder—including amounts assessed for mortality [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."), contract administration, initiation, or surrender—are not fixed and guaranteed by the terms of the contract. 2. b Amounts that accrue to the benefit of the policyholder—including interest accrued to policyholder balances—are not fixed and guaranteed by the terms of the contract. 3. c Premiums may be varied by the policyholder within contract limits and without consent of the insurer. ##### [944-20-15-27](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:cb23a1f5ae20e30e832bc9364217f483b2fcf4c612b2f5ef9908c03bca11fd65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A participating or nonguaranteed-premium contract is within the scope of the Long-Duration Subsections of this Subtopic if the terms of the contract suggest that it is, in substance, a universal life-type contract. The determination that a contract is in substance a universal life-type contract requires judgment and a careful examination of all contract terms. ##### [944-20-15-28](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:ca8165cba89c3f1691b14b4269e909aa165277abc0bba741003554de45af6298 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following two paragraphs describe some circumstances in which a participating or nonguaranteed-premium contract shall be accounted for as a universal life-type contract. The provisions of the following two paragraphs are not intended to be either all-inclusive or limiting. Limited-payment participating and limited-payment nonguaranteed-premium contracts that are not, in substance, universal life-type contracts are limited-payment contracts because they are not conventional forms of participating or nonguaranteed-premium contracts. ##### [944-20-15-29](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:60c89624d8dc1ba2632701db856faac4f62b9fb679fe80d1c95c4e884d7ac7c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A participating contract that includes any of the following features shall be considered a universal life-type contract: 1. a The policyholder may vary premium payments within contract limits and without consent of the insurer. 2. b The contract has a stated account balance that is credited with policyholder premiums and interest and against which assessments are made for contract administration, mortality coverage, initiation, or surrender, and any of the amounts assessed or credited are not fixed and guaranteed. 3. c The insurer expects that changes in any contract element will be based primarily on changes in interest rates or other market conditions rather than on the experience of a group of similar contracts or the entity as a whole. ##### [944-20-15-30](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:e08965ad5a05512a80880b0945e2a45dad19c18c9e3ba0c38cfdc725e2d47dc7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A nonguaranteed-premium contract that includes either of the features (b) or (c) in the preceding paragraph shall be considered a universal life-type contract. ##### [944-20-15-31](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:9f38ed9aa45661034a1c8102870756a7bd5cfdd84d9fc2ac7b395c7dfded7c1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on accounting for embedded derivatives contained in nontraditional and other contracts, see Subtopic 815-15. ### Reinsurance Contracts #### Overall Guidance ##### [944-20-15-32](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:e64b87f7859cc18c219e62a41f8f35bbe797e2b6cb744d7eb56a852a90e4bb60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Reinsurance Contracts Subsections follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of this Section, with specific entity and instrument qualifications and exceptions noted below. #### Entities ##### [944-20-15-33](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:8744ae3e44741d92a5c12ec8885385b65d330ff0c7174f6f58e4b8ac63824bd8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Servicing carriers for involuntary risk pools also are included in the scope of the Reinsurance Contracts Subsections of this Subtopic because the servicing carrier business is indistinguishable effectively from other types 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.") for accounting purposes. #### Instruments ##### [944-20-15-34](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:60759e161626b6de23656373f12a29d22bcd94daba2c4937e2364a8570f9b9af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The financial reporting for a contract with a [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") depends on whether the contract is considered to be reinsurance for purposes of applying this Subtopic. Financial reporting for a reinsurance contract also depends on whether the contract reinsures short-duration or long-duration insurance contracts and, for short-duration contracts, on whether the contract is considered [prospective reinsurance](https://asc.understandingaccounting.org/glossary/p/#prospective-reinsurance "Reinsurance in which an assuming entity agrees to reimburse a ceding entity for losses that may be incurred as a result of future insurable events covered under contracts subject to the reinsurance. A reinsurance contract may include both prospective and retroactive reinsurance provisions.") or [retroactive reinsurance](https://asc.understandingaccounting.org/glossary/r/#retroactive-reinsurance "Reinsurance in which an assuming entity agrees to reimburse a ceding entity for liabilities incurred as a result of past insurable events covered under contracts subject to the reinsurance. A reinsurance contract may include both prospective and retroactive reinsurance provisions."). For contracts that reinsure long-duration contracts, characteristics of the reinsurance contract determine whether the contract is short- or long-duration. ##### [944-20-15-34A](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:340a85fafbc4935d79a1c4f130ec091c592afd98e6203a93b35e80f850a5f0a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Determining whether a contract that reinsures a long-duration insurance contract is long-duration or short-duration in nature is a matter of judgment, considering all of the facts and circumstances. For example, some contracts described as yearly renewable term may be, in substance, long-duration contracts, depending on their terms and how they are priced. ##### [944-20-15-34B](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34B) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:92fd494e81dc9301cbf9214906036aa90cf70211451c31419c04ce7d265634e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The distinction between prospective and [retroactive reinsurance](https://asc.understandingaccounting.org/glossary/r/#retroactive-reinsurance "Reinsurance in which an assuming entity agrees to reimburse a ceding entity for liabilities incurred as a result of past insurable events covered under contracts subject to the reinsurance. A reinsurance contract may include both prospective and retroactive reinsurance provisions.") contracts is based on whether the contract reinsures future or past insured events covered by the underlying contracts. For example, in occurrence-based insurance, the insured event is the occurrence of a loss covered by the insurance contract. In claims-made insurance, the insured event is the reporting to the insurer, within the period specified by the policy, of a [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") for a loss covered by the insurance contract. A claims-made reinsurance contract that reinsures claims asserted to the reinsurer in a future period as a result of insured events that occurred before entering into the reinsurance contract is a retroactive contract. ##### [944-20-15-34C](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34C) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:290f32ab7f7bcb5db278e95d26ce68fd1f93421b69717ac3c1cee6a21912d2ce Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reinsurance contracts may include both prospective and retroactive provisions. For example, a reinsurance contract that reinsures liabilities relating to contracts written during one or more prior years also may reinsure losses on contracts to be written during one or more future years. Reinsurance also may be acquired some time after the reinsured contract has been written, but before the close of the [coverage period](https://asc.understandingaccounting.org/glossary/c/#coverage-period "See Contract Period.") for that contract, and be made effective as of the beginning of the [contract period](https://asc.understandingaccounting.org/glossary/c/#contract-period "The period over which insured events that occur are covered by insurance or reinsurance contracts. Commonly referred to as the coverage period or period that the contracts are in force."). This may result in a reinsurance contract with prospective and retroactive provisions that relate to a single contract year. It is not uncommon for a reinsurance arrangement to be initiated before the beginning of a policy period but not finalized until after the policy period begins. Whether there was agreement in principle at the beginning of the policy period and, therefore, the contract is substantively prospective depends on the facts and circumstances. ##### [944-20-15-35](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:39a7258b66f49a591293a4472bd890bf751f5eabc3f3dd084c2c2012f235c4b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [944-605-30-4](https://asc.understandingaccounting.org/asc/605/944/#605-944-30-4) and [944-605-35-14 through 35-15](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-14) state that reinsurance of long-duration contracts can be either short- or long-duration. The fact that no similar guidance is provided for short-duration contracts is intentional, because it is not possible to reinsure more risk than was originally insured under the primary insurance contracts. ##### [944-20-15-36](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a7308172cbd86e62475ae714b925a4d69495a5e5160cb532669f882e4864683d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [944-20-15-37](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:73bef3f635908fe00bf9c1ac98149d268287d5c906f27ce243b1d0a15d19b54b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Reinsurance Subsections of this Subtopic applies to the following instruments: 1. a Any transaction, regardless of its form, whose individual terms indemnify an insurer against loss or liability relating to [insurance risk](https://asc.understandingaccounting.org/glossary/i/#insurance-risk "The risk arising from uncertainties about both underwriting risk and timing risk. Actual or imputed investment returns are not an element of insurance risk. Insurance risk is fortuitous; the possibility of adverse events occurring is outside the control of the insured."). That is, all contracts, including contracts that may not be structured or described as reinsurance, shall be accounted for as reinsurance if those conditions are met, including reinsurance contracts used to, in effect, sell a line of business by coinsuring all or substantially all of the risks related to the line. 2. b All contract amendments. ##### [944-20-15-38](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:8471fd7544c2459d709b63c0f8ecb4137e895cc9bac85e08a111132b415306f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Reinsurance Contracts Subsections of this Subtopic does not apply to the following instruments: 1. a Contracts that do not meet the conditions for reinsurance accounting 2. b Except as noted in the following paragraph, reinsurance assumed. ##### [944-20-15-39](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:17b830c21cf49dc609452922580a0366ab09d0757ce307893da594ed09bb875c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Only the following provisions of the Reinsurance Subsections in this Subtopic apply to reinsurance assumed: 1. a Paragraphs [944-20-15-40 through 15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40) , [944-20-15-46](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-46), [944-20-15-49](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-49), [944-20-15-51](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-51), [944-20-15-53](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-53), and [944-20-15-59 through 15-61](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-59) provide guidance on indemnification against loss or liability relating to insurance risk. 2. b Paragraphs [944-20-50-3 through 50-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-3) require certain disclosures. #### Other Considerations ##### [944-20-15-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:3250707c94206ba28bf96e65b5f64cefcf0776bd663d48e7ea7046e6976258e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Determining under paragraph [944-20-15-37(a)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-37) whether a contract with a reinsurer provides indemnification against loss or liability relating to insurance risk requires a complete understanding of that contract and other contracts or agreements between the ceding entity and related reinsurers. A complete understanding includes an evaluation of all contractual features that do either of the following: 1. a Limit the amount of insurance risk to which the reinsurer is subject (such as through experience refunds, cancellation provisions, adjustable features, or additions of profitable lines of business to the reinsurance contract) 2. b Delay the timely reimbursement of claims by the reinsurer (such as through payment schedules or accumulating retentions from multiple years). This risk transfer assessment shall be made at contract inception, based on facts and circumstances known at the time. ##### [944-20-15-40A](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40A) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:027d96431d97a408cd511d609d85d52ac33725b59fceb9dc08c1d8e32c9eb9a2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reinsurance programs often entail the reinsurance of various layers of exposure through multiple reinsurance contracts. Indemnification against loss or liability relating to insurance risk shall be determined in relation to the provisions of the individual reinsurance contract being evaluated. ##### [944-20-15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a702d027a737e4f122861f8374185593295a2cb5aa48864929fd3007e4bbe604 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unless the condition in paragraph [944-20-15-53](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-53) is met, indemnification of the ceding entity against loss or liability relating to insurance risk in reinsurance of short-duration contracts exists under paragraph [944-20-15-37(a)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-37) only if both of the following conditions are met: 1. a Significant insurance risk. The reinsurer assumes significant insurance risk under the reinsured portions of the underlying insurance contracts. Implicit in this condition is the requirement that both the amount and timing of the reinsurer's payments depend on and directly vary with the amount and timing of claims settled under the reinsured contracts. 2. b Significant loss. It is [reasonably possible](https://asc.understandingaccounting.org/glossary/r/#reasonably-possible "The chance of the future event or events occurring is more than remote but less than likely.") that the reinsurer may realize a significant loss from the transaction. The conditions are independent and the ability to meet one does not mean that the other has been met. A substantive demonstration that both conditions have been met is required for a short-duration contract to transfer risk. ##### [944-20-15-42](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:f2342b8791fede4edb9eb5140dcbd7e67deec0e5ed189d95f4912b7dd3ca42f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The reference in (a) in the preceding paragraph acknowledges that a ceding entity may reinsure only part of the risks associated with the underlying contracts. For example, a proportionate share of all risks or only specified risks may be reinsured. The conditions for reinsurance accounting are evaluated in relation to the reinsured portions of the underlying insurance contracts, rather than all aspects of those contracts. ##### [944-20-15-43](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:97fda2d5b6ed4edec47c2fc4260160adda24bb9c5d06b7a5b3006e2db3e8cabc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assessment of the criterion in paragraph [944-20-15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41) shall be applied from contract inception, considering the effect of any subsequent contract amendments. Careful evaluation and considered judgment is required to determine whether a significant loss to the reinsurer was reasonably possible at inception. The status of a contract should be determinable at inception and, absent amendment, subsequent changes shall be very rare. ##### [944-20-15-44](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:a3783b71ec378d29d02239e0612459b894e579ebaab756bcdcd26191b43d0675 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assessment in paragraph [944-20-15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41) is applied to a particular scenario, not to the individual assumptions used in the scenario. Therefore, a scenario is not reasonably possible unless the likelihood of the entire set of assumptions used in the scenario occurring together is reasonably possible. ##### [944-20-15-45](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:f84081e351807ade5e1561fda35fdfc6fa1f298224c57931e410f024eab516c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Contracts that reinsure risks arising from short-duration contracts shall meet the definition of a short-duration contract in paragraph [944-20-15-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-2) to be accounted for as reinsurance, because reinsurance of short-duration contracts is inherently short-duration. Contracts that reinsure short-duration insurance risks over a significantly longer period are, in substance, financing transactions, because any of the following conditions exist: 1. a Premiums are deferred over a period beyond the term of the underlying insurance contracts. 2. b Losses are recognized in a different period than the period in which the event causing the loss takes place. 3. c Both events (a) and (b) occur at different points in time. ##### [944-20-15-46](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-46) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:f897f254593675e7e6201b1400fd8305094aa75c877a00c6041a37542ba21252 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reinsurer shall not be considered under paragraph [944-20-15-37(a)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-37) to have assumed significant insurance risk under reinsured short-duration contracts if the probability of a significant variation in either the amount or timing of payments by the reinsurer is [remote](https://asc.understandingaccounting.org/glossary/r/#remote "The chance of the future event or events occurring is slight."). Contractual provisions that delay timely reimbursement to the ceding entity would prevent this condition from being met because they prevent the reinsurer's payments from directly varying with the claims settled under the reinsured contracts. ##### [944-20-15-47](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-47) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:32805f60ebb2baeeedc7ebfd0c54478e3101dbcab2be0527112d6228053f84f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether [underwriting risk](https://asc.understandingaccounting.org/glossary/u/#underwriting-risk "The risk arising from uncertainties about the ultimate amount of net cash flows from premiums, commissions, claims, and claim settlement expenses paid under a contract.") has transferred to the reinsurer depends on how much uncertainty about the ultimate amount of net cash flows from premiums, commissions, [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 settlement expenses paid under a contract has been transferred to the reinsurer. The preceding paragraph indicates that insurance risk transfer requires that both the amount and timing of the reinsurer's payments depend on, and directly vary with, the amount and timing of claims settled under the reinsured contracts. Accordingly, the significance of the amount of underwriting risk transferred shall be evaluated in relation to the ceding entity's claims payments. ##### [944-20-15-48](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-48) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:6330d130a6dcb80b349ee9323a6a3d9e12ecc3bb7340b9eadcbb31374f63f54b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The word timely is used in paragraph [944-20-15-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40) in the ordinary temporal sense to refer to the length of time between payment of the underlying reinsured claims and reimbursement by the reinsurer. While the test for reasonable possibility of significant loss to the reinsurer provides for a present-value-based assessment of the economic characteristics of the reinsurance contract, the concept of timely reimbursement relates to the transfer of insurance risk (the condition in paragraph [944-20-15-41\[a\]](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41)), not the reasonable possibility of significant loss (the condition in paragraph [944-20-15-41\[b\]](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41)). Accordingly, timely reimbursement shall be evaluated based solely on the length of time between payment of the underlying reinsured claims and reimbursement by the reinsurer. ##### [944-20-15-49](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-49) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:382073371b6f3c185a60f524cb8a6e66406cc33e108af737993e9542b482464a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The ceding entity's evaluation of whether it is reasonably possible for a reinsurer to realize a significant loss from the transaction shall be based on the present value of all cash flows between the ceding and assuming entities under reasonably possible outcomes, without regard to how the individual cash flows are characterized. The same interest rate shall be used to compute the present value of cash flows for each reasonably possible outcome tested. To be reasonable and appropriate, that rate shall reflect both of the following: 1. a The expected timing of payments to the reinsurer 2. b The duration over which those cash flows are expected to be invested by the reinsurer. ##### [944-20-15-50](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-50) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:33de729949694f0efb0f63aa2d7786439dc466d446cfe1d61c5309ab65776625 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All cash flows are included in the calculation in the preceding paragraph because payments that effectively represent premiums or refunds of premiums may be described in various ways under the terms of a reinsurance contract. The way a cash flow is characterized does not affect whether it should be included in determining the reinsurer's exposure to loss. Only cash flows between the ceding and assuming entities are considered, therefore precluding consideration of other expenses of the reinsurer (such as taxes and operating expenses) in the calculation. ##### [944-20-15-51](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-51) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:f6cfd33eb46519471bd3e30307278a37cbcf1a83df48caaa9c2d38c2341d3dcb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Significance of loss shall be evaluated by comparing the following: 1. a The present value of all cash flows (determined as described in paragraph [944-20-15-49](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-49)) 2. b The present value of the amounts paid or deemed to have been paid to the reinsurer. Determining (for purposes of \[b\]) the amounts paid or deemed to have been paid for reinsurance requires an understanding of all contract provisions. For example, payments and receipts under a reinsurance contract may be settled net. The ceding entity may withhold funds as collateral or may be entitled to compensation other than recovery of claims. Gross premiums shall be used—expenses shall not be deducted from premiums in evaluating the significance of a reasonably possible loss. ##### [944-20-15-52](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-52) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:dcec934e3b90710e525cb5b8f8d0435e9059a49fadc22a5b879bb9e773cf9481 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the present value of cash flows shall be determined over the period in which cash flows are reasonably expected to occur, unless commutation ([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.")) is expected in the scenario being evaluated, commutation shall not be assumed in the calculation. Further, the assumptions used in a scenario shall be internally consistent and economically rational for that scenario's outcome to be considered reasonably possible. ##### [944-20-15-53](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-53) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:1c260cd0c14ee53c08ef4359a91a3e870a369f450486ceb7cbee25a0c8ff821d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, based on the comparison in paragraph [944-20-15-51](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-51), the reinsurer is not exposed to the reasonable possibility of significant loss, the ceding entity shall be considered indemnified against loss or liability relating to insurance risk only if substantially all of the insurance risk relating to the reinsured portions of the underlying insurance contracts has been assumed by the reinsurer. That condition is met only if insignificant insurance risk is retained by the ceding entity on the reinsured portions of the underlying insurance contracts. The assessment of that condition shall be made by comparing both of the following: 1. a The net cash flows of the reinsurer under the reinsurance contract 2. b The net cash flows of the ceding entity on the reinsured portions of the underlying insurance contracts. If the economic position of the reinsurer relative to the insurer cannot be determined, the contract shall not qualify under the exception in this paragraph. ##### [944-20-15-54](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-54) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:e29dfe155d6f461f12a6ebdc5585819cf0660a64d39e5a5c606059c70b7d5a39 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The extremely narrow and limited exemption in the preceding paragraph is for contracts that reinsure either an individual risk or an underlying book of business that is inherently profitable. To qualify under that exception, no more than trivial insurance risk on the reinsured portions of the underlying insurance contracts may be retained by the ceding entity. The reinsurer's economic position shall be virtually equivalent to having written the relevant portions of the reinsured contracts directly. ##### [944-20-15-55](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-55) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:407800ddcc60eb9925e2e1a23704e5d7d53d2e79e16d56aa37709914856ea76f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To be accounted for as reinsurance, a contract that reinsures risks arising from short-duration insurance contracts must meet all of the following conditions: 1. a The contract shall qualify as a short-duration contract under paragraph [944-20-15-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-7). 2. b The contract shall not contain features that prevent the risk transfer criteria in this Subsection from being reasonably applied and those risk transfer criteria shall be met. 3. c The ultimate premium expected to be paid or received under the contract shall be reasonably estimable and allocable in proportion to the reinsurance protection provided as required by paragraphs [944-605-25-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-2) and [944-605-35-8](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-8). If any of these conditions are not met, a [deposit method](https://asc.understandingaccounting.org/glossary/d/#deposit-method "A revenue recognition method under which premiums are not recognized as revenue and claim costs are not charged to expense until the ultimate premium is reasonably estimable, and recognition of income is postponed until that time.") of accounting shall be applied by the ceding and assuming entities. ##### [944-20-15-56](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-56) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:596d7bff18a28bc70fedae2a5831b48fa1ada1672b5a399974da7e7df9e57a54 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Condition (b) in the preceding paragraph applies to a contract and determining the substance of a contract is a judgmental matter. If an agreement with a reinsurer consists of both risk transfer and nonrisk transfer coverages that have been combined into a single legal document, those coverages must be considered separately for accounting purposes. Section 944-20-15 does not intend for different kinds of exposures combined in a program of reinsurance to be evaluated for risk transfer and accounted for together because that would allow contracts that do not meet the conditions for reinsurance accounting to be accounted for as reinsurance by being designated as part of a program that in total meets the conditions for reinsurance accounting. ##### [944-20-15-57](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-57) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:d05837072005fb84de0f3b947f9001be4bf51479a439190ca24abafd6160e2b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because the retrospective rating provisions of single-year retrospectively rated contracts do not create benefits or obligations in a future accounting period, other guidance, including paragraphs [720-20-25-1](https://asc.understandingaccounting.org/asc/720/20/#720-20-25-1), [944-605-25-2(a) through (b)](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-2), [944-605-25-20](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-20), and [944-605-35-8](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-8), shall be applied to those contracts. ##### [944-20-15-58](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-58) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:40a6b7ed62e4de291bb5d18e34ca8a47d61e97f446cdebb7bd8f09d1b2aed1ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the retrospectively rated contract contains any of the characteristics of paragraph [460-10-15-4](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-4) and does not qualify for the scope exception in paragraph [460-10-15-7(d)](https://asc.understandingaccounting.org/asc/460/10/#460-10-15-7), the guarantor would be subject to the initial recognition, initial measurement, and disclosure provisions of Subtopic 460-10. The guarantor could be the ceding entity, assuming entity, or both, depending on the terms of the retrospectively rated contract. ##### [944-20-15-59](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-59) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:b1744353ddabcdc495496747078d249f14d3287ad27dd656acf6e71ec22c56d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Indemnification of the ceding entity against loss or liability relating to insurance risk in reinsurance of long-duration contracts requires the reasonable possibility that the reinsurer may realize significant loss from assuming insurance risk. ##### [944-20-15-60](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-60) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:5270c95d6d8cf38c25e53b1e1c985207dab31c51b7de4e2967960fc829a89baf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consistent with the definition of [investment contract](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."), a contract that does not subject the reinsurer to the reasonable possibility of significant loss from the events insured by the underlying insurance contracts does not indemnify the ceding entity against insurance risk. ##### [944-20-15-61](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-61) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:6009fe1af6b6742c375059806b45ab1809b7991a2c1e9d928acae75d766831e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The evaluation of [mortality risk](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.") or [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment.") risk in contracts that reinsure universal life-type policies shall be consistent with the criteria in paragraphs [944-20-15-16 through 15-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-16) . Evaluation of the presence of insurance risk in contracts that reinsure other long-duration contracts (such as those that reinsure ordinary life contracts or contracts that provide benefits related only to illness, physical injury, or disability) also shall be consistent with those criteria. ##### [944-20-15-62](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-62) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:3f050ef8d5f21743f01ca98437f8ef3ba83c8b0f512c7c22b4941d932a9ff974 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any change or adjustment of contractual terms is considered an amendment for purposes of applying this Subtopic, including all but the most trivial changes and without distinction between financial and nonfinancial terms. ##### [944-20-15-63](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-63) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:b8735dea474ad600e7469634ad3014237f8e4519805a1ab7cbea12ec47c51a9d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of amendments include but are not limited to the following: 1. a Replacing one assuming entity with another (including an affiliated entity) 2. b Modifying the contract's limit, [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."), premium, commissions, or experience-related adjustable features. ##### [944-20-15-64](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-64) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:0ce58206761639d697bf339b6194485c2c17f0a9526fc89b582fdbe8cfa3e1b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If contractual terms are amended, risk transfer shall be reassessed. For example, a contract that, upon its inception, met the conditions for reinsurance accounting under this Subsection could later be amended so that it no longer meets those conditions. The contract shall be reclassified and accounted for as a deposit in accordance with the guidance in Subtopic 340-30. ##### [944-20-15-65](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-65) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:612e877e6090a9d6bd1ea71a6774a6c48fa078d5495e1452559b2b178c97edcc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether an amended contract in substance transfers risk shall be determined considering all of the facts and circumstances in light of risk transfer requirements. Judgment also will be required to determine whether an amendment in effect creates a new contract. ### Financial Guarantee Insurance Contracts #### Overall Guidance ##### [944-20-15-66](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-66) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:026f51c2663b1d977e0553c2f47784df2dadce4ff9c0d003a0b22554d9bb42e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Financial Guarantee Insurance Contracts Subsections follow the same Scope and Scope Exceptions as outlined in the General Subsection of this Section, with specific instrument qualifications and exceptions noted below. ##### [944-20-15-67](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-67) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:e235e29473aabd24509796a6d553a5736be81e1dd320fa02691afc588466e619 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except as noted in the following paragraph, the guidance in the Financial Guarantee Insurance Contract Subsections applies to all [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 contract](https://asc.understandingaccounting.org/glossary/f/#financial-guarantee-reinsurance-contract "See Financial Guarantee Insurance Contract"). ##### [944-20-15-68](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-68) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:e54843c358d4aff041eb12b52b6074a034dff3fbd7b656d737ad9fad44946745 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Financial Guarantee Insurance Contract Subsections does not apply to any of the following: 1. a An insurance contract that is similar to a financial guarantee insurance contract (for example, mortgage guaranty insurance and credit insurance on trade receivables) 2. b A financial guarantee insurance contract accounted for as a derivative instrument within the scope of Subtopic 815-10. An insurance entity shall consider the application of the Financial Guarantee Insurance Contracts Subsections only if the contract is not within the scope of Subtopic 815-10 and is not accounted for as a derivative instrument. #### Other Considerations ##### [944-20-15-69](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-69) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:06.206Z to 2026-09-10T02:15:06.206Z Record version: sha256:6b156049c652416c9856b487d437f9a081a2b66cd0e2a4fbf89c74475a504e01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The recognition and measurement provisions of the Financial Guarantee Insurance Contracts Subsections shall be applied on a contract-by-contract basis. Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:e4bf310dcbece3cd17576744767538be6f1e0ba4dea1b817cff585da917015e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/944/20/#25-recognition) SEC content: no ### Short-Duration Contracts #### Multiple-Year Retrospectively Rated Insurance Contracts ##### [944-20-25-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:a5d6d9eb8c9efc060f2325c603bfaadde232c32d46ddc760fac441b72d910cc3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To be accounted for as insurance, a multiple-year retrospectively rated insurance contract must indemnify the insured as required by paragraph [944-20-15-1B](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-1B). ##### [944-20-25-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:5f2ef915bf741ea9efa1e98cb57720480366c493d1557d89d6b99e917a1fa286 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a multiple-year retrospectively rated insurance contract accounted for as insurance, the insurer shall both: 1. a Recognize an asset to the extent that the insured has an obligation to pay cash (or other consideration) to the insurer that would not have been required absent experience under the contract 2. b Recognize a liability to the extent that any cash (or other consideration) would be payable by the insurer to the insured based on experience to date under the contract. ##### [944-20-25-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:8d56a442f1c51060da3457078c3746866db6a2b0913b6130c4bc15c7d5b27fd3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Deposit accounting shall not be used to avoid loss recognition that would otherwise be required (for example, if the insured has no future [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.") relating to the deposit with the insurer and, therefore, the deposit is not recoverable). ### Reinsurance Contracts #### Multiple-Year Retrospectively Rated Contracts by Ceding and Assuming Entities ##### [944-20-25-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:fada681e1563a514063d93e5157bb76366730d9acb068d117c5b21719297fc6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contracts that meet all of the conditions described in paragraph [944-20-15-55](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-55): 1. a 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.") shall recognize a liability and the assuming entity shall recognize an asset to the extent that the ceding entity has an obligation to pay cash (or other consideration) to the [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") that would not have been required absent experience under the contract (for example, payments that would not have been required if losses had not been experienced). 2. b The ceding entity shall recognize an asset and the assuming entity shall recognize a liability to the extent that any cash (or other consideration) would be payable from the assuming entity to the ceding entity based on experience to date under the contract. ##### [944-20-25-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:aa002c2fde0efd7b29552595356c884573ecef053222521545688c4a9fbb9c8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [944-20-25-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:10.222Z to 2026-09-10T02:15:10.222Z Record version: sha256:235b1da43586d3eb231889c66a97b2348726d8826ee7744d08a8639ee8994b23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If either party entering into a new contract in consideration for canceling a retrospectively rated contract would not have agreed to cancel the existing retrospectively rated contract unless a new contract were entered into, the two contracts are in effect the same contract for purposes of measuring assets and liabilities and shall be accounted for that way. Source downloaded (UTC): 2026-09-10T02:15:13.179Z to 2026-09-10T02:15:13.179Z Record version: sha256:0155f01b7f3426f6ab4940ae0705066759b85b4090c07a21e1fd85415c5557e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/944/20/#30-initial-measurement) SEC content: no ### Reinsurance Contracts #### Multiple-Year Retrospectively Rated Contracts by Ceding and Assuming Entities ##### [944-20-30-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:13.179Z to 2026-09-10T02:15:13.179Z Record version: sha256:d31437bc72030c42b806729cc2fecef5c8600471c9850bf34bb6afc2b8366a0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-25-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-6) states that if either party entering into a new contract in consideration for canceling a retrospectively rated contract would not have agreed to cancel the existing retrospectively rate contract unless a new contract were entered into, the two contracts are in effect the same contract for purposes of measuring assets and liabilities and shall be accounted for that way. Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:2b5b64e8dc9e8ca7fc10785105cd62e4835fc4245d10dd62583f8e6b78733e53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/944/20/#35-subsequent-measurement) SEC content: no ### Short-Duration Contracts #### Multiple-Year Retrospectively Rated Insurance Contracts ##### [944-20-35-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:78dfd59decafce3d2f756802eed5e8846e542256f472204c53371f578276e856 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [944-20-25-2(a)](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-2), certain amounts are recognized by the insurer and insured to the extent that the insured has an obligation to pay cash (or other consideration) to the insurer that would not have been required absent the experience under the contract.The amount recognized in the current period shall be computed, using a with-and-without method, as the difference between the insured's total contract costs before and after the experience under the contract as of the reporting date, including costs such as premium adjustments, settlement adjustments, and impairments of [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."). The amount of premium expense related to impairments of coverage shall be measured in relation to the [original contract](https://asc.understandingaccounting.org/glossary/o/#original-contract "A contract that was initially entered into by the contract holder before any potential internal replacement activity.") terms. Future experience under the contract (that is, future losses and future premiums that would be paid regardless of past experience) shall not be considered in measuring the amount to be recognized. ##### [944-20-35-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:f9c84c9668abf456cc5df916d8bbcce5dde6e8db06dfbd67d754f783ad4f2248 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurer shall account for changes in coverage in the same manner as changes in other contract costs. For example, the effects of decreases in coverage without a commensurate reduction in premium shall be recognized as a gain by the insurer when the event causing the decrease in coverage takes place. ### Reinsurance Contracts #### Multiple-Year Retrospectively Rated Contracts by Ceding and Assuming Entities ##### [944-20-35-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:1facf9b8938220ac1f5426a345d2d2da2b58a8645d8bbde15753381a07f394af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount recognized under paragraph [944-20-25-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-4) in the current period shall be computed, using a with-and-without method, as the difference between the ceding entity's total contract costs before and after the experience under the contract as of the reporting date, including costs such as premium adjustments, settlement adjustments, and impairments of [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."). ##### [944-20-35-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:0d862d0381bc5884be2aeb127cee8c56a9f145f2aa165a80b508136790f20b77 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of premium expense related to impairments of coverage shall be measured in relation to the [original contract](https://asc.understandingaccounting.org/glossary/o/#original-contract "A contract that was initially entered into by the contract holder before any potential internal replacement activity.") terms. Future experience under the contract (that is, future losses and future premiums that would be paid regardless of past experience) shall not be considered in measuring the amount to be recognized. ##### [944-20-35-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:0be4df6da523ebd991c81ed849fcd9520d52fd8ed92a9023307035393ed5c1e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Example 1 (see paragraph [944-20-55-60](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-60)) illustrates the application of this guidance. ##### [944-20-35-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:22d2879a54aace31c431e0eb4d5ad74142b750fc2f873f624ed89a2958da00d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of the asset to be recognized may be affected by credit risk, and appropriate valuation allowances shall be established for any amounts deemed uncollectible. However, 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.") shall not consider the likelihood of future losses in evaluating whether the asset is realizable at the financial reporting date. The effect of those future losses on the asset, if any, shall be recognized in the period of the loss. Potential future unfavorable development on the incurred losses covered by the contract shall not be considered in measuring the asset at the financial reporting date. The relevant recorded [claim](https://asc.understandingaccounting.org/glossary/c/#claim "A demand for payment of a policy benefit because of the occurrence of an insured event.") liability at that date represents the ceding entity's best estimate of the expected ultimate claim liability, and is the liability that must be used in measuring the refundable amount based on contract experience to date. ##### [944-20-35-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:3303ad6bf9264a9ce2aa46314c4dc76e7dc5811953384878bbd3b244f38b80fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Recognizing a smaller asset based on potential unfavorable loss development implies that claim liabilities are understated at the financial reporting date. Accordingly, changes in estimates of claim liabilities shall not be recognized in measuring the related asset until the change in estimate takes place. ##### [944-20-35-8](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:f23170701d570b45989d59d99dafc306de0f862df3aa31e7bcfee5bc78d23a11 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The remainder of this Subsection addresses the following matters: 1. a Changes in coverage 2. b Loss recognition 3. c With-and-without method 4. d Multiple contingent contractual features 5. e Payment for continuation of contract 6. f Contract cancellation. ##### [944-20-35-9](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:774b6cf977257f46667901b7884dc408b81ef444f73cfce124c1e1203a6e503d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The ceding entity and the assuming entity shall account for changes in coverage in the same manner as changes in other contract costs. ##### [944-20-35-10](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:1285d74e01f0a6971acf142c29d84bfffd9ae4708b663344ecd803a8580844a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, the effects of decreases in coverage without a commensurate reduction in premium shall be recognized as a loss by the ceding entity and as a gain by the assuming entity when the event causing the decrease in coverage takes place. ##### [944-20-35-11](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:8ef6e8cff68034be764fbce1d1772e7698a15c8084256e2bdf35140433be3370 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Changes in either the probability or amount of potential future recoveries are considered a change in coverage. For example, if the contract limit stayed the same, but the ceding entity could not receive any recoveries unless losses for the industry as a whole reached a certain level, coverage has been reduced. What matters is not the specific contract provisions regarding coverage, but whether the probability or amount of potential future recoveries has increased or decreased as a result of those provisions. ##### [944-20-35-12](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:9650faf06e52effa36c13bbed85dc16e7c5b47227787b75df760047664b054c6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Deposit accounting shall not be used to avoid loss recognition that would otherwise be required; for example, if the ceding entity has no future coverage relating to the deposit with the [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") and therefore the deposit is not recoverable. ##### [944-20-35-13](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:bfbca1549af128b215ee3db3dd2e64a48731fde2e422d80ff162403688e8205e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [944-20-35-14](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:b4f645a56b31d93c0466cd4ad31157d5a415fa9298c00941abb8460659a62510 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some circumstances, the ceding entity will be relieved of its obligation if the reinsurer cancels the contract, and only has to pay additional amounts if either: 1. a 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."). 2. b The ceding entity cancels before the end of the contract term. Unless the reinsurer has terminated the contract, the ceding entity has an obligation for the additional amounts and must recognize the related liability. The effect of termination, which is to relieve the ceding entity of its liability, shall not be recognized until termination takes place. ##### [944-20-35-15](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:9d5198e2124cca51bd4d2975fe2b1fd2ad9ae7c3658f19eff1d07716ab87434f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cash or other compensation equal to all or part of the positive fund balance received from the reinsurer if the ceding entity's contract continues in force shall be recognized as an asset because the ceding entity controls whether termination takes place and, thus, controls realization of the future economic benefit. ##### [944-20-35-16](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:19e756cdb26427b6dcbebaee619d05d0130ecb0cd091957a247301cbd4a82cf3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-25-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-6) states that, if either entity entering into a new contract in consideration for canceling a retrospectively rated contract would not have agreed to cancel the existing retrospectively rate contract unless a new contract were entered into, the two contracts are in effect the same contract for purposes of measuring assets and liabilities and shall be accounted for that way. #### Multiple-Year Retrospectively Rated Contract Terminated by the Ceding Entity ##### [944-20-35-17](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:e5a5a59c39d0d8f2be3517fa176b077b7d3c55f1d281d03e6b0ee00b5233a8ca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following paragraph applies to contracts having both of the following characteristics: 1. a The ceding entity could terminate the contract before the end of its term. 2. b Termination would change the amounts paid—for example, if terminating the contract would cost less than continuing the contract in force. ##### [944-20-35-18](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:91e6fa26a6910ad12a06f11cb3a55dcf66c3306f5a9eedde3009dbbca54f1abf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability resulting from a contract having the characteristics in the preceding paragraph shall be measured as follows: 1. a If a decision to terminate has been made, the measurement shall be based on an assumption of termination and experience to date. 2. b If a decision to terminate has not been made, the measurement shall be based on the lesser of the following: 1. 1 The total incremental cost that would be paid based on the with-and-without calculation assuming experience to date and assuming termination—that is, excluding the effects of future losses and future premiums that would have been paid regardless of experience to date 2. 2 The total incremental cost that would be paid based on the with-and-without calculation assuming experience to date and assuming no termination—that is, excluding the effects of future losses and future premiums that would have been paid regardless of experience to date. ##### [944-20-35-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:16.265Z to 2026-09-10T02:15:16.265Z Record version: sha256:fc80ad91f2ab8626165644d6a2fc4ade147e6a91fa5fd240b671e1b7ec9bad6c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [944-20-35-18](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-18), if a decision to terminate a contract has been made, the measurement of the liability shall be based on the assumption of [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 experience to date. Otherwise, the measurement of the liability shall be based on the lesser of the following: 1. a The total incremental cost that would be paid based on the with-and-without method assuming experience to date and assuming termination 2. b The total incremental cost that would be paid based on the with-and-without method assuming experience to date and assuming no termination. The effects of future losses and future premiums that would have been paid regardless of experience to date shall be excluded from both calculations. Costs associated with the decision not to terminate shall be recognized in the period in which the future coverage is provided because those costs are associated with that future coverage. Source downloaded (UTC): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:25e5258c0663f00a0b2f1acf31bc9710ed63ec24ca25ebf169b72bcfd8c5d144 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/944/20/#40-derecognition) SEC content: no ### Reinsurance Contracts #### Multiple-Year Retrospectively Rated Contracts by Ceding and Assuming Entities ##### [944-20-40-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:168dcd0ccd3064a17f0d5a0fe9bcb96cce8a3a6ebe3debeadf8b66d1868cbe8f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-25-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-25-6) states that, if either party entering into a new contract in consideration for canceling a retrospectively rated contract would not have agreed to cancel the existing retrospectively rated contract unless a new contract were entered into, the two contracts are in effect the same contract for purposes of measuring assets and liabilities and shall be accounted for that way. #### Payment from Continuation of Reinsurance Contract ##### [944-20-40-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:fdf6b74be770ce3c43182523e00b64c882e4b2f1e4fa78aeacaa6f1f8a42393b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a [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.") loses an asset recognized under paragraph [944-20-35-15](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-15) because it terminates the contract, the loss shall be recognized in the period [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.") takes place. #### Assumption Reinsurance ##### [944-20-40-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:37ec5816d26d004e2ed6ddf56fc9b4cc6e3190b08a176812278e0ef7a05adc5c 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 that are legal replacements of one insurer by another (often referred to as assumption and novation) extinguish the ceding entity's liability to the policyholder and shall result in removal of related assets and liabilities from the financial statements of the ceding entity. ##### [944-20-40-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:77d6042aa72d5a7dd92771b1840cbadf93d9d8a10d1fc388a472881339d5c933 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Reinsurance contracts in which a ceding entity is not relieved of the legal liability to its policyholder shall not result in removal of the related assets and liabilities from the ceding entity's financial statements. ##### [944-20-40-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-40-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:19.568Z to 2026-09-10T02:15:19.568Z Record version: sha256:59b494363f6032380198d24b4e6aecdc7201f3ca84b155bb0b91446b19b62f29 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether the liability to the policyholder has been entirely extinguished essentially is a legal question, depending on all of the facts and circumstances. See Section 405-20-40 for guidance for determining if a liability has been extinguished. Source downloaded (UTC): 2026-09-10T02:15:22.645Z to 2026-09-10T02:15:22.645Z Record version: sha256:15cbc8cff263b85cea5582a00c2a9a313c10c7b07e1394e0e2073d1ff230549c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/944/20/#45-other-presentation-matters) SEC content: no ### Long-Duration Contracts #### Statement of Earnings—Universal Life-Type Contracts ##### [944-20-45-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:22.645Z to 2026-09-10T02:15:22.645Z Record version: sha256:7706a8ef3496cb733f0d230f3ef9d4976e5174b93eac9368dbf916b9e71cfed7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Payments to policyholders that represent a return of policyholder balances are not expenses of the insurance entity and shall not be reported as such in the statement of earnings. ##### [944-20-45-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:22.645Z to 2026-09-10T02:15:22.645Z Record version: sha256:7d881c0617645f57937bd94291121030ed6aa79107909e42b20fc7c9d93d409d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts reported as expenses shall include all of the following: 1. a Benefit claims in excess of the related policyholder balances 2. b Expenses of contract administration 3. c Interest accrued to policyholders 4. d Amortization of capitalized [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.") (see Subtopic 944-30). ##### [944-20-45-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:22.645Z to 2026-09-10T02:15:22.645Z Record version: sha256:717fca06d91759157fe82924047f808084b63ffc78b1943553889855348eb064 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Various other paragraphs in this Topic address presentation-related matters associated with universal life-type contracts as follows: 1. a Premiums collected—see paragraph [944-605-25-5](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-5) 2. b Amounts assessed for compensation—see paragraph [944-605-25-6](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-6) 3. c Amounts assessed against policyholders for initiation or front end fees—see paragraph [944-605-25-5](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-5) 4. d Unearned revenue—see paragraph [944-605-35-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-35-2) 5. e Amounts that may be assessed against policyholders in future periods—see paragraph [944-40-30-17](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-17) 6. f Cash values—see paragraph [944-40-30-18](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-18). Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:8dfcd6636d1285d9c0479cea4a3cce9b5a66e602535660585a8662281246b353 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/20/#50-disclosure) SEC content: no ### Long-Duration Contracts #### Limited-Payment and Universal Life-Type Contracts ##### [944-20-50-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:e4bec3807d7f2970069ec9f3197ca07674ce68f293ff8db8952295f4edac2589 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For financial statement disclosures about limited-payment and universal life-type contracts, see paragraphs [944-605-50-1 through 50-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-50-1) . #### Certain Participating Life Insurance Contracts ##### [944-20-50-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:d1d83edcc484114ee09434ab19cb43ba82c9cf0c7cc9e9f6d16ac7eb476cb808 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Disclosure of the specific accounting policy applied 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 made in accordance with Section 235-10-50. ### Reinsurance Contracts ##### [944-20-50-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:a80de5bf995691d45e5b75dd44666e4c3cef2ed33b6cba3b78605b7af1db4e68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All insurance entities shall disclose the nature, purpose, and effect of ceded [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.") transactions on the insurance entity's operations. ##### [944-20-50-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:ffe9f8ab7ef071fffbbb37f2120ce67512d9cf9637376e9ff0ba2f64dba87a5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Ceding entities also shall disclose the fact that the insurer is not relieved of its primary obligation to the policyholder in a reinsurance transaction. ##### [944-20-50-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:2d15ceeca825dcb13a059d09a585c1149b78b0ad3a9a3f61c6d7f7cf4ccaca10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-310-45-6](https://asc.understandingaccounting.org/asc/310/944/#310-944-45-6) states that, although amounts recoverable on unasserted claims shall be reported as [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."), details of the amounts comprising reinsurance recoverables may be presented separately. ##### [944-20-50-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:27d9dcea63f58caa7996d0dcf52cd49047d30019cf04ba05e808c00889532c1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Separate presentation or disclosure of servicing carrier activity is not precluded. ### Financial Guarantee Insurance Contracts ##### [944-20-50-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-50-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:25.223Z to 2026-09-10T02:15:25.223Z Record version: sha256:c1e342028d3b4e3f166bf11e6eeba375043c6195616a00e93b78eb5989194908 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall disclose information that enables users of its financial statements to understand the factors affecting the present and future recognition and measurement of financial guarantee insurance contracts. Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:2e94b5c26e6d0b6c253abd399d322ddfc0f147dc026a4d3228aaa8e0827f3277 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/944/20/#55-implementation-guidance-and-illustrations) SEC content: no ### Short-Duration Contracts #### Implementation Guidance ##### [944-20-55-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:5e41b07bfe794409b56113de79e71e22ecd5a572a9f6d63c88264c3a9ddd9616 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of short-duration contracts within the scope of the Short-Duration Contracts Subsections of this Subtopic include both of the following: 1. a Most property and liability insurance contracts 2. b Certain [term life insurance](https://asc.understandingaccounting.org/glossary/t/#term-life-insurance "Insurance that provides a benefit if the insured dies within the period specified in the contract. The insurance is for level or declining amounts for stated periods, such as 1, 5, or 10 years, or to a stated age. Term life insurance generally has no loan or cash value.") contracts, such as [credit life insurance](https://asc.understandingaccounting.org/glossary/c/#credit-life-insurance "Life insurance, generally in the form of decreasing term insurance, that is issued on the lives of borrowers to cover payment of loan balances in case of death."). ##### [944-20-55-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:696d568d8872fa23a7ba1f30f0a16fcbe3e58e6745f11bf0b5d8a2bcce5b6716 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-55-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-5) states that accident and health insurance contracts may be short-duration or long-duration depending on whether the contracts are expected to 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 an extended period. ### Long-Duration Contracts ##### [944-20-55-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:748ab516d9a3c899cea59f91292fed5a9508ebb48b5881c80fcf45aa97df761f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of long-duration contracts within the scope of the Long-Duration Contracts Subsections of this Subtopic include all of the following: 1. a Whole-life contracts 2. b Guaranteed renewable term life contracts 3. c [Endowment contracts](https://asc.understandingaccounting.org/glossary/e/#endowment-contract "An insurance contract that provides insurance from inception of the contract to the maturity date (endowment period). The contract specifies that a stated amount, adjusted for items such as policy loans and dividends, if any, will be paid to the beneficiary if the insured dies before the maturity date. If the insured is still living at the maturity date, the policyholder will receive the maturity amount under the contract after adjustments, if any. Endowment contracts generally mature at a specified age of the insured or at the end of a specified period.") 4. d Annuity contracts 5. e Title insurance contracts. ##### [944-20-55-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:de5d1db3684c317135e0d2b92367f90e715062692f33aaf827214b6a6d173e92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Title insurance contracts provide protection for an extended period and therefore are considered long-duration contracts. ##### [944-20-55-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:f17eafe314a339f36abd6b2c89256adfc35797b85e8375e6d432c395845338d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accident and health insurance contracts may be short-duration or long-duration depending on whether the contracts are expected to 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 an extended period. For example, individual and [group insurance](https://asc.understandingaccounting.org/glossary/g/#group-insurance "Insurance protecting a group of persons, usually employees of an entity and their dependents. A single insurance contract is issued to their employer or other representative of the group. Individual certificates often are given to each insured individual or family unit. The insurance usually has an annual renewable contract period, although the insurer may guarantee premium rates for two or three years. Adjustments to premiums relating to the actual experience of the group of insured persons are common.") contracts that are noncancelable or guaranteed renewable (renewable at the option of the insured), or collectively renewable (individual contracts within a group are not cancelable), ordinarily are long-duration contracts. ##### [944-20-55-6](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:db06babb47e60ce854c3732126eb5384d7823f0d52ad34136ffb9e37c3342d01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance discusses the nature of [mortality risk](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."). ##### [944-20-55-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:a1164d21db640031a197c3707b65d238d661260912f6fc5f691250f3708a584d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The risk that the guaranteed price of an annuity may prove to be unfavorable to the guaranteeing entity if the annuity is purchased is a price risk not unlike a guaranteed price of any commodity and does not create a mortality risk. ##### [944-20-55-8](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:48624540d0ca7f0af373fc4d9b2b95cbfb9bb43ede9d94563b48828961134b0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A mortality risk does not arise until the purchase provision is executed and the obligation to make [life-contingent payments](https://asc.understandingaccounting.org/glossary/l/#life-contingent-payments "Payments that are made if the beneficiary is alive when the payments are due.") is present in an [annuity contract](https://asc.understandingaccounting.org/glossary/a/#annuity-contract "A contract that provides fixed or variable periodic payments made from a stated or contingent date and continuing for a specified period, such as for a number of years or for life."). ##### [944-20-55-9](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:e55e3fb92b3cbd3de1bcaec9ff7d30c537038660316ab8750d84aee0cb55f5fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A nominal mortality risk—a risk of insignificant amount or of [remote](https://asc.understandingaccounting.org/glossary/r/#remote "The chance of the future event or events occurring is slight.") probability—is not sufficient to permit that a contract be accounted for as an insurance contract. ##### [944-20-55-10](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:f8621115d371f8a0877543b4c291a077660e23b5cec559341b371995ab39e37c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assets and liabilities related to market value adjusted annuities should be accounted for and reported as [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).") assets and liabilities because the insurance entity provides a fixed return for a specified period, market value adjusted annuities written through a [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.") do not meet the criteria in paragraph [944-80-25-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-2). Under that paragraph, all investment performance, net of contract fees, must be required to be passed through to the contract holder to qualify for separate account treatment. ##### [944-20-55-11](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:b96393e0f700383b3fdcfa160f353c3e756ecc721a906454fef276e8d6d1fca4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the model described in paragraphs [944-40-25-13 through 25-25](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-13) , the liability to be held for market value adjusted annuities is the accrued account balance using the contractually specified rate. The market value adjusted amount generally is available at surrender only and is not available at contract maturity; therefore, the market value adjustment is considered a surrender charge or credit. ##### [944-20-55-12](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:bbc0843059ca199ed2a7e8b61232bc0a7860155660ab8c6e6c81e64e4675a710 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For [group participating pension contracts](https://asc.understandingaccounting.org/glossary/g/#group-participating-pension-contracts "Contracts between insurance entities and pension plans that have account balance crediting provisions that give the contract holder the total return based on a referenced pool of assets over the life of the contract either through crediting rates or termination adjustments.") not accounted for under the provisions of Subtopic 815-10, the liability for the contract holder account balance should 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 without regard to the accounting under generally accepted accounting principles (GAAP) for the assets in the referenced pool of assets, with any change in the liability recognized through earnings. ##### [944-20-55-13](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:7559b8393e2ca5625bdc6dcf540e4eb6f84fe3d62d9c337df371ff0f8986911f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [long-term care benefit](https://asc.understandingaccounting.org/glossary/l/#long-term-care-benefit "A feature of a deferred annuity in which, if during the accumulation phase, the contract holder has an insurable event (for example, disability, loss of activities of daily living) that meets the criteria specified in the contract, additional benefits in excess of the account balance will be available.") should be evaluated and accounted for in accordance with paragraphs [944-20-15-20 through 15-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-20) , [944-40-25-35 through 25-39](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-35) , [944-40-30-20 through 30-24](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-20) , [944-40-35-9 through 35-10](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-9) , [944-40-35-17 through 35-18](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-17) , and [944-605-30-1 through 30-2](https://asc.understandingaccounting.org/asc/605/944/#605-944-30-1) . ##### [944-20-55-14](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:c0304fc442fc4185529ce5c6b7bc05306b032f7fbacbfc6572b23661ab162050 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [earnings protection benefit](https://asc.understandingaccounting.org/glossary/e/#earnings-protection-benefit "A feature of an annuity under which, in the event of death, the beneficiary will receive a benefit in addition to the account balance equal to a percentage (for example, 40 percent) of the difference between the account balance and the deposits less withdrawals.") is a death benefit and should be evaluated and accounted for in accordance with paragraph [944-40-25-25B](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-25B). ##### [944-20-55-15](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:010c74e9465548b7b0682b67f389fe1ac087116a2975ec0f54d7cc4dec940a99 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/). ##### [944-20-55-16](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:38da72e238f86b7aaa8a5544cd35291897e7953e65c679f19933b57a07582071 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/). ##### [944-20-55-17](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:5cc0d946639043bcf8a5bfc71101d644976e4d124e0c76709bfb4040f0b2c049 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/). ##### [944-20-55-18](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:0a84f2f70a648042d89d18c5966c5e0b12d31784cbd540f72a16bd5e6f4ea635 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/). ##### [944-20-55-19](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:f060ee24b48c8b39d3fc5d0253d165f5d930d0a634c75a686dcf8fe45d1db94c 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/). ##### [944-20-55-20](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:ec43d5b63c4ecf4eb7eb0ecb247ba5820477bf0dc76de3a21a05b3938004fd54 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/). ##### [944-20-55-21](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:524a2031dae2a763415e8196472f5745406cc1725162ce5495dd485caac1f13e 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/). ##### [944-20-55-22](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:14c18220b702b642681fbade713efee3834e68122c20b6701f46620f3aab121d 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/). ##### [944-20-55-23](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:c478d79427bfb988d156b47824b7d062b6b50ac9eecb7d273bec732655edcf11 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/). ##### [944-20-55-24](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:a8b96e4c3677bfdda80f5af5598950d3d14f95a5ab135c175c9f4d493184682e 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/). ##### [944-20-55-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:df5c75c783fa282e645662344e6716c3613fcaf92c4d486e15b46e4283f42783 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/). ##### [944-20-55-26](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:88d150cbf7ab60a787bb7b9926b67c83861d1f8802358b6e9ef3307d31bdc73e 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/). ### Reinsurance Contracts ##### [944-20-55-27](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:7d7d2c5a2fe6686d82e5e6dd91a6b6a3f91b7a9c78110493aba09d3307f09e94 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance discusses, for purposes of evaluating whether a contract with a [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") transfers risk, what constitutes a contract, which is essentially a question of substance. It may be difficult in some circumstances to determine the boundaries of a contract. ##### [944-20-55-28](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:e52aa68a37127ddb67a19f1ba81093a0750f35b529153bf490a1d16c3e611f6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For instance, the profit-sharing provisions of one contract may refer to experience on other contracts and, therefore, raise the question of whether, in substance, one contract rather than several contracts exist. ##### [944-20-55-29](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:faeaefea63303ea845165ea4026982999e4701f889544c8c333e56391ffe1e07 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Financial Services—Insurance Topic on [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.") limits the inconsistency that could result from varying interpretations of the term contract by requiring that features of the contract or other contracts or agreements that directly or indirectly compensate the reinsurer or related reinsurers for losses be considered in evaluating whether a particular contract transfers risk. Therefore, if agreements with the reinsurer or related reinsurers, in the aggregate, do not transfer risk, the individual contracts that make up those agreements also would not be considered to transfer risk, regardless of how they are structured. ##### [944-20-55-30](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:b886b8dd66781cb17edc60991c2e0e862f469f227b190d36cd07a71187537e21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain guidance relevant to determining the boundaries of a contract is provided in the accounting literature. ##### [944-20-55-31](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:cc57e508f2b694f643d58bec87a3daa3a3588bd905dd7241abf619c93a5b9c3e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40) states that provisions of other related contracts may be considered part of the subject contract under certain circumstances. ##### [944-20-55-32](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:699e5f5b0b59caa4f4432035cc6da7aad2b29fd69f7f249120ef0de771fca4c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Different kinds of exposures combined in a program of reinsurance shall not be evaluated for risk transfer and accounted for together, because that would allow contracts that do not meet the conditions for reinsurance accounting to be accounted for as reinsurance by being designated as part of a program. ##### [944-20-55-33](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:85a3723e202af34c0a8b593b43e8cf176869bbaf26107e40418a1672a72ef478 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In addition, paragraph [944-20-15-65](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-65) refers to the fact that an amendment of a contract may create a new contract. ##### [944-20-55-34](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:681992477f18960b8b6690afc51f3407f4f64e22aa36158ff8113bb45792b7b0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The legal form and substance of a reinsurance contract generally will be the same, so that the risks reinsured under a single legal document would constitute a single contract for accounting purposes. However, that may not always be the case. Accordingly, careful judgment may be required to determine the boundaries of a contract for accounting purposes. ##### [944-20-55-35](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:e9efe97dd68cc4abea6c4bf22f22dafdd599ba351e1fd4b924c20f66db82d228 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-56](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-56) states that, if an agreement with a reinsurer consists of both risk transfer and nonrisk transfer coverages that have been combined into a single legal document, those coverages shall be considered separately for accounting purposes. ##### [944-20-55-36](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:04c9b95d997a6497f7e8fa9c0b828cccf0a4982a56d68534d8de660129b6a5d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance discusses how the guidance on multiple-year retrospectively rated contracts in the Reinsurance Contracts Subsections of this Subtopic is based on the concept that there is a substantive difference between a contract that contains an obligatory retrospective rating provision and one that does not. This distinction derives from Subtopic 450-20, which requires recognition of liabilities (which are defined as present obligations) as of a financial reporting date, but prohibits recognition of losses and expenses that will result from future events. For example, it may be a virtual certainty that an entity will pay employee salaries next year. But because there is no present obligation to pay those salaries, they are not recognized today. ##### [944-20-55-37](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:78eb338c505f2f150ceca9d0a940ef3531aef6bf10c106eee8e242c55b302ad0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance on multiple-year retrospectively rated contracts in the Reinsurance Contracts Subsections of this Subtopic does not permit recognition of the effects of retrospective rating provisions unless those provisions are obligatory. ##### [944-20-55-38](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:1554c9b0bfad8f25bc6404790ddfeae34cb813a41c3f8f041dedf07c4e01772a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses circumstances in which the assessment of risk transfer changes after the initial assessment at contract inception. ##### [944-20-55-39](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:65f61d2b00e5ef9c5ba13e51617e24fc4006b001bf9f2dd54dc7a88e25efd13b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-43](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-43) states that the status of a contract should be determinable at inception and, absent amendment, subsequent changes shall be very rare. ##### [944-20-55-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:9d588ed174bdf76dfdcfaed9dc680ef1121c2f3fe248a2e1717e751df6e6f0e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the risk of significant loss was not deemed [reasonably possible](https://asc.understandingaccounting.org/glossary/r/#reasonably-possible "The chance of the future event or events occurring is more than remote but less than likely.") at inception, and a significant loss subsequently occurred, the initial assessment was not necessarily wrong, because [remote](https://asc.understandingaccounting.org/glossary/r/#remote "The chance of the future event or events occurring is slight.") events do occur. Likewise, once a reasonable possibility of significant loss has been established, such loss need not occur to maintain the contract's status as reinsurance. ##### [944-20-55-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:7af1e48fbe2a32857da34ea23ede909d6f01078f6a6bc9d1dc4f3077f56c7c61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not preclude reclassification if the initial assessment is later deemed incorrect. However, careful consideration would need to be given to whether the reclassification represents the correction of an error (see Subtopic 250-10). ##### [944-20-55-42](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:e6636e7e60c9766a29b2ff1e5e44c70902e42296d4e99f06f2cf057222a47d96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance discusses the definition of past insurable events that governs whether reinsurance [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.") of short-duration insurance policies is prospective or retroactive. As described in paragraph [944-20-15-34B](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34B), the distinction between prospective and [retroactive reinsurance](https://asc.understandingaccounting.org/glossary/r/#retroactive-reinsurance "Reinsurance in which an assuming entity agrees to reimburse a ceding entity for liabilities incurred as a result of past insurable events covered under contracts subject to the reinsurance. A reinsurance contract may include both prospective and retroactive reinsurance provisions.") is based on whether a contract reinsures future or past insured events covered by the underlying insurance contracts. The form of the reinsurance—whether claims-made or occurrence-based—does not determine whether the reinsurance is prospective or retroactive. ##### [944-20-55-43](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:4d65d3dfb86d6192f1f9ce07eec8dc07f814cb4963e3868e88622167a4d96e6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Most reinsurance contracts covering calendar-year incurred losses combine coverage for insured events that occurred before entering into the reinsurance contract with coverage for future insured events and, therefore, include both prospective and retroactive elements. ##### [944-20-55-44](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:915d345bf102179857e24c7cc35fb87e8c0ac76789b48e861e1c08c2b8db38ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract may be considered to have been substantively entered into even though regulatory approval of that contract has not taken place. The absence of agreement on significant terms, or the intention to establish or amend those terms at a later date based on experience or other factors, generally indicates that the parties to the contract have not entered into a reinsurance contract, but rather have agreed to enter into a reinsurance contract at a future date. If contractual provisions under a contract substantively entered into at a future date cover insurable events before that date, that coverage is retroactive. ##### [944-20-55-45](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:95f872a28c1ddddaaf947d798920044079db3ce92eb3c8db720d3a4bf84b781f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of this guidance, assume a reinsurance contract covers losses from asbestos and pollution claims on occurrence-based insurance policies effective during previous periods and for which the reinsurance coverage is triggered by a court interpretation that a loss is covered within the terms of the underlying insurance policies. In this instance, the insured event is the occurrence of loss within the coverage of the underlying insurance contracts, not the finding of a court. Therefore, the fact that the asbestos exposure or pollution is covered under insurance policies effective during prior periods makes the reinsurance coverage in this instance retroactive. ##### [944-20-55-46](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:6ea751c8fbc11d1b84d0d4ee62030e3f12f391386dec918d37f73902e72a632f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses classification of a contract to reinsure short-duration policies entered into after the contract's effective date. The portion of the contract related to the period of time between the effective date of the contract and the date the contract was entered into is retroactive because it covers insured events that occurred before entering into the reinsurance contract. ##### [944-20-55-47](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:e239c87e31cb2d0fff85be1756353723e62701b20d3aaf9e11fa1a6c77cc2ee7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance explains that adjustments to future premiums or coverage may affect the accounting for a reinsurance contract. As discussed in paragraph [944-20-15-34B](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-34B), whenever an adjustment results in a reinsurer providing new or additional coverage for past insurable events, that coverage is retroactive. ##### [944-20-55-48](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:1320b099616542f6b881e5311e7e380ffd9f90c67d2ced9c9237644a0cf7f440 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, if subsequent years' premiums under a multiple accident year contract create additional coverage for previous accident years, the additional coverage is retroactive, even if the original coverage provided in the contract for those accident years was prospective. ##### [944-20-55-49](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:3017449ce43daa0458088be9ae81be1a89753d613b58944e2fe7197de4d1a144 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Likewise, if current losses under a multiple-year contract eliminate coverage in future periods, some or all of the premiums to be paid in those future periods should be charged to the current period. ##### [944-20-55-50](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:4ddff54ff6ceb1b43eaae9b9e9ce8a45f02e669bc76cf449787606f5584d7086 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance discusses the application of the scope guidance for reinsurance of short-duration contracts beginning in paragraph [944-20-15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41). ##### [944-20-55-51](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:7546421d18545587857b68b71eda59ea12a0a5478ae5b1bbaa5f621025517c98 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A reasonable possibility of significant loss to the reinsurer does not necessarily indicate underwriting risk has been transferred. The tests are independent and the methods and assumptions used in the significant loss test in paragraph [944-20-15-41(b)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41), such as comparing present value of cash flows to ceded premiums, are not relevant to the other test. ##### [944-20-55-52](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:060c3f3c72dc95d1d6607101eeafc680436012a1e42e48e2e4f1bf6f9f7f7a16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It would be possible to demonstrate the reasonable possibility of significant loss on a contract that does not transfer underwriting risk for two reasons. First, if sufficient timing risk is present, the loss could be generated from timing risk alone. Second, judgments about what is significant and what is reasonably possible could differ. ##### [944-20-55-53](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:ffdadd0234872c5acc0cdedbe1763a5e9a608f32b5d4590e27179b71316a3b6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some features that can delay timely reimbursement violate the condition in paragraph [944-20-15-41(a)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41)but could still result in the reasonable possibility of significant loss to the reinsurer. Examples are a payment schedule or accumulating retention. Because both the condition in (a) in that paragraph and the condition in (b) in that paragraph must be met, failure to transfer significant timing and underwriting risk is not overcome by the possibility of significant loss to the reinsurer. ##### [944-20-55-54](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:3367dde0a3c1aba0e4abce64c60a4bd88c26d4431b5c18fc3323d6272dc8b3b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-20-15-40](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40) refers to contractual features inherently designed to delay the timing of reimbursement to 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."). Regardless of what a particular feature might be called, paragraphs [944-20-15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41) and [944-20-15-46](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-46) state that any feature that can delay timely reimbursement violates the conditions for reinsurance accounting. As indicated in those paragraphs, transfer of [insurance risk](https://asc.understandingaccounting.org/glossary/i/#insurance-risk "The risk arising from uncertainties about both underwriting risk and timing risk. Actual or imputed investment returns are not an element of insurance risk. Insurance risk is fortuitous; the possibility of adverse events occurring is outside the control of the insured.") requires that the reinsurer's payments to the ceding entity depend on and directly vary with the amount and timing of claims settled under the reinsured contracts. Contractual features that can delay timely reimbursement prevent that condition from being met. Therefore, any feature that may affect the timing of the reinsurer's reimbursement to the ceding entity should be closely scrutinized. ##### [944-20-55-55](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:00f9d562a452057a2df8e6deda8b3233964fb010333f5352716722d3daab0160 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under very limited circumstances, the reinsurer need not be exposed to the reasonable possibility of significant loss for a contract to meet the conditions for reinsurance accounting. For example, applying the reasonable possibility of significant loss condition is problematic if the underlying insurance contracts themselves do not result in the reasonable possibility of significant loss to the ceding entity. If the reinsurer has assumed substantially all of the insurance risk in the reinsured portions of the underlying policies, even if that risk does not result in the reasonable possibility of significant loss, the transaction meets the conditions for reinsurance accounting. In this narrow circumstance, the reinsurer's economic position is virtually equivalent to having written the insurance contract directly. The risks retained by the ceding entity are insignificant, so that the reinsurer's exposure to loss is essentially the same as the insurer's. Most commonly, such a situation arises if an individual risk or insurance contract, rather than a group of risks or contracts, is reinsured. The probability of loss from any individual short-duration insurance contract generally is considered to be remote. Therefore, outcomes that would expose the assuming entity to risk of significant loss ordinarily could not be characterized as reasonably possible. ##### [944-20-55-56](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:8c86c7f8e51f31411c58406ed2269a1e2c502b0197d7ace6d3c8939f04033e88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assessing the economic position of the reinsurer in relation to that of the ceding entity under paragraph [944-20-15-53](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-53)may be relatively easy for reinsurance of individual risks or for unlimited-risk quota-share reinsurance, because the premiums and losses on these types of reinsurance generally are the same as the premiums and losses on the reinsured portions of the underlying insurance policies. In other types of reinsurance, determining the reinsurer's net cash flows relative to the insurer is likely to be substantially more difficult. For example, it generally would be difficult to demonstrate that the ceding entity's premiums and losses for a particular layer of insurance are the same as the reinsurer's premiums and losses related to that layer. That paragraph states that, if the economic position of the reinsurer relative to the insurer cannot be determined, the contract would not qualify under the exception in that paragraph. ##### [944-20-55-57](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:b2adb89ba6185a166e0d0913baf7bd06cac8a727a64616faee308aee7f7d481b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A structured settlement transaction that does not legally replace one insurer by another and thereby extinguish the primary insurer's liability to the policyholder is accounted for as reinsurance if the annuity funding the settlement meets the conditions for reinsurance accounting. Otherwise, the transaction is accounted for as a deposit in accordance with paragraph [340-30-05-1](https://asc.understandingaccounting.org/asc/340/30/#340-30-05-1). ##### [944-20-55-58](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:5e2b976f6924b5c305a1cf4b7c14647df23c17478f5cf7dbc2e3b8e226f1474f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract does not meet the conditions for reinsurance accounting if features of the reinsurance contract or other contracts or agreements directly or indirectly compensate the reinsurer or related reinsurers for losses. That compensation may take many forms, and an understanding of the substance of the contracts or agreements is required to determine whether the ceding entity has been indemnified against loss or liability relating to insurance risk. For example, contractual features may limit the reinsurer's exposure to insurance risk or delay the reimbursement of claims so that investment income mitigates exposure to insurance risk. Examples of those contractual features, noted in paragraph [944-20-15-40(a) through (b)](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-40), are not all-inclusive. ##### [944-20-55-59](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:86097a10549ca5a53435ae3e99e7161bc487178a743fad37c8c24b5604e01527 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This implementation guidance addresses a circumstance in which, under a multiple-year retrospectively rated reinsurance contract, the ceding entity has to make additional payments to the reinsurer, but the ceding entity also receives expanded coverage. The single payment is allocated to the two separate transactions. In one transaction, the ceding entity has acquired an asset by making a payment to the reinsurer in exchange for expanded coverage. In the other, the ceding entity has incurred a loss or liability to the extent that it is reimbursing the reinsurer for past losses. Because a variety of factors may affect the value of reinsurance coverage at any point in time, the most appropriate measure of the value of additional coverage generally is the price of the initial coverage. For example, if coverage of $6.00 was acquired for a $1.00 premium, and the ceding entity would pay $4.00 more for another $6.00 of coverage if a loss occurs, the most relevant measure of the amount of premium that relates to the new coverage would be $1.00. The other $3.00 presumably is a reimbursement for the loss that has been incurred. #### Illustrations ##### [944-20-55-60](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:a717a4c15b79b7f5107c4e5ed52f33a86b767057cab1bf8ff38a4ee7ba71e0e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the application of the with-and-without method under paragraph [944-20-35-13](https://asc.understandingaccounting.org/asc/944/20/#944-20-35-13). This Example assumes all of the following: 1. a The retrospectively rated contract reinsures risks arising from short-duration contracts. 2. b The three-year contract prohibits cancellation during the [contract period](https://asc.understandingaccounting.org/glossary/c/#contract-period "The period over which insured events that occur are covered by insurance or reinsurance contracts. Commonly referred to as the coverage period or period that the contracts are in force."). 3. c Cash settlement is required upon [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.") of the contract. 4. d The contract provides for deposit premiums of $1.00 per year for $6.00 of coverage in excess of a stipulated retention. 5. e Coverage is limited to one catastrophic event each year (that is, the ceding entity will not collect more than $6.00 per year from the reinsurer). 6. f If one or more losses occur, the ceding entity owes the reinsurer a single premium adjustment of $4.00 spread proportionately over the remaining contract term. 7. g If the ceding entity incurs a loss of $6.00 in the first year, the results in the fund balance will be negative $5.00 ($1.00 of premium to date less $6.00 of losses to date). 8. h In Years 2 and 3, the ceding entity must pay the assuming entity $3.00 each year ($1.00 of deposit premium and $2.00 of the premium adjustment). ##### [944-20-55-61](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:cc8116cfc978b94445345f49529af61a21386c12543dfb8de3ee21a86b25e052 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the with-and-without method, the ceding entity would recognize a liability as the difference between the ceding entity's total contract costs before and after the experience under the contract loss ($4.00). ##### [944-20-55-62](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:2c924c4b4f511359f73ca9f31c20f785dc28fbbe9c1f4f5cb50ac7796f42f106 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the effect of termination. Assume a ceding entity enters into a three-year contract with an assuming entity. ##### [944-20-55-63](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-63) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:d0259f1f4f7e45ec9f51c22f7995d43a117f7ede7998fee370cea262fe998c16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a loss occurs in the first year, the ceding entity is required to pay either of the following: 1. a An additional $2.00 premium adjustment in each subsequent year that the contract is [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.") 2. b If the ceding entity terminates the contract before the end of the third year, 90% of any remaining premium adjustment. ##### [944-20-55-64](https://asc.understandingaccounting.org/asc/944/20/#944-20-55-64) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:28.362Z to 2026-09-10T02:15:28.362Z Record version: sha256:140a046e522baef35b537b741fdf13f3b66d7fbb0d48b49cdebd3b4bc39bd097 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under the guidance in this Subtopic, the ceding entity would recognize a liability at the end of the first year equal to the difference in the total contract costs before and after the loss unless the ceding entity has decided to terminate the contract at that time. In this Example, if the ceding entity decided to terminate the contract, it would recognize the cost of termination ($3.60). Otherwise, it would recognize the lesser of the amount assuming termination ($3.60) or the amount assuming no termination ($4.00). Source downloaded (UTC): 2026-09-10T02:15:30.760Z to 2026-09-10T02:15:30.760Z Record version: sha256:d36380b4e2b0827a06538f6b99cc6e9b98b9f82e1c14fa4cedcfcd8143561250 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/944/20/#65-transition-and-open-effective-date-information) SEC content: no ##### [944-20-65-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:30.760Z to 2026-09-10T02:15:30.760Z Record version: sha256:b11532c2140d8768fa7a1832143c9a7af6ed385eae204068b7d27688ebafbbb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 07/01/2010 after the end of the transition period stated in FASB Statement No. 163, _Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60_. Source downloaded (UTC): 2026-09-10T02:15:37.433Z to 2026-09-10T02:15:37.433Z Record version: sha256:e71e27bbd00ab7603b6be6efd6735d2a5fa344000ef51f87324f2f48b7a9937d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/20/#sec-00-status) SEC content: yes ##### [944-20-S00-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:37.433Z to 2026-09-10T02:15:37.433Z Record version: sha256:32f721ae7447e8e179e1d7659075074d857dec4dbb2d275a46c986505c23a1d9 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
944-20-S99-1AmendedAccounting Standards Update No. 2012-0308/27/2012
944-20-S99-2AmendedAccounting Standards Update No. 2010-0401/15/2010
Source downloaded (UTC): 2026-09-10T02:15:39.545Z to 2026-09-10T02:15:39.545Z Record version: sha256:69ab92097fe1aadd770013deb18fcc4941a80c07a9ba339c887482846d0154d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-S30: SEC 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/944/20/#sec-30-initial-measurement) SEC content: yes #### Discounting Claims Liabilities Related to Short-Duration Contracts ##### [944-20-S30-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:39.545Z to 2026-09-10T02:15:39.545Z Record version: sha256:51e0da71f22b3c82c13e77125d65a237073e694028fa9cebf7fb805c39927f44 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 insurance contracts. Source downloaded (UTC): 2026-09-10T02:15:41.464Z to 2026-09-10T02:15:41.464Z Record version: sha256:f011b1ac2bb4a68382ae5f8eba8015ec6c2c005c151277485e4a85eb198ec223 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-S35: SEC 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/944/20/#sec-35-subsequent-measurement) SEC content: yes #### Discounting Claims Liabilities Related to Short-Duration Contracts ##### [944-20-S35-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:41.464Z to 2026-09-10T02:15:41.464Z Record version: sha256:746934ccdd3223f3bdfbbc3111bd87d84b49e07675e804c8caedd81d057fb140 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 insurance contracts. Source downloaded (UTC): 2026-09-10T02:15:43.227Z to 2026-09-10T02:15:43.227Z Record version: sha256:f7293834c5b51e9a23f09cfdf1ce1f1868f3ebdbc6e2a9d867f0956872e3845f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/20/#sec-50-disclosure) SEC content: yes #### Present Value of Future Profits ##### [944-20-S50-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:43.227Z to 2026-09-10T02:15:43.227Z Record version: sha256:ba9f0cbdb7c53e8b128674cc0f7de4341a2a854269e39b601c17ad12e52d37ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [944-20-S99-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-S99-2), SEC Observer Comment: Accounting for the Present Value of Future Profits Resulting from the Acquisition of a Life Insurance Company, for SEC Staff views on disclosures regarding present value of future profit assets. Source downloaded (UTC): 2026-09-10T02:15:47.018Z to 2026-09-10T02:15:47.018Z Record version: sha256:404a8a58b38f92ee212df49ada3a6c5a63f7c42e7702d268f07850dde365326a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/944/20/#sec-99-sec-materials) SEC content: yes #### SEC Staff Guidance ##### [944-20-S99-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-S99-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:47.018Z to 2026-09-10T02:15:47.018Z Record version: sha256:7ecfc12b4f4dcb7a8e098681126a2e060578e8aeee94a00d30dd099f79dbf973 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.N, Discounting by Property-Casualty Insurance Companies. - Facts: A registrant which is an insurance company discounts certain unpaid claims liabilities related to short-duration FN9 insurance contracts for purposes of reporting to state regulatory authorities, using discount rates permitted or prescribed by those authorities ("statutory rates") which approximate 3 1/2 percent. The registrant follows the same practice in preparing its financial statements in accordance with GAAP. It proposes to change for GAAP purposes, to using a discount rate related to the historical yield on its investment portfolio ("investment related rate") which is represented to approximate 7 percent, and to account for the change as a change in accounting estimate, applying the investment related rate to claims settled in the current and subsequent years while the statutory rate would continue to be applied to claims settled in all prior years. - FN9 The term "short-duration" refers to the period of coverage (see FASB ASC paragraph [944-20-15-7](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-7) (Financial Services—Insurance Topic), not the period that the liabilities are expected to be outstanding. - Question 1: What is the staff's position with respect to discounting claims liabilities related to short-duration insurance contracts? - Interpretive Response: The staff is aware of efforts by the accounting profession to assess the circumstances under which discounting may be appropriate in financial statements. Pending authoritative guidance resulting from those efforts however, the staff will raise no objection if a registrant follows a policy for GAAP reporting purposes of: - Discounting liabilities for unpaid claims and claim adjustment expenses at the same rates that it uses for reporting to state regulatory authorities with respect to the same claims liabilities, or - Discounting liabilities with respect to settled claims under the following circumstances: - (1) The payment pattern and ultimate cost are fixed and determinable on an individual claim basis, and - (2) The discount rate used is reasonable on the facts and circumstances applicable to the registrant at the time the claims are settled. - Question 2: Does the staff agree with the registrant's proposal that the change from a statutory rate to an investment related rate be accounted for as a change in accounting estimate? - Interpretive Response: No. The staff believes that such a change involves a change in the method of applying an accounting principle, i.e., the method of selecting the discount rate was changed. The staff therefore believes that the registrant should reflect the cumulative effect of the change in accounting by applying the new selection method retroactively to liabilities for claims settled in all prior years, in accordance with the requirements of FASB ASC Topic 250, Accounting Changes and Error Corrections. Initial adoption of discounting for GAAP purposes would be treated similarly. In either case, in addition to the disclosures required by FASB ASC Topic 250 concerning the change in accounting principle, a preferability letter from the registrant's independent accountant is required. ##### [944-20-S99-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-S99-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:47.018Z to 2026-09-10T02:15:47.018Z Record version: sha256:85682a33dfcbec7ff1e08c955f4fe8f59a5abadc96499b2eaaf196dc952c19c7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SEC Observer Comment: Accounting for Intangible Assets Arising from Insurance Contracts Acquired in a Business Combination. - The SEC staff will require registrants to provide the following disclosures about intangible assets arising from insurance contracts acquired in a business combination in filings with the Commission: - 1\. A description of the registrant's accounting policy - 2\. An analysis of the intangible assets arising from insurance contracts acquired in a business combination account for each year for which an income statement is presented—that analysis should include the intangible assets arising from insurance contracts acquired in a business combination balance at the beginning of the year, the amount of additions during the year arising from acquisitions of insurance companies, the amount of amortization during the year, the amount of any write-offs during the year due to impairment and how those write-offs were determined, and the balance at the end of the year - 3\. The estimated amount or percentage of the end-of-the-year balance of intangible assets arising from insurance contracts acquired in a business combination to be amortized during each of the next five years. Source downloaded (UTC): 2026-09-10T02:15:49.991Z to 2026-09-10T02:16:24.166Z Record version: sha256:eb9d31a4aba1646a3325a886e62202f88f0f63ff2182cb9ae9ea668f0450f567 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30: Financial Services—Insurance — Acquisition Costs ### Machine-generated study aids ```json { "summary": "ASC 944-30 governs how insurance entities capitalize, amortize, present, and disclose acquisition costs (DAC) for short-duration contracts, long-duration contracts, investment contracts, and reinsurance, plus deferred sales inducements. Only costs \"related directly to the successful acquisition\" of new or renewal contracts may be capitalized (944-30-25-1A) — incremental direct costs, directly related compensation/fringe benefits for underwriting, policy issuance and processing, medical and inspection, and sales force contract selling, plus certain other direct costs and qualifying direct-response advertising. Post-ASU 2018-12, long-duration DAC is amortized on a constant level basis over the expected contract term (944-30-35-3A), and the Internal Replacement Transactions Subsections determine whether a modified/replaced contract is \"substantially unchanged\" (continuation, DAC carried forward) or \"substantially changed\" (extinguishment, DAC written off).", "key_points": [ "Only costs directly related to the successful acquisition of new or renewal contracts may be capitalized: incremental direct costs, the portion of employee compensation and payroll-related fringe benefits for time spent on underwriting, policy issuance and processing, medical and inspection, and sales force contract selling, and other directly related costs that would not have been incurred but for the acquisition (944-30-25-1A); unsuccessful efforts, idle time, market research, training, general overhead, and dedicated software are expensed as incurred (944-30-55-1B; 944-30-55-1F).", "Direct-response advertising costs are capitalized only if the primary purpose is to elicit sales to customers documented as responding specifically to the advertising and the advertising results in probable future benefits based on verifiable historical patterns for the entity (944-30-25-1AA through 25-1I); probable future benefits include only primary revenues (944-30-25-1P), and costs not capitalized may not be retroactively capitalized (944-30-25-1I).", "Acquisition costs that vary in a constant relationship to premiums or insurance in force, are recurring, or are incurred in level amounts (e.g., recurring premium taxes, ultimate level commissions) are maintenance and other period costs expensed as incurred (944-30-25-4 through 25-5).", "Short-duration DAC is charged to expense in proportion to premium revenue recognized under Subtopic 944-605 (944-30-35-1A; 944-30-35-2), while long-duration DAC is charged to expense on a constant level basis — straight-line for individual contracts, or a constant-level basis approximating individual straight-line for grouped contracts — over the expected contract term, not as a function of revenue or profit emergence, with no interest accrual (944-30-35-3A; 944-30-35-3C).", "The long-duration DAC balance is reduced for actual experience in excess of expected (unexpected terminations), and changes in future estimates are recognized prospectively as revisions of future amortization amounts (944-30-35-3B).", "Sales inducements that are incremental to amounts credited on similar contracts, exceed expected ongoing crediting rates, are recognized as part of the liability under 944-40-25-12, and are explicitly identified in the contract at inception are deferred as an asset and amortized like DAC, with amortization in benefit expense (944-30-25-6 through 25-7; 944-30-35-18; 944-30-45-2).", "An internal replacement is 'substantially unchanged' only if all six conditions in 944-30-35-37 are met (no change in insured event/risk/period of coverage, investment return rights, no additional deposit, no net account value reduction, no change in participation/dividend features, no change in amortization method or revenue classification); continuation carries DAC, unearned revenue liabilities, and deferred sales inducements forward on a prospective basis (944-30-35-38 through 35-40, 35-46), while a substantially changed contract is accounted for as an extinguishment with those balances not deferred (944-30-40-1 through 40-4)." ], "categories": [ "Industry-specific", "Initial measurement", "Subsequent measurement", "Disclosure" ], "audience_level": "advanced", "student_note": "DAC is the signature insurance-accounting asset, and ASU 2018-12 fundamentally changed it: long-duration DAC is now amortized on a constant level basis over the expected term with no interest accrual and no unlocking/retrospective catch-up, and it is no longer subject to the old EGP/gross-profit amortization or to DAC recoverability testing. The most common error is assuming all costs of writing business are deferrable — only costs directly related to *successful* acquisition qualify, so unsuccessful underwriting effort, idle time, marketing, training, and overhead must be expensed as incurred.", "related_topics": [ "944-40", "944-60", "944-605", "944-20", "944-720", "310-20" ], "key_concepts": [ "deferred acquisition costs", "successful efforts capitalization", "constant level amortization", "direct-response advertising", "deferred sales inducements", "internal replacement transactions", "substantially unchanged contract", "integrated vs. nonintegrated contract features" ] } ``` Source downloaded (UTC): 2026-09-10T02:15:49.991Z to 2026-09-10T02:15:49.991Z Record version: sha256:cf4cb6f4405318c6c664559699a51f59abd9bcf3e5cc147fa8271a05ff170125 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/30/#00-status) SEC content: no ##### [944-30-00-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:49.991Z to 2026-09-10T02:15:49.991Z Record version: sha256:f064b90bea0ee30814693fdcb88add469329f538ffdd54f6faab581bce50682c 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
Acquisition CostsAmendedAccounting Standards Update No. 2010-2610/13/2010
Annual Policyholder DividendsSupersededAccounting Standards Update No. 2018-1208/15/2018
Annuitization PhaseSupersededAccounting Standards Update No. 2014-0603/14/2014
Benefit PeriodSupersededAccounting Standards Update No. 2018-1208/15/2018
Contract RateSupersededAccounting 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 Income BenefitAmendedAccounting Standards Update No. 2018-1208/15/2018
Gross PremiumSupersededAccounting Standards Update No. 2018-1208/15/2018
Incremental Direct Cost of Contract AcquisitionAddedAccounting Standards Update No. 2010-2610/13/2010
Investment YieldSupersededAccounting Standards Update No. 2018-1208/15/2018
Involuntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
Market Risk BenefitAddedAccounting Standards Update No. 2018-1208/15/2018
Net Level Premium ReserveSupersededAccounting 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
Sales InducementsAmendedAccounting Standards Update No. 2014-0603/14/2014
TerminationAmendedAccounting Standards Update No. 2014-0603/14/2014
Voluntary TerminationSupersededAccounting Standards Update No. 2014-0603/14/2014
944-30-05-1AmendedAccounting Standards Update No. 2016-1912/14/2016
944-30-15-6AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-1SupersededAccounting Standards Update No. 2010-2610/13/2010
944-30-25-1AAmendedAccounting Standards Update No. 2018-0907/16/2018
944-30-25-1AAmendedAccounting Standards Update No. 2014-0905/28/2014
944-30-25-1AAddedAccounting Standards Update No. 2010-2610/13/2010
944-30-25-1AAAddedAccounting Standards Update No. 2014-0905/28/2014
944-30-25-1BAmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-1BAddedAccounting Standards Update No. 2010-2610/13/2010
944-30-25-1C through 25-1P
AddedAccounting Standards Update No. 2014-0905/28/2014
944-30-25-1DDAddedAccounting Standards Update No. 2018-0907/16/2018
944-30-25-2AmendedAccounting Standards Update No. 2010-2610/13/2010
944-30-25-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-6AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-8AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-8AmendedAccounting Standards Update No. 2015-1006/12/2015
944-30-25-9AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-25-10SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-25-14AmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-30-2AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-1AAmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-3AAmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-3AAddedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-3BAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-3CAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-4 through 35-17
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-35-10AmendedAccounting Standards Update No. 2014-0603/14/2014
944-30-35-18 through 35-20
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-18AmendedAccounting Standards Update No. 2014-0603/14/2014
944-30-35-19AmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-20AmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-21SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-35-22SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-35-22AmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-28AmendedAccounting Standards Update No. 2014-0603/14/2014
944-30-35-36AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-38AmendedAccounting Standards Update No. 2014-0603/14/2014
944-30-35-41 through 35-45
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-35-46 through 35-52
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-53AmendedAccounting Standards Update No. 2012-0410/01/2012
944-30-35-61AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-62SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-35-63AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-35-64AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-40-3AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-50-1AmendedAccounting Standards Update No. 2024-0311/04/2024
944-30-50-1AmendedAccounting Standards Update No. 2010-2610/13/2010
944-30-50-2SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-50-2AAmendedAccounting Standards Update No. 2025-1112/08/2025
944-30-50-2AAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-50-2BAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-50-3SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-50-4AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-1AmendedAccounting Standards Update No. 2010-2610/13/2010
944-30-55-1A through 55-1G
AddedAccounting Standards Update No. 2010-2610/13/2010
944-30-55-1FAmendedAccounting Standards Update No. 2014-0905/28/2014
944-30-55-2AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-3 through 55-6
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-55-7AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-7AAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-7BAddedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-8 through 55-10
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-55-11 through 55-14
AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-15 through 55-32
SupersededAccounting Standards Update No. 2018-1208/15/2018
944-30-55-36AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-39AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-40AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-56AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-58AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-65AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-66AmendedAccounting Standards Update No. 2018-1208/15/2018
944-30-55-76AmendedAccounting Standards Update No. 2018-1208/15/2018
Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:2c024772be79a667c4d6b21d149edb8b4a54321099baf7a2ac75c8548f7e8049 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/944/30/#05-overview-and-background) SEC content: no ##### [944-30-05-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:472a38035bd3cc4ca911bd62d52148a7a174fa8d2ea35bbb3672e8a9500f61c6 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 [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.") including related considerations for [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") transactions. 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 Internal Replacement Transactions 5. e [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. ### Short-Duration Contracts ##### [944-30-05-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:5a714b3ce8dafb0a26d06fbd8eec27a15536bd0639bbf578dea98cab11dfbb69 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 [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.") involving short-duration contracts. ### Long-Duration Contracts ##### [944-30-05-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:8449a676e2d34f4e9d8289e006879be1429633a0fa1e9d9c15fa15def47cd57f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of [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.") involving long-duration contracts. ### Internal Replacement Transactions ##### [944-30-05-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:06d53ab2fe7cc4842d0cca865afc1cd5bfdaa7807c084359b11014d245966f5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Internal Replacement Transactions Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of unamortized [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.") in the event of an [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") transaction. ##### [944-30-05-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:a7aec4a99fc955a1fb126c94e889b46e2c741bf7978ffa99400bd9cef1a3a288 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Policyholders often purchase universal life-type contracts as replacements for other insurance contracts issued by the same entity (sometimes referred to as internal replacement transactions). In those cases, the policyholder often uses the cash surrender value of the previous contract to pay an initial lump-sum premium for the new contract. ### Reinsurance Contracts ##### [944-30-05-6](https://asc.understandingaccounting.org/asc/944/30/#944-30-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:52.993Z to 2026-09-10T02:15:52.993Z Record version: sha256:bfad88ce11303f3a9b5a8c84913c8388c73e7ae67824018a9ed8f1b2564e4e07 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 [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.") involving [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. Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:4e0473b97162da2a2c49d0de26d55f8cb1db9e9166e60d8c7d81b8174754dd5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/944/30/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [944-30-15-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:900d227146099f8cc386b7680707cf1e9128c739cf644475be12679a96f74b18 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 qualifications noted below. #### Entities ##### [944-30-15-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:cd88ecc4506444ad62d9aed0ee608005b612247da0effd5634b672d2a4d6a946 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in 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 ##### [944-30-15-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:fecd8cdc6727ccaaf8433a13b28abefa89e5ba3fbbfc6113f9cff568a05490fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Short-Duration Contracts Subsections of this Subtopic follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/30/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-30-15-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:451902e4ef760302e62b26cc572dcc2e6222ead9a351ad0fcc3ebe40f26427f1 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 insurance contracts. For guidance on identifying a short-duration insurance contract, see the [Short-Duration Contracts Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15. ### Long-Duration Contracts #### Overall Guidance ##### [944-30-15-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:15d30607f88a9a77e95924a284047d3e15120f14c65e3c21c1f6c49acb2d1da9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections of this Subtopic follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/30/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-30-15-6](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:a8aa59a70dc4854569310cd1c7ccac9759f6384362a87293df355049e4b95550 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Long-Duration Contracts Subsections of this Subtopic applies only to long-duration contracts. For guidance on identifying a long-duration contract, see the [Long-Duration Contracts Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15. ### Internal Replacement Transactions #### Overall Guidance ##### [944-30-15-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:faa11606d7c2c7dd631e1ab4be9ceb1276d2880aab12165eabc244b807a40351 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Internal Replacement Transactions Subsections follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/30/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications and other considerations noted below. #### Instruments ##### [944-30-15-8](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:97b6318a029631a0659b31ce22111e698adc97d816d75a873b926b230955c404 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Internal Replacement Transactions Subsections applies to modifications and replacements made to short-duration contracts and long-duration contracts (including those contracts defined as [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.")). #### Other Considerations ##### [944-30-15-9](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:63c3e170806157bf33178381127320027fad0b03f70cdbee82b434bb363a9a14 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on modifications and exchanges of debt issued by insurance entities, see Subtopic 470-50. ### Reinsurance Contracts #### Overall Guidance ##### [944-30-15-10](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:f4e9600cc6629f2d03ab6a993b50d188ac0e71c7a8470a5e440ad4093c71d1bd 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/944/30/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-30-15-11](https://asc.understandingaccounting.org/asc/944/30/#944-30-15-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:55.044Z to 2026-09-10T02:15:55.044Z Record version: sha256:a4f4b8b324a3f7452de74e2b2290a0bff39d7522dd29b43c063e24fd53910827 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. Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:7c9491759e5d51d79d5b944616091396f6bf41c4420908a84090495f5f81b8c3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/944/30/#25-recognition) SEC content: no ##### [944-30-25-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:e78716a92fd494b90718dbefd74bd57034b307a68ed246ace592a63ee00e1b9b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2010-26](https://asc.understandingaccounting.org/updates/asu-2010-26/). ##### [944-30-25-1A](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:a1a5ddf84b3cb56e88dd92884c65f57d6b7fbb2472cf7833d9fdc2893999fa8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall capitalize only the following as acquisition costs related directly to the successful acquisition of new or renewal insurance contracts: 1. a [Incremental direct costs of contract acquisition](https://asc.understandingaccounting.org/glossary/i/#incremental-direct-cost-of-contract-acquisition "A cost to acquire an insurance contract that has both of the following characteristics: It results directly from and is essential to the contract transaction(s). It would not have been incurred by the insurance entity had the contract transaction(s) not occurred.") 2. b The portion of the employee's total compensation (excluding any compensation that is capitalized as incremental direct costs of contract acquisition) and payroll-related fringe benefits related directly to time spent performing any of the following acquisition activities for a contract that actually has been acquired: 1. 1 Underwriting 2. 2 Policy issuance and processing 3. 3 Medical and inspection 4. 4 Sales force contract selling. 3. c Other costs related directly to the insurer's acquisition activities in (b) that would not have been incurred by the insurance entity had the acquisition contract transaction(s) not occurred. 4. d [Subparagraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). - If the application of the guidance in this paragraph results in the capitalization of acquisition costs that had not previously been capitalized by the insurance entity before fiscal years beginning after December 15, 2011, the insurance entity may elect to not capitalize those types of costs. This election shall be made before fiscal years beginning after December 15, 2011. - _\[**Editor's Note**: This accounting policy election was a one-time election upon the adoption of the amendments in Update 2010-26.\]_ ##### [944-30-25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1AA) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:45c2b266232056abb43b7842baa00d60019f5330a60375b9df577b1bdc4d03f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The costs of direct-response advertising shall be capitalized if both of the following conditions are met: 1. a The primary purpose of the advertising is to elicit sales to customers who could be shown to have responded specifically to the advertising. Paragraph [944-30-25-1D](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1D) discusses the conditions that must exist in order to conclude that the advertising's purpose is to elicit sales to customers who could be shown to have responded specifically to the advertising. 2. b The direct-response advertising results in probable future benefits. Paragraph [944-30-25-1G](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1G) discusses the conditions that must exist in order to conclude that direct-response advertising results in probable future benefits. ##### [944-30-25-1B](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:cfd36ff496761dcad1079187b6a943f96bc670a5d3d7077a48cde90f8b9c2dd8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To associate [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.") with related premium revenue, for acquisition costs that are charged to expense in proportion to premium revenue recognized under Subtopic 944-605, capitalized acquisition costs shall be allocated by groupings of insurance contracts consistent with the entity's manner of acquiring, servicing, and measuring the profitability of its insurance contracts. #### Primary Purpose to Elicit Sales to Customers Responding to the Advertising ##### [944-30-25-1C](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:90fe49231e2ad59fa7f73d1255dae3aea974ca9fb5ecf9818a15f50129940239 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As noted in paragraph [944-30-25-1AA(a)](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1AA), the first condition for capitalizing direct-response advertising is that the primary purpose of the advertising is to elicit sales to customers who could be shown to have responded specifically to the advertising. ##### [944-30-25-1D](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1D) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:837eb42505122f12d0af02b8acffaf77a8452c8acc175fddc17cb17753e72ac2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In order to conclude that advertising elicits sales to customers who could be shown to have responded specifically to the advertising, there must be a means of documenting that response, including a record that can identify the name of the customer and the advertising that elicited the direct response. Examples of such documentation include the following: 1. a Files indicating the customer names and the related direct-response advertisement 2. b A coded order form, coupon, or response card, included with an advertisement, indicating the customer name 3. c A log of customers who have made phone calls to a number appearing in an advertisement, linking those calls to the advertisement. ##### [944-30-25-1DD](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1DD) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:805fee41a61f238188d376c4c6f89e4897f5d0bcbacf8ba0411e5fbcd4fdb1a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Direct-response advertising activities exclude advertising that, though related to the direct-response advertising, is directed to an audience that could not be shown to have responded specifically to the direct-response advertising. For example, a television commercial announcing that order forms (that are direct-response advertising) soon will be distributed directly to some people in the viewing area would not be a direct-response advertising activity because the television commercial is directed to a broad audience, not all of which could be shown to have responded specifically to the direct-response advertising. #### Probable Future Benefits of Direct-Response Advertising ##### [944-30-25-1E](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1E) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:c004e8f5ab1e6a1877f9a563b166ecbe274933606f8f429c063d9b5a7e548132 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As noted in paragraph [944-30-25-1AA(b)](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1AA), the second condition for capitalizing direct-response advertising is that the direct-response advertising results in probable future benefits. ##### [944-30-25-1F](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1F) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:3df7a0942ddb4f7e4657024696099f2f8ff0e98b7e5270911915c59006b8a041 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The probable future benefits of direct-response advertising activities are probable future revenues arising from that advertising in excess of future costs to be incurred in realizing those revenues. ##### [944-30-25-1G](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1G) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:76b915fd55537729462f57aa4988a433e926ebfda4c992230d6a192a1f89b8e5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Demonstrating that direct-response advertising will result in future benefits requires persuasive evidence that its effects will be similar to the effects of responses to past direct-response advertising activities of the entity that resulted in future benefits. Such evidence shall include verifiable historical patterns of results for the entity. Attributes to consider in determining whether the responses will be similar include the following: 1. a The demographics of the audience 2. b The method of advertising 3. c The product 4. d The economic conditions. ##### [944-30-25-1H](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1H) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:b12ec0fd458fb463f197dda43de1870a1b945f44e3706d1c21353c1aecf5749b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Industry statistics would not be considered objective evidence that direct-response advertising will result in future benefits in the absence of the specific entity's operating history. If the entity does not have an operating history for a particular product or service but does have operating histories for other new products or services, statistics for the other products or services may be used if it can be demonstrated that the statistics for the other products or services are likely to be highly correlated to the statistics of the particular product or service being evaluated. For example, test market results for a new product or service may be used to support the view that the results of advertising for current new products or services are likely to be highly correlated with the results of advertising for new products or services previously sold by the entity. In the absence of the expectation of a high degree of correlation, a success rate based on historical ratios of successful products or services to total products or services introduced to the marketplace would not be a sufficient basis for reporting a portion of the costs of current-period advertising as resulting in assets. #### Direct-Response Advertising That Does Not Result in Probable Future Benefits ##### [944-30-25-1I](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1I) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:035b7694130b3ea256011e39e9ff76353b7de917138c7bb38319342122adca38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Direct-response advertising costs that are not capitalized because it cannot be demonstrated that the direct-response advertising will result in future benefits shall not be retroactively capitalized in subsequent periods if historical evidence in those subsequent periods indicates that the advertising did in fact result in future benefits. #### Basis of Measurement ##### [944-30-25-1J](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1J) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:3301f40064807a25d86e0ec83f15c20909ae41488989b1e7a7945b2282b76dcc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Based on the potential customers and the probable customer response rates, direct-response advertising that is expected to produce future revenues generally is undertaken before the customers' identity is known. Such advertising is undertaken with the expectation that not all targets of the direct-response advertising will provide benefits but that the benefits created by the customers who do respond to the advertising will justify the total advertising costs. Accordingly, the cost of the direct-response advertising directed to all prospective customers, not only the cost related to the portion of the potential customers that are expected to respond to the advertising, shall be used to measure the amounts of such reported assets. #### Period and Extent of Expected Future Benefits ##### [944-30-25-1K](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1K) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:62fe2147365dfe9c8cb83df9cb317578f5b699eff7569e3c09838c33621c0e5f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There is no overriding guidance that would either permit or prohibit reporting the costs of direct-response advertising as assets based on the inclusion of future revenues from renewals or repeat sales. Reporting entities with an established operating history, such as certain entities in subscription businesses, may be able to measure such amounts with the required degree of reliability and, if so, shall report assets based on renewal amounts. The reporting entity must exercise judgment about both of the following: 1. a The existence of the degree of reliability required to determine the probability of renewals 2. b Whether those renewals result from the direct-response advertising being accounted for. In order to conclude that the renewals result from the direct-response advertising being accounted for, the renewals must not result from significant direct-response advertising that took place subsequent to the direct-response advertising being accounted for. ##### [944-30-25-1L](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1L) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:f18e5cf217953e9ef82701d62c3437070bcb699143649684e6150f4e98ae0bf1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Each significant advertising effort establishes a separate standalone cost pool. Examples of situations in which that required degree of reliability may exist, without significant direct-response advertising subsequent to the direct-response advertising being accounted for, include the following: 1. a The sale of subscriptions may be offered only through direct-response advertising. The entity may have objective evidence that, historically, a quantifiable percentage of subscriptions is renewed at the end of each subscription period without a significant advertising effort. After the subscription is purchased, in what is deemed to be an insignificant advertising effort, renewal subscriptions are offered for sale by mailing a renewal card to those who have subscriptions that will lapse soon. The amount of direct-response advertising reported as assets and amortized in future periods ordinarily would be based on the expected total revenue to be realized over both the initial and the renewal subscription periods. 2. b A series of products, such as pieces in a chess set, may be offered for sale only through direct-response advertising. After the first piece is purchased, the remaining pieces are offered for sale by mailing a response card to those who purchased the first piece in what is deemed to be an insignificant advertising effort. The entity may have objective evidence that, historically, each customer who buys the first piece will buy a quantifiable percentage of the remaining pieces. If each of the pieces is bought separately, the amount of direct-response advertising reported as assets and amortized in future periods ordinarily would be based on total revenue from all sales, including estimated future sales. If significant marketing efforts are required to generate subsequent revenues through renewal or repeat sales, those subsequent revenues would not qualify as revenues resulting from the direct-response advertising that resulted in the initial sale and initial standalone cost pool. For instance, in the chess set example in (b), if a pamphlet describing the chess set, its monetary and aesthetic value, and the history of the game of chess is sent to those who purchased the first piece, the amount of direct-response advertising reported as assets and amortized in future periods would be based on sales of the first piece rather than on the total of all sales including estimated future sales. However, subsequent direct-response advertising may result in the capitalization of the costs of that subsequent advertising, with its costs accumulated in a standalone cost pool, if the conditions for capitalization in this Subtopic are met. #### Acquisition Costs of Assets ##### [944-30-25-1M](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1M) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:3fa511e322fdce2db4cebfb37a521956594cf175d45016354188a57dd12b9cf0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The costs of materials bought from a supplier in the production of advertising materials shall be reported as costs of assets from direct-response advertising if those materials can be directly attributed to specific direct-response advertising. An example of such costs and activities is the cost of paper bought from a third party used to produce catalogues. #### Tangible Assets Used for Several Advertising Campaigns ##### [944-30-25-1N](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1N) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:0fde17555c7fac4df3d5846328a86c49909a0068bdac7febce1d4e6f110e1269 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Tangible assets, such as blimps or billboards, may be used for several advertising campaigns. The costs of such assets shall be capitalized. #### Revenues to Consider When Evaluating Future Benefits ##### [944-30-25-1O](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1O) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:cf4bd7ae48e5a66cb6e46017aa61014475785aa0d381c6a9ec9be54f5eaf0bc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of considering the probable future benefits of direct-response advertising, revenues associated with such advertising are as follows: 1. a Primary: Revenues from sales to customers receiving and responding to the direct-response advertising 2. b Secondary: Revenues that are not from sales to customers receiving and responding to the direct-response advertising. For example, most publishers receive revenue from customers that subscribe to the publications; these subscription revenues are primary revenues. Publishers also receive secondary revenues such as advertisements in the publications (referred to as placement fees). Placement fee revenues are affected by several factors, including the total number of subscribers to the publication and the selling efforts devoted to obtaining the placement fees. ##### [944-30-25-1P](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1P) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:94db38fb7c70c1b284c7f5d8dd1c65b3ff1b480eff67f0c5842a9ce177d6c3e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When determining probable future revenues, those revenues shall be limited to revenues from sales to customers receiving and responding to the direct-response advertising (primary revenues). When evaluating whether the direct-response advertising results in probable future benefits (see paragraph [944-30-25-1AA(b)](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1AA)), probable future benefits shall include only primary revenues. ##### [944-30-25-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:1810df56e57f4271200d8415a22a59a6d1ad8b17018be4ddd6ceb28aafa437ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-720-25-2](https://asc.understandingaccounting.org/asc/720/944/#720-944-25-2) requires that an insurance entity charge to expense as incurred certain other costs. ### Long-Duration Contracts ##### [944-30-25-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:1f83545cab4fbb5f02626496582f3874034a29d2ad51a23c01ece957876f21f6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance does not define the costs to be included in [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.") but does describe those that are not eligible to be capitalized. ##### [944-30-25-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:5399d34f89f4c05cd3f8eef70ddfd6ab688b1883e7af177228f7916f4e2342eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition costs that have any of the following characteristics shall be considered maintenance and other period costs and be charged to expense in the period incurred: 1. a Acquisition costs that vary in a constant relationship to premiums or insurance [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.") 2. b Acquisition costs that are recurring in nature 3. c Acquisition costs that tend to be incurred in a level amount from period to period. ##### [944-30-25-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:dd3f5ed9c0b94b6ff05063b8b07dbb89e3ee3312c9e405ff49fc837b4121693f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs such as recurring premium taxes and ultimate level commissions, which vary with premium revenue, shall be charged to expense in the periods incurred. #### Sales Inducements ##### [944-30-25-6](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:49439d67f019a958ae518f0c394bd50039675876593eec064833dab0be3e0e7f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-30-25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-7) addresses [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.") that may be deferrable if the insurance entity can demonstrate that the sales inducement amounts have both of the following characteristics: 1. a The amounts are incremental to amounts the entity credits on similar contracts without sales inducements. 2. b The amounts are higher than the contract's expected ongoing crediting rates for periods after the inducement, as applicable; that is, the crediting rate excluding the inducement should be consistent with assumptions used in contract illustrations and interest-crediting strategies. Due to the nature of [day-one bonuses](https://asc.understandingaccounting.org/glossary/d/#day-one-bonus "See Immediate Bonus.") and [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.") bonuses, the criteria in items (a) and (b) generally are met for such sales inducements. ##### [944-30-25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:0f7c048f0a2c6a53f37cec3184cc9e45733c5f94ada83cb1ccb9b938f74d8bbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Amounts specified in the preceding paragraph shall be deferred and amortized using the same methodology and assumptions used to amortize capitalized acquisition costs if the sales inducements have both of the following characteristics: 1. a The sales inducements are recognized as part of the liability under paragraph [944-40-25-12](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-12). 2. b The sales inducements are explicitly identified in the contract at inception. #### Limited-Payment Contracts ##### [944-30-25-8](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:ea8e250c87f0c0731dedc3c687f16f465367d31282857d36405f09e5abbebf9c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs related to the acquisition of new and renewal business that are not capitalized (because they do not meet the criteria for capitalization in paragraphs [944-30-25-1A through 25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A)) and 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 paragraphs [944-40-30-15](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-15) and [944-720-25-2](https://asc.understandingaccounting.org/asc/720/944/#720-944-25-2)) are period costs that shall be recognized when incurred. Such costs shall not be included in the calculation of [net premium](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.") used in determining the profit to be deferred on [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.")because the inclusion of such costs in the calculation of net premium would result in their deferral. ##### [944-30-25-9](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:5a223801b9081e8f6bc152a46ea447bdeeed96200bad246fe1c3ebf03a0911f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs that would be included in the determination of net premium under this Subtopic are policy-related costs that are not primarily related to the acquisition of business (such as termination or settlement costs; see paragraph [944-40-30-15](https://asc.understandingaccounting.org/asc/944/40/#944-40-30-15)). ##### [944-30-25-10](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:38f3fa3eca5a1b721634362949c64a35a20c032b1375c66dda6811e7e3b7e5a3 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/). ### Internal Replacement Transactions ##### [944-30-25-11](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:de44b0f21d31031974c7510c1653c8f0927e230184c9eed5fee0aa9d91527b7d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance applies only to replacements of traditional life insurance contracts by universal life type contracts. If surrender of a life insurance contract is associated with an [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") by a universal life-type contract, the entity shall not defer either of the following in connection with the [replacement contract](https://asc.understandingaccounting.org/glossary/r/#replacement-contract "A new or modified contract in an internal replacement transaction."): 1. a Unamortized [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.") associated with the [replaced contract](https://asc.understandingaccounting.org/glossary/r/#replaced-contract "A contract that currently is held by the contract holder, and is exchanged or modified in an internal replacement transaction.") 2. b Any difference between the cash surrender value and the previously recorded liability. ##### [944-30-25-12](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:dc50000adfea428b5fef3f5159707eb5e405afd49efff257ac5982bb45b9d5cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting for other internal replacements shall be based on the circumstances of the transaction. ### Reinsurance Contracts ##### [944-30-25-13](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:8bdf66d8ab3a6abe0825fa0d79f2b1f0dff3ac6306acc8e124d06355e17f56c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The net cost to the assuming entity shall be accounted for as an [acquisition cost](https://asc.understandingaccounting.org/glossary/a/#acquisition-costs "Costs that are related directly to the successful acquisition of new or renewal insurance contracts."). ##### [944-30-25-14](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:02.838Z to 2026-09-10T02:16:02.838Z Record version: sha256:21aefb306689985c335e324725c79725805aa3f0ad7d8bf00f8aa1a1a6cd839a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraphs [944-30-25-1A through 25-1B](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) provide guidance on recognition of acquisition costs. Source downloaded (UTC): 2026-09-10T02:16:05.010Z to 2026-09-10T02:16:05.010Z Record version: sha256:71886c5eff2a4dcf476705a7ee69748c871be15c7a03ce455ad36b3304b4f7be Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/944/30/#30-initial-measurement) SEC content: no ### Short-Duration Contracts ##### [944-30-30-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:05.010Z to 2026-09-10T02:16:05.010Z Record version: sha256:7e61f8bfe560ab3e175ee3689b7d6dcb09f5c86e1ddc71740c55dfe95bf517fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-30-35-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-2) states that, if [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.") for short-duration contracts are determined based on a percentage relationship of costs incurred to premiums from contracts issued or renewed for a specified period, the percentage relationship and the period used, once determined, shall be applied to applicable unearned premiums throughout the period of the contracts. ### Long-Duration Contracts ##### [944-30-30-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:05.010Z to 2026-09-10T02:16:05.010Z Record version: sha256:b871e93a0befc0fc8d8cf5d5ab4aed7c8665e7576a9eee1d80ce02519c97b398 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Incurred [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.") for long-duration contracts shall be used in determining acquisition costs to be capitalized. Acquisition costs, including future contract renewal costs, shall not be capitalized or amortized before the incurrence of those costs. Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:a08064a457c7e03d82025fbfbd04d3eea0a762fb2df9319a203cf2d2305e1605 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/944/30/#35-subsequent-measurement) SEC content: no ##### [944-30-35-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:a1769bc7e16472521bb4a935721843e68e87b29aba43f0545c1ce089cf1f08f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Subsections in this Section address [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 other costs. ### Short-Duration Contracts ##### [944-30-35-1A](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-1A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:6cd163ba425e7e5509ee51a4144e3ae2f5035c763f2325363390d4136c969dde Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition costs capitalized under paragraphs [944-30-25-1A through 25-1B](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) shall be charged to expense in proportion to premium revenue recognized under Subtopic 944-605. ##### [944-30-35-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:8e4b4f481ea5cf5cbde170f55a6db4b30b776b2295e7fc6e58a963e4ec4277bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If acquisition costs for short-duration contracts are determined based on a percentage relationship of costs incurred to premiums from contracts issued or renewed for a specified period, the percentage relationship and the period used, once determined, shall be applied to applicable unearned premiums throughout the period of the contracts. ### Long-Duration Contracts #### Insurance Contracts ##### [944-30-35-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:a6df032082b4028a1e643cf32d1fac54f5f7a0b361781064492e61da42ca7170 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Capitalized [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.") shall be charged to expense using assumptions consistent with those 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.")(or any other related balance) for the corresponding contracts (see Subtopic 944-40), as applicable (for example, [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.")). For contracts with accumulation and payout phases, 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.") shall be viewed as a separate contract under this Topic and shall not be combined with 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.") for amortization of capitalized acquisition costs. ##### [944-30-35-3A](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-3A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:977228dca2201ddf29d6a20464803d2c8233ecf89c714cdcf34a6ddf744ba63a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition costs capitalized under paragraphs [944-30-25-1A through 25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) shall be charged to expense on a constant level basis—either on an individual contract basis or on a grouped contract basis—over the expected term of the related contract(s) as follows: 1. a Individual contracts. Capitalized acquisition costs shall be charged to expense on a straight-line basis. 2. b Grouped contracts. Capitalized acquisition costs shall be charged to expense on a constant-level basis that approximates straight-line amortization on an individual contract basis. Contracts shall be grouped consistent with the grouping used in estimating the liability for future policy benefits (or any other related balance) for the corresponding contracts. The resulting amortization amount shall not be a function of revenue or profit emergence. The amortization method shall be applied consistently over the expected term of the related contract(s). ##### [944-30-35-3B](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-3B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:d5fd6fc462c027cf4c84383a50fee64b4f36bd53191d0b0bcbfdbeb9996aba56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The balance of capitalized acquisition costs shall be reduced for actual experience in excess of expected experience (that is, as a result of unexpected contract terminations). The effect of changes in future estimates (for example, revisions of mortality or lapse assumptions as required in paragraph [944-40-35-5(a)](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-5)) shall be recognized over the remaining expected contract term as a revision of the future amortization amounts. ##### [944-30-35-3C](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-3C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:34471d2414c7355c6c518b92ace7a0ed58e7cafd77b429d46287b7061e7aef8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. No interest shall accrue on the unamortized balance of capitalized acquisition costs. In determining amortization expense, future deferrable costs shall not be included before the incurrence and capitalization of those costs. ##### [944-30-35-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:27a777f67058b7383400047f8ef829af69208a872e4647fda1cd070839232612 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/). ##### [944-30-35-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:f473aa3c221d8c608b348d1e623a973b34542f97dc7a10a8a747c7422f1c156d 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/). ##### [944-30-35-6](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:58944ae6d6eee70c38d17fe67dcf6e4d3cd4205c28d0a01c8a9fee66cf993826 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/). ##### [944-30-35-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:9029bdc421229990cfdde8ccbc857f028edef7aa49007feef180c7fe77254520 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/). ##### [944-30-35-8](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:5673a949609ce93d4ef30a65cb16610f787f777c2fe0fbf7d8def39344c89f18 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/). ##### [944-30-35-9](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:672832159b23b0e5f20c2711a26ad7309cc2c36bd294ae90a2218d36e0c2b4b8 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/). ##### [944-30-35-10](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:377a6b41330440e3c63e9fa333ec50e81ba59aef091c75a18d47af2c79fba19b 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/). ##### [944-30-35-11](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:85de123bc5f7ef256a7a304cb6deccecfdcb6b475ccc6d82451b20a18943502b 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/). ##### [944-30-35-12](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:4cd7f1a8f3b9c38d61d8f71790e129743005c1d41802f610589ed2870e6a3235 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/). ##### [944-30-35-13](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:00251053765673b9f867a72a8196f07148751d4bac0532ff7cbffdb1c59e2432 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/). ##### [944-30-35-14](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:60d8c865f8d5032065080aab5c8e815b1720428626f21e696abc93813a40c46e 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/). ##### [944-30-35-15](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:e4c96e9137c4bccbe73f4ef36171c13f75c7c0da26c665174dd4b72b99b59fd0 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/). ##### [944-30-35-16](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:2b93ccb6a052cabc39a1ef0fd27b0ad7b6e17f6f7d68d7c133de45602c49de09 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/). ##### [944-30-35-17](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:38684edc0f7123acf17891aa23432259e1b97e9dfa026f933b16c4741acacfb0 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/). #### Sales Inducements ##### [944-30-35-18](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:f88d0b2f1e92af023e6cbc041deb6d5f7cd96290ef511d8d49aad0655c69edcc 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.")deferred under paragraph [944-30-25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-7) shall be amortized using the same methodology and assumptions used to amortize capitalized acquisition costs. No interest shall accrue to the unamortized balance of deferred sales inducements. In determining the amortization expense, future deferrable sales inducements shall not be included before the incurrence and capitalization of those sales inducements. The payout phase is viewed as a separate contract under this Topic and shall not be combined with the accumulation phase for amortization of deferred sales inducements. #### Investment Contracts ##### [944-30-35-19](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:b551299353af696a77f1c09425858306e91b2152ce5002c3856cc2028fbe0e43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amortization method described in paragraphs [944-30-35-3 through 35-3C](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-3) shall be used to amortize acquisition costs deferred under paragraphs [944-30-25-1A through 25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) for [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.") that include significant [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.") or that yield significant revenues from sources other than the investment of contract holders' funds. ##### [944-30-35-20](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:467487ebb1e4316119559addde5fbbb6f53083e8cbde4952173af3e132f9fcbb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition costs deferred under paragraphs [944-30-25-1A through 25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) for other investment contracts shall be amortized using an accounting method that recognizes costs as expenses at a constant rate applied to net policy liabilities and that is consistent with the [interest method](https://asc.understandingaccounting.org/glossary/i/#interest-method "The method used to arrive at a periodic interest cost (including amortization) that will represent a level effective rate on the sum of the face amount of the debt and (plus or minus) the unamortized premium or discount and expense at the beginning of each period.") under Subtopic 310-20. The incidence of surrenders (if they are [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") and can be reasonably estimated) can be anticipated for purposes of determining the amortization period. The rate of amortization shall be adjusted for changes in the incidence of surrenders to be consistent with the handling of principal prepayments under Subtopic 310-20. ##### [944-30-35-21](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:c3ea3f00b7a1b31044715b7670ca62b127e13f6703113e23b097fc4395f79b45 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/). ##### [944-30-35-22](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:7621830ad9301161f554dccfabcc4af69e4309bb768531da545e5a587b8d095e 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/). ##### [944-30-35-23](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:e8f27d624c01f38c39ba5b7f432fdb64d26ca392941736ecfecae20e1f413535 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Under some methods, the contract liabilities may be calculated net of deferred acquisition costs. In that event, the amounts of deferred acquisition costs and contract liabilities have to be determined separately. ### Internal Replacement Transactions #### Overall ##### [944-30-35-24](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:1edf242f052b193e31b939108c5601135a1bfe701760d8eb88391475237c9ecc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") (as described in this Subsection) occurs and the rights and obligations of the parties to the contract are substantially unchanged (based on an evaluation of the conditions specified in paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37)) from those under the [replaced contract](https://asc.understandingaccounting.org/glossary/r/#replaced-contract "A contract that currently is held by the contract holder, and is exchanged or modified in an internal replacement transaction."), the [replacement contract](https://asc.understandingaccounting.org/glossary/r/#replacement-contract "A new or modified contract in an internal replacement transaction.") shall be accounted for as a continuation of the replaced contract in accordance with the guidance beginning in paragraph [944-30-35-38](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-38). ##### [944-30-35-25](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:5ae9044301766ea4a5f963da389221a1b1dd4debcce1e233860a6f41ba733901 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the internal replacement occurs and results in a replacement contract that is substantially changed from the replaced contract, the replaced contract shall be accounted for as extinguished in accordance with the guidance in paragraphs [944-30-40-1 through 40-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-1) . ##### [944-30-35-26](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:212ba0cd461e485d590d5101eb5b0a2f56ec8f2a4b06a5262e1cd3b896e266d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Modifications (other than partial withdrawals, surrenders, or reductions in [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.") \[see paragraph [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29)\]) that result from the election by the contract holder of a benefit, feature, right, or coverage that was within the [original contract](https://asc.understandingaccounting.org/glossary/o/#original-contract "A contract that was initially entered into by the contract holder before any potential internal replacement activity.") are not internal replacements subject to this guidance as long as all of the following conditions are met: 1. a The election is made in accordance with terms fixed or specified within narrow ranges in the original contract. 2. b The election of the benefit, feature, right, or coverage is not subject to any underwriting. 3. c The insurance entity cannot decline to provide the coverage or adjust the pricing of the benefit, feature, right, or coverage. 4. d The benefit, feature, right, or coverage had been accounted for since the inception of the contract. ##### [944-30-35-27](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:d443c9e37c6e4a8c19985fea6c1b616491a8dbbfad768d269f9c65855e2af54f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of (d) in the preceding paragraph include both of the following: 1. a The option to elect the feature is an embedded option within the contract that is required to be accounted for under Subtopic 815-15. 2. b The existence of the option to elect a feature was assessed in the classification of and accounting for the contract, such as the classification of the contract as an insurance contract under Section 944-30-15. ##### [944-30-35-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:1d09a7c31ace3695d69e71f93222ee373e643f38f4da6cc564360c74a7b78402 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 a contract is separate and distinct from and shall not be accounted for as a continuation of 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."), even if annuitization is in accordance with terms fixed in the original contract. ##### [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:d1a587dc961a855cf6d7b463226b11246743f11b84cf2e40939aeed671d3ad46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Partial withdrawals, surrenders, or reductions in coverage (for example, reduced face amount on a life insurance contract or higher deductibles on a property casualty contract), as allowed by terms that are fixed and specified at contract inception either in the contract or other information available to the contract holder or, if required by state law or regulation, at terms in effect when the reduction is made for that benefit, feature, right, or coverage, whether or not [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.") or other [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.") charges are assessed, are not internal replacements subject to this guidance, as long as there are no [reunderwriting](https://asc.understandingaccounting.org/glossary/r/#reunderwriting "The reexamination of the insurance risk of the entire contract for purposes of acceptance or rejection or for rating the risk for pricing purposes.") or other modifications to the contract, at that time, that would require evaluation under paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37). #### Integrated and Nonintegrated Contract Features ##### [944-30-35-30](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:fd3b25bd98951f01c45392b289805f7c3debbb6272689e59863d68fa8d060b96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For long-duration contracts, [integrated contract features](https://asc.understandingaccounting.org/glossary/i/#integrated-contract-feature "A contract feature in which the benefits provided by the feature can be determined only in conjunction with the base contract.") are those for which the benefits provided by the feature can be determined only in conjunction with the account value or other contract holder balances related to the [base contract](https://asc.understandingaccounting.org/glossary/b/#base-contract "The type of contract specified in the policy form before the addition or election of riders or other contract features. For example, for an annuity with a guaranteed-minimum-income-benefit rider, the annuity would be considered the base contract."), and [nonintegrated contract features](https://asc.understandingaccounting.org/glossary/n/#nonintegrated-contract-feature "A contract feature in which the benefits provided are not related or dependent on the provisions of the base contract.") are those for which the determination of benefits provided by the feature is not related to or dependent on the account value or other contract holder balances of the base contract. Underwriting and pricing for nonintegrated contract features typically are executed separately from other components of the contract, and it is inherent in this concept that the premium charged is not in excess of an amount that is commensurate with the incremental insurance coverage provided. ##### [944-30-35-31](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:359177aeffe2b843aaaac235f0890c8970646f1f483d5ba38428caf2405a9e2a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For short-duration contracts, nonintegrated contract features are those that provide coverage that is underwritten and priced only for that incremental insurance coverage, and do not result in the explicit or implicit reunderwriting or repricing of other components of the contract. It is inherent in this concept that the premium charged is not in excess of an amount that is commensurate with the incremental insurance coverage provided. Additional coverage provided by a nonintegrated contract feature would be considered nonintegrated even though the entire coverage provided by the short-duration contract may be subject to only one deductible or limit in the event of an insured loss. For short-duration contracts, integrated contract features are those where there is explicit or implicit reunderwriting or repricing of existing components of the base contract. #### Contract Modifications Involving Nonintegrated Contract Features ##### [944-30-35-32](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:00777353b0e12cc7f9b36fcf220cbcb7d41f93465f833cd92852eaa503a43046 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a contract feature or coverage is nonintegrated, the addition or election of that feature or coverage, in and of itself, does not change the existing base contract and, as a result, further evaluation of the base contract under paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) is not required. ##### [944-30-35-33](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:457be6d78380b74b87a70ace09bb0c78c6abef904ace8de64928d2061a4e3a52 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The nonintegrated contract feature or coverage shall be accounted for in a manner similar to a separately issued contract. ##### [944-30-35-34](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:279ad47b04116e5b777c5e4ec9fb46b1dc7720eea40c49bef70ed6527c645464 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subsequent modifications made only to the nonintegrated contract feature or coverage shall be evaluated under paragraphs [944-30-35-26 through 35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) separately from the base contract, and any 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.") related to the nonintegrated contract feature or coverage accounted for accordingly. ##### [944-30-35-35](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:fa43c2a3970631c51c549a83928440fb7973b2c23d7d4354fc7d0c4a379c74dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subsequent termination of a nonintegrated contract feature or coverage shall be accounted for as an extinguishment of only the balances related to the nonintegrated contract feature or coverage. #### Contract Modifications Involving Integrated Contract Features ##### [944-30-35-36](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:31b6486f95e1436d58c9045ce5728fcc8d08c1ab3120f9d7cd4bdf881ab16e83 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contract modifications involving integrated contract features or coverages (other than those contract modifications described in paragraphs [944-30-35-26 through 35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) ) the insurance entity shall review the conditions set forth in paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) to determine whether the contract has changed substantially as a result of the modification. As a result of that review, either of the following actions shall be taken: 1. a Continuation. A contract modification meeting all of the conditions in paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) results in a replacement contract that is substantially unchanged from the replaced contract, and shall be accounted for as a continuation of the replaced contract in accordance with paragraphs [944-30-35-38 through 35-40](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-38) and [944-30-35-46 through 35-60](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-46) . 2. b Extinguishment. A contract modification that fails any of the conditions in paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) results in a replacement contract that is substantially changed from the replaced contract, and shall be accounted for as an extinguishment of the replaced contract in accordance with paragraphs [944-30-40-1 through 40-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-1) . ##### [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:2c334ba7146ac0b53700fd407128a4107cf889c89373fc0a8f84a402372f8430 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An internal replacement (other than those described in paragraphs [944-30-35-26 through 35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) ) is determined to involve contracts that are substantially unchanged only if all the following conditions exist: 1. a The insured event, risk, or period of coverage of the contract has not changed, as noted by no significant changes in the kind and degree of [mortality risk](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."), [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment.") risk, or other [insurance risk](https://asc.understandingaccounting.org/glossary/i/#insurance-risk "The risk arising from uncertainties about both underwriting risk and timing risk. Actual or imputed investment returns are not an element of insurance risk. Insurance risk is fortuitous; the possibility of adverse events occurring is outside the control of the insured."), if any. 2. b The nature of the investment return rights (for example, whether amounts are determined by formulas specified by the contract, pass through of actual performance of referenced investments, or at the discretion of the insurer), if any, between the insurance entity and the contract holder has not changed. 3. c No additional deposit, premium, or charge relating to the original benefit or coverage, in excess of amounts specified or allowed in the original contract, is required to effect the transaction; or if there is a reduction in the original benefit or coverage, the deposit, premiums, or charges are reduced by an amount at least equal to the corresponding reduction in benefits or coverage. 4. d Other than distributions to the contract holder or contract designee or charges related to newly purchased or elected benefits or coverages, there is no net reduction in the contract holder's account value or, for contracts not having an explicit or implicit account value, the cash surrender value, if any. 5. e There is no change in the participation or dividend features of the contract, if any. 6. f There is no change to the amortization method or revenue classification of the contract. If any of the conditions are not met, an internal replacement is determined to involve a replacement contract that is substantially changed from the replaced contract. Example 2 (see paragraph [944-30-55-33](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-33)) illustrates the application of this guidance. ##### [944-30-35-38](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:d2633dd6f3e60007edc2c27fb5ccaa5654b1f127d033e0eea2b30df4c6a6bad3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An internal replacement that is determined to result in a replacement contract that is substantially unchanged from the replaced contract shall be accounted for as a continuation of the replaced contract. However, even if both accumulation and payout phase contracts are [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.") involving no life contingencies, the payout phase of a contract is separate and distinct from and cannot be accounted for as a continuation of the accumulation phase of the contract. For a short-duration contract, renewal results in a separate and distinct contract that cannot be accounted for as a continuation of the previous contract. Example 1 (see paragraph [944-30-55-12](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-12)) illustrates the application of this guidance. ##### [944-30-35-39](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:1ae7ebc1436d094bf5c4da55623372ef45b9be1e820bcd6458854edc62455f1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unamortized deferred acquisition costs, unearned revenue liabilities, and deferred sales inducement assets associated with the replaced contract shall continue to be deferred and amortized or earned in connection with the replacement contract. If the replaced contract was acquired in a business combination, any present value of future profits shall be accounted for in a similar manner. ##### [944-30-35-40](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:c06c754029ebdad3fd52a305313defa337800d81633a26d3b125ccacf1ffbf51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other balances associated with the replaced contract, such as any liability for minimum guaranteed death benefits or guaranteed minimum income benefits, shall be accounted for in a similar manner, that is, as if the replacement contract is a continuation of the replaced contract. ##### [944-30-35-41](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:05f60d4052757539a4d8a581b39d2ee0d240c79330239a2d62b4477db1c0168e 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/). ##### [944-30-35-42](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:a8d0e9de38c995550a18edd24f923d2d7308c4b397e420482963734d247f3ce7 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/). ##### [944-30-35-43](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:69b1ba00a9b917ba108e8b67f6647ab02bedec077b3abb395374140047755042 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/). ##### [944-30-35-44](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:5503487dd5183ce64d21328e81758c6a087ce867baadfacf64a5eeb97dae7097 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/). ##### [944-30-35-45](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:b6eca9fff21df0a753f4aab17619260e63b28ac8bf96dab71188b669f608a998 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/). ##### [944-30-35-46](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-46) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:371591c84ad9f64f69aa4d5698e1e2683c80f789d989c690bde2eaa9f6410f0e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For long-duration contracts other than investment contracts described in paragraph [944-30-35-48](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-48), a replacement contract that is substantially unchanged shall be viewed as a prospective revision of the replaced contract with future amortization of unamortized deferred acquisition costs adjusted, accordingly, on a prospective basis. Under the prospective revision methodology for long-duration contracts other than certain investment contracts, the unamortized deferred acquisition costs balance at the time of replacement is unchanged. ##### [944-30-35-47](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-47) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:02d58f8a8a47d8b8f5f316bdbe4e597fdc0d53234195aef6e630461c8efb4a28 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If it is not reasonably practicable for an insurance entity to account for a [contract exchange](https://asc.understandingaccounting.org/glossary/c/#contract-exchange "The legal extinguishment of one contract and the issuance of another.") that has resulted in a replacement contract that is substantially unchanged from the replaced contract, the insurance entity shall determine the balance of unamortized deferred acquisition costs related to the replaced contract to carry forward to the replacement contract and determine future amortization on a prospective basis. The total balance of unamortized deferred acquisition costs before the internal replacement shall be allocated between replaced contracts and contracts remaining in the original book of business based on a reasonable and systematic allocation process. ##### [944-30-35-48](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-48) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:4397d977433ccb7f5a5c84f289abf45b3eff6864413f836fa30c0edee21a4bdf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For contracts to which the interest method amortization methodology discussed in Subtopic 310-20 is applied, the replacement contract represents revisions to the cash flows of the replaced contract, and unamortized deferred acquisition costs and deferred sales inducement assets are adjusted accordingly. ##### [944-30-35-49](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-49) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:3185a90763f1a30bf6b4b9a462c0f64b683700d5fb5f53823369ec79a58cccc8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The balance of unamortized deferred acquisition costs and other contract-related balances shall be updated based on the most current assumptions at the time of the internal replacement. ##### [944-30-35-50](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-50) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:63fead322be866dae992b4f5568bcb1b961ac3fb4549af95c7b3149f3d4b4263 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Any related liability for future policy benefits or [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.") for a substantially unchanged contract shall be updated as described in Subtopic 944-40 on claim costs and liabilities for future policy benefits. ##### [944-30-35-51](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-51) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:07b873d3a7695f59b7d683f6ff150e16123c0b5f5d7d9d3ddb36a274507a988f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other balances that are determined based on activity over the life of the contract, such as an additional liability for death or other insurance benefits (which, under this Subtopic, is determined based on assessments and benefit costs) shall be calculated considering the entire revised life of the contract, including activity during the term of the replaced contract. ##### [944-30-35-52](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-52) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:2333a12062046ecda6f7f1ba502670f607afaf5a196079ee166198d4902a8995 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A revision to a short-duration contract is viewed as a prospective revision with future recognition of unearned premium and amortization of unamortized deferred acquisition costs adjusted, accordingly, on a prospective basis. ##### [944-30-35-53](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-53) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:293e2333a1ccf0035b813067bac586cb22327630c30ddc67a8a5586e2e8d6a78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Consistent with the guidance in paragraphs [944-30-35-1A](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-1A) and [944-605-25-1](https://asc.understandingaccounting.org/asc/605/944/#605-944-25-1), unearned premium is recognized as revenue over the period of the contract in proportion to the amount of insurance protection provided, amortization of deferred acquisition costs continues to be recognized in proportion to the premium recognized, and the revised amortization ratio is used prospectively. ##### [944-30-35-54](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-54) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:7d39e9363cdb385191c89962cb111ba7300d736ea8ba5d0555bf0ce4018a2214 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the modification is a reduction in benefits with a directly proportionate reduction in premiums, the modification shall result in an immediate proportionate reduction in unamortized deferred acquisition costs rather than a prospective revision. ##### [944-30-35-55](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-55) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:e85936ec870a1fed9c0f379ca87a91d915ca06f748ee46b20d1037f6deb2c66c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs incurred in connection with an internal replacement that results in a replacement contract that is substantially unchanged from the replaced contract shall be accounted for as 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.") and charged to expense as incurred. ##### [944-30-35-56](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-56) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:9658188a96578b4550e7059bcac9ed3789daa79d1f90be55e2e0ca5d50425683 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of renewal commissions paid on the replacement contract that meets the criteria for deferral under this Subtopic, limited to the amount of the future deferrable renewal commissions on the replaced contract that would have met the deferral criteria, continues to be deferrable under those provisions. ##### [944-30-35-57](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-57) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:442cd8e41212b2270a6aa96aba19516de020c72cca551fe30de668e9ac938c84 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an insurance entity assesses a surrender charge on the replaced contract that is offset by an immediate sales inducement to a contract holder on the replacement contract, the insurance entity shall offset any surrender charges assessed against the contract holder's account balance under the replaced contract against any stated immediate sales inducement to determine whether there has been a net reduction in the contract holder's account value in accordance with paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37). ##### [944-30-35-58](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-58) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:fb934bf0759575689f49095fc419bac6c1ab177f778a93bc111ed7a98e6dee4f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The liability for a sales inducement to a contract holder offered in conjunction with an internal replacement of a long-duration contract that is determined to result in a replacement contract that is substantially unchanged from the replaced contract shall be accounted for from the date of its addition to the replacement contract in accordance with the guidance in paragraph [944-40-25-12](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-12). ##### [944-30-35-59](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-59) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:040463101c306c5c197266cba88396fd7892a0bc2cc2a7ce729202784a0d57a4 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 investment or universal life-type contracts, 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 [944-30-35-46 through 35-51](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-46) . No adjustments shall be made to reduce the liability related to the sales inducements for anticipated surrender 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. ##### [944-30-35-60](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-60) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:205c63147118201d77e752edd1184d46aa45d2112ff38a9148cb5978223ba2c8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The criteria in paragraphs [944-30-25-6 through 25-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-6) for recognition of a related sales inducement asset cannot be satisfied in these circumstances because the sales inducement was not specifically identified in the original contract. #### Contract Assessments ##### [944-30-35-61](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-61) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:be550a3b98f25258dc6eeb990e2031eaba5a873747e9e39013ff8bf1e91b79c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Front-end fees](https://asc.understandingaccounting.org/glossary/f/#front-end-fees "See Initiation or Front-End Fees.") assessed in connection with an internal replacement of a long-duration contract shall be evaluated for deferral in accordance with the guidance in Subtopic 944-605 on revenue recognition. ##### [944-30-35-62](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-62) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:7284f292ebac493e0e99f85babede2dbc0c41d336cfd21705cc0f2bc20ca5837 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/). #### Recoverability ##### [944-30-35-63](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-63) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:93999a95458c65c2a2d98113b6781fe0c352cf6228f5f26787735372508e7634 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unamortized deferred acquisition costs for short-duration contracts and the present value of future profits continue to be subject to premium deficiency testing in accordance with the provisions of Subtopic 944-60. ### Reinsurance Contracts ##### [944-30-35-64](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-64) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:07.285Z to 2026-09-10T02:16:07.285Z Record version: sha256:1c37983d8332c7d309a134dcf3d916156bc94fd3c9909f4abfcff312e240b90f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Proceeds from [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.") transactions that represent recovery of [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.") shall reduce applicable unamortized acquisition costs in such a manner that net acquisition costs are capitalized and charged to expense in accordance with the amortization guidance in this Section that applies to those unamortized acquisition costs. Source downloaded (UTC): 2026-09-10T02:16:11.022Z to 2026-09-10T02:16:11.022Z Record version: sha256:4787f82031e038bcf61b6a4194e5e08b9fd258b05c1a7b6b66a037e68d6e22f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/944/30/#40-derecognition) SEC content: no ### Internal Replacement Transactions #### Contracts That Are Substantially Changed ##### [944-30-40-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:11.022Z to 2026-09-10T02:16:11.022Z Record version: sha256:58913a73930ebbe9e7997795bfb40d39676c88ae800868e72672cd147cb5be3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") that is determined under paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37) to result in a [replacement contract](https://asc.understandingaccounting.org/glossary/r/#replacement-contract "A new or modified contract in an internal replacement transaction.") that is substantially changed from the [replaced contract](https://asc.understandingaccounting.org/glossary/r/#replaced-contract "A contract that currently is held by the contract holder, and is exchanged or modified in an internal replacement transaction.") shall be accounted for as an extinguishment of the replaced contract. ##### [944-30-40-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:11.022Z to 2026-09-10T02:16:11.022Z Record version: sha256:db2e69de883b12d06d6af9a3e8caf055783f00f8ef381f40dfcab0950701c7f8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unamortized 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."), unearned revenue liabilities, and deferred sales inducement assets from the replaced contract in an internal replacement transaction that results in a substantially changed contract shall not be deferred in connection with the replacement contract. If the replaced contract was acquired in a purchase business combination, any present value of future profits shall be accounted for in a similar manner. ##### [944-30-40-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:11.022Z to 2026-09-10T02:16:11.022Z Record version: sha256:a86b11f90b64bec8993b3b1d9d28c262469f9b01fa3ec9ff23d513fbcf756329 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Other balances associated with the replaced contract, such as any [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.") or [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 accounted for based on an extinguishment of the replaced contract and issuance of a new contract. ##### [944-30-40-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:11.022Z to 2026-09-10T02:16:11.022Z Record version: sha256:b9bd8a97d6a7227d0bb40ec489ecac88ea68efa3481c67a679d761aac922cc72 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Acquisition costs related to the replacement contract shall be evaluated for deferral in accordance with Section 944-30-25. Source downloaded (UTC): 2026-09-10T02:16:14.846Z to 2026-09-10T02:16:14.846Z Record version: sha256:978b45324e5eac42f9fad67d57f8a2c894f9e9bcfd110bc3e29f46d13a1a5d21 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/944/30/#45-other-presentation-matters) SEC content: no ##### [944-30-45-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:14.846Z to 2026-09-10T02:16:14.846Z Record version: sha256:f0337692372a2abc5fabf3d6ee0added9a74e08509e2878043492246b886f565 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unamortized [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.") shall be classified as an asset. ### Long-Duration Contracts #### Deferred Sales Inducement Asset ##### [944-30-45-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:14.846Z to 2026-09-10T02:16:14.846Z Record version: sha256:7488861ac6d3b62e2b516826481552cf1bf36bb38915e7b88635100cfb0835fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount deferred under paragraph 944-30-25-7 shall be recognized on the statement of financial position as an asset and amortization shall be recognized as a component of benefit expense. ##### [944-30-45-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:14.846Z to 2026-09-10T02:16:14.846Z Record version: sha256:3435cc4bcd840b8137a10a9adbab19dea5f70a250d2d669cf277cff629619c0b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-825-45-1](https://asc.understandingaccounting.org/asc/825/944/#825-944-45-1) states that 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.") related to [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 reported as an asset to be consistent with the guidance in the preceding paragraph. Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:d71db0ab772ef972ea375294cc6a58451a6563faa30351239565e2b6770c0b56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/30/#50-disclosure) SEC content: no ##### [944-30-50-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:40e777d53582552d148e21a79b0d92a8c9390019029982236278cd02f1dfa2d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance entities shall disclose all of the following in their financial statements: 1. a The nature and type of [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.") capitalized 2. b The method of amortizing capitalized acquisition costs 3. c The amount of acquisition costs amortized for the period. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)Insurance entities shall disclose all of the following in their financial statements: 1. a The nature and type of [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.") capitalized 2. b The method of amortizing capitalized acquisition costs 3. c The amount of acquisition costs amortized for the period. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. ### Long-Duration Contracts ##### [944-30-50-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:ef1b920f2c25955cd04cad894e040242cc5509b63880050ffc25154327a05e27 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/). ##### [944-30-50-2A](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-2A) Pending content: yes Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:5e593c3ab99f953dd995841725121f453c8a6e3c43ee49a004b59c2e88865dd0 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 the following information about deferred acquisition costs and sales inducements: 1. a The nature of the costs deferred 2. b Information about the inputs, judgments, assumptions, and methods used to determine amortization amounts and changes in those inputs, judgments, and assumptions. 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 the following information about deferred acquisition costs and sales inducements: 1. a The nature of the costs deferred 2. b Information about the inputs, judgments, assumptions, and methods used to determine amortization amounts and changes in those inputs, judgments, and assumptions. ##### [944-30-50-2B](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-2B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:5c47e3e2abf0d0b8d23e55b83a1a491abe73db36fde77ff5a3a7ed489f6ace37 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: 1. a A year-to-date disaggregated tabular rollforward of the beginning to the ending balance of unamortized deferred costs—and balances amortized on a basis consistent with 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."), to the extent that such balances are not included in the tabular rollforwards required in Section 944-40-50—disaggregated in a manner that is consistent with the disaggregation of the related liability disclosures 2. b A reconciliation of the disaggregated rollforwards to the aggregate ending carrying amount in the statement of financial position. ##### [944-30-50-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:c2d8af48da1b053f0af129438336fed173427baec863b24a5db2c66c97eed9b7 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/). ### Internal Replacement Transactions ##### [944-30-50-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:c79bd3a029539285258362e7579d7c830a254cf5e948214280c7ff330927155d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The notes to financial statements shall describe the accounting policy applied to internal replacements, including whether or not the entity has availed itself of the alternative application guidance outlined in paragraphs [944-30-35-47](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-47) and [944-30-35-49](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-49) and, if so, for which types of [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") transactions. ##### [944-30-50-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:17.491Z to 2026-09-10T02:16:17.491Z Record version: sha256:313a8c8df7b900618016ffd6abd3b60c4e6239cfef874966a7db698696d8f14a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:934e5851f586653b11348c08e15c66406e5998601b2cc6345b1a932c841d026e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/944/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [944-30-55-1](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:243c9c43c5ea970fdb9339ce33a13e765c00755d04207737cea4e279580547b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-30-25-1A(a)](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) requires that an insurance entity capitalize [incremental direct costs of contract acquisition](https://asc.understandingaccounting.org/glossary/i/#incremental-direct-cost-of-contract-acquisition "A cost to acquire an insurance contract that has both of the following characteristics: It results directly from and is essential to the contract transaction(s). It would not have been incurred by the insurance entity had the contract transaction(s) not occurred."). Such costs include the following: 1. a An agent or broker commission or bonus for successful contract acquisition or acquisitions. 2. b [Subparagraph superseded by Accounting Standards Update No. 2010-26](https://asc.understandingaccounting.org/updates/asu-2010-26/). 3. c Medical and inspection fees for successful contract acquisition or acquisitions. ##### [944-30-55-1A](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:555f187bbde7de756767b6b9cbe67d29463e2f5602f89ab95e2529aa1795d1d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of other costs related directly to the insurer's acquisition activities in paragraph [944-30-25-1A(b)](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1A) that would not have been incurred by the insurance entity had the acquisition contract transaction(s) not occurred include all of the following: 1. a Reimbursement of costs for air travel, hotel accommodations, automobile mileage, and similar costs incurred by personnel relating to the specified activities 2. b Costs of itemized long-distance telephone calls related to contract underwriting 3. c Reimbursement for mileage and tolls to personnel involved in on-site reviews of individuals before the contract is executed. ##### [944-30-55-1B](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:4c214665482ebd9f5c38ff9ee1406bf6756bc64f4052b05b8f8136fc02a221e7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Costs for software dedicated to contract acquisition are not eligible for deferral as 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.") under the definition of that term. Such costs are not other costs related to those activities that would not have been incurred but for that contract under the definition of that term. ##### [944-30-55-1C](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1C) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:047c3fa078b8d063b278ac1f4b73edecd8bb180d8ae88860f1822d4271b6679d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Payroll-related fringe benefits include any costs incurred for employees as part of the total compensation and benefits program. Examples of such benefits include all of the following: 1. a Payroll taxes 2. b Dental and medical insurance 3. c Group life insurance 4. d Retirement plans 5. e 401(k) plans 6. f Stock compensation plans, such as stock options and stock appreciation rights 7. g Overtime meal allowances. ##### [944-30-55-1D](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1D) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:1d5ec20fa89d736273caa891b72bffe083ace8ede2db65ed8ee0a31959e4001c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic does not specify how costs are to be determined but rather what costs must be deferred. In many instances, standard costing may be used to estimate the costs to be deferred in accordance with this Subtopic. For certain contracts, the cost of acquisition may be similar and standard costing may be appropriate for those contracts, while other contracts may be of such a nature that costs must be identified separately. Insurers may use any one or a combination of methods that will provide adequate information to report financial results in accordance with this Subtopic. Development of a standard costing system will require periodic analysis of variances and, if necessary, adjustment of standard costing estimates. Possible standard costing methods that may be used to measure costs applicable to transactions that have occurred include standard costs, actual costs, job process costs (for example, homogeneous policies), or job order costs (for example, specific contracts). ##### [944-30-55-1E](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1E) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b1b64f632514e7c67382a22835446deab12c1624f0b75188ba044ee9401e52af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The successful-efforts accounting notion utilized at an entity-wide level may result in a standard costing system that does not accurately reflect the amount of costs that may be deferred and amortized under this Subtopic. Successful acquisition efforts can be determined as a percentage of each function (for example, application, underwriting, and medical and inspection) and may be based on the percentage, adjusted for idle time and time spent on activities for which the related costs cannot be deferred, of successful and unsuccessful efforts determined for each function. ##### [944-30-55-1F](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1F) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:e6ee21608b07526bc65904ba809cbc3e7f879693ffdfb49b65cca226027d3775 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All other contract acquisition-related costs, including costs related to activities performed by the insurer for soliciting potential customers (except direct-response advertising capitalized in accordance with paragraph [944-30-25-1AA](https://asc.understandingaccounting.org/asc/944/30/#944-30-25-1AA)), market research, training, and administration, should be charged to expense as incurred. Employees' compensation and fringe benefits related to those activities, unsuccessful contract acquisition efforts, and idle time should be charged to expense as incurred. Administrative costs, rent, depreciation, and all other occupancy and equipment costs are considered indirect costs and should be charged to expense as incurred. ##### [944-30-55-1G](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-1G) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:443b29a0995ec5032ee80e2243243ac760b9df99f7e5ff90b49dbf84ecc4dcd1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of total compensation of executive employees that relates directly to the time spent approving successful contracts may be deferred as acquisition costs under the definition of that term. For example, the amount of compensation allocable to time spent by members of a contract approval committee is a component of acquisition costs. ### Long-Duration Contracts #### Illustrations ##### [944-30-55-2](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:d4deacf38f037c597bca4f7c356301038d9e94487b841da97e3b43440aab517b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the tabular rollforward that an insurance entity should disclose in its financial statements to meet the requirements of paragraph [944-30-50-2B(a)](https://asc.understandingaccounting.org/asc/944/30/#944-30-50-2B). 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/). - Note X: Deferred Acquisition Costs - The balances of and changes in 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.") as of and for the years ended December 31, 20X2, and December 31, 20X1, respectively, follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-EDA7E218-86A2-4582-BBBC-F92C926D0AC1-low.gif) "As of December 31, 20X2" Whole Life Universal Life Fixed Annuity Variable Annuity Variable Universal Life Total "Balance, beginning of year" $YYY $YYY $YYY $YYY $YYY $YYY Capitalizations XXX XXX XXX XXX XXX XXX Amortization expense (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) Experience adjustment (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) "Balance, end of year" $ZZZ $ZZZ $ZZZ $ZZZ $ZZZ $ZZZ "As of December 31, 20X1" Whole Life Universal Life Fixed Annuity Variable Annuity Variable Universal Life Total "Balance, beginning of year" $WWW $WWW $WWW $WWW $WWW $WWW Capitalizations XXX XXX XXX XXX XXX XXX Amortization expense (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) Experience adjustment (XXX) (XXX) (XXX) (XXX) (XXX) (XXX) "Balance, end of year" $YYY $YYY $YYY $YYY $YYY $YYY ##### [944-30-55-3](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:e37dc93293571c81ef3721ba539a6ab582f1358d6555ea468c7523a4a3f7c682 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/). ##### [944-30-55-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:c88a12fb0965ead1f18d8b7bc6c92caee9673bc0e1a58c68d78995cbf287dcde 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/). ##### [944-30-55-5](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:90785e314042b25a8eb2110d13ee9b33a74d84351671419becabb8be5745d65e 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/). ##### [944-30-55-6](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:40c240b5534e83dee5f5ec614e98407d354cbdbfd639e52e2a5894c8c8b876b1 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/). ##### [944-30-55-7](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:fc0fae76c119702bd548b86f5b7e05666e74b12922133bdb11bb92d87c126fb4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the computation of amortization on a constant level basis. In this Example, a block of long-duration guaranteed-renewable five-year term life insurance contracts are grouped and amortized in proportion to the amount of insurance [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 derive an approximate level amortization amount on an individual contract basis. In 20X1, the insurance entity defers costs totaling $80 and projects the balance of insurance in force over 5 years. The insurance entity would need to include mortality and lapse assumptions to project the balance of insurance in force; however, for ease of illustration, no mortality or lapses are assumed (see paragraph [944-30-55-7B](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-7B) for subsequent changes to the mortality and lapse assumptions). - ![](https://asc.understandingaccounting.org/asc-img/GUID-92F8565F-4193-4B28-9C8B-58BBCDEF6242-low.gif) Schedule One Year Balance of Insurance in Force 20X1 " $1,000 " 20X2 " 1,000 " 20X3 " 1,000 " 20X4 " 1,000 " 20X5 " 1,000 " Total " $5,000 " (x) Capitalized acquisition costs $80 (y) Amortization rate = (y) / (x) 1.60% (z) - ![](https://asc.understandingaccounting.org/asc-img/GUID-FF3CC961-CCF3-44F2-AF93-894BF6A7FCCE-low.gif) Schedule Two "Capitalized costs, year one" $80 "Amortization, year one" "Balance of insurance in force of $1,000 (from Schedule One) at rate (z) above" (16) "Balance, end of year one" $64 ##### [944-30-55-7A](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-7A) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:c2f36c3d780c788b546fc1edf1f1784ddbf6097c2e2e3f04952b55db5798bbf4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the beginning of 20X2, the entity incurs an additional $10 of deferrable acquisition costs and computes the amortization rate and expense for 20X2 as follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-40584995-946D-4D01-BBEC-16411332B5FE-low.gif) Schedule Three Year Balance of Insurance in Force 20X2 " $1,000 " 20X3 " 1,000 " 20X4 " 1,000 " 20X5 " 1,000 " Total " $4,000 " (x) Capitalized acquisition costs $74 (y) Amortization rate = (y) / (x) 1.85% (z) ##### [944-30-55-7B](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-7B) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:d0bc86e4ce6f043d7a059875c4973b0b57fc34a4813af23a46a1b99ebd05272d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of 20X2, the entity experienced unexpected contract terminations that resulted in the writeoff of deferred acquisition costs at the end of the reporting period. In addition, the entity updated the expected balance of insurance in force for the remaining periods. - ![](https://asc.understandingaccounting.org/asc-img/GUID-DAEB00E2-7F83-49E1-835E-705ECB552371-low.gif) Schedule Four "Capitalized costs, year two" $74 "Amortization, year two" "Balance of insurance in force of $1,000 (from Schedule Three) at rate (z) above" (19) "Experience adjustment, end of year two" Change in balance of insurance in force "$55 × \[(1,000 - 700) / 1,000\]" (17) "Balance, end of year two" $38 - ![](https://asc.understandingaccounting.org/asc-img/GUID-09B368BE-E900-4FF6-8B86-64E51F8599C0-low.gif) Schedule Five Year Balance of Insurance in Force 20X3 $700 20X4 400 20X5 200 Total " $1,300 " (x) Capitalized acquisition costs $38 (y) Amortization rate = (y) / (x) 2.92% (z) - ![](https://asc.understandingaccounting.org/asc-img/GUID-36892719-FF4E-4ECE-91FF-6A0E6C6EE601-low.gif) Schedule Six "Capitalized costs, year three" $38 "Amortization, year three" Balance of insurance in force of $700 (from Schedule Five) at rate (z) above (20) "Balance, end of year three" $18 - ![](https://asc.understandingaccounting.org/asc-img/GUID-9B170E0F-1795-44D6-8D9A-0DF526296C9C-low.gif) Schedule Seven Deferred Acquisition Costs Rollforward Year "Balance, Beginning of Year" Capitalization Experience Adjustment Amortization "Balance, End of Year" 20X1 $- $80 $- $(16) $64 20X2 64 10 (17) (19) 38 20X3 38 - - (20) 18 20X4 18 - - (12) 6 20X5 6 - - (6) - Total $90 $(17) $(73) ##### [944-30-55-8](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:81afb106b56cd1f523e7039d2237c506f8505454decf18eecb1c753b0f505e3c 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/). ##### [944-30-55-9](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:6761b1dec2e22b1e03d239a9bc5d580fd3e12d138b2ccee0259bc7ea8aead042 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/). ##### [944-30-55-10](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:466ad60a17b409fc5134408617a5b9bb2cfae50637c05fb0ea39fc04046cb6ef 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/). ### Internal Replacement Transactions #### Implementation Guidance ##### [944-30-55-11](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:1ce792e0d10cfdeb388fb5b649c765b17aa603e726db850315474d57901a0278 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A flowchart summarizing the accounting model set out in the Internal Replacement Transactions Subsections of this Subtopic follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-9032F3BA-2C88-4C37-BB6C-9923CF17DE07-low.gif) #### Illustrations ##### [944-30-55-12](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:34b11e0c32ee392c8dc659a8101241eb84719c80c514c98753de45c7e6739805 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following Example illustrates the application of the guidance in the Internal Replacement Transactions Subsections of this Subtopic to an [internal replacement](https://asc.understandingaccounting.org/glossary/i/#internal-replacement "A modification in product benefits, features, rights, or coverages that occurs by a contract exchange; by amendment, endorsement, or rider to a contract; or by the election of a benefit, feature, right, or coverage within the contract.") transaction that results in a substantially unchanged contract. 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/). ##### [944-30-55-13](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:45d054044b19b06e35452d14e9149853abf5370e6cacd936201236f5d3c978cf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example assumes the following: 1. a An insurance entity is offering to replace its [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).") single premium deferred [annuity contracts](https://asc.understandingaccounting.org/glossary/a/#annuity-contract "A contract that provides fixed or variable periodic payments made from a stated or contingent date and continuing for a specified period, such as for a number of years or for life.") with newer general account single premium deferred annuity contracts. 2. b The insurance entity assumes that 50 percent of the [existing contract](https://asc.understandingaccounting.org/glossary/e/#existing-contract "A contract that is currently held by the contract holder and excludes nonintegrated contract features.") holders choose the internal replacement at the end of Year 5. 3. c No [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.") from the [original contract](https://asc.understandingaccounting.org/glossary/o/#original-contract "A contract that was initially entered into by the contract holder before any potential internal replacement activity.") will be imposed on contract holders who elect to have their contracts replaced. 4. d The contract holder who elects the new contract will receive a higher interest crediting rate than under the older contract but must accept a new surrender charge period. 5. e The insurance entity expects that [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.") rates will improve under the [replacement contracts](https://asc.understandingaccounting.org/glossary/r/#replacement-contract "A new or modified contract in an internal replacement transaction.") as a result of the new surrender charge period and the higher credited interest. ##### [944-30-55-14](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:4f803c9b36b6c234d8f636dff9eea4141c3cbf03567b92395e8cb90c6946b34d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The exchange of the single premium deferred annuity contract for a newer single premium deferred annuity contract in this Example results in the replacement contract being substantially unchanged from the [replaced contract](https://asc.understandingaccounting.org/glossary/r/#replaced-contract "A contract that currently is held by the contract holder, and is exchanged or modified in an internal replacement transaction."), due to the following: 1. a The insured event or risk, type, or period of [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.") of the contract has not changed, as noted by no significant changes in the kind and degree of [mortality risk](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."), [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment.") risk, or other [insurance risk](https://asc.understandingaccounting.org/glossary/i/#insurance-risk "The risk arising from uncertainties about both underwriting risk and timing risk. Actual or imputed investment returns are not an element of insurance risk. Insurance risk is fortuitous; the possibility of adverse events occurring is outside the control of the insured."), if any. 2. b The nature of the investment return rights, if any, have not changed. 3. c No additional deposit, premium, or charge relating to the original benefit, in excess of amounts contemplated in the original contract, is required to effect the transaction. 4. d Other than distributions to the contract holder or contract designee, there is no net reduction in the contract holder's account value or, for contracts not having an explicit or implicit account value, the cash surrender value, if any. 5. e There is no change in the participation or dividend features of the contract, if any. 6. f There is no change to the revenue classification of the contract. ##### [944-30-55-15](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:5e70ac9f4759906113f0b714e698d5b06c41095c60aebb4554f521bef9b467b9 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/). ##### [944-30-55-16](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:9dfb630761eed017ac079deb27e4580f806863e0f5dff9d065982be50ef98042 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/). ##### [944-30-55-17](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:2e4b9cd8a1d2684873d7cb70c32014936100e865b562750ddcf1572da6f01193 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/). ##### [944-30-55-18](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:9455579f1f8ee0c304c8bfa12b5400b7396c1eb6ac5b73c25b9dae6b491b0305 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/). ##### [944-30-55-19](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:6a5abbfccf1093d3270c59aa0136872e434108c2c1944bbb48e45712fd4f117a 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/). ##### [944-30-55-20](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:14722c9aaf917c1d63d92ed54e645d64ef6798b4ddc2112bdf5798391224595d 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/). ##### [944-30-55-21](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:619b6b71760c777f272504b8bcddf863523a89e6a4b47e0f4c275a9e63369ac6 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/). ##### [944-30-55-22](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-22) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:5784977f233e9add9175efda6a8d6169f40251400a95fb54491eb7ff2f96c660 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/). ##### [944-30-55-23](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-23) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:9e402ff924f1a378f319155091e32c7186b8c678e638dd5da7452f59206d52a3 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/). ##### [944-30-55-24](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-24) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:7cdeb4ba207f3ab9e603eb0f1cd24012bba6b39c7f1360c71032db5d6651f67b 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/). ##### [944-30-55-25](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-25) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:bb7b585a1a65741308d76fe76513e94311f6cf21c190eb7e7ac86c514ee1bf99 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/). ##### [944-30-55-26](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-26) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:0e5c53b9fe5d4bcd5eb5c4433a4ff5fcf78dc6b97aa7cb46ca973255ffcdcb8a 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/). ##### [944-30-55-27](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-27) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:da973a15d6a01b62e74bb5962d006bbf81b4ca8d759af6beb0d2413d070a9f29 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/). ##### [944-30-55-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-28) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:cd78fc31156ae03482bb179d91b81354c7ca1471e1ff2826effa7f8e4c03c7d6 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/). ##### [944-30-55-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-29) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:e3375841bccd4c01c4233c04f230a515b99efb1fec49c405c200515753c720be 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/). ##### [944-30-55-30](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-30) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:8fb52829941bf74a6b3d69b8da69dcac4e573b2350837bb8a01950cf28935a89 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/). ##### [944-30-55-31](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-31) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b57b10c638164443d40b8e2c8c89328c2172a8b22471d0a0a3b3f1d0f31015c6 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/). ##### [944-30-55-32](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-32) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:55a75bbcd82ff4ac31b249bb9b9d164624d0695f0603e40fc009f3c5401c0503 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/). ##### [944-30-55-33](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-33) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:6cff413ef0f2a576e7b6d4f93db9aeb9cad56fbafd23e13143e58d36938fcaf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following represents implementation guidance for contract modifications and the application of the guidance in Section 944-30-35 for evaluating whether the internal replacements are substantially changed from the replaced contracts. The guidance is based on the specific facts and circumstances; the same conclusions may not be reached for other modifications because of differing facts or circumstances. The following cases represent contract modifications. ##### [944-30-55-34](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-34) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:65d7f593963556e5ea47bf0fe41bc008639180fb2b83c620bae1fe59cf75d1ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There are several ways in which a contract holder can increase death benefit coverage on a traditional whole life insurance contract. ##### [944-30-55-35](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-35) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:cc07973e0aecd527e5d999b339ad51db1e2d30d5eb816ead09e043099461a3dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An option to purchase additional insurance rider gives the contract holder the right to purchase additional insurance coverage with no additional underwriting. That is, the contract holder can increase the face value of the policy for the same type of insurance coverage and in the same form as that provided by the original contract. The additional premium charged is not in excess of an amount that would be commensurate with the additional insurance coverage obtained. The rider could be included in the original contract or added subsequently to its issuance. This is an example of a nonintegrated contract feature. Once purchased, the benefit under the option to purchase additional insurance rider generally is accounted for as a separate contract. ##### [944-30-55-36](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-36) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b7ebf069987fbe0c2d217d01535684feaabe08ad80d8d827856f4d5b45c837ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contract holder obtains a second life insurance policy for an incremental face amount, with underwriting required on the new policy only. The original contract remains in force without change. This transaction does not fall within the definition of an internal replacement in Section 944-30-35. The accounting for the original contract remains unchanged and the new contract is accounted for independently of the original contract. Any deferrable [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.") associated with the new contract are deferred and amortized in accordance with the guidance in Section 944-30-35, as applicable. ##### [944-30-55-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-37) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b6ca726041f957e95aece05aa3688e654e15064afe4dfe04904b03ba2d337316 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The increased face amount (death benefit) of a traditional life insurance contract effectuated through an amendment or rider to the original contract is considered a nonintegrated feature that should be accounted for separately from the existing life insurance contract, provided that the additional premium charged for that incremental insurance coverage is not in excess of an amount that is commensurate with the incremental insurance coverage and does not result in the explicit or implicit reunderwriting or repricing of other components of the contract. ##### [944-30-55-38](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-38) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:2b2aa715dc1823aa460c4fe938e82983ddd4ad08cbda910960e0d8056e33fc1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Universal life-type contracts are long-duration contracts that can provide either death or annuity benefits and are characterized by one of the following features: 1. a One or more of the amounts assessed by the insurer against the policyholder are not fixed and guaranteed by the terms of the contract. 2. b Amounts that accrue to the benefit of the policyholder are not fixed and guaranteed by the terms of the contract. 3. c Premiums may be varied by the policyholder within contract limits without the consent of the insurer. ##### [944-30-55-39](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-39) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:a30b2f5bdb7a5ce580ac120e8cd21899ce244feeab3a77343ed0e504527b60ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The increase in face amount of a universal life-type contract through an amendment to the original contract is considered an integrated feature as the death benefit under a universal life-type contract is equal to the excess of face amount over contract account value. In this example, only the additional face amount has been underwritten during the contract amendment and the additional premium charged is not in excess of an amount that would be commensurate with the additional insurance coverage obtained. This contract amendment to increase the face amount of a universal life-type contract results in the replacement contract being substantially unchanged from the replaced contract due to the following: 1. a The modification does not result in a change in the insured event, as there is no significant change in the kind and degree of mortality risk. Although the face amount of the contract has increased, it is appropriate in this example to analyze the change in degree of mortality risk by comparing the relationship of the expected cost of the benefit to charges assessed for that benefit, and there was no significant change in this relationship. 2. b There is no change in the nature of the investment return rights from the replaced contract. 3. c There are no changes in the charges related to the original benefits; also, the additional [cost of insurance](https://asc.understandingaccounting.org/glossary/c/#cost-of-insurance "Amounts expected to be assessed for mortality.") is not in excess of an amount commensurate with the additional insurance coverage obtained. 4. d There is no net decrease in the balance available to the contract holder, except to pay the cost of insurance charge for the increased coverage. 5. e There is no change in the participation or dividend feature of the replaced contract. 6. f The modification does not result in a change to either the amortization method or revenue classification of the contract. ##### [944-30-55-40](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-40) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:bd65a4c0e272759b60536eb67f17b229e1407a11b176cfae4986ce3b91a6a2fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A universal-life type contract may contain a no-lapse guarantee feature that provides for continuing coverage of the contract even if the account value drops to a level that cannot cover the contract charges. The [contract exchange](https://asc.understandingaccounting.org/glossary/c/#contract-exchange "The legal extinguishment of one contract and the issuance of another.") of a universal life-type contract for a universal life-type contract that contains a no-lapse guarantee results in the replacement contract being substantially changed from the replaced contract because the addition of the no-lapse guarantee changes both the period of coverage of the contract as well as introduces a combination of mortality and investment risk. The analysis would be the same if the change had been achieved through the addition of a no-lapse guarantee rider, as it would be considered an integrated benefit (the benefit is a function of the contract account value) and would need to meet the conditions of paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37). If, however, the contract holder had elected to add a no-lapse guarantee feature that was included in the original contract (and met the specifications of paragraphs [944-30-35-26 through 35-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) ), the modification would not be considered an internal replacement. ##### [944-30-55-41](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-41) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:aea212a6c70792f7ef2de9f13387ed40db5f6b29cf2e7fb6143f4d133b85e6fd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A second-to-die feature incorporates multiple mortality events within a single contract, as payment to the beneficiary is made, assuming the contract remains in force, only after both insured individuals die. The contract exchange of a universal life-type contract for a universal life-type contract that contains a second-to-die provision results in the replacement contract being substantially changed from the replaced contract because the addition of the second-to-die feature changes the insured event, as now two mortality events must occur for the beneficiary to obtain the proceeds. If the modification were achieved through amendment, endorsement, or rider rather than through a contract exchange, the analysis and conclusion would be the same as for the contract exchange because the second-to-die provision is an integrated feature. ##### [944-30-55-42](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-42) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:c8596dcc32b2c9b9d01f17c6ca4a2925b0450bfd198d3293b0e97c92e09acb81 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An automobile insurance contract is a short-duration contract that generally provides coverage for personal injury and automobile damage sustained by the insured and liability to third parties for losses caused by the insured. A newly purchased car being added to an existing automobile policy with no change in the other vehicles covered or the premium related to the other vehicles under the contract results in additional nonintegrated contract coverage that should be accounted for separately from the existing automobile contract coverage, assuming the underwriting and price for coverage of the new car is determined separately and there is no change, explicit or implicit, in the pricing of the base contract. ##### [944-30-55-43](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-43) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:33cb3c36ca0f5086457e3d9d6a55bdb4c6e349a2031817c55c5cbf43e614331d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If one of the existing automobiles under the contract described in paragraph [944-30-55-42](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-42) above is removed from the automobile contract, it is considered the extinguishment of nonintegrated contract coverage and should be accounted for as an extinguishment of only the balances related to that nonintegrated coverage. The amount refunded to the contract holder from the change in the coverage is determined in accordance with terms that are fixed in the contract or applicable state law or regulation, and no reunderwriting is required for other coverage. The amount refunded to the contract holder reduces the related unearned revenue liability, and unamortized deferred acquisition costs related to the extinguished nonintegrated contract coverage are eliminated. ##### [944-30-55-44](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-44) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:87253ad85acc36f0808685c948c89056f6bf2359fa2e6bb4c0ac9afe28f18e8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the automobile insurance contract described in paragraph [944-30-55-42](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-42) contains one car and one driver, the existing car is sold and replaced with another car, and coverage is changed through a contract endorsement. For accounting purposes, the original automobile contract is extinguished and coverage for a new automobile contract is established for the driver and the new car. The modification is not a reduction in coverage under paragraph [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29), as it is a termination of all coverage in the contract, not a partial termination of coverage as described in paragraph [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29). It is common practice to net settle the premium and commission adjustments resulting from this contract modification. For accounting purposes, there are in substance two transactions: the extinguishment of one contract, which is accounted for as a contract extinguishment under paragraphs [944-30-40-1 through 40-4](https://asc.understandingaccounting.org/asc/944/30/#944-30-40-1) , and establishment of a new contract. ##### [944-30-55-45](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-45) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:78d2d0cf6fca24f2ff1806403af328b0f58c44e342a9f9261fad8a199208c7f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The addition of a new driver to an existing automobile contract with no other changes in the contract results in additional nonintegrated contract coverage that should be accounted for separately from the existing automobile contract coverage, as the underwriting and price for coverage for the new driver is determined separately. ##### [944-30-55-46](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-46) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:d7f9566c1c24c3b1cf5ba57c0433e412d0be146f755b1bdfbe68ad25d8bbe521 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If one of the existing drivers under the contract described in paragraph [944-30-55-44](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-44) is removed from the automobile contract, it is the extinguishment of nonintegrated contract coverage and should be accounted for as an extinguishment of only the balances related to that nonintegrated coverage. The amount refunded to the contract holder from the change in the coverage is determined in accordance with terms that are fixed in the contract or applicable state law or regulation, and no reunderwriting is required for other coverage. The amount refunded to the contract holder reduces the related unearned revenue liability, and the balance of the unamortized deferred acquisition costs related to the extinguished nonintegrated contract coverage is eliminated. ##### [944-30-55-47](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-47) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b7d3e4ee6461b33bbaed40c1d92f1ec4405fc74965c90db0021adcccfb325728 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An increase in the collision deductible of an automobile contract is, in effect, a reduction in the coverage provided. It is not an internal replacement, but a reduction in coverage under paragraph [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29), providing that all the terms that determine the amount refunded from the change in coverage are fixed in the original contract or by applicable state law or regulation and no reunderwriting is required for the continuing coverage. Contractual provisions that allow the contract holder to elect to decrease existing coverage at then-current rates (other than when required by state law or regulation), subject to a stated minimum and maximum, generally are not specific enough to satisfy this requirement. ##### [944-30-55-48](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-48) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:3cf826484dfb60a858aff0aadd086ec6e7213faed27b7b25527456bc06075286 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A decrease in the collision deductible of an automobile contract is, in effect, an increase in the coverage provided. It is not an internal replacement, but an election by the contract holder of coverage that was within the original contract as noted in paragraphs [944-30-35-26 through 35-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) , providing that all the terms that determine the amount of the premium related to the additional coverage are fixed in the original contract or by applicable state law or regulation and no reunderwriting is required of the original coverage. Contractual provisions that allow the contract holder to elect to add future coverage at then-current rates (other than when required by state law or regulation), subject to a stated minimum and maximum, generally are not specific enough to satisfy this requirement. ##### [944-30-55-49](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-49) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:238a27ecfdd36e6e587f4222e80109c3efed52f0236dfdb16866e2d3f25dc7b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A homeowner's contract is a short-duration contract that generally provides coverage for loss or damage of property and personal injury occurring on the insured's property. A personal articles floater provides coverage for losses on personal property not covered under the terms of the homeowner's contract. If multiple pieces of jewelry are added to a personal articles floater, each separately identified and priced item constitutes a nonintegrated contract feature. Thus, the addition of a personal articles floater providing coverage for several new pieces of jewelry to an existing homeowner's contract, with no other changes in the contract, results in additional nonintegrated contract coverage that should be accounted for separately from the existing homeowner's contract, as the underwriting and price for coverage for the jewelry is determined separately from the homeowner's contract and does not result in the reunderwriting of the existing coverages provided by the contracts. This is true even though the items covered by the personal articles floater and the homeowner's contract share a deductible and limit in the event of a common loss. The sharing of a common deductible and limit in the event of loss does not determine whether the contract feature or coverage is integrated, as the deductible is a definition of the terms of coverage resulting from a single loss event. ##### [944-30-55-50](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-50) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:47a2b390f36c6c65435fc9deb466702923b4c2d7150452c98ac565788487cf30 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract holder increases the coverage of a homeowner's contract, which insures a house valued at $350,000 with $300,000 of insurance coverage, to $400,000 to include a recently completed addition to the house worth $100,000. The additional layer of coverage results in a nonintegrated contract feature that should be accounted for separately from the existing homeowner's contract, provided that the additional premium charged for that incremental insurance coverage is not in excess of an amount that is commensurate with the incremental insurance coverage and does not result in the explicit or implicit reunderwriting or repricing of other components of the contract. If, however, there was substantive underwriting of the entire contract, including the original coverage, the contract would be considered to be substantially changed because substantive reunderwriting of existing contract coverage is an indicator that the insurance risk has changed significantly, and would probably also result in the repricing of the entire contract, which would result in failure to satisfy the criteria in paragraph [944-30-35-37](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-37). Additional coverage provided by a nonintegrated contract feature is considered nonintegrated even though the entire coverage provided by the contract is subject to a common deductible and limit in the event of an insured loss. ##### [944-30-55-51](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-51) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:55d20cdcdb0c34cdb7dd01fa041cfbfbe8fc99da649aeeb15d9b8ad4fcead04a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A contract holder currently has an umbrella contract from the same insurance entity as his or her homeowner's contract that provides for liability coverage with a limit of $1 million. The contract holder requests to increase the limit on the umbrella contract to $2 million. This additional layer of coverage results in additional nonintegrated contract coverage that should be accounted for separately from the existing umbrella contract, as the additional premium charged is not in excess of an amount that would be commensurate with the additional insurance coverage obtained ($1 million in excess of $1 million with no additional deductible), and there was no reunderwriting of the original coverage. If, however, there was substantive underwriting of the entire contract, including the original coverage, the contract would be considered to be substantially changed because substantive reunderwriting of existing contract coverage is an indicator that the insurance risk has changed significantly. ##### [944-30-55-52](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-52) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:bb32fbf55b49a57bbe14c79e233ffda5431631a3228576a81d268524816df6a4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A long-term care product provides for a specified payment while the insured qualifies for benefits under the contract; for example, while in a long-term care facility or when receiving care at home. If the long-term care product had an authorized rate increase, the insurance entity may offer the contract holder the option of reducing coverage instead of paying additional premiums (i.e., maintain the current premium rate). For example, if the original contract provided benefit coverage of $100 a day for a $2,000 annual premium and there was an authorized increase of premiums to $2,500, the contract holder could elect to pay the increased premium or, if allowed by the insurance contract, retain annual premiums of $2,000 with reduced benefit coverage of $80 a day. In this example, the increase in premiums from $2,000 to $2,500 is related to a change in the cost of the insurance that is within ranges outlined in the contract and approved by the insurance regulator, and by itself the premium increase is not considered a modification to the contract. The contract holder election of a reduction in benefits is not an internal replacement, but rather a reduction in coverage under paragraph [944-30-35-29](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-29), if all the terms for a change in coverage are fixed in the original contract or by applicable state law or regulation and no reunderwriting of the continuing coverage is required. ##### [944-30-55-53](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-53) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:524b144cf2505697e635a8ed83a7bc391e147757f123ef0e2225c2f7596496b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the contract holder elected a reduction in benefits under which the terms related to a change in coverage were not fixed in the original contract, the contract modification results in the replacement contract being substantially unchanged from the replaced contract as a result of the following: 1. a The insured event has not changed from the replaced contract. 2. b The exchange does not change the nature of the contract holder's investment return rights. 3. c No additional deposit or premium is required and there are no changes in the charges related to the original benefits in excess of the amounts specified or allowed in the original contract, as the reduction in benefits is not in excess of the corresponding reduction in premiums. (The original contract provided for benefits of $100 a day for $2,000 annual premium, the reduction in benefits to $80 a day is commensurate with the 20-percent reduction in premiums from the increased rate of $2,500 to $2,000.) 4. d There is no net decrease in the balance available to the contract holder. 5. e There is no change in the participation or dividend features of the replaced contract. 6. f There is no change in the amortization method or revenue classification of the replaced contract. ##### [944-30-55-54](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-54) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:dcf37a8fc20411ec25ad1a05c7d7ea8b91c1adbcccd3c0bb172421670bd13c66 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [single premium deferred annuity](https://asc.understandingaccounting.org/glossary/s/#single-premium-deferred-annuity "A general account fixed deferred annuity with a single premium and guaranteed minimum crediting rate. The crediting rate may vary above the minimum guaranteed rate at the discretion of the insurance entity and typically is declared in advance and set for a defined period (for example, one year or three years), often as a result of a selection made by the contract holder.") typically is classified as an investment contract as addressed in paragraphs [944-20-15-16 through 15-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-16) . ##### [944-30-55-55](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-55) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:74743b143f720a7e774460d9be826389548adc9b96404628e162d27426b7c138 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The current interest rate guarantee period of a [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.") typically does not encompass substantially all of the expected life of the contract. At the end of an interest rate declaration period, a new crediting rate is declared by the insurance entity and may vary above the minimum guaranteed rate. The length of the initial and subsequent interest rate guarantee periods generally is selected by the contract holder. Market value annuities typically are classified as investment contracts. ##### [944-30-55-56](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-56) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:3190712b7be2b2c0d53047cef91e5d3710fb47425e261a39e220468d47113e38 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this guidance, there is no significant difference in the declared interest crediting rate (further, the change in interest rates is consistent with the change in declaration period), no change in the guaranteed minimum interest rate, no additional deposit or premium is required, and there are no surrender charges or [front-end fees](https://asc.understandingaccounting.org/glossary/f/#front-end-fees "See Initiation or Front-End Fees.") associated with the internal replacement. The contract exchange of a single premium deferred annuity contract for a market value annuity contract results in the replacement contract being substantially unchanged from the replaced contract as a result of the following: 1. a The insured event has not changed from the replaced contract. 2. b The exchange does not change the nature of the contract holder's investment return rights (crediting rate declared by insurance entity, subject to guaranteed minimum crediting rate). The single premium deferred annuity and the market value annuity are both contracts for which the interest rate is periodically reset by the insurance entity subject to a minimum interest rate guaranteed by the contract and, in this example, the current declared interest period does not represent substantially all of the expected life of the contract. The difference between the single premium deferred annuity and the market value annuity results from the manner in which the amount available to the contract holder is determined in the event the contract is terminated prematurely, not the contractual rights and provisions for the determination of the contract holder's investment return in the absence of a premature termination of the contract. 3. c No additional deposit or premium is required, and there are no changes in the charges related to the original benefits. 4. d There is no net decrease in the balance available to the contract holder. 5. e There is no change in the participation or dividend features of the replaced contract. 6. f There is no change in the amortization method or revenue classification of the replaced contract. ##### [944-30-55-57](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-57) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:218f57e4aa783d64e2e66d5704d3c0ba1a3dd4af6945c81601b9c8cfb3fa8d96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The single premium deferred annuity and the market value annuity are both contracts for which the interest rate is periodically reset by the insurer subject to a minimum interest rate guaranteed by the contract; the only significant substantive difference between these two contracts is the manner in which amounts are determined in the event of a premature surrender. If the declared interest rate period of the market value annuity constituted substantially all of the expected life of the contract, the change from a contract for which interest is set at the discretion of the insurer to one for which the rate is set by contract would result in a substantially changed contract. ##### [944-30-55-58](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-58) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:02511d2e8440f11d5fbba4f6df173fd597ea05395bc7663385ce492a9f3eee50 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A single premium deferred annuity has a crediting rate that is set at the discretion of the insurance entity. An equity-indexed annuity is a deferred fixed annuity contract with a guaranteed minimum crediting rate plus a contingent return based on a contractually specified internal or external equity index. Equity-indexed annuities typically are classified as investment contracts with embedded derivatives that are required to be bifurcated from the contract and accounted for separately under Topic 815 (see paragraphs [815-15-55-62 through 55-72](https://asc.understandingaccounting.org/asc/815/15/#815-15-55-62) ). Generally, the equity index feature represents a periodic crediting rate mechanism that affects the amounts credited to the contract holder's account balance, rather than representing a benefit in addition to the account balance that protects the contract holder from other-than-nominal capital market risk and exposes the insurance entity to other-than-nominal capital market risk. Periodic crediting rate mechanisms are required to be evaluated for possible bifurcation under Topic 815. However, an equity-indexed annuity also may contain one or more [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.") (see paragraphs [944-40-55-29A through 55-29D](https://asc.understandingaccounting.org/asc/944/40/#944-40-55-29A) ). ##### [944-30-55-59](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-59) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:06f3a642622937b2f657bf5bf736496423173ab7ee750e4ff52a37b7c45f9409 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contract exchange of a single premium deferred annuity contract for an equity-indexed annuity results in the replacement contract being substantially changed from the replaced contract because the nature of the contract holder's investment return rights differs significantly between the two contracts. The crediting rate of the single premium deferred annuity contract is declared at the discretion of the insurance entity, while the crediting rate on the equity-indexed annuity is contractually determined by reference to a pool of assets, an index, or other specified formula. ##### [944-30-55-60](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-60) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:4dc1e5447079afa64a22f345a788d0dba0b27235fe43e3359ccf0a182304994c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A single premium deferred annuity has a crediting rate that is set at the discretion of the insurance entity. A multi-bucket annuity is a general account deferred annuity for which, subject to a contractually specified minimum crediting rate, the interest rate to be credited on the contract holder's account balance is determined based on the returns achieved on a specified category of investments or investment strategy selected by the contract holder. The contract specifies the rights and provisions for the determination of investment return to the contract holder. ##### [944-30-55-61](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-61) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:60061fd547443a76d1a4816deec3a56d5788eebdbc08785f9bb0e59bceb62307 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contract exchange of a single premium deferred annuity contract for a multi-bucket annuity results in the replacement contract being substantially changed from the replaced contract because the nature of the investment return rights are different between the two contracts. In the case of the typical single premium deferred annuity, the interest rate is declared at the discretion of the insurance entity whereas, in the case of the multi-bucket annuity, the interest rate is determined by reference to a specific category of assets or investment strategy selected by the contract holder as defined in the contract. ##### [944-30-55-62](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-62) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:bd31100eef365ae452d3af81f076d1d0b48d1e5c2e7ace35af2bfe6a049e25f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A fixed-interest rate guaranteed investment contract has a stated fixed crediting rate guaranteed for a specified period. An example of a variable-interest rate guaranteed investment contract is a contract with a credited interest rate defined as London Inter Bank Offered Rate (LIBOR) plus a specified spread. Both types of guaranteed investment contracts are classified investment contracts under paragraphs [944-20-15-16 through 15-25](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-16) . ##### [944-30-55-63](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-63) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:fc3ebeabfb71b65701703f3ad8ca07c63b6ed3f29bd718aebe1f73ff614e3e02 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contract exchange of a fixed-rate guaranteed investment contract for a variable-rate guaranteed investment contract results in the replacement contract being substantially changed from the replaced contract because the investment return rights for the determination of the contract holder's investment return are different between the two contracts. In the case of the fixed-rate guaranteed investment contract, the interest rate is fixed and guaranteed whereas, in the case of the variable-interest rate guaranteed investment contract, the investment return to the contract holder is contractually specified to be determined based on the returns achieved on a specified category of investments or tied to a specific index. ##### [944-30-55-64](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-64) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:3903a2e45a2e93cea21fc6853032116bc090fb6a3b02db89eb141a1a7bbc9c1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A variable annuity is a product offered by an insurance entity in which the contract holder's payments are used to purchase units of a [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."). The contract holder directs the allocation of the account value among various investment allocation alternatives and bears the investment risk. The units may be surrendered for their current value in cash (often less a surrender charge) or applied to purchase annuity income contracts. The insurance entity periodically deducts mortality and expense charges from the account. A common feature in variable annuities is a [minimum guaranteed death benefit](https://asc.understandingaccounting.org/glossary/m/#minimum-guaranteed-death-benefit "A feature in an annuity, life insurance, or similar contract that provides that in the event of an insured's death, the beneficiary (or insurer in the case of a reinsurance contract) will receive the higher of the current account balance of the contract or another amount defined in the contract."), with some minimum guaranteed death benefit designs providing more extensive benefits than others. ##### [944-30-55-65](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-65) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:5f7d5ca149734ebbf5cc402aa6e4d5a0d4c8379e0a24d80ebbf2e86c7044887c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The contract exchange of a variable annuity with a return of premium death benefit guarantee, that in this example is determined to have a minimal degree of mortality risk (although sufficient to result in classification as an insurance contract), for a variable annuity that contains a ratchet death benefit guarantee, that in this example is determined to be a "rich" death benefit, results in the replacement contract being substantially changed from the replaced contract as the change in death benefits substantively changes the degree of mortality risk. The nature of a minimum guaranteed death benefit provision is essentially a combination of mortality and investment events. Although the actual mortality event itself is the same in the return of premium and ratchet guaranteed minimum death benefits (death of the contract holder), the risk has changed because of the combined effects of mortality and investment events. In this instance, the preparer analyzed and concluded that a significant change in the actuarially determined expected mortality costs was indicative of a significant change in the degree of mortality risk. It should be noted that other methods and approaches could have been used to evaluate the change in degree of mortality. ##### [944-30-55-66](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-66) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:6ce36c66b7e2b29f139d5ab0699c0c3d55808b16bec0fd3c52edb8ed56d24be1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this guidance, it is assumed that both the variable annuity with the rollup death benefit guarantee and the variable annuity with the ratchet death benefit guarantee offered as an internal replacement are determined to have similar degrees of mortality risk. In this instance, the preparer compared actuarially determined expected mortality costs, and since the costs were similar, it was indicative that the degree of mortality risk was also similar. It should be noted that other methods and approaches could have been used to evaluate the change in degree of mortality. It is also assumed that there is no reunderwriting required for the transaction, no additional deposit required to effect the transaction, and no net decrease in the balance available to the contract holder prior to surrender charges. In this guidance, the replacement results in additional mortality and expense charges due to the enhanced death benefit guarantee not in excess of an amount commensurate with the added benefit. A contract exchange of a variable annuity contract that contains a minimum guaranteed death benefit that is determined to have significant mortality risk with a variable annuity contract that contains another kind of minimum guaranteed death benefit that is determined to have a comparable degree of mortality risk, results in the replacement contract being substantially unchanged from the replaced contract as a result of the following: 1. a The exchange does not result in a significant change in the kind and degree of mortality risk. 2. b The exchange does not change the nature of the contract holder's investment return rights. 3. c No additional deposit or premium is required relating to the variable annuity (the original benefit), and the additional charges for the ratchet death benefit guarantee are not in excess of an amount commensurate with the benefit. 4. d There is no net decrease in the balance available to the contract holder. 5. e There is no change in the participation or dividend features of the contracts. 6. f There is no change to the revenue classification of the replaced contract. ##### [944-30-55-67](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-67) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:19e0d21aef46afe538d5cb44e7ebffd783a450ad16923c939093db064a999004 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the modification were achieved through amendment, endorsement, or rider rather than through a contract exchange, the analysis and conclusion would be the same as for the contract exchange because the minimum guaranteed death benefit is an integrated feature. ##### [944-30-55-68](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-68) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:fbc7ba37c19008289ca24f1bd970deada214a8e252488e8186bf891a18aede7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A long-term care rider provides that in the event the insured enters a covered facility, the feature will provide a specified fixed payment while the insured is being treated at a covered facility. ##### [944-30-55-69](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-69) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:b5aeab99d4d8bf7e99f1a03f9884a39f47acda9ad99fb3b39948360c756dbdf1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this guidance, the contract holder exchanges the original variable annuity contract for a new variable annuity contract that contains an long-term care rider. This is a contract exchange in which the replacement contract contains a nonintegrated contract feature, as the long-term care rider is not related to the provisions of the replacement variable annuity contract. This contract exchange results in the base annuity contract being substantially unchanged from the replaced contract as a result of the following: 1. a The modification does not result in a change in the insured event, as there is no significant change in the kind and degree of mortality risk from the replaced contract. 2. b There is no change in the nature of the investment return rights from the replaced contract. 3. c There are no changes in the charges related to the variable annuity (the original benefit), and the additional premium for the long-term care benefit is not in excess of an amount commensurate with the additional insurance coverage obtained. 4. d There is no net decrease in the balance available to the contract holder. 5. e There is no change in the participation or dividend features of the replaced contract. 6. f The modification does not result in a change to either the amortization method or revenue classification of the contract. ##### [944-30-55-70](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-70) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:ae918310c42e2fc7257a8c562987b9a299b06303ff566978060f02097511db41 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The long-term care rider should be accounted for as a separate contract, as it is a nonintegrated contract feature. This accounting would be the same if the modification had been achieved through the addition of a long-term care rider to the original annuity contract rather than through an exchange. ##### [944-30-55-71](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-71) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:d59fe030ab910c5c22eab68061b78d99c1b048afb49ec34d4dd8603754110fa8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Variable annuities generally have a number of investment allocation alternatives from which the contract holder may select. In the normal course of business, companies modify these elections for a number of reasons, including competition and changes in investment management and distribution relationships. Throughout the life of the contract, the contract holder has the option to select new allocations for the investment of his or her annuity account balance. Generally, the addition of new investment allocation alternatives to variable life insurance or annuity contracts does not result in a substantive change to the original contract because the contractual rights and provisions for the determination of the contract holder's investment return have not changed. ##### [944-30-55-72](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-72) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:bcacc53cab295bf9c4e4524a6a984209ca572692ea5941eb66940f62510291c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It is possible that one of the investment allocation alternatives added or elected could be a fixed return option. As long as the contract remains a variable annuity contract and the contract holder retains the right to reallocate amounts to other investment alternatives, neither the addition of the investment alternative nor the contract holder's utilization of that investment alternative would constitute an internal replacement that results in a substantially changed contract. If, however, the contract holder's election of a fixed allocation alternative results in a conversion or partial conversion to a fixed annuity contract or the contract remains a variable annuity contract but the transfer is effectively a conversion or partial conversion because there are substantive restrictions on the contract holder's ability to reallocate amounts to other investment alternatives, the modification would result in a substantially changed contract to the extent of the conversion or substantially restricted balance. ##### [944-30-55-73](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-73) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:a145d4eb9a49e5cea9369bd0d50f31d339becd21c329ab6afde380af359f592b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A variable annuity contract is replaced with a variable annuity contract that also provides 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."), in this example, a 5-percent annual rollup of contract value in 10 years. The contract exchange of a variable annuity for a variable annuity that contains a guaranteed minimum accumulation benefit results in the replacement contract being substantially changed from the replaced contract because the addition of a guaranteed minimum accumulation benefit, an integrated benefit feature, changes the investment return rights of the contract holder by providing a minimum investment return guarantee. The analysis would be the same if the change had been achieved through the addition of a guaranteed minimum accumulation benefit rider. If, however, the contract holder had elected to add a guaranteed minimum accumulation benefit feature that was included in the original contract (and met the specifications in paragraphs [944-30-35-26 through 35-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) ), the modification would not be considered an internal replacement. ##### [944-30-55-74](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-74) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:2b497a71c9a5c437600e5fe2b71a4c8a2fc6ed8912f0dbd32d0663870dcadcea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A variable annuity contract is replaced with a variable annuity contract that also 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."), in this guidance, a 5-percent annual rollup of contract value. A guaranteed minimum income benefit, an integrated contract feature, specifies a manner in which an annuitization benefit is determined if the contract holder elects to annuitize. The guaranteed minimum income benefit cannot be withdrawn or net settled. The contract exchange of a variable annuity for a variable annuity that contains a guaranteed minimum income benefit results in the replacement contract being substantially changed from the replaced contract because the addition of a guaranteed minimum income benefit changes the investment return rights of the contract holder, as a minimum investment return provision, via the guaranteed amount for annuitization, has been added to the variable annuity. The analysis would be the same if the change had been achieved through the addition of a guaranteed minimum income benefit rider. If, however, the contract holder had elected to add a guaranteed minimum income benefit feature that was included in the original contract (and met the specifications in paragraphs [944-30-35-26 through 35-28](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26) ), the modification would not be considered an internal replacement. ##### [944-30-55-75](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-75) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:1623c5d377752562ee658cd46d84346f7ee05779db06006022366adfe21e123e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The insurance entity either replaces deferred annuity contracts with annuity contracts that contain the [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.") feature or the insurance entity adds a guaranteed minimum withdrawal benefit rider to existing inforce business (that is, deferred annuity contracts). ##### [944-30-55-76](https://asc.understandingaccounting.org/asc/944/30/#944-30-55-76) Pending content: no Source downloaded (UTC): 2026-09-10T02:16:20.762Z to 2026-09-10T02:16:20.762Z Record version: sha256:922ca0500f461aad2abb8405aa6857373c17bed5f4188ffb6ab5b2f89ef9c647 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A variable annuity with a guaranteed minimum withdrawal benefit is classified as an investment contract with a market risk benefit. The contract exchange of a variable annuity for a variable annuity that contains a guaranteed minimum withdrawal benefit results in the replacement contract being substantially changed from the replaced contract because the addition of a guaranteed minimum withdrawal benefit, an integrated contract feature, changes the investment return rights of the contract holder, as a minimum investment return provision, via the guaranteed withdrawal amount, to the variable annuity. The analysis would be the same if the change had been achieved through the addition of a guaranteed minimum withdrawal benefit rider. If, however, the contract holder had elected to add a guaranteed minimum withdrawal benefit feature that was included in the original contract (and met the specifications in paragraph [944-30-35-26](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-26)), the modification would not be considered an internal replacement. 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. Source downloaded (UTC): 2026-09-10T02:17:16.793Z to 2026-09-10T02:17:40.431Z Record version: sha256:7c4f8f1233a83d118f201fd5cd2b87293b0dd0d90204a1208e959411a3b0f282 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-50: Financial Services—Insurance — Policyholder Dividends ### Machine-generated study aids ```json { "summary": "ASC 944-50 governs how insurance entities account for and report policyholder dividends on participating insurance contracts. For participating contracts other than the long-duration participating life contracts described in 944-20-15-3, dividends are accrued (measured at an estimate of the amount to be paid, or recognized over the premium-paying period using anticipated/illustrated dividend scales), and any policyholders' share of net income that cannot be distributed to stockholders is charged to operations and credited to a participating policyholders' funds liability. For long-duration participating life contracts meeting 944-20-15-3, annual policyholder dividends are expensed based on amounts incurred for policies in force and reported separately in the statement of earnings.", "key_points": [ "Policyholder dividends on participating contracts other than the long-duration participating life contracts identified in 944-20-15-3 shall be accrued (944-50-25-1), measured using an estimate of the amount to be paid (944-50-30-1).", "When limitations exist on the net income from participating contracts distributable to stockholders, the nondistributable policyholders' share is excluded from stockholders' equity by a charge to operations and credited to a liability for participating policyholders' funds; dividends declared or paid reduce that liability, and any excess is charged to operations (944-50-25-2).", "For life insurance entities with no net income restrictions that use dividend scales unrelated to actual net income, dividends are accrued over the premium-paying periods (944-50-25-3), based on dividends anticipated or intended in setting gross premiums or shown in published dividend illustrations at contract inception (944-50-30-3).", "Income-based dividend provisions must be based on net income that includes GAAP-to-statutory adjustments that will reverse and enter into future dividend calculations (944-50-30-2).", "For long-duration participating life insurance contracts meeting the criteria in 944-20-15-3, annual policyholder dividends are expensed based on estimates of amounts incurred for policies in effect during the period (944-50-25-4; 944-50-30-4), with pro rata accrual between anniversary dates (944-50-30-5).", "That annual policyholder dividend expense must be reported separately in the statement of earnings (944-50-45-1).", "Required disclosures are the relative percentage of participating insurance, the method of accounting for policyholder dividends, the amount of dividends, and the amount of any additional income allocated to participating policyholders (944-50-50-1)." ], "categories": [ "Industry-specific", "Recognition", "Presentation", "Disclosure" ], "audience_level": "intermediate", "student_note": "The whole subtopic turns on one fork: whether the contract is a long-duration participating life contract meeting 944-20-15-3 (dividends expensed as incurred and shown separately) or any other participating contract (dividends accrued, sometimes over the premium-paying period, with a policyholders' funds liability when distributions to stockholders are restricted). Students commonly forget that terminal dividends are not covered here — they are handled in the liability for future policyholder benefits under 944-40-25-30 and 944-40-35-22 through 35-23.", "related_topics": [ "944-20", "944-40", "944-10", "944-740", "944-30" ], "key_concepts": [ "policyholder dividends", "participating insurance contracts", "long-duration contracts", "participating policyholders' funds liability", "dividend scales", "terminal dividends", "premium-paying period accrual" ] } ``` Source downloaded (UTC): 2026-09-10T02:17:16.793Z to 2026-09-10T02:17:16.793Z Record version: sha256:075988fcff3f14d04d4d36d212343c3a327a9e42340e94fb1d8f791fee4380bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-50-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/50/#00-status) SEC content: no ##### [944-50-00-1](https://asc.understandingaccounting.org/asc/944/50/#944-50-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:16.793Z to 2026-09-10T02:17:16.793Z Record version: sha256:943a95d5e94c8621ba3b341189b63164cd772ea297b1c25caaa1bf9c787cc8ae 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
Participating Insurance ContractsSupersededAccounting Standards Update No. 2016-1912/14/2016
944-50-25-2AmendedAccounting Standards Update No. 2016-1912/14/2016
944-50-25-5AmendedAccounting Standards Update No. 2018-1208/15/2018
Source downloaded (UTC): 2026-09-10T02:17:20.214Z to 2026-09-10T02:17:20.214Z Record version: sha256:d24d1ce5d6ec9a5085c368a2e3c5d10fd2c377600516bb14a88191a6a62100ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-50-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/944/50/#05-overview-and-background) SEC content: no ##### [944-50-05-1](https://asc.understandingaccounting.org/asc/944/50/#944-50-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:20.214Z to 2026-09-10T02:17:20.214Z Record version: sha256:e7270a4aea85b31396d7c221533d4cce2d0b3b808005957d0c26d8575c8453ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides insurance entities guidance on the accounting for and financial reporting of policyholder dividends. The guidance in this Subtopic is presented in the following two Subsections: 1. a General 2. b Long-Duration Contracts. ### Long-Duration Contracts ##### [944-50-05-2](https://asc.understandingaccounting.org/asc/944/50/#944-50-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:20.214Z to 2026-09-10T02:17:20.214Z Record version: sha256:f976b63e693fbf2baf72539264d8ae79be8cfc6b7ef025bc151af1160ded78d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections of this Subtopic provide insurance entities guidance on the accounting for and financial reporting of policyholder dividends on long-duration contracts. Source downloaded (UTC): 2026-09-10T02:17:24.083Z to 2026-09-10T02:17:24.083Z Record version: sha256:20b45fe7ee9e6dace3e1e6ea25726006c4850811ce08982ed91339c5fbe83a7b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-50-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/944/50/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [944-50-15-1](https://asc.understandingaccounting.org/asc/944/50/#944-50-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:24.083Z to 2026-09-10T02:17:24.083Z Record version: sha256:5c1e710e6588252d9e8c66c9174141ea3034697c34aaa9b57889a72142a548e7 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. The guidance in this Subtopic distinguishes between participating contracts that meet the criteria in paragraph [944-20-15-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-3) and those that do not. ### Long-Duration Contracts ##### [944-50-15-2](https://asc.understandingaccounting.org/asc/944/50/#944-50-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:24.083Z to 2026-09-10T02:17:24.083Z Record version: sha256:c499540dc35b7a46363c66ae665872c3dca544653a1ff2ebb3e07cb46819206d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Long-Duration Contracts Subsections of this Subtopic follow the same Scope and Scope Exceptions as outlined in the [General Subsection](https://asc.understandingaccounting.org/asc/944/50/#15-scope-and-scope-exceptions) of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-50-15-3](https://asc.understandingaccounting.org/asc/944/50/#944-50-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:24.083Z to 2026-09-10T02:17:24.083Z Record version: sha256:2c88b3a132ea8d2b1c8237909ea28eb25154551a440080589924706aca02808a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Long-Duration Contracts Subsections of this Subtopic applies only to long-duration insurance contracts. For guidance on identifying a long-duration insurance contract, see the [Long-Duration Contracts Subsection](https://asc.understandingaccounting.org/asc/944/20/#15-scope-and-scope-exceptions) of Section 944-20-15. Source downloaded (UTC): 2026-09-10T02:17:29.887Z to 2026-09-10T02:17:29.887Z Record version: sha256:d7960f30980e611c8db457e0d8cb09b24d6c40efdd9e02ab8045e59ae2d0deb6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-50-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/944/50/#25-recognition) SEC content: no #### Participating Contracts ##### [944-50-25-1](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:29.887Z to 2026-09-10T02:17:29.887Z Record version: sha256:2e37d5b087bdb5c172cc94ac9982d76e0f250ca1bdbd9713bd88605a99aa98d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For participating contracts other than those long-duration participating life insurance contracts identified in paragraph [944-20-15-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-3), policyholder dividends shall be accrued. ##### [944-50-25-2](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:29.887Z to 2026-09-10T02:17:29.887Z Record version: sha256:836aa8378e30bc317a792474468fe25848acf4217f28d4ea9105bb55f0d5d154 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance applies to participating contracts other than those long-duration participating life insurance contracts identified in paragraph [944-20-15-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-3). Limitations may exist on the amount of net income from [participating insurance](https://asc.understandingaccounting.org/glossary/p/#participating-insurance "Insurance in which the policyholder is entitled to participate in the earnings or surplus of the insurance entity. The participation occurs through the distribution of dividends to policyholders.") contracts of a [life insurance entity](https://asc.understandingaccounting.org/glossary/l/#life-insurance-entity "An entity that can issue annuity, endowment, and accident and health insurance contracts as well as life insurance contracts. Life insurance entities may be either stock or mutual entities.") that may be distributed to stockholders. In that circumstance, the policyholders' share of net income on those contracts that cannot be distributed to stockholders shall be recognized by both: 1. a Excluding that share from stockholders' equity by a charge to operations 2. b Recognizing that share as a credit to a liability relating to participating policyholders' funds. Dividends declared or paid to participating policyholders shall reduce the liability recognized in (b); dividends declared or paid in excess of the liability shall be charged to operations. ##### [944-50-25-3](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:29.887Z to 2026-09-10T02:17:29.887Z Record version: sha256:ff8857a26f620721370bbeb4cc422fcc5ed43dc8221ad50eb3a8b1aa160f9362 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance applies to participating contracts other than those long-duration participating life insurance contracts identified in paragraph [944-20-15-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-3). For life insurance entities for which there are no net income restrictions and that use life insurance [dividend scales](https://asc.understandingaccounting.org/glossary/d/#dividend-scales "The actuarial formulas used by life insurance entities to determine amounts payable as dividends on participating policies based on experience factors relating, among other things, to investment results, mortality, lapse rates, expenses, premium taxes, and policy loan interest.") unrelated to actual net income, policyholder dividends shall be accrued over the premium-paying periods of the contracts. Paragraph [944-740-25-1](https://asc.understandingaccounting.org/asc/740/944/#740-944-25-1) states that, although payment is not required, a dividend recognized under this paragraph is considered a planned contractual benefit in computing generally accepted accounting principle (GAAP) liabilities, it may be necessary to identify the amount of this dividend to calculate deferred income taxes in those cases in which there is a question as to whether the dividend provision in the liabilities, together with the dividends paid or declared, may exceed the amount of dividends otherwise deductible for federal income tax purposes. ### Long-Duration Contracts #### Certain Long-Duration Participating Life Insurance Contracts ##### [944-50-25-4](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:29.887Z to 2026-09-10T02:17:29.887Z Record version: sha256:247d4c451b6b1edd7dc7272797c7dc0d15079ad9ec2a86d9cba30a56067aad2f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For 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), [annual policyholder dividends](https://asc.understandingaccounting.org/glossary/a/#annual-policyholder-dividends "Amount of dividends to policyholders calculated and paid each year, representing the policyholders' share of divisible surplus.") shall be expensed. ##### [944-50-25-5](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:29.887Z to 2026-09-10T02:17:29.887Z Record version: sha256:3c1c09e3f05661f1c857d0adf100b9ea1aac7a0dd07041832d7fd9c6d8c54dc2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [944-40-25-30](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-30) and [944-40-35-22 through 35-23](https://asc.understandingaccounting.org/asc/944/40/#944-40-35-22) for guidance on accounting 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.") as part of the liability for future policyholder benefits. Source downloaded (UTC): 2026-09-10T02:17:31.739Z to 2026-09-10T02:17:31.739Z Record version: sha256:3c4926d41d74023b5b08a43cb3470ec1d0aabd66942ee8819b8847382143404f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-50-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/944/50/#30-initial-measurement) SEC content: no #### Participating Contracts ##### [944-50-30-1](https://asc.understandingaccounting.org/asc/944/50/#944-50-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:31.739Z to 2026-09-10T02:17:31.739Z Record version: sha256:be392af8a811b04f19b9da6ff9124cfb85e2d8d44e328fa0acf200730cb66a3b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Policyholder dividends accrued under paragraph [944-50-25-1](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-1) shall be measured using an estimate of the amount to be paid. ##### [944-50-30-2](https://asc.understandingaccounting.org/asc/944/50/#944-50-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:31.739Z to 2026-09-10T02:17:31.739Z Record version: sha256:e06d476c128439a457b86cc128025f0f19cb031a9f7f639e548d2733be250f06 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Income-based dividend provisions for participating contracts other than those 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), shall be based on net income that includes adjustments between general-purpose and statutory financial statements that will reverse and enter into future calculations of the dividend provision. ##### [944-50-30-3](https://asc.understandingaccounting.org/asc/944/50/#944-50-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:31.739Z to 2026-09-10T02:17:31.739Z Record version: sha256:604b8d730026ccfc1e6f7a0d9b0942bce88b3c026f9695211c4f446c24d59e88 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Policyholder dividends shall be recognized over the premium-paying periods under paragraph [944-50-25-3](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-3) based on dividends anticipated or intended in determining gross premiums or as shown in published dividend illustrations at the date insurance contracts are made. ### Long-Duration Contracts #### Certain Long-Duration Participating Life Insurance Contracts ##### [944-50-30-4](https://asc.understandingaccounting.org/asc/944/50/#944-50-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:31.739Z to 2026-09-10T02:17:31.739Z Record version: sha256:e3bfc152d0533337177ecea1d542e7d248c5d7d396439731d9f6884d53b21767 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The expense recognized under paragraph [944-50-25-4](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-4) for [annual policyholder dividends](https://asc.understandingaccounting.org/glossary/a/#annual-policyholder-dividends "Amount of dividends to policyholders calculated and paid each year, representing the policyholders' share of divisible surplus.") shall be based on estimates of amounts incurred for the policies in effect during the period. ##### [944-50-30-5](https://asc.understandingaccounting.org/asc/944/50/#944-50-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:31.739Z to 2026-09-10T02:17:31.739Z Record version: sha256:ac6825dcb84bf46cb8ca5d6b82da07dd4ee52a3272a84fd2615477f353adafe3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, if a policy has an anniversary date of June 30, at which time annual dividends are paid, at December 31, 19X1, dividends should be accrued for the period July 1, 19X1, through December 31, 19X1. Source downloaded (UTC): 2026-09-10T02:17:34.746Z to 2026-09-10T02:17:34.746Z Record version: sha256:81af3b079d8e174754c050367af9a1dc8a149fbdfdc9c6d5a3c023eca507d792 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-50-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/944/50/#45-other-presentation-matters) SEC content: no ### Long-Duration Contracts #### Certain Long-Duration Participating Life Insurance Contracts ##### [944-50-45-1](https://asc.understandingaccounting.org/asc/944/50/#944-50-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:34.746Z to 2026-09-10T02:17:34.746Z Record version: sha256:ca45ab999a049241ae8ba08140a384e583b100f9eeeef42ce9fb140c97b4c060 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The expense recognized under paragraph [944-50-25-4](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-4) for [annual policyholder dividends](https://asc.understandingaccounting.org/glossary/a/#annual-policyholder-dividends "Amount of dividends to policyholders calculated and paid each year, representing the policyholders' share of divisible surplus.") shall be reported separately in the statement of earnings. Source downloaded (UTC): 2026-09-10T02:17:37.723Z to 2026-09-10T02:17:37.723Z Record version: sha256:edd62cbd7ecf05d0928bb6e9035547b3e7e64f89fc92be6db16ba8071a445200 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-50-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/50/#50-disclosure) SEC content: no #### Participating Contracts ##### [944-50-50-1](https://asc.understandingaccounting.org/asc/944/50/#944-50-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:37.723Z to 2026-09-10T02:17:37.723Z Record version: sha256:34b013d3a46ed92dd91097b238a5f474e4d52fd2569f7d9ae75fa2865af2ab3d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance entities shall disclose all of the following in their financial statements: 1. a The relative percentage of [participating insurance](https://asc.understandingaccounting.org/glossary/p/#participating-insurance "Insurance in which the policyholder is entitled to participate in the earnings or surplus of the insurance entity. The participation occurs through the distribution of dividends to policyholders.") 2. b The method of accounting for policyholder dividends 3. c The amount of dividends 4. d The amount of any additional income allocated to participating policyholders. Source downloaded (UTC): 2026-09-10T02:17:42.336Z to 2026-09-10T02:18:05.734Z Record version: sha256:063e2bd13473e5ffdbd3be387d2861f45c09e19c69faefa9c5c207b89fa331ad Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-60: Financial Services—Insurance — Premium Deficiency and Loss Recognition ### Machine-generated study aids ```json { "summary": "ASC 944-60 tells insurance entities when and how to recognize a premium deficiency (loss recognition) on insurance contracts, with separate guidance for short-duration and long-duration contracts. For short-duration contracts, a deficiency exists when expected claim costs and claim adjustment expenses, expected policyholder dividends, unamortized acquisition costs, and maintenance costs exceed related unearned premiums; it is recognized first by writing off unamortized acquisition costs and then by accruing a liability for any excess (944-60-25-4 through 25-6). For long-duration contracts, if actual experience shows existing contract liabilities plus the present value of future gross premiums will not cover future benefits and settlement costs and recover unamortized present value of future profits, the deficiency is charged to income by reducing the present value of future profits or increasing the liability for future policy benefits (944-60-25-7 through 25-8).", "key_points": [ "Contracts must be grouped consistent with the entity's manner of acquiring, servicing, and measuring the profitability of its insurance contracts to determine whether a premium deficiency exists (944-60-25-3).", "A premium deficiency on short-duration contracts is recognized when expected claim costs and claim adjustment expenses, expected dividends to policyholders, unamortized acquisition costs, and maintenance costs exceed related unearned premiums (944-60-25-4).", "The deficiency is recognized first by charging unamortized acquisition costs to expense, and only if the deficiency exceeds those costs is a liability accrued for the excess (944-60-25-5 through 25-6).", "For long-duration contracts, revised assumptions based on actual and anticipated experience are used to remeasure the liability as the PV of future benefits and settlement costs minus the PV of future gross premiums; the deficiency is that amount minus the existing liability reduced by unamortized present value of future profits (944-60-30-1 through 30-2).", "Once a deficiency occurs, future changes in the liability are based on the revised assumptions, and no loss may be reported currently if it results in creating future income (944-60-35-5).", "A deficiency must at a minimum be recognized when an entire line of business is deficient in the aggregate; if profits would be recognized in early years and losses in later years, the liability is increased to offset the later-year losses (944-60-25-9).", "Disclosures include whether anticipated investment income was considered in short-duration premium deficiency testing (944-60-50-1) and, for long-duration loss recognition, the liability amount and factors causing it, the methodology used, and the anticipated investment income assumption (944-60-50-2); loss recognition is not permitted for investment contracts (944-60-35-6)." ], "categories": [ "Industry-specific", "Impairment", "Subsequent measurement", "Disclosure" ], "audience_level": "advanced", "student_note": "Premium deficiency testing is the insurance analog of a loss contract accrual: it is done at the contract-grouping (often line-of-business) level, not contract by contract. A common misunderstanding is jumping straight to a liability — for short-duration contracts you must first write off unamortized acquisition costs, and note that long-duration traditional and limited-payment contracts under 944-40-25-11 are scoped out of this testing.", "related_topics": [ "944-40", "944-30", "944-20", "944-825", "450-20", "944-805" ], "key_concepts": [ "premium deficiency", "loss recognition", "short-duration contracts", "long-duration contracts", "unamortized acquisition costs", "liability for future policy benefits", "present value of future profits", "anticipated investment income" ] } ``` Source downloaded (UTC): 2026-09-10T02:17:42.336Z to 2026-09-10T02:17:42.336Z Record version: sha256:26315cd0cdce628908c5f919cbf74e8e705996cd9098656d5ffda86b0aa405ed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-60-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/60/#00-status) SEC content: no ##### [944-60-00-1](https://asc.understandingaccounting.org/asc/944/60/#944-60-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:42.336Z to 2026-09-10T02:17:42.336Z Record version: sha256:a3dc60c40bdcc4e1f949b956ecf4b4ced65d5444f64d12893573fc298e057a81 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
Acquisition CostsAmendedAccounting Standards Update No. 2010-2610/13/2010
Dividends to PolicyholdersAddedAccounting Standards Update No. 2014-0603/14/2014
944-60-15-5AmendedAccounting Standards Update No. 2018-1208/15/2018
944-60-25-4AmendedAccounting Standards Update No. 2014-0603/14/2014
944-60-25-7AmendedAccounting Standards Update No. 2018-1208/15/2018
944-60-25-8AmendedAccounting Standards Update No. 2018-1208/15/2018
944-60-30-1AmendedAccounting Standards Update No. 2018-1208/15/2018
944-60-30-2AmendedAccounting Standards Update No. 2018-1208/15/2018
944-60-35-2AmendedAccounting Standards Update No. 2014-0603/14/2014
944-60-35-5AmendedAccounting Standards Update No. 2018-1208/15/2018
944-60-50-2AmendedAccounting Standards Update No. 2025-1112/08/2025
944-60-50-2AddedAccounting Standards Update No. 2018-1208/15/2018
Source downloaded (UTC): 2026-09-10T02:17:44.085Z to 2026-09-10T02:17:44.085Z Record version: sha256:e2afc33a4033383196d9ffe1b1a45275ec7aa3631df6e947929884ad8a8ac42a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-60-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/944/60/#05-overview-and-background) SEC content: no ##### [944-60-05-1](https://asc.understandingaccounting.org/asc/944/60/#944-60-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:44.085Z to 2026-09-10T02:17:44.085Z Record version: sha256:2adbccf454116588125bf5994e668dd62f92646c8c835e924d064f88b1a4805c 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 a premium deficiency on insurance contracts. The guidance in this Subtopic is presented in the following three Subsections: 1. a General 2. b Short-Duration Contracts 3. c Long-Duration Contracts. ### Short-Duration Contracts ##### [944-60-05-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:44.085Z to 2026-09-10T02:17:44.085Z Record version: sha256:262a9c8295d80efe44b0c094f5bd04fc61a12351f175ac14a976a20f912df751 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Short-Duration Contracts Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of a premium deficiency on short-duration insurance contracts. ### Long-Duration Contracts ##### [944-60-05-3](https://asc.understandingaccounting.org/asc/944/60/#944-60-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:44.085Z to 2026-09-10T02:17:44.085Z Record version: sha256:55506d92b41a34309ca8e88da652932f1701253e3f778b60ab4f5ad82f733654 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 a premium deficiency on long-duration insurance contracts. Source downloaded (UTC): 2026-09-10T02:17:46.601Z to 2026-09-10T02:17:46.601Z Record version: sha256:2cba22fc143dff9d7c5f21919de3cbc97dad948c9d662665134ecdbb20293897 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-60-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/944/60/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [944-60-15-1](https://asc.understandingaccounting.org/asc/944/60/#944-60-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:46.601Z to 2026-09-10T02:17:46.601Z Record version: sha256:c4bda5470618244ea82852613c22477914637af66ee13cec657ab8bc3330f564 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. ### Short-Duration Contracts ##### [944-60-15-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:46.601Z to 2026-09-10T02:17:46.601Z Record version: sha256:706d3ea821f05e09cf6d581b786756f0350f70a90cf04e2c80dcc0d011379a3a 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 of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-60-15-3](https://asc.understandingaccounting.org/asc/944/60/#944-60-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:46.601Z to 2026-09-10T02:17:46.601Z Record version: sha256:537b840a0e5a43bb5923cc05bd5140213117dec916c1bdc03beb348f4eebc7df 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 ##### [944-60-15-4](https://asc.understandingaccounting.org/asc/944/60/#944-60-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:46.601Z to 2026-09-10T02:17:46.601Z Record version: sha256:6d164b8bd73184f81302e3466c6cea4065ab2b78c55ca07e9adf6f1b8685ba9b 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 of this Section, with specific instrument qualifications noted below. #### Instruments ##### [944-60-15-5](https://asc.understandingaccounting.org/asc/944/60/#944-60-15-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:46.601Z to 2026-09-10T02:17:46.601Z Record version: sha256:a7803e2a9dc91e7b6f018109310e6692f839afd34ed16dd5ac518e9d7e64e384 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, except for the liability for future policy benefits for traditional and limited-payment contracts subject to the guidance in paragraph [944-40-25-11](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-11). Paragraph [944-30-35-63](https://asc.understandingaccounting.org/asc/944/30/#944-30-35-63) specifies that the present value of future profits relating to insurance (including traditional and limited-payment) and reinsurance contracts acquired is subject to premium deficiency testing in accordance with the provisions of this Subtopic (see paragraph [944-805-35-3](https://asc.understandingaccounting.org/asc/805/944/#805-944-35-3)). 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. Source downloaded (UTC): 2026-09-10T02:17:52.429Z to 2026-09-10T02:17:52.429Z Record version: sha256:0235e67796427bb9192973d86208704526a18244c29786c970005af2c55fb4dc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-60-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/944/60/#25-recognition) SEC content: no ##### [944-60-25-1](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:52.429Z to 2026-09-10T02:17:52.429Z Record version: sha256:eb4d3ce3ceeb9761797303c493c1d6703b6634d3e5780f38d9a4b60ab022a215 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [450-20-55-17A](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-17A) states that Subtopic 450-20 does not prohibit (and, in fact, requires) accrual of a net loss (that is, a loss in excess of deferred premiums) that probably will be incurred on insurance policies that are [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."), provided that the loss can be reasonably estimated. ##### [944-60-25-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:52.429Z to 2026-09-10T02:17:52.429Z Record version: sha256:1efe338ac123e8bc4cd987d99c4cab2de8ac7335ee2e926d95c177d87ca9aa1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") loss on insurance contracts exists if there is a premium deficiency relating to short-duration or long-duration contracts. ##### [944-60-25-3](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:52.429Z to 2026-09-10T02:17:52.429Z Record version: sha256:6a872ff80662a5fa59842f8d286acc6a355005a61395964efdee94dfd4b4762d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Insurance contracts shall be grouped consistent with the entity's manner of acquiring, servicing, and measuring the profitability of its insurance contracts to determine if a premium deficiency exists. ### Short-Duration Contracts ##### [944-60-25-4](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:52.429Z to 2026-09-10T02:17:52.429Z Record version: sha256:eb4305c75e11cee1644eb6200f0449aad16e2c2e345150bd0a593614b9c8f330 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A premium deficiency shall be recognized if the sum of expected [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 and [claim adjustment expenses](https://asc.understandingaccounting.org/glossary/c/#claim-adjustment-expenses "Expenses incurred in the course of investigating and settling claims."), expected [dividends to policyholders](https://asc.understandingaccounting.org/glossary/d/#dividend-to-policyholders "Nonguaranteed amounts distributable to policyholders of participating life insurance contracts and based on actual performance of the insurance entity as determined by the insurer. Under various state insurance laws, dividends are apportioned to policyholders on an equitable basis. The dividend allotted to any contract often is based on the amount that the contract, as one of a class of similar contracts, has contributed to the income available for distribution as dividends. Dividends to policyholders include annual policyholder dividends and terminal dividends."), unamortized [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 [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.") exceeds related unearned premiums. ##### [944-60-25-5](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:52.429Z to 2026-09-10T02:17:52.429Z Record version: sha256:581cd94ff2195f06a54f40dc3c4c7fa46e47e48c9af24e07b5c1e08d3ec55b04 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A premium deficiency shall first be recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. ##### [944-60-25-6](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:52.429Z to 2026-09-10T02:17:52.429Z Record version: sha256:0b9c43f025c9d60a4f9cb25a0e4ed1cf71336ecb7536c97eaae142b5d7cbdcca Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the premium deficiency is greater than unamortized acquisition costs, a liability shall be accrued for the excess deficiency. ### Long-Duration Contracts ##### [944-60-25-7](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:52.429Z to 2026-09-10T02:17:52.429Z Record version: sha256:cc2af3f187b6297aca86a57e5a74cb1c24023317fd99ad4a3b73148a8c1927e0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Original policy benefit assumptions for certain long-duration contracts ordinarily continue to be used during the periods in which 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.") is accrued under Subtopic 944-40. However, actual experience with respect to investment yields, [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, or expenses may indicate that [existing contract](https://asc.understandingaccounting.org/glossary/e/#existing-contract "A contract that is currently held by the contract holder and excludes nonintegrated contract features.") liabilities, together with the present value of future gross premiums, will not be sufficient to do both of the following: 1. a Cover the present value of future benefits to be paid to or on behalf of policyholders and settlement costs relating to a block of long-duration contracts 2. b Recover unamortized present value of future profits. ##### [944-60-25-8](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:52.429Z to 2026-09-10T02:17:52.429Z Record version: sha256:24abe308ee356c5151b0695aba8cbdba4195037596cf1eea871934928b3d8a3f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The premium deficiency shall be recognized by a charge to income and either of the following: 1. a A reduction of unamortized present value of future profits 2. b An increase in the liability for future policy benefits. ##### [944-60-25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:52.429Z to 2026-09-10T02:17:52.429Z Record version: sha256:c657565222269fb43ef5e82b3a15d4d6a8155aae5537c53ed452adb075085dea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A premium deficiency, at a minimum, shall be recognized if the aggregate liability on an entire line of business is deficient. In some instances, the liability on a particular line of business may not be deficient in the aggregate, but circumstances may be such that profits would be recognized in early years and losses in later years. In those situations, the liability shall be increased by an amount necessary to offset losses that would be recognized in later years. Source downloaded (UTC): 2026-09-10T02:17:55.154Z to 2026-09-10T02:17:55.154Z Record version: sha256:6dac3f7eb39a049ad73601509b61680f2931726f016cbfafba82b0fc59c3da57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-60-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/944/60/#30-initial-measurement) SEC content: no ### Long-Duration Contracts ##### [944-60-30-1](https://asc.understandingaccounting.org/asc/944/60/#944-60-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:55.154Z to 2026-09-10T02:17:55.154Z Record version: sha256:cb5e197fb6e5393973039eba39aed540f6edd3ebcc8474794ee09a5175296257 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the conditions in paragraph [944-60-25-7](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-7) exist, an entity shall determine 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.") using revised assumptions as the remainder of the present value of future payments for benefits and related settlement costs (determined using revised assumptions based on actual and anticipated experience) minus the present value of future gross premiums (also determined using revised assumptions based on actual and anticipated experience). ##### [944-60-30-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:55.154Z to 2026-09-10T02:17:55.154Z Record version: sha256:731ccd483c1edca48a71622a8490cd76d88f2759536b96e2b672127c22ee0bba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A premium deficiency shall then be determined as the liability measured in paragraph [944-60-30-1](https://asc.understandingaccounting.org/asc/944/60/#944-60-30-1)minus the liability for future policy benefits at the valuation date, reduced by the unamortized present value of future profits. Source downloaded (UTC): 2026-09-10T02:17:59.204Z to 2026-09-10T02:17:59.204Z Record version: sha256:368ddc897eb7a1fd8197b3b93b2e22dde978580bf4545969b72298efbb80db23 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-60-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/944/60/#35-subsequent-measurement) SEC content: no ##### [944-60-35-1](https://asc.understandingaccounting.org/asc/944/60/#944-60-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:59.204Z to 2026-09-10T02:17:59.204Z Record version: sha256:fe4605853b58ce968caa22e0e87a0fb4a4c827a174fc151893c11d7d25ee927f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [450-20-55-17A](https://asc.understandingaccounting.org/asc/450/20/#450-20-55-17A) states that Subtopic 450-20 does not prohibit (and, in fact, requires) accrual of a net loss (that is, a loss in excess of deferred premiums) that probably will be incurred on insurance policies that are [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."), provided that the loss can be reasonably estimated. ### Short-Duration Contracts ##### [944-60-35-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:59.204Z to 2026-09-10T02:17:59.204Z Record version: sha256:b8864d544b06f7685d65cc55c5b8d169cd810d69522e655c4a06e6f7e5ccb149 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-60-25-4](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-4) states that a premium deficiency shall be recognized if the sum of expected [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 and [claim adjustment expenses](https://asc.understandingaccounting.org/glossary/c/#claim-adjustment-expenses "Expenses incurred in the course of investigating and settling claims."), expected [dividends to policyholders](https://asc.understandingaccounting.org/glossary/d/#dividend-to-policyholders "Nonguaranteed amounts distributable to policyholders of participating life insurance contracts and based on actual performance of the insurance entity as determined by the insurer. Under various state insurance laws, dividends are apportioned to policyholders on an equitable basis. The dividend allotted to any contract often is based on the amount that the contract, as one of a class of similar contracts, has contributed to the income available for distribution as dividends. Dividends to policyholders include annual policyholder dividends and terminal dividends."), unamortized [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 [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.") exceeds related unearned premiums. ##### [944-60-35-3](https://asc.understandingaccounting.org/asc/944/60/#944-60-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:59.204Z to 2026-09-10T02:17:59.204Z Record version: sha256:45e3557c0f5034f39f5acbe720ddd69c24f5e0807549d289cd374529d3bbfe9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-60-25-5](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-5) states that a premium deficiency shall first be recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. ##### [944-60-35-4](https://asc.understandingaccounting.org/asc/944/60/#944-60-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:59.204Z to 2026-09-10T02:17:59.204Z Record version: sha256:bcb0665d7c8d6023737c0335fd2ae2285a26c544cb434b3214a83347807c8f12 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-60-25-6](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-6) states that, if the premium deficiency is greater than unamortized acquisition costs, a liability shall be accrued for the excess deficiency. ### Long-Duration Contracts ##### [944-60-35-5](https://asc.understandingaccounting.org/asc/944/60/#944-60-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:59.204Z to 2026-09-10T02:17:59.204Z Record version: sha256:b035911dcbdf4f6ae96f4a92dffcda6cc2a113f769842d95b8742c12262911f1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a premium deficiency does occur, future changes in the liability shall be based on the revised assumptions. No loss shall be reported currently if it results in creating future income. 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.") using revised assumptions based on actual and anticipated experience shall be estimated periodically for comparison with the liability for future policy benefits (reduced by the unamortized present value of future profits) at the valuation date. ##### [944-60-35-6](https://asc.understandingaccounting.org/asc/944/60/#944-60-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:17:59.204Z to 2026-09-10T02:17:59.204Z Record version: sha256:daa794829956cf63fb77e19255d172b335a0b2bef3720a52da09900dcd298a4a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subsection shall not be applied to [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.") (see the Investment Contracts Subsections of Subtopic 944-825). Such loss recognition is not permitted. Source downloaded (UTC): 2026-09-10T02:18:01.966Z to 2026-09-10T02:18:01.966Z Record version: sha256:d3d3e7377bc855d298be8447c4e0c3b27648daa97479c9b48406507017f60c15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-60-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/60/#50-disclosure) SEC content: no ### Short-Duration Contracts ##### [944-60-50-1](https://asc.understandingaccounting.org/asc/944/60/#944-60-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:01.966Z to 2026-09-10T02:18:01.966Z Record version: sha256:e32018304669b5161b6ce7ca2a288c26bac9ad9d9ea41dc89c8812ab2c89cdc7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An insurance entity shall disclose in its financial statements whether it considers anticipated investment income in determining if a premium deficiency relating to short-duration contracts exists. ### Long-Duration Contracts ##### [944-60-50-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-50-2) Pending content: yes Source downloaded (UTC): 2026-09-10T02:18:01.966Z to 2026-09-10T02:18:01.966Z Record version: sha256:ab47f572fcb5a9d8e9eed6c5f5282de6c05bde812aad768bddb73273f487c3de 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 the following: 1. a The amount of a liability that is established as a result of a premium deficiency and loss recognition testing determined in accordance with paragraphs [944-60-25-7 through 25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-7) and a description of the factors that led to the establishment of the liability 2. b Information about the methodology used when performing premium deficiency testing in accordance with paragraphs [944-60-25-7 through 25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-7) 3. c Whether the entity considered anticipated investment income when performing premium deficiency testing in accordance with paragraphs [944-60-25-7 through 25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-7) and, if so, what that assumption was. 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 the following: 1. a The amount of a liability that is established as a result of a premium deficiency and loss recognition testing determined in accordance with paragraphs [944-60-25-7 through 25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-7) and a description of the factors that led to the establishment of the liability 2. b Information about the methodology used when performing premium deficiency testing in accordance with paragraphs [944-60-25-7 through 25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-7) 3. c Whether the entity considered anticipated investment income when performing premium deficiency testing in accordance with paragraphs [944-60-25-7 through 25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-7) and, if so, what that assumption was. Source downloaded (UTC): 2026-09-10T02:18:08.530Z to 2026-09-10T02:18:42.131Z Record version: sha256:3c5db535133f0e612c0d8a1da04c320fa4ad6d15fa2dddf0f5481f8a134a31d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80: Financial Services—Insurance — Separate Accounts ### Machine-generated study aids ```json { "summary": "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": [ "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)." ], "categories": [ "Industry-specific", "Presentation", "Fair value", "Consolidation" ], "audience_level": "advanced", "student_note": "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.", "related_topics": [ "944-40", "944-605", "810-10", "320-10", "321-10", "360-10" ], "key_concepts": [ "separate account", "contract holder funds", "pass-through of investment performance", "legal insulation", "seed money proportionate interest", "summary total presentation", "minimum guarantees and market risk benefits", "variable annuity contracts" ] } ``` Source downloaded (UTC): 2026-09-10T02:18:08.530Z to 2026-09-10T02:18:08.530Z Record version: sha256:0f63a7566a185c24652634a09b3cadfb78c992f0ee046b3d6c2dabc56e06c311 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/944/80/#00-status) SEC content: no ##### [944-80-00-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:08.530Z to 2026-09-10T02:18:08.530Z Record version: sha256:e8dad8f873999471922107bfa243b5e5b3b4ff47efb34f1b4cddb39f06da44c5 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
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
Source downloaded (UTC): 2026-09-10T02:18:10.428Z to 2026-09-10T02:18:10.428Z Record version: sha256:9801d61f138a9177ac002c0b093c73a02e54536a0c18dc0d5ceecbcd96cf1ae9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/944/80/#05-overview-and-background) SEC content: no ##### [944-80-05-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:10.428Z to 2026-09-10T02:18:10.428Z Record version: sha256:2b02a9c927e9345290ee34caa9f7526f82a88c7480d5d8e48fb88212cdc77c1c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides insurance entities guidance on accounting for and financial reporting of [separate accounts](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."), 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:10.428Z to 2026-09-10T02:18:10.428Z Record version: sha256:7ab37487b133445fad11e56e4f84c2da8c7241e85949126b228ad4d25e83ec43 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place.") and expense risks assumed. ##### [944-80-05-3](https://asc.understandingaccounting.org/asc/944/80/#944-80-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:10.428Z to 2026-09-10T02:18:10.428Z Record version: sha256:ed416373a75868978d759270df373d22b1ade361a2f0ffa853566928a2552031 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T02:18:14.210Z to 2026-09-10T02:18:14.210Z Record version: sha256:f31fafcd02f2fa6c9758aca80d5d780f0635c9d5f405a090b4134bdf6987bdb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/944/80/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [944-80-15-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:14.210Z to 2026-09-10T02:18:14.210Z Record version: sha256:4ba9251d809902a9439a653c60be7086e21fb080f563e9ea149358b4332ab8e2 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. 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. Source downloaded (UTC): 2026-09-10T02:18:22.518Z to 2026-09-10T02:18:22.518Z Record version: sha256:5e814ab609bdf147802f54586789f0da3c9fd63d0571044f0c63559ab609471f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/944/80/#30-initial-measurement) SEC content: no ##### [944-80-30-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:22.518Z to 2026-09-10T02:18:22.518Z Record version: sha256:d5db160ef666e54b8508d3c5f1c8f663451f05639e743d4f996508968f6a8a68 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of [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 representing contract holder funds recognized under paragraph [944-80-25-3](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-3) shall be measured initially 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."). Source downloaded (UTC): 2026-09-10T02:18:25.338Z to 2026-09-10T02:18:25.338Z Record version: sha256:10019b5d8023c100126c011228c2dfa64857f14f242d509c9375ad04a8b389ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/944/80/#35-subsequent-measurement) SEC content: no #### Overall ##### [944-80-35-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:25.338Z to 2026-09-10T02:18:25.338Z Record version: sha256:65bd33486e1321dcdccfbb6c4855cd5a8ebffb39a4360eab15b378d51f965e85 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Investments in separate accounts shall be reported 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.") except for [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.") contracts with guaranteed investment returns. For those separate accounts, the related assets shall be reported in accordance with paragraph [944-80-25-4](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-4). ##### [944-80-35-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:25.338Z to 2026-09-10T02:18:25.338Z Record version: sha256:e9e7437ca58095acdd2b10a463af6546aa59f853a493122da41814b4a63f3811 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of separate account assets representing contract holder funds recognized under paragraph [944-80-25-3](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-3) shall be measured subsequently at fair value. #### Transfers to Separate Accounts ##### [944-80-35-3](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:25.338Z to 2026-09-10T02:18:25.338Z Record version: sha256:21d74d88cfabed3985f0b31cb1cfaae84cc67569b62bb1f3977510f6edfad5ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [944-80-40-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-40-1) states that assets transferred 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).") 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](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 the criteria in paragraph [944-80-25-2](https://asc.understandingaccounting.org/asc/944/80/#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. ##### [944-80-35-4](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:25.338Z to 2026-09-10T02:18:25.338Z Record version: sha256:fdb69ac751e4094e6a6609824c348601766bdfe904d1c65f08ea2ccf42e6f0ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). ##### [944-80-35-5](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:25.338Z to 2026-09-10T02:18:25.338Z Record version: sha256:9ffadce1b541e6540282129f4d3af8b09ff011454368ce480f05ea4301f6fbed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:25.338Z to 2026-09-10T02:18:25.338Z Record version: sha256:cf7a8fa2121e85dfd24da3c676e2fbd1c4a36ee76a010a882ed10119b591b9b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the separate account arrangement does not meet the criteria in paragraph [944-80-25-2](https://asc.understandingaccounting.org/asc/944/80/#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](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:25.338Z to 2026-09-10T02:18:25.338Z Record version: sha256:b17315f987f61616387916137d610d385ffff8f7dd06381b057df4a8ef8fec46 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#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](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:25.338Z to 2026-09-10T02:18:25.338Z Record version: sha256:f133f65fcbc22cd46bcf10a8abb1fb7e7727be0d5e2912df8e8ff88d585d90aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#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](https://asc.understandingaccounting.org/glossary/c/#carrying-amount "The amount of an item as displayed in the financial statements."). ##### [944-80-35-9](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:25.338Z to 2026-09-10T02:18:25.338Z Record version: sha256:ac05275965d69a3ab0275d0fdc7c318e38d96468ebd7ddcdb2347603df3caaf9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-2), the reduction in the insurance entity's proportionate interest may result in additional gain. ##### [944-80-35-10](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:25.338Z to 2026-09-10T02:18:25.338Z Record version: sha256:37b771d72465dffaade94f37a6049315172cdf9c22886ec62f968ce71604e7a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T02:18:27.891Z to 2026-09-10T02:18:27.891Z Record version: sha256:4210e6f794219439970da8bf6dea945eed03556119610b12ea09142cbe9b07fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80-40: 40 Derecognition [Read section](https://asc.understandingaccounting.org/asc/944/80/#40-derecognition) SEC content: no #### Transfers to Separate Accounts ##### [944-80-40-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-40-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:27.891Z to 2026-09-10T02:18:27.891Z Record version: sha256:8a73110dfa71a7f902b1c406f618f766e5505902473e4cbe9804acde8e9a6faa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assets transferred 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).") to a [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.") shall be recognized 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.") to the extent of the third-party contract holders' proportionate interests in the separate account 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 the criteria in paragraph [944-80-25-2](https://asc.understandingaccounting.org/asc/944/80/#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](https://asc.understandingaccounting.org/asc/944/80/#944-80-40-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:27.891Z to 2026-09-10T02:18:27.891Z Record version: sha256:565c3decd15665a379a7b8f3b5284551070482e1f37f04a9cd31f857f73a4cc9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-40-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:27.891Z to 2026-09-10T02:18:27.891Z Record version: sha256:9859a8e69e01cea96aa205a9ba908f6b92b717b3f9fa527206ea74895e0c07fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-2), the reduction in the insurance entity's proportionate interest may result in additional gain. Source downloaded (UTC): 2026-09-10T02:18:30.731Z to 2026-09-10T02:18:30.731Z Record version: sha256:f3229634d714dda67d2f57d9c3bb3b7129d4b8f754af59b320110079fdf0311b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/944/80/#45-other-presentation-matters) SEC content: no #### Overall ##### [944-80-45-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:30.731Z to 2026-09-10T02:18:30.731Z Record version: sha256:5001c110cfcc58207b22e604cd5dd5ca2531052dc06121b371e2000400afa339 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 as summary totals in the financial statements of the insurance entity. ##### [944-80-45-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:30.731Z to 2026-09-10T02:18:30.731Z Record version: sha256:14e71edcc39b435646af7f9bc2265ac56822291c36540432a1bd9acd337b5841 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](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 criteria in paragraph [944-80-25-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-2). ##### [944-80-45-3](https://asc.understandingaccounting.org/asc/944/80/#944-80-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:30.731Z to 2026-09-10T02:18:30.731Z Record version: sha256:367d76d95e633c80ecafff7b3f97b927dc65f8db51ff5f565d57a2593a92becb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T02:18:33.389Z to 2026-09-10T02:18:33.389Z Record version: sha256:68e1c3dec5e6fa8406697b1c2aab5de4f34b2602912c629bea6277a3af3a8824 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/944/80/#50-disclosure) SEC content: no ##### [944-80-50-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-50-1) Pending content: yes Source downloaded (UTC): 2026-09-10T02:18:33.389Z to 2026-09-10T02:18:33.389Z Record version: sha256:de21b1d2e6fb1c7b2ba05f72fd9a885ec61b7ccda3582b7ddc8b3601f3224a67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](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.")) 2. b The basis of presentation for both of the following: 1. 1 [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 2. 2 Related separate account activity. 3. c [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). 4. d [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). 5. e The aggregate [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 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: [270-10-65-1](https://asc.understandingaccounting.org/asc/270/10/#270-10-65-1)The 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](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.")) 2. b The basis of presentation for both of the following: 1. 1 [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 2. 2 Related separate account activity. 3. c [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). 4. d [Subparagraph superseded by Accounting Standards Update No. 2018-12](https://asc.understandingaccounting.org/updates/asu-2018-12/). 5. e The aggregate [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 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:33.389Z to 2026-09-10T02:18:33.389Z Record version: sha256:1091e5d7bd4a08f205ea78909c8d38779d7b2bbd3bc9aba7d82706a0e623f06f 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 separate account liabilities 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 disaggregated in accordance with paragraph [944-40-50-5A](https://asc.understandingaccounting.org/asc/944/40/#944-40-50-5A) 2. b For each separate account liability rollforward presented, the related [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.)") 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. Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:825e48a1cf1b69521d0f7ff543d5b66702b833c944022bc7db2533da47760ec0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/944/80/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [944-80-55-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:5475d5804c7a7227174fa5af3a6959f1187fbbe5dd89de1fd06e949c1d8cfa62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/g/#general-account "All operations of an insurance entity that are not reported in the separate account(s).") to a [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.").The general account transfers to 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."), as [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."), a debt security with a book value of $60 and a [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 $100. No gain is recognized on the initial transfer to the separate account arrangement. ##### [944-80-55-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:f1c1676043230f803270f3d1f1dfc951c1385e2dce542187aa5e289724ee29bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:407ebf907ef1c2dbda5861672db445845413649e857d0c4df5a26244610780a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:dfd4df808039e4b658fd035aba06d6d417b048f38dfb0b06864594921dadf799 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:ca0d12cd3fe5c761cc0cd30ca22d6f89d29588d0ad22f1ee28cd7d19ba048fd0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:e42b55fe554a800e17fb91a3e790eec02fb25c0dc9a8ef75c0b0086cedeb3516 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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). ##### [944-80-55-7](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:69d08b3d36a9c4dd1502fa267e5e77e2fa82fdb722b9d138ad55a6aeacafa33d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2010-15](https://asc.understandingaccounting.org/updates/asu-2010-15/). ##### [944-80-55-8](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:0b14296ebdd8392fb60f3bb65c14e36d16429fd846f7dfec63794b0214f856b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The assets of Subaccount XYZ follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-6CA8E9CB-5C6B-4572-AB91-AFCC3B017A05-low.gif) 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:c339a80abb47c8c86e43b47336ec9ef016c38944ac3eedde1181762a7565c270 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Balances presented in the insurer's statement of financial condition follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-79D0E75B-8BA9-421D-A753-31E8F166FD62-low.gif) 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:37e9e52b8bd45030a143ab0258130facf2a06d24b5a8c1ac68fc464e849fac06 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:53850bcd138a9f8cbac9a2e7462b341bf2b5b6903e797852351a876df3e52b58 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The XYZ separate account's balances for net investment income and gains and losses follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-290097FD-B20F-4F7F-B2BA-A127B17BA06D-low.gif) 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:fc5f815978f637a10c01cfd074d4b1a1f87cf8a3618db4b5ea6050b84a4b331d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:6f4f2851769351deba93396dee2de24d2763b4414de0e29d6e7539808c609bb2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assets of Subaccount XYZ at the end of first quarter follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-ADFC21B6-737F-463B-8416-AC5808CA7A51-low.gif) 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:250adaa29835d44ac987751c21f611f6cad601db33e3e6c3b9bb32b4cce8dd10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Balances presented in the insurer's statement of financial condition follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-64F70507-AFDC-4E63-B6B8-068131B756DD-low.gif) 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:02ad04033278b2df842410d2df8d426f6438d620810d0350a4b043af414262e6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Subaccount XYZ separate account's balances for net investment income and gains and losses for the quarter follow. - ![](https://asc.understandingaccounting.org/asc-img/GUID-C88B23A3-27BC-49AB-AAF1-06148F760ECE-low.gif) 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-16) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:1aa31705b3e4044c3672c8ddd5929dccb450042b164a27fd4056284376bd8ac0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting for the seed money change for the quarter follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-D4B9FA3A-B01B-4A87-829E-13B6B82D985A-low.gif) 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-17) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:78b5685a427968dc46438f12a9b15e1eac828240a7a48ad2a3e09dc98ecb15a6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The aggregate fair value of assets, by major investment asset category, supporting separate accounts follows. - ![](https://asc.understandingaccounting.org/asc-img/GUID-257366DA-B887-4E0E-A486-F81B744EEB9B-low.gif) 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-18) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:9a1731effdec367bffc717a88a298ade2644f93cbdec59b419c6e27d3f94cbde Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the separate account liability information that an insurance entity should disclose to meet the requirements in paragraph [944-80-50-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-50-2). - Note X: Separate Account Liability - The balances of and changes in separate account liabilities follow. - - ![](https://asc.understandingaccounting.org/asc-img/GUID-078325A9-AA15-4678-A82C-A16D9F046809-low.gif) "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. - - ![](https://asc.understandingaccounting.org/asc-img/GUID-FCC87EF9-63F4-489C-90E8-3B8B6B0680AA-low.gif) "December 31, " 20X2 20X1 Variable universal life $DDD $BBB Variable annuity CCC AAA Other XXX XXX Total $XXX $XXX ##### [944-80-55-19](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-19) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:0cc4031f01ef2cba236a824b7b2f082740b9043f4c4bae89a849ac0a1b37c46f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-20) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:028ec926f7f76e879c3bb1b4de40cfa6edb84daf8e214e724ede77d7449c7129 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/944/80/#944-80-25-2) , [944-80-30-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-30-1), [944-80-35-2](https://asc.understandingaccounting.org/asc/944/80/#944-80-35-2), and [944-80-45-2 through 45-3](https://asc.understandingaccounting.org/asc/944/80/#944-80-45-2) . The allocation to the guaranteed interest separate account does not satisfy the criterion in paragraph [944-80-25-2](https://asc.understandingaccounting.org/asc/944/80/#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](https://asc.understandingaccounting.org/asc/944/80/#944-80-55-21) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:36.210Z to 2026-09-10T02:18:36.210Z Record version: sha256:5cf0bebc80d39568d1a5a760df83bf7797e46fca8b47e350b29fb81d9532b0de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T02:18:39.188Z to 2026-09-10T02:18:39.188Z Record version: sha256:09e0393f78922a83341fa3f0341d93c9851827b83671f165eeb8ce0b83c4c259 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-80-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/944/80/#65-transition-and-open-effective-date-information) SEC content: no ##### [944-80-65-1](https://asc.understandingaccounting.org/asc/944/80/#944-80-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:18:39.188Z to 2026-09-10T02:18:39.188Z Record version: sha256:454fedf97f4e85eae0d901945e792435c95eafb67ee640f179d93d1853eb641b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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_.