Summary - The FASB issued proposed Accounting Standards Update (ASU), Financial Services—Insurance (Topic 944): Transition for Sold Contracts. Comments on the proposed standard are due by August 8, 2022.
The amendments in ASU No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI), require an insurance entity to apply a retrospective transition method as of the beginning of the earliest period presented or the beginning of the prior fiscal year if early application is elected. The FASB received stakeholder feedback indicating that applying the LDTI guidance to contracts that were derecognized because of a sale or disposal of individual or a group of contracts or legal entities before the LDTI effective date likely would not provide decision-useful information to investors and other financial statement users and may result in significant operability challenges for insurance entities to apply the guidance.
As such, the FASB is issuing this proposed ASU to attempt to reduce implementation costs and complexity associated with the adoption of LDTI for contracts that have been derecognized because of a sale or disposal of individual or a group of contracts or legal entities before the LDTI effective date. Otherwise, an insurance entity would be required to reclassify a portion of the previously recognized gains or losses to the LDTI transition adjustment because of the adoption of a new accounting standard. Because there is no effect on an insurance entity’s future cash flows, such a reclassification could be misleading to financial statement users.
For more information, click here.
© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Summary - As reported in its “Summary of Board Decision” publication, the FASB met on September 30, 2020, and discussed comment letter feedback received on its proposed Accounting Standards Update (ASU), Financial Services—Insurance (Topic 944): Effective Date and Early Application, and made the following two decisions.
To affirm its decision to defer the effective date of the amendments in ASU No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, for all insurance entities by one year.
To amend the proposed early application provisions of ASU 2018-12 whereby the early application transition date would be either the beginning of the prior period or the earliest period presented.
The FASB directed its staff to draft an ASU for vote by written ballot.
For more information, click here.
© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Summary - The FASB issued a proposed Accounting Standards Update (ASU) that would help insurance companies adversely affected by the COVID-19 pandemic by giving them an additional year to implement ASU No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). However, for insurers that may not need the extra time, the proposal would make it easier and cost-effective to maintain their current timelines and early adopt LDTI. Stakeholders are asked to review and provide comment on the proposed ASU by August 24, 2020.
To facilitate early application and encourage accelerated delivery of better information to investors, the proposed ASU would allow insurance companies to restate only one previous period, rather than two, if they choose to early adopt LDTI.
The proposed ASU would permit insurance companies to delay implementation by one year as follows:
For more information, click here.
© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on June 10, 2020, and discussed two agenda requests regarding the effective date of Accounting Standards Update (ASU) No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.
The FASB decided to:
For more information, click here.
© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Summary - The IASB has issued amendments to IFRS 17, Insurance Contracts, aimed at helping companies implement the Standard and making it easier for them to explain their financial performance.
The fundamental principles introduced when the IASB first issued IFRS 17 in May 2017 remain unaffected. The amendments, which respond to feedback from stakeholders, are designed to:
The IASB has also issued an amendment to the previous insurance contracts Standard, IFRS 4, so that eligible insurers can still apply IFRS 9, Financial Instruments, alongside IFRS 17.
The deferral of the effective date by two years, to annual reporting periods beginning on or after 1 January 2023, is intended to allow time for an orderly adoption of the amended IFRS 17 by jurisdictions around the world. This should enable more insurers to implement the new Standard at the same time.
For more information, click here.
© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Summary - The AICPA’s Financial Reporting Executive Committee (FinREC) has issued for public comment several working drafts of accounting issues for Insurance Entities, related to the implementation of FASB Accounting Standards Update (ASU) No. 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts.
The new FASB accounting standard on Long-Duration Contracts makes targeted improvements to the existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance company. FinREC and the AICPA Insurance Expert Panel will continue to develop working drafts on accounting implementation issues that have been identified for the new standard.
The working drafts for implementation of ASU 2018-12 are:
For more information, click here.
© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Summary - The AICPA’s Financial Reporting Executive Committee (FinREC) has issued four working drafts of accounting issues for insurance entities. These working drafts provide guidance on implementation of FASB Accounting Standards Update (ASU) No. 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts.The comment due date for each working draft is April 10, 2020.
When final, the text of the working drafts will be included in the Audit and Accounting Guide: Life and Health Insurance Entities.
The new working drafts for implementation of ASU 2018-12 include:
For more information, click here.
© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Summary - The FASB issued ASU No. 2019-09, Financial Services—Insurance (Topic 944): Effective Date, which finalizes insurance standard effective date delays for all insurance companies that issue long-duration contracts, such as life insurance and annuities. The change to the effective date is as follows:
Insurance (ASU No. 2018-12): For public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The one-time determination of whether an entity is eligible to be a smaller reporting company should be based on an entity’s most recent determination as of November 22, 2019, in accordance with SEC regulations. Early application is permitted.
For all other entities, for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early application is permitted.
For more information, click here.
© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.