FASB makes presentation and disclosure decisions for long-duration insurance contracts

KPMG reports on the FASB’s decisions about the presentation and revised disclosures for long-duration insurance contracts. These decisions include changes to the frequency and transition requirements.

Applicability

Proposed ASU on ASC 944

• Insurance entities that issue long-duration contracts
• Not applicable to policyholders of long-duration contracts
• Not applicable to non-insurance entities

Relevant dates

• September 29, 2016 – FASB issued exposure draft
• November 1, 2017 – FASB continues deliberations on exposure draft

Key impacts

The FASB decided to:

• Affirm the separate presentation of market risk benefits in the statement of financial position and statement of operations, except for changes in instrument-specific credit risk
• Require separate presentation of the liability remeasurement gain or loss for future policy benefits in the statement of operations
• Add disclosures for gross premiums, techniques used to determine unobservable rates and premium deficiency testing methodologies and results
• Remove disclosures for information about managing risks, certain weighted-average inputs or assumptions, and information used to conclude that no additional liability should be recognized for universal life-type contracts
• Reduce the frequency of certain disclosure requirements
• Replace the proposed transition disclosure requirements

Report contents

• Applicability
• Key facts and impacts
• Presentation
• Disclosures
• Next steps

Related content

• Defining Issues: FASB continues discussion on targeted improvements for long-duration insurance contracts