Defining Issues | August 2017
FASB redeliberates proposed ASU on long-duration insurance contracts
KPMG reports on the FASB’s redeliberations on targeted improvements for long-duration insurance contracts. The Board made decisions on the reserving model for nonparticipating traditional and limited-payment insurance contracts.
Applicability
- 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
- August 2, 2017 – FASB redeliberated exposure draft
Key impacts
- Insurance entities would be required to update cash flow assumptions at least annually, and remeasure the liability for future policy benefits using a catch-up method
- Upper-medium grade, fixed income instrument yield would be used to discount future cash flows
- Insurance entities would apply a prospective transition approach, but would have an option to use a retrospective transition approach
Report contents
- Applicability
- Key facts and impacts
- Updating cash flow assumptions used in measuring the liabilities
- Discount rate used in measuring the liability
- Transition
- Next steps
Related content
Receive timely updates on accounting and financial reporting topics from KPMG.
Receive timely updates on accounting and financial reporting topics from KPMG.
Sign up now