United States

Long-duration insurance: Deferral and ease of adoption

FINANCIAL REPORTING INSIGHTS  | 

The Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-11, Financial Services – Insurance (Topic 944): Effective Date and Early Application, which provides an additional year for the implementation of ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, as follows:

  • For SEC filers, excluding smaller reporting companies (SRC) as defined by the SEC, ASU 2018-12 will be effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. (The one-time determination of whether an entity is an SRC is still based on an entity’s most recent determination as of November 15, 2019, in accordance with SEC regulations.)
  • For all other entities, ASU 2018-12 will be effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025

In addition, ASU 2020-11 eases the adoption provisions by allowing insurance companies that choose to early adopt ASU 2018-12 to do so as of the beginning of the prior period presented or as of the beginning of the earliest period presented. If early application is not elected, the transition date is as of the beginning of the earliest period presented.

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