Long-Duration Contracts Targeted Improvements – Deferred Acquisition Costs Amortization

Accounting Standards Codification (ASC) Topic 944, Financial Services — Insurance, is the source of authoritative Generally Accepted Accounting Principles (GAAP) to be applied to longduration insurance contracts. In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (the Update), which will amend and update ASC Topic 944.

The objective of the Update is to improve, simplify and enhance the financial reporting of long-duration contracts providing financial statement users with more useful information about the amount, timing and uncertainty of cash flows related to those contracts. The Update affects all insurance and reinsurance companies that issue longduration contracts, including life insurance, long term care, disability income and annuities.

The AICPA Insurance Expert Panel has identified several technical implementation issues associated with the new standard. The full list of potential implementation issues can be found here on the AICPA website. This article addresses the implementation issues identified in Issue Number 9, DAC Amortization.

CONTRIBUTORS

Matt Moffitt
Senior Manager, Insurance

RELATED KNOWLEDGE SHARE

© Dixon Hughes Goodman LLP. All rights reserved.
DHG is registered in the U.S. Patent and Trademark Office to Dixon Hughes Goodman LLP.
praxity