FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944). 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 adopt LDTI early. Comment on the proposal are invited by August 24, 2020.
The proposed Accounting Standards Update would permit insurance companies to delay implementation by one year as follows:
- For SEC filers, excluding smaller reporting companies as defined by the SEC, LDTI would be effective for fiscal years beginning after December 15, 2022 and for interim periods within those fiscal years.
- For all other entities, LDTI would be effective for fiscal years beginning after December 15, 2024 and for interim periods within fiscal years beginning after December 15, 2025.
To facilitate early application of LDTI, the early application transition date would be the beginning of the prior period presented (rather than beginning of the earliest period presented), thus aligning the early application transition date with the standard transition date for SEC filers. For example, a large calendar-year public insurance entity would reflect LDTI as of January 01, 2021 (and record a transition adjustment as of that date) in its 2022 financial statements if the entity elects early application or in its 2023 financial statements if the entity does not elect early application.
Comment Due Date: August 24, 2020
Keywords: Americas, US, Accounting, Insurance, COVID-19, Insurance Contracts, Topic 944, LDTI, IFRS 17, Implementation Timeline, FASB
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleESMA Updates Reporting Manual on European Single Electronic Format
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).