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
The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.