About the Insurance contracts guide

PwC is pleased to offer our updated Insurance contracts guide addressing accounting by insurance and reinsurance entities for insurance contracts.

This guide summarizes the applicable accounting literature, including relevant references to and excerpts from the FASB’s Accounting Standards Codification (the Codification). It also provides our insights and perspectives, interpretative and application guidance, illustrative examples, and discussion on emerging practice issues. The PwC guides should be read in conjunction with the applicable authoritative accounting literature.

Definitions, full paragraphs, and excerpts from the Financial Accounting Standards Board’s Accounting Standards Codification are clearly labelled. In some instances, guidance was cited with minor editorial modification to flow in the context of the PwC Guide. The remaining text is PwC’s original content.

This guide provides general and specific references to chapters in other PwC guides to assist users in finding other relevant information. References to other guides are indicated by the applicable guide abbreviation followed by the specific section number. The other PwC guides referred to in this guide, including their abbreviations, are:

• Business combinations and noncontrolling interests (BCG)
• Derivatives and hedging (DH)
• Equity method investments and joint ventures (EM)
• Fair value measurements (FV)
• Financial statement presentation (FSP)
• Foreign currency (FX)
• Loans and investments (LI)

The following is a summary of recent noteworthy revisions to the guide. Additional updates may be made to future versions to keep pace with significant developments.

• Information on the initial recognition and measurement of DAC previously included in IG 3.4.6 was incorporated into IG 3.4.

• Example IG 5-1 and Example IG 5-2 were updated to clarify calculations of the net premium ratio and the liability of future policy benefits at initial and subsequent measurements.

• IG 8.4 was updated to clarify the ceding entity’s short-duration reinsurance accounting model.
• IG 8.6.3.3 was updated to clarify the subsequent measurement of retroactive reinsurance by ceding entities.
• IG 8.10 was updated to address accounting for retroactive reinsurance by assuming entities.
• Information on the accounting for reinsurance premiums received from affiliated entities in the separate financial statements of an assuming entity previously included in IG 8.6.3.3 was moved to IG 8.10.

• IG 9.4 was updated to clarify the ceding entity’s long-duration reinsurance and deposit accounting models.

• Figure IG 10-1 was updated to clarify explanations of the components of the disaggregated rollforwards of the liability for future policy benefits.

• IG 11.2 was updated to address effective date considerations for non-SEC filers.
• IG 11.4 was updated to clarify the transition guidance for balances amortized on a basis consistent with deferred acquisition cost.

• Guidance on initial measurement of acquired short-duration insurance contracts, which was previously included in IG 12.2.1 and IG 12.2.2, was updated and moved to IG 12.2.
• IG 12.3.4 was updated to clarify the guidance on subsequent measurement of insurance contract intangible assets (or other liabilities) for acquired long-duration insurance contracts.

This publication has been prepared for general informational purposes, and does not constitute professional advice on facts and circumstances specific to any person or entity. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. The information contained in this publication was not intended or written to be used, and cannot be used, for purposes of avoiding penalties or sanctions imposed by any government or other regulatory body. PricewaterhouseCoopers LLP, its members, employees, and agents shall not be responsible for any loss sustained by any person or entity that relies on the information contained in this publication. Certain aspects of this publication may be superseded as new guidance or interpretations emerge. Financial statement preparers and other users of this publication are therefore cautioned to stay abreast of and carefully evaluate subsequent authoritative and interpretative guidance.

The FASB Accounting Standards Codification material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, and is reproduced with permission.

PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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• About the Insurance contracts guide