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Deloitte comments on FASB's proposal on long-duration insurance contracts

Published on: Dec 16, 2016

Deloitte & Touche LLP comments on the FASB's Proposed ASU, Targeted Improvements to the Accounting for Long-Duration Contracts, which was issued in September 2016.

An excerpt from the comment letter is shown below:

We fully support the Board’s objectives of (1) improving, simplifying, and enhancing insurers’ financial reporting for long-duration insurance contracts and (2) providing financial statement users with more decision-useful disclosures. In particular, we support the proposed improvements’ premise that measuring insurance liabilities by using both updated actuarial assumptions and discount rates that are representative of the nature of reserves for long-duration insurance contracts is more beneficial to the users of financial statements than existing requirements. We also agree with the Board’s efforts to simplify the accounting for deferred acquisition costs (DAC) and to provide more consistent accounting for market risk benefits in contracts issued by insurers.

While we broadly support the Board’s objectives for this project and the nature of most of the targeted improvements, we believe that the Board should reconsider certain aspects of the proposal to enable insurers to better portray the underlying economics of their insurance contracts in their financial statements and more easily implement the proposed changes. In particular, we ask the Board to focus on the issues discussed below.

For more information, see the full text of the comment letter which is available below.


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