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ASC 944 — Financial Services — Insurance

Below is an overview of FASB Accounting Standards Codification Topic 944, Financial Services — Insurance, as well as a list of FASB Accounting Standards Updates (ASUs) and proposed ASUs related to this Topic. The full text of ASC 944 can be found in the FASB Accounting Standards Codification (link to the FASB's Web site; registration required). Also, the full text of the Codification and Deloitte-authored Q&As related to the Codification are available in the Deloitte Accounting Research Tool (DART) Web site (subscription required).


ASC 944 comprises seven Subtopics (Overall, Insurance Activities, Acquisition Costs, Claim Costs and Liabilities for Future Policy Benefits, Policyholder Dividends, Premium Deficiency and Loss Recognition, and Separate Accounts), as well as numerous intersecting Subtopics for industry-specific guidance. Below is an overview of these Subtopics.

944-10 Overall

ASC 944-10 provides an overview of the various Subtopics of ASC 944 and defines what entities are included within the scope of ASC 944.

944-20 Insurance Activities

ASC 944-20 notes the following:


This Subtopic provides a description of insurance activities and insurance contracts, provides guidance on accounting for multi-year retrospectively rated contracts, and contains other overarching industry-specific content.

In some cases an insurance contract or reinsurance contract does not transfer insurance risk. In those cases, Subtopic 340-30 provides guidance on applying the deposit method of accounting.

Four methods of premium revenue and contract liability recognition for insurance contracts have developed: short-duration contract accounting and three methods of long-duration contract accounting—Traditional, Universal Life, and Participating Contracts. Generally, the four methods reflect the nature of the insurance entity's obligations and policyholder rights under the provisions of the contract.

The accounting model for financial guarantee insurance contracts incorporates attributes of both the short-duration and the long-duration models. Financial guarantee insurance contracts provide insurance protection to the holder of the insured financial obligation. Therefore, premium revenue recognition issues are addressed in the context of the short-duration insurance accounting model. The claim liability recognition and measurement approach for financial guarantee insurance contracts incorporates aspects of the long-duration insurance accounting model.

944-30 Acquisition Costs

ASC 944-30 notes the following:


This Subtopic provides guidance to insurance entities on accounting for and financial reporting of acquisition costs including related considerations for internal replacement transactions. The guidance in this Subtopic is presented in the following five Subsections:

  1. General
  2. Short-Duration Contracts
  3. Long-Duration Contracts
  4. Internal Replacement Transactions
  5. Reinsurance Contracts.

944-40 Claim Costs and Liabilities for Future Policy Benefits

ASC 944-40 notes the following:


This Subtopic provides guidance to insurance entities on accounting for and financial reporting of claims costs and liabilities for future policy benefits.

Claim adjustment expenses include costs incurred in the claim settlement process such as all of the following:

  1. Legal fees
  2. Outside adjuster fees
  3. Costs to record, process, and adjust claims.

944-50 Policyholder Dividends

ASC 944-50 provides guidance for insurance entities on the "accounting for and financial reporting of policyholder dividends."

944-60 Premium Deficiency and Loss Recognition

ASC 944-60 provides guidance for insurance entities on the "accounting for and financial reporting of a premium deficiency on insurance contracts."

944-80 Separate Accounts

ASC 944-80 notes the following:


This Subtopic provides insurance entities guidance on accounting for and financial reporting of separate accounts, including an insurance entity's accounting for separate account assets and liabilities related to contracts for which all or a portion of the investment risk is borne by the insurer.

Separate accounts represent assets and liabilities that are maintained by an insurance entity for purposes of funding fixed-benefit or variable annuity contracts, pension plans, and similar activities. The contract holder generally assumes the investment risk, and the insurance entity receives a fee for investment management, certain administrative expenses, and mortality and expense risks assumed.

Often for administrative purposes, separate account subaccounts with differing investment objectives are created within a single separate account. Examples include both of the following:

  1. A variable life insurance contract offered through an insurance entity's high return separate account
  2. A contract holder’s allocation of a portion of the contract holder's deposit in a deferred variable annuity to a growth equity fund.

Intersecting Subtopics

ASC 944 also contains intersecting Subtopics that provide industry-specific guidance related to the following Codification Topics:

Content from the FASB Accounting Standards Codification® included at is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission.

FASB Accounting Standards Updates

    The following ASUs amended the guidance in this Topic:

    Proposed FASB Accounting Standards Updates

      The following are proposed amendments to ASC 944:

      Correction list for hyphenation

      These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.