GAAP guidance for universal life-type contracts requires that the loss recognition requirements of traditional long-duration insurance contracts as described in ARM 9632.2421 should also be applied to universal life-type contracts. This means that, although the liability for these contracts is based on account balances, the present value of future benefits and expenses less the present value of future gross premiums will need to be compared with the account balance liability, net of unamortized acquisition costs. The interaction of these requirements could result in having to record the greater of the account balance liability or the net level premium method liability (determined using realistic assumptions with no provision for adverse deviation) for universal life-type contracts, if there is a premium deficiency. In practice, for universal life-type contracts, the recoverability test is sometimes satisfied by demonstrating that the present value of expected gross profits equals or exceeds the present value of capitalized acquisition costs. In addition, where a premium deficiency is recorded on universal life contracts, we believe it is preferable to unlock the assumptions related to the premium deficiency reserve for future periods. The profits followed by losses situation noted above in ARM 9632.2421 can also occur with universal-life type contracts. Although the 2015 discussion between the SEC staff and the AICPA Insurance Expert Panel was specific to traditional life insurance, we believe it can be applied by analogy to universal-life type contracts.