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ASC 944 requires specific disclosures for long-duration contracts.
Insurance entities subject to Article 7 of SEC Regulation S-X may be required to make additional disclosures based on the requirements of Regulation S-X, Rule 7-03 through Regulation S-X, Rule 7-05.

10.3.1 Disaggregated rollforwards – non-participating long-duration contracts

Year-to-date disaggregated tabular rollforwards are required in both annual and interim reporting periods in accordance with ASC 944-40-50-6 through ASC 944-40-50-7B, ASC 944-80-50-2, and ASC 944-30-50-2B for the following balances associated with nonparticipating long-duration contracts:
  • future policy benefits,
  • additional liability for annuitization, death or other insurance benefits,
  • policyholder account balances,
  • market risk benefits,
  • separate account liabilities, and
  • deferred acquisition costs (and balances amortized on a basis consistent with DAC).
Each disaggregated rollforward must reconcile to the aggregate ending carrying amount included in the balance sheet and/or amounts included in the income statement, as appropriate. For example, for annual reporting, the beginning and ending balances in the rollforward must reconcile to the balance sheet, and the activity within the rollforward must reconcile to the corresponding income statement amounts. For interim reporting, the beginning and ending balance must agree to the balance sheet and the activity must reconcile to the year-to-date income statement. We believe the comparative periods presented in the rollforwards should highlight the comparative year-to-date activity and should reconcile to the corresponding income statement amounts.
The disaggregated rollforwards of DAC (and balances amortized on a basis consistent with DAC) are required for all long-duration contracts. The remaining rollforwards are required for all nonparticipating long-duration contracts that are written, assumed, or ceded by insurance entities and reinsurance entities.
Refer to ASC 944-40-50-8 and ASC 944-805-50 for the disclosure requirements applicable to participating long-duration contracts, including those contained within closed blocks.
See IG 10.3.1.2 through IG 10.3.1.6 for various illustrations of these disaggregated rollforwards and IG 10.3.2 for additional long-duration contract disclosures relating to key judgments and assumptions.

10.3.1.1 Level of aggregation of disaggregated rollforwards

The guidance does not prescribe the level of disaggregation and indicates the level of aggregation or disaggregation will depend on the specific facts and circumstances. ASC 944-40-50-5A states that disaggregation should be at a level that does not obscure useful information by including a large amount of insignificant detail and aggregation should not combine items with significantly different characteristics.
In determining the extent of disaggregation, the following information should be considered in accordance with ASC 944-40-55-13G:
  • Disclosures presented outside the financial statements (e.g., Management’s Discussion and Analysis in Annual Reports on Form 10-K, earnings releases, or statutory filings)
  • Information regularly viewed by the chief operating decision maker for evaluating financial performance
  • Other information that management or financial statement users use to evaluate the insurance entity’s financial performance or that is used to make resource allocations (e.g., supplemental schedules provided to investors)
ASC 944-40-55-13H provides examples of disaggregated categories to consider and notes that reporting entities should not aggregate amounts from different reportable segments.

ASC 944-40-55-13H

Examples of categories that might be appropriate to consider to aggregate or disaggregate disclosures include the following:
  1. Type of coverage (for example, major product line)
  2. Geography (for example, country or region)
  3. Market or type of customer (for example, individual or group lines of business).
When applying the guidance in paragraphs ASC 944-30-50-2A through 50-2B, 944-40-50-6 through 50-7C, and 944-80-50-1 through 50-2, an insurance entity should not aggregate amounts from different reportable segments according to Topic 280, if applicable.

The rollforwards of DAC (and balances amortized on a basis consistent with DAC) are required to be disaggregated in a manner that is consistent with the related liability disclosures.
Insurance entities are not required to include disclosure for “insignificant categories” of liabilities, but if omitted, these categories would be included in the reconciliation to the applicable balance sheet amounts. Judgment will be needed to assess what is insignificant in the context of the financial statements.

10.3.1.2 Disaggregated rollforwards – Liability for future policy benefits and additional liability

The disaggregated tabular rollforwards of the liability for future policy benefits and additional liability for annuitization, death, or other insurance benefits are required to be presented on a year-to-date basis, within the notes, for all annual and interim reporting periods. See IG 10.3.1.1 for considerations on the level of disaggregation. These disaggregated rollforwards must be reconciled to the aggregate ending balance on the balance sheet and/or amounts included in the income statement, as appropriate. Amounts included within the rollforwards are required to be presented gross of any related reinsurance recoverables.
ASC 944-40-50-6 requires that each disaggregated rollforward of the liability for future policy benefits and additional liability for annuitization, death, or other insurance benefits that is presented within the notes include the following information either as a component of the rollforward or as accompanying information:
  • Undiscounted and discounted ending balance of expected future gross premiums and expected future benefits and expenses (for traditional and limited-payment contracts)
  • Actual experience during the period for mortality, morbidity, and lapses, compared with what was expected for the period
  • Amount of revenue and interest recognized in the income statement (disaggregated amounts must be reconciled to the amounts recognized in the income statement for the period, but interest recognized does not need to be reported as a separate line within the income statement)
  • Weighted average duration of the liability
  • Weighted average interest rates for accretion and current discounting relating to the liability for future policy benefits, a description of the techniques used to determine the interest rate assumption, and information about any adjustments to observable market information
For traditional and limited-payment contracts, expected future net premiums and expected future benefits must be separately included in the rollforwards.
Items that may be included within the rollforwards of the liability for future policy benefits or additional liability for annuitization, death, or other insurance benefits are provided in ASC 944-40-55-13I.

Excerpt from ASC 944-40-55-13I

  1. Issuances
  2. Interest accrual
  3. Net premiums or assessments collected
  4. Benefit payments
  5. Derecognition (lapses or withdrawals)
  6. Effect of actual variances from expected experience
  7. Effect of changes in cash flow assumptions
  8. Effect of changes in discount rate assumptions.

Insurance entities should consider the information that is most useful for users of the financial statements when determining which of the suggested lines to include in the rollforwards. Information necessary to prepare the disaggregated rollforwards may already be compiled as part of supplemental external reporting (e.g., investor supplements) or as part of internal reporting.
Figure IG 10-1 illustrates disaggregated rollforwards and accompanying information for the liability for future policy benefits and indicates which line items within the rollforwards are required per ASC 944-40-50-6 versus suggested within ASC 944-40-55-13I or illustrated within ASC 944-40-55-29E.
Figure IG 10-1
Illustrative disaggregated rollforwards of the liability for future policy benefits
Note X: Liability for future policy benefits
[For example purposes, two major product lines (term life and whole life) are illustrated and the applicable ASC references are provided. Additional product lines may be disclosed depending on the insurance entity’s insurance products.]
The following table presents the balances and changes in the liability for future policy benefits. [Required by ASC 944-40-50-6a]
December 31,
20X2
20X1
PwC observations
Term life
Whole life
Term life
Whole life
Balance, beginning of year
(1) Required – ASC 944-40-50-6a
$TTT*
$UUU*
$XXX
$XXX
Beginning balance at original discount rate
(1) Illustrated – ASC 944-40-55-29E
RRR*
SSS*
XXX
XXX
Effect of changes in cash flow assumptions
(2) Suggested – ASC 944-40-55-13I
XXX
XXX
XXX
XXX
Present value of expected net premiums
Effect of actual variances from expected experience
(3) Required – ASC 944-40-50-6b-2
XXX
XXX
XXX
XXX
Issuances
(4) Suggested – ASC 944-40-55-13I
XXX
XXX
XXX
XXX
Interest accrual
(5) Suggested – ASC 944-40-55-13I
XXX
XXX
XXX
XXX
Net premiums collected
(6) Suggested – ASC 944-40-55-13I
(XXX)
(XXX)
(XXX)
(XXX)
Derecognition (lapses)
(7) Suggested – ASC 944-40-55-13I
(XXX)
(XXX)
(XXX)
(XXX)
Ending balance at original discount rate
(1) Illustrated - ASC 944-40-55-29E
VVV*
WWW*
RRR*
SSS*
Effect of changes in discount rate assumptions
Suggested - ASC 944-40-55-13I
XXX
XXX
XXX
XXX
Balance, end of year
(1) Required - ASC 944-40-50-6a
$YYY*
$ZZZ*
$TTT*
$UUU*
Balance, beginning of year
(1) Required - ASC 944-40-50-6a
$TTT*
$UUU*
$XXX
$XXX
Beginning balance at original discount rate
(1) Illustrated - ASC 944-40-55-29E
RRR
SSS
XXX
XXX
Present value of expected future policy benefits
Effect of changes in cash flow assumptions
(2) Suggested - ASC 944-40-55-13I
XXX
XXX
XXX
XXX
Effect of actual variances from expected experience
(3) Required in –ASC 944-40-50-6b-2
XXX
XXX
XXX
XXX
Issuances
(4) Suggested - ASC 944-40-55-13I
XXX
XXX
XXX
XXX
Interest accrual
(5) Suggested - ASC 944-40-55-13I
XXX
XXX
XXX
XXX
Benefit payments
(8) Suggested - ASC 944-40-55-13I
(XXX)
(XXX)
(XXX)
(XXX)
Derecognition (lapses)
(7) Suggested - ASC 944-40-55-13I
(XXX)
(XXX)
(XXX)
(XXX)
Ending balance at original discount rate
(1) Illustrated - ASC 944-40-55-29E
VVV*
WWW*
RRR*
SSS*
Effect of changes in discount rate assumptions
Suggested - ASC 944-40-55-13I
XXX
XXX
XXX
XXX
Balance, end of year
(1) Required inASC 944-40-50-6a
$YYY*
$ZZZ*
$TTT*
$UUU*
Net liability for future policy benefits
(9) Required - ASC 944-40-50-6a
$CCC*
$DDD*
$AAA*
$BBB*
Related reinsurance recoverable
(10) Required - ASC 944-40-50-6b-4
XXX
XXX
XXX
XXX
Weighted-average liability duration of the liability for future policy benefits (years)
(11) Required - ASC 944-40-50-6b-5
XX
XX
XX
XX
* These balances should agree to other balances identified with the same letters within this table or in other tables within the footnote.
The following is a reconciliation of the net liability for future policy benefits to the liability for future policy benefits in the consolidated balance sheet. [Required by ASC 944-40-50-6c]
December 31,
20X2
20X1
Term life (9)
$CCC
$AAA
Whole life (9)
DDD
BBB
Other
XXX
XXX
Total
$XXX
$XXX
The following table presents the amount of undiscounted expected future benefit payments and expected gross premiums. [Required by ASC 944-40-50-6b-1]
December 31,
20X2
20X1
Term life
Expected future benefit payments
$XXX
$XXX
Expected future gross premiums
$XXX
$XXX
Whole life
Expected future benefit payments
$XXX
$XXX
Expected future gross premiums
$XXX
$XXX
The following table presents the amount of revenue and interest recognized in the income statement. [Required by ASC 944-40-50-6b-3 and ASC 944-40-50-6c]
Gross premiums
Interest accretion
December 31,
December 31,
20X2
20X1
20X0
20X2
20X1
20X0
Term life
$XXX
$XXX
$XXX
$XXX
$XXX
$XXX
Whole life
XXX
XXX
XXX
XXX
XXX
XXX
Other
XXX
XXX
XXX
XXX
XXX
XXX
Total
$XXX
$XXX
$XXX
$XXX
$XXX
$XXX
The following table presents the weighted-average interest rate. [Required by ASC 944-40-50-6b-6]
December 31,
20X2
20X1
20X0
Term life
Interest accretion rate
XXX%
XXX%
XXX%
Current discount rate
XXX%
XXX%
XXX%
Whole life
Interest accretion rate
XXX%
XXX%
XXX%
Current discount rate
XXX%
XXX%
XXX%
Table footnotes:
The liability rollforward for the liability for future policy benefits provided in the FASB example in 944-40-55-29E is illustrative and therefore does not provide instructions on specific line items. An entity’s disclosures need to, at a minimum, satisfy the requirements in ASC 944-40-50-6 and ASC 944-40-50-7. An entity will need to apply judgment to determine the presentation and components that allow users to understand the amount, timing, and uncertainty of future cash flows arising from the liability. The line items in the table above and the explanations in the footnotes below are just an example.
  1. Balance, beginning of year and Beginning balance at original discount rate in 20X2 should agree to the Balance, end of year and Ending balance at original discount rate in 20X1, respectively, for each major category. The Balance, end of year by major category should also agree to the amounts included in the reconciliation to the balance sheet carrying amount.
  2. Remeasurement gain/loss - Effect of changes in cash flow assumptions and Remeasurement gain/loss - Effect of actual variances from expected experience (#3 below), together represent the year-to-date remeasurement gain/loss on the liability that is required to be presented separately in the income statement. See IG 5.2.4 for a discussion on updating of cash flow assumptions. The remeasurement gain/loss, also referred to as the retrospective catch up adjustment, is recognized as of the beginning of the current reporting period, which is the beginning of the quarter for SEC filers. The disaggregated rollforwards are presented on a year-to-date basis. Therefore, annual and year-to-date remeasurement gains or losses included in the rollforwards will be the sum of each interim (e.g., quarter) period remeasurement gains or losses. For example, the third quarter notes to the financial statements of a calendar SEC filer will include the total remeasurement gain or loss recorded for first, second, and third quarters, if any, since the disaggregated rollforward is presented on a year-to-date basis.

    The effect of changes in the cash flow assumptions component of the total remeasurement gain/loss represents the effect on the liability of changes in expected future cash flows due to updates in actuarial assumptions applied to the beginning of the period balance at the original locked in discount rate. Although this line item is not listed as required in the ASC 944-40-50-6 disaggregated rollforward guidance, it is suggested in ASC 944-40-55-13I and illustrated in the ASC 944-40-55-29E rollforward example. ASC 944-40-50-7 requires that changes in significant inputs, judgments, and assumptions during the period and the effect on the measurement of the liability be disclosed in the notes, so presenting this line item will assist in satisfying this requirement. Insurance entities should also consider providing narrative disclosures as to the major products or geographies driving the remeasurement gain or loss.
  3. Remeasurement gain/loss - Effect of actual variances from expected experience is the component that together with the Remeasurement gain/loss - Effect of changes in cash flow assumptions (#2 above) comprises the year-to-date remeasurement gain/loss on the liability. Year-to-date results will equal the sum of quarterly results. For each quarter (which will then be totaled to a year-to-date amount), the exact content of this line depends on the frequency of net premium updates. See IG 5.2.4 for a discussion on updating for actual experience.

    (a) If, for example, the net premium ratio is updated for actual experience every quarter, this line will include the difference between actual net premiums or benefits for each quarter and their expected amounts, the effect of the change in future net premiums and benefits due to actual amounts in force that differ from the amounts expected, and the effect of updating the net premium ratio for those differences. This line then satisfies the ASC 944-40-50-6 requirement to disclose “Actual experience … compared with what was expected for the period.”

    (b) If the net premium ratio is updated only in certain quarters, in those quarters this line will show the effect of updating the net premium ratio. In periods when the net premium ratio is not updated and therefore there is no remeasurement gain/loss, the ASC 944-40-50-6 requirement to disclose “Actual experience … compared with what was expected for the period,” will need to be shown elsewhere, “as a component of the rollforward or as accompanying information.” For example, in a period when the net premium ratio is not updated, and death benefits are $1,000 in excess of expected amounts, the $1,000 could be shown in an “experience variance” line item within the benefits section of the rollforward.
  4. Issuances is not specifically defined. We believe it is generally understood to represent net premiums expected to be collected on new contracts/cohorts. Given the expected future net premiums and expected future benefits must be separately disclosed in the disaggregated rollforwards for traditional and limited-payment contracts, the present value of all future net premiums and the present value of future benefit payments for all new contracts/cohorts need to be presented gross within the rollforward sections, but in theory should be the same equal and offsetting amounts.
  5. Interest accrual is not specifically defined. We believe interest accrual represents the amount of interest accreted on the expected future net premiums and interest expense accreted on the expected future benefits, respectively. The net amount of interest is recognized as part of benefit expense.
  6. Net premiums collected (due) represents the portion of actual gross premiums collected from policyholders that is required to provide for all benefits and expenses. This amount is recognized as benefit expense. Revenue is recognized when due; therefore, we believe “net premiums collected” represents amounts due during the current period from policyholders. The difference between the expected net premiums included within the liability for future policy benefits and the actual net premium payments in the period would be captured in the “Effect of actual variances from expected experience” (#3 above) if an entity updates the net premium ratio for current experience every quarter. If an entity did not update the net premium ratio for experience in the quarter, the difference between actual net premiums collected presented in this line and expected amounts could be presented in an “experience variance” line item within the net premiums section of the rollforward.
  7. Derecognition (terminations) is not specifically defined. The content of this line will depend on update frequency described in #3 above. If an entity updates for current experience every quarter, this line will be zero unless an entity decides to identify the impact of derecognition on new policies issued during the year separately.

    For quarters in which an entity does not update the net premium ratio for current experience, this derecognition line would be used to reflect the impact of derecognition experience, meaning unexpected terminations, which can be more or less than expected terminations. For example, assume an excess death benefit was shown in a separate “experience variance” line item, and that unexpected death led to a decrease in future net premiums of $200 and a decrease in future benefits of $250. In the net premium section of the rollforward, the derecognition line would show a decrease of $200, and in the benefits section, the derecognition line would show a decrease of $250.
  8. Benefit payments is not specifically defined. We believe it represents the actual benefit payments during the period. The difference between the expected benefit payments included within the liability for future policy benefits and the actual benefit payments in the period would be captured in Effect of actual variances from expected experience (#3 above) if an entity updates the net premium ratio for current experience every quarter. If an entity did not update the net premium ratio for experience in the quarter, the difference between actual benefit payments presented in this line and expected amounts could be presented in an “experience variance” line item within the benefits section of the rollforward.
  9. Net liability for future policy benefits represents the liability for future policy benefits recorded on the balance sheet for the particular category in each disaggregated rollforward. The liability typically represents the difference between the balance at the end of the period for the “Present value of expected net premiums” and the “Present value of expected future policy benefits.” However, an additional reconciling line item may be needed when application of ASC 944-40-35-7B guidance requires an adjustment to floor the liability at zero. The net liability for future policy benefits must be reconciled to the aggregate ending balance on the balance sheet.
  10. Reinsurance recoverable represents the recoverable for the particular category in each disaggregated rollforward. The rollforward guidance requires the disaggregated rollforwards to be presented gross of any related reinsurance, but does not require the reinsurance recoverable amounts in each disaggregated rollforward to be reconciled to the balance sheet. We believe the reinsurance balances included within the rollforwards should be consistent with balances included in an insurance entity’s reinsurance disclosures in the notes.
  11. Weighted-average duration of the liability represents the weighted-average expected length of time to payment of the liability and must be disclosed for each disaggregated rollforward either as accompanying information in the rollforward or in the notes.
Question IG 10-2
Is the deferred profit liability (DPL) on limited-payment contracts required to be rolled forward separately from the rollforwards of the liability for future policy benefits?
PwC response
No. ASC 944-40-50-6 does not require a separate tabular rollforward for the DPL. However, if the DPL is included in the liability for future policy benefits line on the balance sheet, the DPL balances would, at a minimum, be required to be included in the disclosures to reconcile the rollforward for the liability for future policyholder benefits to the carrying amount in the balance sheet and income statement, as required by ASC 944-40-50-6(c). If the DPL is voluntarily included within the rollforward, we believe companies should ensure that the inclusion of the DPL in the rollforward does not obfuscate the rollforward information required for the liability for future policy benefits.
Question IG 10-3
Can the additional liability for annuitization, death, or other insurance benefits be combined with the liability for future policy benefits into a single disaggregated rollforward?
PwC response
It depends. ASC 944-40-50-6 requires disaggregated rollforward disclosures for each balance. Judgment will therefore have to be applied to determine whether the aggregation of these two balances violates the principle outlined in ASC 944-40-50-5A, which states that no entity shall aggregate items with significantly different characteristics if the balances are material. Immaterial balances could be presented as a reconciling item within the disaggregated rollforwards so as to reconcile to the carrying amount on the balance sheet or amounts in the income statement as appropriate. However, insurance entities may prefer to create separate rollforwards for the additional liability since only the disaggregated rollforwards for the liability for future policy benefits for traditional and limited-payment contracts must present expected gross and net future premiums and expected future benefits separately.
Furthermore, certain of the suggested line items or disclosures within the liability for future policy benefits may need to be modified or tailored for the additional liability for annuitization, death, or other insurance benefits. For example, instead of expected net premiums collected, the additional liability is calculated considering the expected assessments over the life of the contract, which can include charges assessed against the policyholder as well as investment margin earned on the assets of the contract.

10.3.1.3 Disaggregated rollforwards – Policyholders’ account balances

The disaggregated tabular rollforwards of the liability for policyholders’ account balances are required to be presented on a year-to-date basis, within the notes, for all annual and interim reporting periods. The disclosure requirements for the liability for policyholder account balances in ASC 944-40-50-7A refer to the accrued account balance described in ASC 944-40-25-14. In addition, if other items are included in the liability for policyholder account balances (e.g., embedded derivatives), the rollforwards must reconcile to the ending carrying amount included in the balance sheet. Separate account liabilities are not included in the disaggregated rollforwards of the liability for policyholders’ account balances. See IG 10.3.1.1 for considerations on the level of disaggregation and IG 10.3.1.5 for the disclosure requirements for the disaggregated rollforwards of the separate account liability.
ASC 944-40-50-7A requires that each disaggregated rollforward of the liability for policyholders’ account balances that is presented within the notes include the following information either as a component of the rollforward or as accompanying information:
  • Weighted-average crediting rates
  • Guaranteed benefit amount in excess of current account balances
  • Cash surrender value
A tabular schedule of policyholders’ account balances by range of guaranteed minimum crediting rates and the related range of the difference between the rates being credited and the respective guaranteed minimums must also be provided.
Items that may be included within the rollforwards of the liability for policyholders’ account balances are provided in ASC 944-40-55-13J.

Excerpt from ASC 944-40-55-13J

  1. Issuances
  2. Premiums received
  3. Policy charges
  4. Surrenders and withdrawals
  5. Benefit payments
  6. Transfer from or to separate accounts
  7. Interest credited.

Insurance entities should consider the information that is most useful for users of the financial statements when determining which of the suggested lines to include in the rollforwards. Information necessary to prepare the disaggregated rollforwards may already be compiled as part of supplemental external reporting (e.g., investor supplements) or as part of internal reporting.
Figure IG 10-2 illustrates the disaggregated rollforwards and accompanying information for the liability for policyholders’ account balances and indicates which line items within the rollforwards are required per ASC 944-40-50-7A versus suggested within ASC 944-40-55-13J.
Figure IG 10-2
Illustrative disaggregated rollforwards of the liability for policyholders’ account balances
Note X: Policyholders’ account balances
[For example purposes, two major product lines (universal life and fixed annuity) are illustrated and the applicable ASC references are provided. Additional product lines may be disclosed depending on the insurance entity’s insurance products.]
The following table presents the balances and changes in policyholders’ account balances. [Required by ASC 944-40-50-7A-a]
December 31,
20X2
20X1
PwC observations
Universal life
Fixed annuity
Universal life
Fixed annuity
Balance, beginning of year
(1) Required – ASC 944-40-50-7A-a
$AAA*
$BBB*
$XXX
$XXX
Issuances
(2) Suggested - ASC 944-40-55-13J
XXX
XXX
XXX
XXX
Premiums received
(3) Suggested - ASC 944-40-55-13J
XXX
XXX
XXX
XXX
Policy charges (a)
(XXX)
(XXX)
(XXX)
(XXX)
Surrenders and withdrawals
(XXX)
(XXX)
(XXX)
(XXX)
Benefit payments
(XXX)
(XXX)
(XXX)
(XXX)
Net transfers from(to) separate account
XXX
XXX
XXX
XXX
Interest credited
XXX
XXX
XXX
XXX
Other
(4) Suggested - ASC 944-40-55-13J
XXX
XXX
XXX
XXX
Balance, end of year
(1) Required - ASC 944-40-50-7A-a
$CCC*
$DDD*
$AAA*
$BBB*
Weighted-average crediting rate
X.XX%
X.XX%
X.XX%
X.XX%
Net amount at risk
(5) Required - ASC 944-40-50-7A-b25
$XXX
$XXX
$XXX
$XXX
Cash surrender value
$XXX
$XXX
$XXX
$XXX
(a) Contracts included in the policyholder account balances are generally charged a premium and/or monthly assessments on the basis of the account balance.
* These balances should agree to other balances identified with the same letters in this table or other tables within the footnote.
The following table presents the reconciliation of policyholders’ account balances to the policyholders’ account balances’ liability in the consolidated statement of financial position. [Required by ASC 944-40-50-7A-d]
December 31,
20X2
20X1
Universal life (1)
$CCC
$AAA
Fixed annuity (1)
DDD
BBB
Other
XXX
XXX
Total
$XXX
$XXX
The following table presents the balance of account values by range of guaranteed minimum crediting rates and the related range of the difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums. [Required by ASC 944-40-50-7A-d]
December 31, 20X2
Range of guaranteed minimum crediting rate
At guaranteed minimum
1 to 50 basis points above
51 to 150 basis points above
Greater than 150 basis points above
Total
Universal life
X.XX%–X.XX%
$XXX
$XXX
$XXX
$XXX
$XXX
X.XX%–X.XX%
XXX
XXX
XXX
XXX
XXX
Greater than X.XX%
XXX
XXX
XXX
XXX
XXX
Total
$XXX
$XXX
$XXX
$XXX
$CCC
Fixed annuity
X.XX%–X.XX%
$XXX
$XXX
$XXX
$XXX
$XXX
X.XX%–X.XX%
XXX
XXX
XXX
XXX
XXX
Greater than X.XX%
XXX
XXX
XXX
XXX
XXX
Total
$XXX
$XXX
$XXX
$XXX
$DDD
December 31, 20X1
Range of guaranteed minimum crediting rate
At guaranteed minimum
1 to 50 basis points above
51 to 150 basis points above
Greater than 150 basis points above
Total
Universal life
X.XX%–X.XX%
$XXX
$XXX
$XXX
$XXX
$XXX
X.XX%–X.XX%
XXX
XXX
XXX
XXX
XXX
Greater than X.XX%
XXX
XXX
XXX
XXX
XXX
Total
$XXX
$XXX
$XXX
$XXX
$AAA
Fixed annuity 
X.XX%–X.XX%
$XXX
$XXX
$XXX
$XXX
$XXX
X.XX%–X.XX%
XXX
XXX
XXX
XXX
XXX
Greater than X.XX%
XXX
XXX
XXX
XXX
XXX
Total
$XXX
$XXX
$XXX
$XXX
$BBB
Table footnotes:
  1. Balance, beginning of year in 20X2 should agree to the Balance, end of year in 20X1 for each major category. The Balance, end of year by major category should also agree to the amounts included in the reconciliation to the balance sheet carrying amount.
  2. Issuances is not specifically defined. We believe it represents premiums collected on new contracts written during the period. Some insurance entities may not currently track premiums collected on new business separately within their systems, and may want to consider gathering that information if it is considered relevant to the users of the financial statements. If an insurance entity elects to include the entire amount paid by the contract holder, gross of any amounts attributed to MRBs or embedded derivatives, the amounts allocated to those other accounting units should be included in a separate line item in the roll forward.
  3. Premiums received, Policy charges, Benefit payments, Surrenders and withdrawals, Net transfers from (to) separate account, and Interest credited are not specifically defined in the guidance. Policyholder account balances are generally charged fees in various forms, including periodic flat dollar amounts, percent of premium amounts, cost of insurance, and rider charges. If an insurance entity elects to include the amounts gross of activity attributed to other accounting units (e.g., MRBs or embedded derivatives), or in the case of interest credited, excluding the interest related to the accretion of the discount created by the initial allocation of compensation to other accounting units, the differences should be included in a separate line item in the roll forward.
  4. Other may represent the adjustment between (1) line items that represent policyholder activity recorded within the policyholder administrative systems and shown on the policyholder statements (e.g., persistency bonus accruals), (2) activity attributed to the other accounting units that were separated at each contract’s inception (if the amounts were shown gross in other lines), and (3) the accretion of the discount created by other accounting units (if the contractual interest credited was included in the earlier line).
  5. Net amount at risk is generally defined as the current guaranteed minimum benefit in excess of the current account balance at the balance sheet date. A reporting entity may want to include a reconciliation or discussion in the notes to explain where in the balance sheet the total net amount at risk disclosed is presented (e.g., market risk benefit, additional liability for annuitization, death, or other insurance benefits). There may be multiple net amounts at risk if there are multiple GMXBs in the policies included in the roll forward.
Question IG 10-4
Are contracts without insurance risk (such as funding agreements) required to be included in the liability for policyholders’ account balances rollforwards?
PwC response
No. The disaggregated rollforward requirements in ASC 944 are not applicable to liabilities accounted for under other GAAP guidance. Funding agreements are not accounted for under ASC 944, even though in practice they are sometimes included in the same balance sheet line item as the liability for policyholders’ account balances. However, we believe an insurance entity would not be precluded from including funding agreements within the disaggregated rollforwards for the liability for policyholders’ account balances. This may be helpful to users of the financial statements to the extent the balance of funding agreements is material. Even if not included in the rollforwards, the amount of funding agreements would be disclosed to reconcile the disaggregated balances to the financial statement line item.

10.3.1.4 Disaggregated rollforwards – Market risk benefits (MRBs)

The disaggregated tabular rollforwards of MRBs are required to be presented on a year-to-date basis, within the notes for all annual and interim reporting periods. These rollforwards must reconcile to the ending carrying amount included in the balance sheet by reconciling to those in an asset position and those in a liability position. However, separate rollforwards for MRBs in an asset position and those in a liability position are not required. See IG 10.3.1.1 for considerations on the level of disaggregation. Disaggregated amounts should be presented gross of any derivatives or other financial instruments that may be used to economically hedge these features. While the guidance is silent, we believe the disaggregated rollforwards should be presented gross of reinsurance for MRBs. See Figure IG 10-3 for additional observations on the components of the disaggregated rollforwards.
ASC 944-40-50-7B requires that each disaggregated rollforward of MRBs that is presented within the notes include the following information either as a component of the rollforward or as accompanying information:
  • Guaranteed benefit amounts in excess of the current account balances (for example, the net amount at risk)
  • Weighted average attained age of contract holders of MRBs
Items that may be included within the rollforwards of market risk benefits are provided in ASC 944-40-55-13K.

Excerpt from ASC 944-40-55-13K

  1. Issuances
  2. Interest accrual
  3. Attributed fees collected
  4. Benefit payments
  5. Effect of changes in interest rates
  6. Effect of changes in equity markets
  7. Effect of changes in equity index volatility
  8. Actual policyholder behavior different from expected behavior
  9. Effect of changes in future expected policyholder behavior
  10. Effect of changes in other future expected assumptions
  11. Effect of changes in the instrument-specific credit risk

Insurance entities should consider the information that is most useful for users of the financial statements when determining which of the suggested lines to include in the rollforwards. Information necessary to prepare the disaggregated rollforwards may already be compiled for purposes of analyzing the effectiveness of the economic hedging programs for certain MRBs or as part of internal reporting.
The suggested lines for the disaggregated MRB rollforwards in ASC 944-40-55-13K is an extensive list that may not be relevant for every type of MRB and, as a result, each insurance entity should tailor those line items to their individual facts and circumstances.
Additionally, since MRBs are carried at fair value, these tabular rollforwards may satisfy certain of the disclosure requirements in ASC 820-10-50. If that is the case, an insurance entity is not required to duplicate the related fair value disclosures. See IG 10.3.3 for a comparison of ASC 820 fair value disclosures and MRB required disclosures.
Figure IG 10-3 illustrates the disaggregated rollforwards and accompanying information for market risk benefits and indicates which line items within the rollforwards are required per ASC 944-40-50-7B versus suggested within ASC 944-40-55-13K or illustrated within ASC 944-40-55-29G.
Figure IG 10-3
Illustrative disaggregated rollforwards of market risk benefits
Note X: Market risk benefits
[For example purposes, disaggregated rollforwards of market risk benefits associated with two major product lines (variable annuities and indexed annuities) are illustrated and the applicable ASC references are provided. Additional product lines may be disclosed depending on the insurance entity’s products.]
The following table presents the balances and changes in market risk benefits associated with variable and indexed annuities. [Required by ASC 944-40-50-7B]
December 31, 20X2
December 31, 20X1
PwC observations
Variable annuities
Indexed annuities
Variable annuities
Indexed annuities
Balance, beginning of year
(1) Required - ASC 944-40-50-7B-a
$AAA*
$FFF*
$XXX
$XXX
Balance, beginning of year, before effect of changes in the instrument-specific credit risk
(1) Illustrated - ASC 944-40-55-29G
XXX
XXX
XXX
XXX
Issuances
(2) Suggested - ASC 944-40-55-13K
XXX
XXX
XXX
XXX
Interest accrual
(3) Suggested - ASC 944-40-55-13K
XXX
XXX
XXX
XXX
Attributed fees collected
(2) Suggested - ASC 944-40-55-13K
XXX
XXX
XXX
XXX
Benefit payments
(2) Suggested - ASC 944-40-55-13K
(XXX)
(XXX)
(XXX)
(XXX)
Effect of changes in interest rates
(4) Suggested - ASC 944-40-55-13K
XXX
XXX
XXX
XXX
Effect of changes in equity markets
(4) Suggested - ASC 944-40-55-13K
XXX
XXX
XXX
XXX
Effect of changes in equity index volatility
(4) Suggested - ASC 944-40-55-13K
XXX
XXX
XXX
XXX
Actual policyholder behavior different from expected behavior
(4) Suggested - ASC 944-40-55-13K
XXX
XXX
XXX
XXX
Effect of changes in future expected policyholder behavior
(4) Suggested - ASC 944-40-55-13K
XXX
XXX
XXX
XXX
Effect of changes in other future expected assumptions
(4) Suggested - ASC 944-40-55-13K
XXX
XXX
XXX
XXX
Balance, end of year, before effect of changes in the instrument-specific credit risk
(1) Suggested - ASC 944-40-55-13K
XXX
XXX
XXX
XXX
Effect of changes in the instrument-specific credit risk
(5) Suggested - ASC 944-40-55-13K
XXX
XXX
XXX
XXX
Balance, end of year
(1) Required - ASC 944-40-50-7B-a
$GGG*
$LLL*
$AAA*
$FFF*
Reinsured MRB, end of year
(7) Illustrated - ASC 944-40-55-29G
$XXX
$XXX
$XXX
$XXX
Net amount at risk
(6) Required - ASC 944-40-50-7B(b)
$XXX
$XXX
$XXX
$XXX
Weighted average attained age of contract holders
XX
XX
XX
XX
* These balances should agree to other balances identified with the same letters in this table or other tables within the footnote.
The following is a reconciliation of market risk benefits by amounts in an asset position and in liability position to the market risk benefits amount in the consolidated statement of financial position. [Required by ASC 944-40-50-7B-c]
December 31,
20X2
20X2
Asset
Liability
Net
Asset
Liability
Net
Variable annuities (1)
$XXX
$XXX
$GGG
$XXX
$XXX
$GGG
Indexed annuities (1)
XXX
XXX
$LLL*
XXX
$XXX
$FFF*
$XXX
$XXX
$NNN*
$XXX
$XXX
$MMM*
Table footnotes:
  1. Balance, beginning of year and Balance, beginning of year, before effect of changes in the instrument-specific credit risk in 20X2 should agree to the Balance, end of year and Balance, end of year, before effect of changes in the instrument-specific credit risk in 20X1, respectively, for each major category. The Balance, end of year by major category should also agree to the amounts included in the reconciliation to the balance sheet carrying amount.
  2. Issuances, Attributed fees collected, and Benefit Payments are not specifically defined. However, those terms are comparable to the requirement to disclose purchases, sales, issues, and settlements within a rollforward of Level 3 assets and liabilities in accordance with ASC 820-10-50-2. It is unclear how Issuances would be applied to MRBs that do not have a day one value associated with them (e.g., GMXBs on variable annuity contracts). Insurance entities may need to consider what line is the most appropriate for the MRBs written.
  3. Interest accrual is not specifically defined. Calculating the amount of interest on a fair value instrument can be complex and insurance entities should consider the relevance of this line item when explaining changes in the fair value of MRBs to the users of the financial statements in the disaggregated rollforwards.
  4. The other Effect of changes… lines within the rollforwards represent changes in fair value due to various changes in assumptions and experience used to determine the fair value of the MRBs. Isolating the portion of the change in fair value of MRBs for each of these assumptions may be challenging given their interdependency. ASC 820-10-50-2 only requires that the total gains and losses for the period that have been recognized in the income statement be included as a line within the Level 3 rollforward. Insurance entities may want to consider aligning the information used with the key inputs used and monitored in their economic hedging programs for these MRBs.
  5. Effect of changes in the instrument-specific credit risk represents the portion of the change in fair value of the MRB that is required to be recorded in OCI. ASC 820-10-50-2 also requires that the Level 3 rollforward include a line for total gains and losses for the period that have been recognized within OCI.
  6. Net amount at risk is the requirement outlined in ASC 944-40-50-7B(b) to disclose the guaranteed benefit amounts in excess of the current account balances. This amount must be presented for each of the rollforwards. The disclosure should align with the related requirement within the policyholders’ account balance rollforwards. See IG 10.3.1.3 for additional information.
  7. Reinsured MRBs represents the reinsurance asset or liability resulting from the cession of MRBs as part of a reinsurance contract. The guidance is silent as to whether the disaggregated rollforwards are required to be presented gross of reinsurance. However, the illustration of the disaggregated rollforwards of MRBs is presented gross of reinsurance with a reconciling item for the reinsured MRBs in ASC 944-40-55-29G. We believe each disaggregated rollforward should be presented gross of reinsurance since the disaggregated rollforwards must be reconciled to the carrying amount on the balance sheet and reinsurance is not allowed to be presented net on the balance sheet given there is no right to offset with the MRB contracts. Insurance entities may wish to include the reinsured MRBs as a separate category within the disaggregated rollforwards, as reinsured MRBs are recorded at fair value and need to comply with the disclosures required by ASC 820. See Figure IG 10-8 which outlines the disclosures required by ASC 820 and compares them to the required MRB disclosures.
Figure IG 10-4 illustrates disaggregated rollforwards in which reinsured MRBs are presented in a separate category.
Figure IG 10-4
Illustrative excerpt of disaggregated rollforwards of MRBs with reinsurance as a separate category
Note X: Market risk benefits
[For example purposes, an excerpt of disaggregated rollforwards of market risk benefits associated with two major product lines (variable annuities and indexed annuities) as well as the reinsurance of indexed annuities is illustrated. Additional lines in the rollforwards or categories may be disclosed depending on the insurance entity’s products and reinsurance agreements.]
The following table presents the balances and changes in market risk benefits associated with variable annuities, indexed annuities, and reinsured indexed annuities.
December 31, 20X2
Variable annuities
Indexed annuities
Reinsured MRB – Indexed annuities
Balance, beginning of year
$AAA
$FFF
$XXX
Balance, beginning of year, before effect of changes in the instrument-specific credit risk
XXX
XXX
XXX
Issuances/Cessions
XXX
XXX
(XXX)
Benefit payments/Receipts
(XXX)
(XXX)
XXX
Effect of changes in interest rates
XXX
XXX
(XXX)
Effect of changes in the instrument-specific credit risk
XXX
XXX
Effect of changes in counterparty credit risk
XXX
Balance, end of year
$GGG
$LLL
$XXX

10.3.1.5 Disaggregated rollforwards – Separate account liabilities

The disaggregated tabular rollforwards of separate account liabilities are required to be presented on a year-to-date basis, within the notes for all annual and interim reporting periods. These rollforwards must reconcile to the ending carrying amount included in the balance sheet. See IG 10.3.1.1 for considerations on the level of disaggregation of the rollforwards. Each disaggregated rollforward of the separate account liability must include the related cash surrender values. Insurance entities must also disclose the general nature of the contracts reported in the separate accounts, including the extent and terms of any minimum guarantees (e.g., market risk benefits).
There are no specific lines required to be included within the rollforwards. Insurance entities should focus on the information that is most useful for users of the financial statements when determining which line items to include in their rollforwards. Information necessary to prepare the disaggregated rollforwards may already be compiled as part of supplemental external reporting (e.g., investor supplements) or as part of internal reporting. ASC 944-80-55-18 provides illustrative rollforwards that insurance entities can use as a basis for determining the line items to include in their rollforwards.
Figure IG 10-5 illustrates the disaggregated rollforward and accompanying information for the separate account liability and indicates which line items within the rollforward are required per ASC 944-80-50-2 versus illustrated in ASC 944-80-55-18.
Figure IG 10-5
Illustrative disaggregated rollforwards of the separate account liability
Note X: Separate Account Liabilities
[For example purposes, disaggregated rollforwards of two major product lines (variable universal life and variable annuities) are illustrated and the applicable ASC references are provided. Additional product lines may be disclosed depending on the insurance entity’s insurance products.]
The following table presents the balances and changes in separate account liabilities. [Required by ASC 944-80-50-2a]
PwC observations
December 31,
20X2
20X1
Variable universal life
Variable annuities
Variable universal life
Variable annuities
Balance, beginning of year
(1) Required – ASC 944-80-50-2a
$BBB*
$AAA*
$XXX
$XXX
Premiums and deposits
(4) Illustrated - ASC 944-80-55-18
XXX
XXX
XXX
XXX
Policy charges
(4) Illustrated - ASC 944-80-55-18
(XXX)
(XXX)
(XXX)
(XXX)
Surrenders and withdrawals
(4) Illustrated - ASC 944-80-55-18
(XXX)
(XXX)
(XXX)
(XXX)
Benefit payments
(4) Illustrated - ASC 944-80-55-18
(XXX)
(XXX)
(XXX)
(XXX)
Investment performance
(3) Illustrated - ASC 944-80-55-183
XXX
XXX
XXX
XXX
Net transfers from (to) general account
(4) Illustrated - ASC 944-80-55-18
XXX
XXX
XXX
XXX
Other charges
(4) Illustrated - ASC 944-80-55-18
(XXX)
(XXX)
(XXX)
(XXX)
Balance, end of year
(1) Required - ASC 944-80-50-2a
$DDD*
$CCC*
$BBB*
$AAA*
Cash surrender value
(2) Required - ASC 944-80-50-2b
$XXX
$XXX
$XXX
$XXX
* These balances should agree to other balances identified with the same letters in this table or other tables within the footnote.
The following is a reconciliation of separate account liabilities to the separate account liability balance in the consolidated statement of financial position. [Required per ASC 944-80-50-2-c]
December 31,
20X2
20X1
Variable universal life (1)
$DDD
$BBB
Variable annuity (1)
CCC
AAA
Other
XXX
XXX
Total
$XXX
$XXX
Table footnotes:
  1. Balance, beginning of year in 20X2 should agree to the Balance, end of year in 20X1 for each major category. The Balance, end of year by major category should also agree to the amounts included in the reconciliation to the balance sheet carrying amount.
  2. Cash surrender value represents the amount of the contract holder’s account balances distributable at the balance sheet date less applicable surrender charges.
  3. Investment performance represents the change in fair value of the corresponding separate account assets that is credited to the policyholder.
  4. The other lines within the rollforwards are consistent with the policyholder activity tracked within typical policy administration systems and information included within the financial statements of the separate accounts.
See IG 10.3.4 for additional required separate account disclosures.

10.3.1.6 Disaggregated rollforwards – Deferred acquisitions costs (and other balances)

The disaggregated tabular rollforwards of DAC are required to be presented on a year-to-date basis, within the notes, for all annual and interim reporting periods. These rollforwards must reconcile to the ending carrying amount included in the balance sheet.
There are balances that are required to be amortized on a basis consistent with DAC, such as deferred sales inducements (DSI) and unearned revenue liability (URR). The balances amortized on a basis consistent with DAC are required to be included in a disaggregated rollforward unless they are already included in another long-duration contract liability rollforward prepared in accordance with ASC 944-40-50.
The disaggregation level within the tabular DAC rollforwards (and balances amortized on a basis consistent with DAC) should be consistent with the disaggregation level in the rollforwards of the related liability disclosures. While the disaggregated liability rollforwards are not required for participating contracts, the disaggregated rollforwards of DAC (and balances amortized on a basis consistent with DAC) are required for all long-duration contracts. See IG 10.3.1 and IG 10.3.1.1 for additional information on the disaggregated rollforwards and level of disaggregation.
There are no specific lines required to be included within the DAC rollforwards. ASC 944-30-55-2 provides illustrative rollforwards that insurance entities can use as a basis for determining the line items to include in their rollforwards. Insurance entities should focus on the information that is most useful for users of the financial statements when determining which line items to include in their rollforwards.
Figure IG 10-6 illustrates the disaggregated rollforwards for deferred acquisition costs and indicates which line items within the rollforwards are required per ASC 944-30-50-2B versus illustrated within ASC 944-30-55-2.
Figure IG 10-6
Example disaggregated rollforwards of the deferred acquisition costs
Note X: Deferred acquisition costs
[For example purposes, disaggregated rollforwards of DAC associated with three major product lines (whole life, universal life, and variable universal life) are illustrated and the applicable ASC references are provided. Additional product lines may be disclosed depending on the insurance entity’s products.]
The following tables present the balances and changes in deferred acquisitions costs.
PwC observations
As of December 31, 20X2
Whole life
Universal life
Variable universal life
Total
Balance, beginning of year
(1) Required - ASC 944-30-50-2B
$AAA*
$BBB*
$CCC*
$DDD*
Capitalizations
(2) Illustrated - ASC 944-30-55-2
XXX
XXX
XXX
XXX
Amortization expense
(3) Illustrated - ASC 944-30-55-2
(XXX)
(XXX)
(XXX)
(XXX)
Experience adjustment
(4) Illustrated - ASC 944-30-55-2
(XXX)
(XXX)
(XXX)
(XXX)
Balance, end of year
(1) Required - ASC 944-30-50-2B
$EEE*
$FFF*
$GGG*
$HHH*
* These balances should agree to other balances identified with the same letters in this table or other tables within the footnote.
PwC observations
As of December 31, 20X1
Whole life
Universal life
Variable universal life
Total
Balance, beginning of year
(1) Required - ASC 944-30-50-2B
$XXX
$XXX
$XXX
$XXX
Capitalizations
(2) Illustrated - ASC 944-30-55-2
XXX
XXX
XXX
XXX
Amortization expense
(3) Illustrated - ASC 944-30-55-2
(XXX)
(XXX)
(XXX)
(XXX)
Experience adjustment
(4) Illustrated - ASC 944-30-55-2
(XXX)
(XXX)
(XXX)
(XXX)
Balance, end of year
(1) Required - ASC 944-30-50-2B
$AAA
$BBB
$CCC
$DDD
Table footnotes:
  1. Balance, beginning of year in 20X2 should agree to the Balance, end of year in 20X1 for each major category. The Balance, end of year by major category should aggregate to the balance sheet carrying amount or agree to amounts included in the reconciliation to the balance sheet carrying amount.
  2. Capitalizations represents new acquisition costs capitalized during the period.
  3. Amortization expense represents the amount of acquisition costs charged to expense during the period.
  4. The Experience adjustment line within the rollforwards represents the amount that DAC was reduced during the period for actual experience incurred in excess of expected experience (e.g., unexpected contract terminations). There may be other acceptable approaches for determining current period DAC amortization that do not result in recording an experience adjustment. For example, if an entity revises its estimates of persistency during the period, it may decide to reflect the revised persistency rate in its current period amortization rate and therefore in its Amortization expense line. Refer to IG 3.5 for further guidance related to the amortization of DAC.
Question IG 10-5
If a reporting entity were to cede a block of business and receive a ceding commission that represented a recovery of acquisition costs, how would that change be reflected in the DAC disaggregated rollforward?
PwC response
ASC 944-30-35-64 requires that proceeds from reinsurance transactions that represent a recovery of acquisition costs reduce the applicable unamortized acquisition costs. This results in only net acquisition costs being reported on the balance sheet. For the period in which the reinsurance arrangement was effective and the ceding commission was recorded, the reporting entity would need to include a line for the recovery of acquisition costs within the disaggregated rollforward.
Question IG 10-6
If GAAP is silent as to the amortization pattern for other assets/ liabilities and the insurance entity analogizes to DAC and follows the simplified DAC amortization approach, are disaggregated rollforwards required for those balances?
PwC response
No. Insurance entities may elect, but are not required, to amortize on a basis consistent with DAC, balances such as contract intangible assets and liabilities acquired in a business combination (e.g., present value of future profits or PVFP) or cost of reinsurance. If an insurance entity analogizes to DAC and follows the simplified DAC amortization approach, the insurance entity may elect to include those balances within separate disaggregated rollforwards. However, we believe an insurance entity is not required to do so. PVFP and cost of reinsurance balances cannot be combined in the DAC disaggregated rollforwards.
Insurance entities that are SEC registrants are required to provide certain disclosures on PVFP balances in accordance with ASC 944-20-S99-2, including a rollforward of the PVFP balance for each year an income statement is presented. There is no specific requirement in GAAP to rollforward the cost of reinsurance. However, if the amount is material, it may be helpful for users of the financial statements to understand changes in the balance each period.

10.3.2 Additional disclosures — key judgments and assumptions

Insurance entities are required to disclose significant inputs, judgments, assumptions, and methods used in measuring the long-duration liabilities, MRBs, DAC, sales inducement costs, and premium deficiency losses, as well as any related changes and their effect on measurement.
Figure IG 10-7 provides a summary of required disclosures for long-duration contracts related to key judgments and assumptions.
Figure IG 10-7
Required long-duration contract disclosures
Disclosure requirement
Contracts impacted
ASC reference
Periods of disclosure
Nature and amounts of the costs deferred (deferred acquisition and sales inducements)
All long-duration contracts
Annual periods (1)
Information about inputs, judgments, assumptions and methods, changes during the period, and effect of those changes on measurement of DAC and DSI
All long-duration contracts
Annual periods (1)
Information about inputs, judgments, assumptions and methods, changes during the period, and effect of those changes on measurement of the related asset or liability
Traditional, limited-payment contracts and MRBs
Annual periods (1)
Qualitative and quantitative discussion about adverse development that resulted in a charge to current period benefit expense because of net premiums exceeding gross premiums
Nonparticipating traditional and limited-payment contracts
Both annual and interim periods
Information about the methodology used when performing PVFP recoverability testing
Nonparticipating traditional and limited-payment contracts
Annual periods (1)
Any liability established as a result of PVFP recoverability testing and a description of the factors that led to the impairment
Nonparticipating traditional and limited-payment contracts
Annual periods (1)
Whether anticipated investment income was considered when performing PVFP recoverability testing and, if so, the assumption utilized
Nonparticipating traditional and limited-payment contracts
Annual periods (1)
Information about the methodology used when performing premium deficiency testing
All long-duration contracts, except for nonparticipating traditional and limited-payment contracts (e.g., participating (including closed block) and universal life-type contracts)
Annual periods (1)
Any liability established as a result of a premium deficiency and loss recognition testing and a description of the factors that led to the liability
All long-duration contracts, except for nonparticipating traditional and limited-payment contracts (e.g., participating (including closed block) and universal life-type contracts)
Annual periods (1)
Whether anticipated investment income was considered when performing premium deficiency testing and, if so, the assumption utilized
All long-duration contracts, except for nonparticipating traditional and limited-payment contracts (e.g., participating (including closed block) and universal life-type contracts)
Annual periods (1)
Results of premium sufficiency or deficiency determined as part of the premium deficiency test in ASC 944-60-25-7 through ASC 944-60-25-9
Participating long-duration contracts included in a closed block
Annual periods (1)
(1)  ASC 944 only requires this disclosure to be made annually unless there is a significant change or event that would require disclosure under ASC 270.
See IG 10.3.1.2 through IG 10.3.1.6 for information on the disaggregated tabular rollforwards required for long-duration contracts for all annual and interim periods. Also, see IG 10.3.1.3 for information on the tabular presentation of policyholders’ account balances by range of guaranteed minimum crediting rates and the related range of the difference between the rates being credited and the respective guaranteed minimums that is required to be disclosed in the notes for all long-duration contracts with policyholders’ account balances (e.g., universal life-type and fixed annuity contracts) at each annual and interim period.

10.3.3 Comparison of required MRB disclosures to ASC 820 disclosures

As noted in IG 10.2.5, MRBs are carried at fair value and ASC 944-40-55-13K states that to the extent the tabular rollforwards satisfy the disclosure requirements in ASC 820-10-50, then an insurance entity is not required to duplicate the related fair value disclosures. Insurance entities may include all of the required disclosures outlined in ASC 820-10-50-1 through ASC 820-10-50-2 within the MRB note to provide users with one comprehensive footnote related to MRBs. However, insurance entities should clearly state where all the information on assets and liabilities carried at fair value is contained within the notes.
MRBs are typically measured using significant unobservable inputs and as a result are classified as Level 3 within the fair value hierarchy. Insurance entities will need to include a disclosure on the fair value levelling classification in the MRB note or other fair value notes. While the Level 3 rollforward is only required for public business entities, the MRB disclosures are required for all insurance entities with MRBs. MRB assets and liabilities are typically classified as Level 3, and therefore the rollforwards would not have any transfers into or out of the rollforwards due to leveling changes (i.e., they will remain as Level 3 throughout their terms).
Figure IG 10-8 outlines how MRB disclosures compare to those required in ASC 820. See FSP 20.3.1 and FSP 20.3.2 for additional information on fair value disclosure requirements.
Figure IG 10-8
Comparison of ASC 820 fair value disclosures to MRB disclosures under ASC 944
Fair value disclosure requirement
Related MRB disclosure
The Level 3 rollforward of beginning and ending balances is required in ASC 820-10-50-2(c), separating the following items:
Disaggregated rollforwards, by major category, of the changes in fair value of MRBs are required at each annual and interim period in accordance with ASC 944-40-50-7B (See IG 10.3.1.4).
  • Total gains or losses for the period in income
  • Total gain or losses for the periods in OCI
  • The line item in the income statement or statement of comprehensive income that includes the gains and losses
The changes in fair value of MRBs are required to be presented in a separate line in the income statement each period, except for the component of the change related to instrument-specific credit risk, which is recognized as a separate line in OCI.
  • Purchases
  • Sales
  • Issues
  • Settlements
ASC 944 does not prescribe the specific lines to be included within the disaggregated rollforwards of MRBs, but suggests that insurance entities include the following lines, which generally align to ASC 820 requirements for Level 3 rollforwards:
  • Issuances
  • Attributed fee collected
  • Benefit payments
The other suggested lines in ASC 944-40-55-13K represent the remaining changes in fair value for MRB assets and liabilities. See IG 10.3.1.4 for additional details on the MRB rollforwards.
For recurring Level 3 fair value measurements, ASC 820-10-50-2(d) requires the disclosure of:
  • Unrealized gains or losses for the period included in income and OCI
  • The line item in the income statement and OCI where the unrealized gains or losses are recognized
Entities must present changes in fair value of the MRBs through income each period in a separate line, except for the component of fair value representing the change in instrument specific credit risk, which is recognized in OCI in a separate line.
Additionally, MRB disclosure must include disaggregated rollforwards, which should include line items that describe the changes in fair value of the MRBs within the rollforwards. See IG 10.3.1.4 for additional details on the MRB rollforwards.
For recurring Level 3 fair value measurements, ASC 820-10-50-2(bbb)(1) requires a description of the valuation technique(s) and the significant unobservable inputs used in measurement.
If the reporting entity has changed its valuation approach or valuation technique, the change and the reason for making it should be disclosed.
(For further discussion, see FSP 20.3.2.1.)
ASC 944-40-50-7C requires information about inputs, judgments, assumptions, and methods to be disclosed as well as any changes during the period and effect of those changes on measurement of the related asset or liability be disclosed within the notes.
For Level 3 fair value measurements, quantitative information about all significant unobservable inputs used in the fair value measurement, including the range and weighted average of the inputs (the “table of significant unobservable inputs”) must be disclosed in accordance with ASC 820-10-50-2(bbb)(2).
A narrative description of the uncertainty of the fair value measurement at the reporting date from use of the significant unobservable inputs if a change in those inputs to a different amount might result in a significantly higher or lower fair value measurement is also required for Level 3 fair value measurements in accordance with ASC 820-10-50-2(g).
ASC 944 requires disclosure of inputs, judgments, assumptions, and methods, changes during the period, and the effect of those changes on measurement of the related asset or liability.
ASC 944 also requires a disaggregated rollforwards of MRBs each annual and interim period, which could include lines as suggested in ASC 944-40-55-13K, with quantitative information about the significant unobservable inputs. See IG 1.3.1.4 for additional information on the disaggregated rollforwards of MRBs.
Additional quantitative and qualitative information may be necessary either within the MRB note or other fair value notes to comply with ASC 820-10-50-2(bbb)(2) and ASC 820-10-50-2(g).

10.3.4 Separate account asset disclosures

Because separate account assets are recorded at fair value, all of the ASC 820 disclosure requirements in ASC 820-10-50-1 through ASC 820-10-50-2 apply. The ASC 820 fair value disclosures are not required for separate account liabilities because they are not recorded at fair value. See IG 10.2.6 for information on the presentation of separate account assets and liabilities on the balance sheet.
An insurance entity is not precluded from providing additional disclosure regarding the linkage between the separate account asset and separate account liability valuation, including disclosures of the amounts pertaining to separate account assets and related separate account liabilities that economically offset each other. The disclosures could explain that the investment performance of separate account assets and the corresponding amounts credited to the separate account liability are offset within the same statement of operations line item netting to zero.
While ASC 820 does not directly apply to the valuation of separate account liabilities, there may be embedded derivatives or MRBs associated with separate account contracts that are not presented with the separate account liabilities line item and accounted for under ASC 815 or ASC 944, respectively, at fair value through income. See FSP 20.3.1 for general fair value disclosure requirements for those features accounted for as embedded derivatives and IG 10.3.3 for additional information on MRB disclosures.
In addition to the ASC 820 fair value disclosures for the separate account assets, an insurance entity must disclose additional information for their qualifying separate account arrangements. Figure IG 10-9 outlines the disclosures requirements for separate accounts.
Figure IG 10-9
Required separate account disclosures
Disclosure requirement
ASC reference
Periods of disclosure
General nature of the contracts reported in the separate accounts including the extent and terms of any minimum guarantees (e.g., market risk benefits)
Annual periods (1)
Basis of presentation for both separate account assets and liabilities and related separate account activity
Annual periods (1)
Aggregate fair value of assets, separately by major investment asset category, supporting the separate accounts
Both annual and interim periods
Amount of gains and losses recognized on those assets transferred to separate accounts
Both annual and interim periods
(1)  ASC 944 only requires this disclosure to be made annually unless there is a significant change or event that would require disclosure under ASC 270.
See IG 10.3.1.5 for information on the disaggregated tabular rollforwards required for separate account liabilities at all annual and interim periods.
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