Search within this section
Select a section below and enter your search term, or to search all click Insurance Contracts
Favorited Content
Balance |
Contract |
Shadow required under the new guidance? |
Reason |
Deferred acquisition costs (DAC) |
Universal-life type contracts |
No |
DAC is no longer amortized based on profit emergence |
Long-duration participating products |
No |
||
Deferred sales inducements (DSI) amortization |
Universal-life type contracts |
No |
DAC (and therefore DSI) is no longer amortized based on profit emergence |
Certain investment contracts |
No |
||
Unearned revenue liability (URR) amortization |
Universal life-type contracts |
No |
DAC (and therefore URR) is no longer amortized based on profit emergence |
Other balances amortized on a basis consistent with the new DAC amortization model (e.g., present value of future profits (PVFP) and cost of reinsurance) |
Universal-life type contracts |
No |
DAC (and therefore these other balances) are no longer amortized based on profit emergence |
Long duration participating contracts |
No |
||
Other balances not amortized on a basis consistent with the new DAC amortization model (e.g., PVFP and cost of reinsurance) |
Universal-life type contracts |
Depends |
If the policy election is to amortize balances based on profit emergence, “shadow” adjustments would still be required |
Long duration participating contracts |
Depends |
||
PVFP loss recognition testing |
Nonparticipating traditional and limited-payment contracts |
Depends |
The loss recognition test for the PVFP associated liability for future policy benefits will have a potential shadow adjustment only to the extent that investment yields continue to be used to project future cash flows available in the recovery analysis |
Premium deficiency loss recognition testing |
Nonparticipating traditional and limited-payment contracts |
No |
The loss recognition test for the liability for future policy benefits is based on a net premium ratio cap and no longer incorporates consideration of investment yield |
Certain additional liabilities for annuitization, death or other insurance benefits (formerly SOP 03-1 liabilities) that are MRBs under ASU 2018-12 |
Guaranteed minimum benefits in addition to account balance in variable annuities, general account annuities, and other products |
No |
These features are now required to be carried at fair value rather than measured using a benefit ratio that references investment margins |
Terminal dividends |
Certain participating life insurance contracts |
No |
Terminal dividends are no longer amortized based on estimated gross margins |
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.
Select a section below and enter your search term, or to search all click Insurance Contracts