FASB amends accounting for long-duration insurance contracts

On December 15, the FASB issued ASU 2022-05, Financial Services—Insurance (Topic 944): Transition for Sold Contracts, which allows an insurance entity to make an accounting policy election to exclude certain contracts or legal entities from application of the ASU 2018-12 long-duration targeted improvement (LDTI) transition guidance when (1) they have been derecognized because of a sale or disposal before the LDTI effective date and (2) the insurance entity has no significant continuing involvement with the derecognized contracts.

The amendments should be adopted concurrent with the adoption of LDTI.

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