AICPA Issues Working Draft for Insurance Entities

The AICPA’s Financial Reporting Executive Committee has released for public comment a working draft that addresses the following issue associated with insurance entities’ implementation of FASB Accounting Standards Update No. 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts:

• “Ceded reinsurance — recognition of the reinsurance recoverable and cost of reinsurance measurement and application of the 100% net premium ratio cap and ‘floor’ (no negative liability) provisions relating to the liability for future policy benefits on ceded reinsurance transactions” (Issue #11AC).

Comments on the working draft are due by September 25, 2020.