Description: This article describes a simple but powerful tool for use by valuation actuaries and auditors when evaluating current assumptions for use in GAAP net premium reserve methods that require retrospective updating for actual experience and assumption changes. As a supplement, this tool can fill some holes left by existing tools. It produces results that can be compared to materiality thresholds at any level of aggregation, from a single reserve cohort up to the combination of all cohorts for all products subject to retrospective net premium reserve requirements. It can also serve as a benchmarking tool for estimated the possible effects of an assumption change or to help in explaining the effects of an actual assumption change.

Description: GAAP's elimination of gross profit as a basis for amortization of deferred acquisition costs enables the accounting for reinsurance of universal life contracts to better reflect the economic protection provided by reinsurance. This article takes a fresh look at the standards of accounting for universal life contracts and for reinsurance, then puts them together to find the techniques that best account for that protection.

Description: This is the final article in a five-part series about accounting for reinsurance under GAAP Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). It looks at some concerns that arise when new reinsurance is purchased to cover previously-issued contracts. The article describes what formal guidance is available. Where that guidance leaves off, the article presents practical solutions to achieving performance objectives.

Description: This is the third in a series of articles about accounting for reinsurance under GAAP Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). It looks at some techniques that have been used to account for long-duration reinsurance under existing GAAP (before LDTI). It looks at whether and how those techniques can be updated to comply with the updated standards and evaluates their effectiveness against compliance, performance, and simplicity objectives.

Description: This is the fourth in a series of articles about accounting for reinsurance under GAAP Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). It looks at some concerns that arise from the relationship between ceded reinsurance and the underlying contracts. Recognizing a lack of formal guidance addressing these concerns, the article aims mostly to achieve performance and simplicity objectives

Description: As a follow-up to a previous five-part series on accounting for ceded reinsurance under LDTI, this article focuses on one issue that has, until now, been left without a general solution—how to measure the reinsured portion of a direct loss from capping a net premium ratio or flooring a liability. After acknowledging limited guidance on the issue, the article describes the various events that can lead to a loss, how reinsurance protects against loss, and how that is translated into formulas for measuring the reinsured portion of a loss.

Description: This article reviews why financial reporting controls are relevant to actuaries. It also discusses the impact of LDTI on controls and the strategic decisions that insurers need to make.

Description: As an addendum to a July 2022 article, this article restates the formulas then presented for a framework to measure the reinsured portion of a direct loss from capping a net premium ratio or flooring a liability. The article corrects a flaw in one of the original formulas and shows, by example, how the framework can be applied to a specific application of reinsurance accounting.

Description: The article summarizes implications of rising interest rates on U.S. GAAP and statutory financial reporting for life insurers, highlighting potential tailwinds from steady increases and headwinds from sharp increases. We further provide insights into how insurers can leverage ALM programs and interest rate risk hedging practices to favorably position themselves in a rising rate environment

Description: Review of some subtle details in GAAP targeted improvements for long-duration contracts (ASU 2018-12).