Description: Provides an overview of SFAS 60, 91, 97, and 120 and the importance of U.S. GAAP for Asian insurance companies with a country by country analysis.

Description: Update on research projects sponsored by the Financial Reporting Section.

Description: Embedded Risk in Settlement Options on Older Life and Annuity Contracts

Description: Variable Annuity DAC: A Survey of Current Practice by Laura J. Hay and Elizabeth Rogalin from The Financial Reporter, December 2002, Issue No. 51. Examines the DAC calculation for Variable Annuities and the possible write down of DAC under revised assumptions.

Description: This paper aims to help financial and insurance practitioners better recognize, assess, and respond to large scale, large impact, rare events (LSLIRE’s) which are occurrences currently often wrongly labeled as being unpredictable black swans. A black swan, as Nassim Taleb defines it in his popular book, The Black Swan: The Impact of the Highly Improbable, Random House & Penguin (2007-2010 2nd. Ed.) is 1) an outlier event, which 2) carries extreme impact, and 3) “makes us concoct explanations for its occurrence after the fact.” Elsewhere, Taleb says it is unpredictable, which is why people concoct explanations. Other people use the term in many and various ways, to enfold events missed by most people because they are rare, missed by computer models and/or experts, and to include events they simply seem personally to have misunderstood. The paper also discusses building better ways to assess such events’ background characteristics, emergence dynamics, logics, and other foreseeable attributes. A secondary focus is educating practitioners to better respond - whether to limit damage or to take advantage of - the opportunities that arise from what others are likely to miss or misjudge during and after the emergence of LSLIRE (AKA black swan) events.

Description: Discussion of FAS 133 Implementation Issue B36 relating to the implications for the financial reporting of modco and similar reinsurance treaties where the assuming company assumes some investment risk from assets still owned by the ceding company.

Description: With coinsurance of an existing block of long-duration insurance contracts, there may be existing reinsurance that remains in force. The new coinsurance is typically net of such “inuring reinsurance.” In this article, we look at approaches that the new reinsurer might apply to account for the effects of inuring reinsurance.

Description: After a summary of FASB decisions in their GAAP Targeted Improvements project, this article describes several issues that will need to be resolved either by the board or in actuarial practice and argues for seeking solutions that provide meaningful results without overly complicating valuation processes.

Description: Understanding the Deferred Acquisition Cost (DAC) asset balance movements from one reporting period to the next can be a challenge when reportinged under FAS 97. The mechanics of FAS 97 call for an amortization ratio (i.e., k factor) that forces the amortization of the DAC asset to be matched to the earnings received over the life of the product. However, the fact that the k factor is dynamically set results in “unlocking” components of the DAC rollforward. This article shows how the basic equation for the amortization ratio can be used to derive equations that provide insights into what the DAC balance represents. Furthermore, partial derivatives of these equations are used to show how unexpected changes in the Estimated Gross Profit (EGP) stream impact the amortization and unlocking components of the DAC rollforward.

Description: Presentation of formulas for measuring the effects of experience variances and assumption changes on traditional contract DAC and benefit reserves under GAAP targeted improvements (ASU 2018-12).