Life Financial Reporting - Policy Acquisition Costs and Profit Emergence

This course provides an overview of GAAP accounting and financial reporting for life insurance company deferred acquisition costs (DAC).

CPE Credits: 2 hours in Accounting

Level: Basic

Prerequisites/Advance Preparation: None

NASBA Publication/Revision Date: May 2020

Learning Objectives

• Recognize how the deferral and amortization of acquisition costs apply to the realization and matching principals of accounting
• Identify and apply U.S. GAAP guidance related to acquisition costs
• Identify and apply the methodology used to amortize DAC for the six U.S. GAAP product classifications
• Recognize the process of DAC “unlocking” and identify the product types where “unlocking” is allowed
• Identify GAAP reporting and disclosure requirements for DAC

Outline

• Getting Started
• Basic DAC Concepts
• What Acquisition Costs Are Deferrable
• DAC Amortization- Short-Duration Contracts
• DAC Amortization- Traditional Long-Duration Contracts/Limited-Payment Contracts
• DAC Amortization- UL-Type Contracts/Investment Contracts/Mutual Par Contracts
• DAC Recoverability and Loss Recognition
• DAC Financial Reporting and Disclosure
• Looking Ahead
• Key Takeaways