ASU 2015-09 is about enhanced disclosure, and while it lays out certain requirements for presentation and provides examples of what the disclosure might look like, it also leaves a high degree of discretion to insurers to determine how and what information best meets with the spirit and intent of the standard. By now you know ASU 2015-09 requires disclosure of development data for short duration contracts. Insurers, not the standard, determine how to aggregate or disaggregate such information in a manner that provides useful information to users and decision makers. Generally, the ASU requires 10 years of data, but an insurer may determine 10 years of data to be unnecessary or irrelevant. The cumulative totals of such data are a required element of the basic financial statements while prior year data is required supplementary information. How does one disclose supplementary information, particularly when commingled basic financial statement data? If you are implementing the ASU for the first time, rather than recreate the wheel, our survey provides examples of disclosures prepared by other insurers. And, if you are thinking about fine tuning your own presentation, we think a confluence of ideas about how others have approached similar issues is a great stepping off point.
A few observations of the 22 public company insurer disclosures we examined: Most disclosures followed the examples in ASU 2015-09 but all varied from one another and several from the example disclosures. Companies aggregated and disaggregated data along varying criteria: line of business, geography, segment, and tail to name a few. Some companies presented 10 years of development data while others presented less for reasons such as inception date of business, impracticality of deriving data, and shorter duration. Most companies commingled supplementary and non-supplementary information, but one of the examples clearly separated basic financial data from supplementary information. Some companies appear to have deviated from required disclosures, providing less than prescribed for reasons not identified. Others went beyond the required disclosures providing information not required by the standard. Still others made adjustments to their presentations to include or exclude data, such as commutations, for fear of presenting misleading information. The reality is that each is unique in its own regard, but all appear to have checked the box of providing more useful information.
Below is a high-level overview of the sampled companies
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