As the holidays approach, JLK Rosenberger is taking a new perspective on a holiday classic – the Twelve Days of Christmas. Rather than filling your head with turtle doves and gold rings, we are focusing on the latest changes to SSAP and how they will impact your insurance company in 2019 and beyond.
Credit Losses (GAAP)
ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments introduced the expected credit loss methodology for financial assets. This new model is applicable for all financial instruments not valued at fair value. This new methodology is a change from the historical incurred loss approach and will require companies to accelerate the recording of credit losses.
Adoption of 2016-13 requires a cumulative-effect adjustment on the date of adoption. ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments-Credit Losses, amends 2016-13 effective dates for private companies for fiscal years beginning after December 15, 2021. The effective date for SEC filers (2020) and public businesses that are not SEC filers (2021) have not changed.