The Financial Accounting Standards Board (FASB) issued last Friday FASB Statement No. 163 or the standard called Accounting for Financial Guarantee Insurance Contracts. This new standard clarifies how FASB Statement No. 60 or Accounting and Reporting by Insurance Enterprises applies to financial guarantee insurance contracts issued by insurance companies. This includes the recognition and measurement of premium revenue and claim liabilities.
It also requires expanded disclosures about financial guarantee insurance contracts. The Statement is effective for financial statements issued for fiscal years starting after December 15, 2008, as well as all interim periods within those fiscal years, except for disclosures about the insurance enterprises risk-management activities. Disclosures regarding the insurance enterprises risk-management activities are effective the first period starting after issuance of the Statement.