• Filing Date: 2020-03-06
  • Form Type: 10-K
  • Description: Annual report
Recent Accounting Pronouncements
12 Months Ended
Dec. 31, 2019
Accounting Changes And Error Corrections [Abstract]  
Recent Accounting Pronouncements

Note 3 -- Recent Accounting Pronouncements

Accounting Standards Update No.  2019-12. In December 2019, the FASB issued Accounting Standards Update No. 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. It eliminates certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill, along with other clarifications. ASU 2019-12 is effective for the Company beginning with the first quarter of 2021. Early adoption is permitted. This guidance will not have a material impact on the Company’s consolidated financial statements. However, it will impact the Company’s future income tax disclosures in its notes to the consolidated financial statements.

Accounting Standard to be Adopted in Fiscal Year 2020

In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (“ASU 2016-13”), Financial Instruments - Credit Losses (Topic 326), effective January 1, 2020. This update amends guidance on the recognition and measurement of credit losses for assets held at amortized cost and available-for-sale debt securities. For assets held at amortized cost, ASU 2016-13 eliminates the probable initial recognition threshold and, instead, requires credit losses to be measured using the Current Expected Credit Loss (“CECL”) model. The CECL model requires the measurement of all expected credit losses based on historical experience, current conditions, and reasonable and supportable forecasts which incorporate forward-looking information. For available-for-sale debt securities, credit losses will continue to be measured in a manner similar to the current standard. ASU 2016-13 requires a valuation allowance, rather than a write-down, to be recognized for the Company’s expected credit losses. The valuation allowance account is a deduction from the amortized cost basis of the financial assets to reflect the net amount expected to be collected. Any subsequent changes to the expected credit losses of the financial assets will be recorded in earnings. The Company is required to use the modified-retrospective method by recognizing a cumulative-effect adjustment to the beginning retained income of fiscal year 2020. As for debt securities in which an other-than-temporary impairment had been recognized before the effective date, the prospective transition method will be used. On January 1, 2020, a cumulative-effect adjustment of $453 related to reinsurance recoverable was recognized to beginning retained income with a corresponding entry to an allowance for credit losses account.