Insurance companies need the same break Congress gave banks in sweeping coronavirus relief legislation that includes more time to comply with major credit loss accounting rules, a life insurance trade group says.
The American Council of Life Insurers asked U.S. accounting rulemakers Friday to extend the date by which insurance companies have to adopt the current expected credit losses (CECL) standard. The group, which represents companies like Prudential Financial Inc. and MetLife Inc., said insurers should get until the period after Dec. 31 this year.
Large publicly traded companies were supposed to adopt the new rules Jan. 1 in time for their first-quarter financial statements this spring. The economic fallout from the coronavirus pandemic made banks and other businesses press lawmakers, regulators, and the Financial Accounting Standards Board to defer the effective date. Congress ended up intervening.
Insurance companies are “vital institutions to the proper functioning of credit markets,” and they, too, need more time to overhaul how they calculate losses on loans and other financial instruments.
The group also asked for clarity about the length of the optional deferral in the law, which President Donald Trump signed Friday. The law says banks can elect to delay CECL until Dec. 31 or the national emergency ends.
FASB declined to comment. The coronavirus relief package represents the first time Congress has intervened in the board’s work.