Effect of New Accounting Pronouncements

12 Months Ended

Dec. 31, 2021

Accounting Changes And Error Corrections [Abstract]

Effect of New Accounting Pronouncements

2. Effect of New Accounting Pronouncements

Credit Impairment

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326):  Measurement of Credit Losses on Financial Instruments.  Under the new guidance an entity is required to measure all credit losses on certain financial instruments, including trade receivables and various off-balance sheet credit exposures, using an expected credit loss model.  This model incorporates past experience, current conditions and reasonable and supportable forecasts affecting collectability of these instruments.  An entity will apply the new guidance through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption.  We adopted this new guidance effective January 1, 2020 and applied the guidance to measure credit losses on our financial instruments, which included premiums and fees receivable, premium finance advances and reinsurance recoverables.  The adoption did not have a material impact on our consolidated financial statements.

Disclosure Framework

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820):  Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.  This new guidance modifies various disclosure requirements for fair value measurements, including in certain part those related to Level 3 fair value measurements.  The new guidance was effective January 1, 2020.  Certain portions of the guidance needed to be adopted prospectively while other portions were required to be adopted retrospectively for all periods presented.

In August 2018, the FASB also issued ASU No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Topic 715-20):  Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans.  This new guidance modifies various disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.  The new guidance was effective January 1, 2020, with early adoption permitted.  Retrospective adoption is required.

We adopted both of the standards effective January 1, 2020.  The adoption did not have any impact on our consolidated financial statements.

Intangibles - Goodwill and Other

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350):  Simplifying the Test for Goodwill Impairment.  The new guidance eliminates Step 2 of the goodwill impairment test.  Instead, the updated guidance requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit to its carrying value, and recognizing a non-cash impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value with the loss not exceeding the total amount of goodwill allocated to that reporting unit.  We adopted this new guidance effective January 1, 2020.  The adoption did not have any impact on our consolidated financial statements.

Internal-use Software

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):  Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.  This new accounting guidance requires deferral of certain implementation costs associated with a cloud computing arrangement, or hosting arrangement, thereby aligning deferral of such costs with implementation costs associated with developing internal-use software.  Accounting for the service component of a hosting arrangement remains unchanged.  An entity will defer these implementation costs over the term of the hosting arrangement, including optional renewal periods that are reasonably certain of exercise.  Amounts expensed would be presented through operating expense, rather than depreciation or amortization.  The new guidance was effective January 1, 2020.  An entity may adopt the guidance either prospectively for all cloud computing arrangement implementation costs incurred on or after the effective date or retrospectively, including comparative periods.  We adopted this new guidance effective January 1, 2020 on a prospective basis.  The adoption did not have a material impact on our consolidated financial statements.

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.  The amendments in ASU 2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods therein.  We adopted this new guidance effective January 1, 2021.  The adoption did not have any impact on our consolidated financial statements.