Benchmarking LDTI implementation

The Long-Duration Targeted Improvements (LDTI) accounting standard presents significant challenges and expenses for the insurance industry while offering potential long-term benefits. This report explores the implementation journey of insurers by delving into the hurdles, resource requirements, and improvements in data and technology capabilities gained from adopting the new standard.

Key insights on achieving industry success with the LDTI accounting standard:

• Both 2023 and 2025 adopters faced significant challenges, including tight implementation timelines, application to reinsurance contracts, valuation of market risk benefits (MRBs), adapting valuation models, difficulties with historical data, and obtaining granular data.
• The average cost of LDTI implementation was $26.4 million for 2023 adopters and $27 million for 2025 adopters, with higher costs attributed to factors such as limited internal resources and legacy systems.
• 2023 adopters utilized more internal full-time equivalents (FTEs) to meet resource and technology needs, while 2025 adopters relied more on external resources, especially in actuarial, accounting, and systems.
• As for insurance industry success, a majority of respondents believed that LDTI changes achieved the FASB's objectives, with 2023 adopters showing greater support. However, challenges related to cost, consistency between adopters and non-adopters, and added complexity contributed to dissenting views.

KPMG can help you successfully navigate the complexities of LDTI implementation and transform your insurance business. You can achieve a seamless transition while future-proofing your organization for enhanced compliance and business value.