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🧾 '''Completion accounts''' are financial statements prepared as of the [[Definition:Completion | completion]] date of an insurance [[Definition:Mergers and acquisitions (M&A) | M&A]] transaction, serving as the basis for the final purchase price adjustment under a [[Definition:Closing accounts mechanism | closing accounts mechanism]]. They capture the target's balance sheet — including [[Definition:Reserves | reserves]], [[Definition:Unearned premium | unearned premium]], [[Definition:Reinsurance recoverables | reinsurance recoverables]], [[Definition:Investment portfolio | investment assets]], and working capital — at the precise moment economic ownership passes, ensuring the buyer pays for what the business is actually worth on that date rather than on an earlier estimate.

🔧 Preparing completion accounts for an [[Definition:Insurance carrier | insurance entity]] presents unique challenges compared to other industries. The most consequential line items are typically [[Definition:Loss reserves | loss reserves]], where even modest differences in [[Definition:Actuarial | actuarial]] assumptions can produce material swings in [[Definition:Net asset value (NAV) | net asset value]]. The [[Definition:Share purchase agreement (SPA) | share purchase agreement]] normally prescribes the accounting policies and methodologies to be used — specifying, for instance, whether reserves should follow [[Definition:US GAAP | US GAAP]], [[Definition:IFRS 17 | IFRS 17]], or local statutory accounting conventions, and whether [[Definition:Discount rate | discounting]] of reserves is permitted. A draft set of completion accounts is usually prepared by one party (often the buyer), reviewed by the other, and any disagreements are resolved through a negotiation period followed, if necessary, by referral to an independent accountant or actuary acting as expert.

💰 Because the delta between estimated and final completion accounts directly determines whether money flows from buyer to seller or vice versa, the preparation and audit of these accounts is one of the most commercially sensitive phases of the post-[[Definition:Completion | completion]] process. Disputes over insurance-specific items — such as the adequacy of [[Definition:Incurred but not reported (IBNR) | IBNR]] reserves, the recoverability of [[Definition:Reinsurance | reinsurance]] assets, or the appropriate treatment of [[Definition:Deferred acquisition cost (DAC) | deferred acquisition costs]] — can persist for months and, in contentious transactions, may end up in arbitration. Experienced deal teams mitigate this risk by negotiating detailed accounting policy schedules at the signing stage, including worked examples that illustrate how key insurance balance sheet items will be calculated. This upfront investment in precision substantially reduces post-completion friction.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Closing accounts mechanism]]
* [[Definition:Net asset value (NAV)]]
* [[Definition:Loss reserves]]
* [[Definition:Locked-box mechanism]]
* [[Definition:Completion]]
* [[Definition:Share purchase agreement (SPA)]]
{{Div col end}}

Definition:Completion accounts - Revision history

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