2017 Annual Statement – Instructions Preview

The most recent update to the Instructions for the 2017 Annual Statement were released on 10/19/2017. A summary of the major changes follows below:

Effective Q1 2017
  • 5.Q – Short Sales (formerly 5.M): A new data captured disclosure was added for short sales as Note 5.M in the 2017 Quarterly Statement. This has been renumbered as 5.Q in the 2017 Annual Statement. (2016-15BWG)
  • 5.R – Prepayment Penalties and Acceleration Fees (formerly 5.N): A new data captured disclosure was added for prepayment penalties and acceleration of fees for callable securities. This was Note 5.N in the 2017 Quarterly Statement but is being renumbered as 5.R in the 2017 Annual Statement. (2016-26BWG)
Effective for the 2017 Annual Statement
  • 1.C(2) – Bonds: There are some Statement changes related to SVO which also require additional disclosure in Note 1.C(2) for mandatory convertible securities and SVO-identified investments. (2017-12BWG)
  • 5.A – Mortgage Loans, including Mezzanine Real Estate Loans: The instructions and illustrations for Note 5.A(4) and 5.A(5) have been modified to reflect additional disclosures required by SSAP No. 37—Mortgage Loans. The additional disclosure surrounds the identification of mortgage loans in which the insurer is a participant or co-lender in a mortgage loan agreement. (2017-11BWG)
  • New: 5.E – 5.I: Repurchase and Reverse Repurchase Agreements: This is the big one. The repurchase agreement and reverse repurchase agreement disclosures have been removed from the old Note 5.E(3) and 5.E(5) and new disclosures for them have been added as 5.F through 5.I, resulting in a renumbering of the remaining Note 5 disclosures, accordingly. Disclosures 5.F through 5.I are data captured with 34 new prescribed tables in new Notes 5.F – 5.I. Note 17.B(5) and 17.B(7) instructions have also been modified to remove references to repurchase agreements and reverse repurchase agreements. (2017-13BWG)
  • (Editorial Change) 5.L(4) – Collateral Received and Reflected as Assets Within the Reporting Entity’s Financial Statements (formerly 5.H(4)): Line item (a) which was “Cash” has been relabeled as “Cash, Cash Equivalents and Short-Term Investments.”
  • 12.A(3) – Funded Status of Defined Benefit Plans: The prescribed table in Note 12.A(3) has been updated to clarify the reporting of Pension and OPEB financial statement components. (2016-34BWG)
  • New: 14.B(3) – Assessments: A new disclosure, 14.B(3), was added to Note 14 for long-term care insolvencies related guaranty funds liabilities and assets, including three new prescribed tables for data capture. (2017-16BWG)
  • Note 17.B(5) & 17.B(7) – Transfers and Servicing of Financial Assets: Instructions for Note 17.B(5) and 17.B(7) have been modified to exclude repurchase agreements and reverse repurchase agreements. (2017-13BWG)
  • New: 25.B: An additional disclosure item was added to Note 25, Change in Incurred Losses and Loss Adjustment Expenses (25.B), to capture significant changes in methodologies and assumptions used in calculating liability for unpaid losses and loss adjustment expenses (all statement types). What was formerly disclosed in Note 25 (i.e., reasons for changes in the provision for incurred loss and loss adjustment expenses  attributable to insured events of prior years) is still to be disclosed but has been lettered 25.A. (2017-14BWG)
  • Note 30 – Premium Deficiency Reserves (Property Only): The paragraph in the instructions around unsecured high deductible recoverables has been removed so the instructions are now consistent with the instructions for Life companies.
  • New: Note 31 – High Deductibles (Property Only): The illustration for Note 31 has been modified and six new prescribed tables were added for data capture. (2017-14BWG)
  • Note 32.A – Tabular Discount (Property Only): An additional disclosure item around the amount of interest accretion recognized in the Statement of Income (and associated line item(s)) was added to Note 32, Discounting of Liabilities for Unpaid Losses or Unpaid Loss Adjustment Expenses (Property only). (2017-15BWG)

The majority of changes are effective on the 2017 Annual Statement. A helpful reference that provides additional information is this  summary of all adopted modifications to the Financial Statements and Instructions from the Blanks Working Group (BWG).

As always, Gain Compliance integrates the latest changes into the NAIC guidelines to streamline the reporting process. Want to learn more? Drop us a line at info@gaincompliance.com or fill out a form here.