The Statutory Accounting Principles Working Group (“SAPWG”) met virtually and in person at the NAIC Summer National Meeting held on August 13, 2024. This post is intended to provide an informative snapshot of what was accomplished during the meeting, as well as help accelerate your determination of the impact the adoptions and modifications will have on your financial statements.
Adopted Items
The SAPWG reviewed and adopted the following items that were previously exposed for comment. The items were adopted with minor revisions recommended by interested parties or regulators during the exposure period and discussed during the meeting. They apply to all lines of business (Life/Fraternal, Property, Health and Title) and all revisions are effective immediately, unless otherwise noted.
- Ref #2019-21: Principles-Based Bond Definition – Issue Paper No. 169 documents the discussions and decisions related to the principles-based bond definition. This item will be classified as a new SAP concept. The revisions to the SSAPs impacted by this guidance have a January 1, 2025 effective date.
- Ref #2022-12: Review of INT 03-02: Modification to an Existing Intercompany Pooling Arrangement – This item modifies SSAP No. 25 – Affiliates and Other Related Parties and SSAP No. 63 – Underwriting Pools to address transfers of assets when modifying intercompany pooling agreements. Specifically, the appropriate valuation basis to be used for assets and liabilities that are transferred among affiliates in this scenario is statutory book value for assets and statutory value for liabilities. With this adoption, INT 03-02 will be nullified.
- Ref #2023-26: ASU 2023-06, Disclosure Improvements – This item modifies SSAP No. 15 – Debt and Holding Company Obligations to include disclosure requirements for unused commitments and lines of credit, disaggregated by short-term and long-term. SSAP No. 86 – Derivatives has been modified to include a requirement for disclosure of the accounting policy for where cash flows associated with derivative instruments and their related gains and losses are presented in the statement of cash flow.
- Ref #2024-02: ASU 2023-01, Leases (Topic 842), Common Control Agreements – This item modifies SSAP No. 19 – Furniture, Fixtures, Equipment and Leasehold Improvements and SSAP No. 73 – Health Care Delivery Assets and Leasehold Improvements in Health Care Facilities to include clarifying guidance regarding how a lease between entities under common control should be amortized. The revisions reject the practical expedient for private companies and not-for-profit entities, but otherwise adopt the underlying guidance from the ASU.
- Ref #2024-03: ASU 2023-08, Accounting for and Disclosure of Crypto Assets – This item adopts the definition of crypto assets from the ASU and adds clarifying guidance to SSAP No. 20 – Nonadmitted Assets that directly-held crypto assets are nonadmitted assets for statutory accounting. This adoption does not modify the general interrogatory disclosures that have been previously added to the Annual Statement Blanks and Instructions. With this adoption, INT 21-01, Accounting for Cryptocurrencies will be nullified.
- Ref #2024-08: Residual Consistency Revisions – This item modifies several SSAPs to incorporate consistency revisions for residuals so that all SSAPs refer to SSAP No. 21R – Other Admitted Assets for the formal definition and accounting and reporting guidance. The following SSAPs will be revised to include this clarification: SSAP No. 26R – Bonds (Effective 2025), SSAP No. 30R – Unaffiliated Common Stock, SSAP No. 32R – Preferred Stock, SSAP No. 43R – Asset-Backed Securities (Effective 2025) and SSAP No. 48 – Joint Ventures, Partnerships and Limited Liability Companies.
- Ref #2024-09: SSAP No. 2 Clarification – This item modifies SSAP No. 2R – Cash, Cash Equivalents, Drafts, and Short-Term Investments to eliminate lingering references implying that asset-backed securities, mortgage loans or other Schedule BA items are permitted to be reported as cash equivalents or short-term investments.
- Ref #2024-14EP: Editorial Revisions – This item modifies the Accounting Practices and Procedures Manual to remove “Revised” and “R” identifiers from SSAP titles and SSAP references throughout the Manual.
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