SSAP and Blank Updates to the Statutory Financial Statements – August 13, 2023 SAPWG Summer National Meeting

The Statutory Accounting Principles Working Group (“SAPWG”) met virtually and in person at the NAIC Summer National Meeting on August 13, 2023. 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 new SAP concepts and/or clarifications to statutory accounting guidance that were previously exposed for comment. These items were adopted with minor revisions recommended by interested parties or regulators during the exposure period and discussed during the meeting and apply to all lines of business (Life/Fraternal, Property, Health and Title). All revisions are effective immediately, unless otherwise noted.

  • Ref #2019-21: Principles-Based Bond Definition – This item primarily revises SSAP No. 26R – Bonds and SSAP No. 43R – Loan-Backed and Structured Securities for the principles-based bond definition and the accounting for bonds (issuer credit obligations and asset-backed securities). It also revises several other SSAPs that have been updated to reflect the revised definition and/or SSAP references. The effective date of this item is January 1, 2025.
  • Ref #2022-01: Conceptual Framework – Updates – This item revises the definition of a liability under statutory accounting in SSAP No. 5R – Liabilities, Contingencies and Impairments of Assets and Issue Paper No. 168 – Updates to the Definition of a Liability to be more consistent with recent Financial Accounting Standards Boards (FASB) revisions.
  • Ref #2022-19: Negative IMR – This item provides optional, limited-time guidance through INT 23-01: Net Negative (Disallowed) Interest Maintenance Reserve (IMR), which allows the admittance of net negative (disallowed) IMR up to 10% of adjusted capital and surplus. The INT will be automatically nullified on January 1, 2026.
  • Ref #2023-02: CLO Financial Modeling – This item revises SSAP No. 43R – Loan-Backed and Structured Securities to incorporate changes to add collateralized loan obligations (CLOs) to the financial modeling guidance and to clarify that CLOs are not captured as legacy securities. The effective date of this item is December 31, 2023.
  • Ref #2023-05: ASUs 2020-04, 2021-01 & 2022-06 – Reference Rate Reform – This item provides a temporary (optional) expedient and exception interpretative guidance to revise the expiration date of the guidance in INT 20-01: ASUs 2020-04 & 2021-01 – Reference Rate Reform to December 31, 2024.
  • Ref #2023-06: Additional Updates on ASU 2021-10, Government Assistance – This item revises SSAP No. 24 – Discontinued Operations and Unusual or Infrequent Items for the rejection of ASU No. 2021-10 while incorporating certain disclosures regarding government assistance that would typically be reported in Note 21.A – Unusual or Infrequent Items.
  • Ref #2023-07: ASU 2019-08 on Stock Compensation and Revenue Recognition – This item adopts ASU 2019-08, with modifications, to include share-based consideration payable to customers in the scope of SSAP No. 47 – Uninsured Plans, SSAP No. 95 – Nonmonetary Transactions and SSAP No. 104R – Share Based Payments.
  • Ref #2023-08: ASU 2019-07, Codification Updates to SEC Sections – This item revises Appendix D of the AP&P Manual to reject ASU 2019-07 as not applicable for statutory accounting.
  • Ref #2023-09: ASU 2020-09, Amendments to SEC Paragraphs – This item revises Appendix D of the AP&P Manual to reject ASU 2020-09 as not applicable for statutory accounting.
  • Ref #2023-10: ASU 2022-05, Transition for Sold Contracts – This item revises Appendix D of the AP&P Manual to reject ASU 2022-05 as not applicable for statutory accounting.
  • Ref #2023-13: PIK Interest Disclosure – This item has been developed to provide clarification and incorporate practical expedient guidance to the paid-in-kind (PIK) interest aggregate disclosure to be captured in the Annual Statement Instructions for 2023 Annual reporting for Note 7 – Investment Income. Modifications to SSAP No. 34 – Investment Income Due and Accrued were adopted by the SAPWG on March 22, 2023 through Ref #2022-17 and are effective for year-end 2023.

As always, Gain Compliance integrates the latest changes into the NAIC guidelines to streamline the reporting process. If there are any further questions or comments, please do not hesitate to reach out.

Stay on top of changes to the NAIC guidance on Gain’s library of resources.

Make sure to check out company blog posts, and follow Gain Compliance on LinkedInFacebook and Twitter.