The Statutory Accounting Principles Working Group (“SAPWG”) held a conference call on August 26, 2021. 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 two items that were previously exposed for comment. The non-substantive revisions are effective immediately and apply to all lines of business (Life/Fraternal, Property and Health).
- Ref #2021-04: Valuation of Foreign Insurance SCAs – This item modifies both SSAP No. 97 – Investments in Subsidiary, Controlled and Affiliated Entities and SSAP No. 48 – Joint Ventures, Partnerships and Limited Liability Companies. These revisions restrict the SSAP No. 97, paragraph 9 limited statutory adjustments for foreign SCAs (8.b.iv entities) and will result in a valuation floor of zero if the entity is not engaged in providing services to, or holding assets on behalf of, the U.S. insurers. Further, the modification clearly states that the equity method valuation referenced in SSAP No. 97 can result in a negative equity valuation for SSAP No. 48 entities.
- Ref #2021-10: SSAP No. 32R – Clarification of Effective Call Price – This adoption modifies SSAP No. 32R – Preferred Stock to clarify that the “effective call price” valuation limitation, for all instruments within the scope of the standard, shall only apply if the call is currently exercisable by the issuer or if the issuer has announced that the instrument will be redeemed or called.
Updates from prior meetings are available in Gain’s growing library of resources.
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