The Statutory Accounting Principles Working Group (“SAPWG”) met virtually and in person at the NAIC Fall National Meeting on December 1, 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 items 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 #2023-15: IMR/AVR Specific Allocations – This item revises the Annual Statement Instructions, effective January 1, 2024, to address guidance that has permitted allocation of non-interest-related losses to the Interest Maintenance Reserve (IMR) for mortgage loans with valuation allowances and debt securities with known credit events. (Life/Fraternal only).
- Ref #2023-17: Short-Term Investments – This adoption will be effective January 1, 2025 in order to coincide with the bond project changes. This item revises SSAP No. 2R – Cash, Cash Equivalents, Drafts and Short Term Investments to further restrict the investments that are permitted for cash equivalent and short-term reporting. The revisions are proposed to ensure that certain investment types are captured on designated Schedule BA reporting lines and to eliminate the potential to design investments to specifically qualify for short-term reporting in an effort to mask the extent of the investment held or to obtain favorable reporting such as reduced RBC, exceptions for state investment limits or admittance requirements, for example.
- Ref #2023-22: Actuarial Guideline 51 and Appendix A-010 Interaction – This item provides clarifying revisions and an illustration to SSAP No. 54R – Individual and Group Accident and Health Contracts to clarify that gross premium valuation (under Appendix A-010, Minimum Reserve Standards for Individual and Group Life Accident and Health Insurance Contracts) and cash flow testing (Under AG51 – Actuarial Guideline LI: The application of Asset Adequacy Testing to Long Term Care Insurance Reserves) are both required if indicated.
- Ref #2023-23: Residuals in Preferred Stock and Common Stock Structures – This item provides clarification in SSAP No. 30 – Unaffiliated Common Stock and SSAP No. 32 – Preferred Stock that structures that are in substance residual interests or a residual security tranche should be accounted and reported as residual interests on Schedule BA – Other Long-Term Assets.
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.
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