The Statutory Accounting Principles Working Group (“SAPWG”) met virtually and in person at the NAIC Spring National Meeting held on March 16, 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 Project & Residual Interests – This item modifies SSAP No. 21R – Other Admitted Assets to provide guidance for debt securities that do not qualify as bonds under the principles-based bond definition. This revision has a January 1, 2025 effective date. In addition, revisions were adopted to prescribe accounting guidance (measurement method) for all residual interests regardless of legal form. This specific guidance is also effective January 1, 2025, but can be early adopted for 2024.
- Ref #2022-14: New Market Tax Credit Project – This item modifies SSAP No. 93R – Low-Income Housing Tax Credit Property Investments to expand and amend guidance to include all tax credit investments regardless of structure and type of state or federal program and SSAP No. 94R – Transferable and Non-Transferable State Tax Credits to expand and amend guidance to include both purchased state and federal tax credits. Consistency revisions were made to SSAP No. 34 – Investment Income Due and Accrued and SSAP No. 48 – Joint Ventures, Partnerships and Limited Liability Companies to respond to the changes made to SSAP No. 93 and SSAP No. 94. This item is considered a new SAP Concept and is effective January 1, 2025.
- Ref #2023-25: ASU 2023-03-SEC Updates – This item modifies Appendix D – Nonapplicable GAAP Pronouncements to reject ASU 2023-03 as not applicable to statutory accounting as the ASU is specific to amendment of SEC paragraphs that are not applicable for statutory reporting purposes.
- Ref #2023-27: ASU 2023-04-SEC Updates, Crypto – This item modifies Appendix D – Nonapplicable GAAP Pronouncements to reject ASU 2023-04 as not applicable to statutory accounting as the ASU is specific to amendment of SEC paragraphs that are not applicable for statutory reporting purposes.
- Ref #2023-29: IMR Preferred Stock – This item proposes modifications to the 2024 Annual Statement Instructions by the Blanks Working Group (BWG) to clarify that realized gains and losses on perpetual preferred stock should not be added to the Interest Maintenance Reserve (IMR), regardless of NAIC designation, and should follow the same concepts that exist for common stock in reporting unrealized gains/losses to the Asset Valuation Reserve (AVR). The revisions proposed will update the A/S instructions to correspond with previously adopted changes to SSAP No. 32R – Preferred Stock regarding the measurement method for perpetual preferred stock. (Life/Fraternal)
- Ref #2023-30: SSAP No. 97 Admissibility Requirements – This item modifies SSAP No. 97 – Investments in Subsidiary, Controlled and Affiliated Entities, paragraph 24, to better align it with the existing guidance provided in paragraphs 26 and 27 for audits and admittance requirements for investments in downstream holding companies.
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