The Statutory Accounting Principles Working Group (“SAPWG”) met virtually and in person at the NAIC Spring National Meeting on March 22, 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.
The SAPWG reviewed and adopted the following 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 #2022-15: Affiliate Reporting Clarification – This item revises SSAP No. 25 – Affiliates and Other Related Parties, clarifying that any invested asset held by a reporting entity that is issued by an affiliated entity, or which includes the obligations of an affiliated entity, is an affiliated investment.
- Ref #2022-16: ASU 2022-03 – Fair Value Measurement of Restricted Securities – This item revises SSAP No. 100R – Fair Value for the adoption of ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sales Restrictions, with modification to reject the contractual sales restriction disclosures.
- Ref #2022-17: Interest Income Disclosure Update – This item revises SSAP No. 34 – Investment Income Due and Accrued to add and data-capture additional disclosures. The SAPWG will work with staff from the Blanks (E) Working Group (BWG) to create an agenda item to incorporate the changes into the Annual Statement blank with a year-end 2023 effective date.
- Ref #2022-18: ASU 2022-04, Disclosure of Supplier Finance Program Obligations – This item revises SSAP No. 105R – Working Capital Finance Investments to reject guidance from ASU 2017-12, Derivatives and Hedging and ASU 2022-04, Disclosure of Supplier Finance Program Obligations for statutory accounting as the disclosures are for borrowers in these programs and as such, are not relevant for insurance preparers that may invest in these programs.
In addition to the clarifications to statutory accounting guidance discussed above, the SAPWG reviewed and adopted the following issue paper that was also previously exposed for comment.
- Ref #2017-33: Issue Paper No. 16X – Derivatives and Hedging – This item historically documents new SAP concept revisions to the documentation and assessment of hedge effectiveness, measurement method guidance for excluded components, and modified incorporation of the U.S. GAAP portfolio layer method and the partial-term hedging method in SSAP No. 86 – Derivatives.
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.