The Statutory Accounting Principles Working Group (“SAPWG”) held a conference call on May 16, 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 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 #INT22-02: Extension of INT 22-02: Third Quarter 2022 through Second Quarter 2023 Reporting of the Inflation Reduction Act – Corporate Alternative Minimum Tax – This INT provides specific guidance for reporting of the 15% Corporate Alternative Minimum Tax (CAMT) that was was enacted as part of the Inflation Reduction Act of 2022 (the Act) on August 16, 2022. The extension will expire on August 16, 2023, allowing the Interpretation to be used through the second quarter of 2023.
While most insurers will not be subject to the CAMT, for those that know they are subject and those that could be subject to the CAMT, the following should be considered when determining third quarter disclosure in the Notes to Financial Statements:
- Note 9 – Income Taxes
- Disclose that the Act was enacted during the reporting period on August 16, 2022.
- Include a statement regarding whether the reporting entity (or the controlled group of corporations of which the reporting entity is a member) has determined if they expect to be liable for CAMT in 2023. For example:
- The reporting entity (or the controlled group of corporations of which the reporting entity is a member) has determined that they do not expect to be liable for CAMT in 2023.
- The reporting entity (or the controlled group of corporations of which the reporting entity is a member) has not determined as of the reporting date if they will be liable for CAMT in 2023 and that the 2023 financial statements do not include an estimated impact of the CAMT because a reasonable estimate cannot be made.
- The reporting entity (or the controlled group of corporations of which the reporting entity is a member) has determined that they expect to be liable for CAMT in 2023 and that the 2023 financial statements do not include an estimated impact of the CAMT because a reasonable estimate cannot be made.
- Note 22 – Events Subsequent
- CAMT updated estimates or other calculations affected by the Act determined subsequent to the statutory financial statement or filing date shall not be recognized as Type I subsequent events.
- Ref #2023-11EP: AP&P Manual Editorial Updates – This item revises the Accounting Practices and Procedures Manual for various maintenance updates such as editorial corrections, reference changes and formatting. The revisions are captured in three broad categories:
- SSAP No. 86—Derivatives, Paragraph 43.g.ii: Changes a reference in the disclosure category for hedging instruments with excluded components from “intrinsic value” to “volatility value.”
- P&P Manual References: All citations to the Purposes and Procedures Manual of the NAIC Investment Analysis Office are proposed to be reviewed and streamlined so they do not reflect a specific location in the Manual or a webpage. These references will be eliminated to prevent inappropriate citations.
- Percent References: Instances in which ‘percent’ is spelled out in combination with a number will be eliminated with retention of the % sign. This is a consistency change as the usage is currently inconsistent within the Manual.
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.