SSAP and Blank Updates to the Statutory Financial Statements – November 10, 2021 SAPWG Conference Call

The Statutory Accounting Principles Working Group (“SAPWG”) held a conference call on November 10, 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 four items that were previously exposed for comment. The nonsubstantive revisions are effective immediately and apply to all lines of business (Life/Fraternal, Property and Health), unless otherwise noted.

  • Ref #2021-15: SSAP No. 43R – Residual Tranches – This item modifies SSAP No. 43R – Loan-Backed and Structured Securities and is effective December 31, 2022, with early application permitted. The SSAP was modified to clarify that non-rated residual tranches should be reported on Schedule BA – Other Long-Term Invested Assets and valued at the lower of cost or fair value. This item corresponds with blanks proposal 2021-21BWG.  For residual tranches or interests retained on Schedule D, Part 1 as of December 31, 2021, this modification further clarifies that the residual tranches are required to be reported with an NAIC 6 designation and that a self-assigned NAIC 5GI designation is not permitted. 
  • Ref #2021-12EP: Editorial Updates – This item adopts editorial revisions as summarized below:
    • Preamble – Incorporates a paragraph number for the existing statutory hierarchy section
    • Appendix A-001 – Updates the designation codes for preferred stock within Question 3 of the Investment Risks Interrogatories, an Annual Statement Supplement due April 1. This information is noted in Section 2 of Appendix A-001: Investments of Reporting Entities and coincides with an editorial update to the blanks that was adopted in March 2021.  
    • Appendix C – Updates the reference to the former Emerging Actuarial Issues (E) Working Group as well as adding reference to the Valuation Analysis (E) Working Group’s use of included interpretations
    • Appendix C-2 – Updates the reference to the former Emerging Actuarial Issues (E) Working Group as well as adding reference to the Valuation Analysis (E) Working Group’s use of included interpretations
    • SSAP No. 21R – Other Admitted Assets – Paragraph 9 has been updated to improve the readability of the information regarding receivables for securities 
  • Ref #2021-13: Salvage – Legal Recoveries – This item adopts nonsubstantive revisions to SSAP No. 55 – Unpaid Claims, Losses and Loss Adjustment Expenses, which clarify that subrogation recoveries should be reported as a reduction of losses and/or loss adjusting expense reserves, depending on the nature of the cost being recovered. Included in this adoption is an update to the related disclosures to reflect the reporting of estimated salvage and subrogation and their impact on unpaid claims, losses, or associated LAE.
  • INT 21-02T: Extension of Ninety-Day Rule for the Impact of Hurricane Ida – This interpretation provides an optional 60-day extension from the ninety-day rule in SSAP No. 6 – Uncollected Premium Balances, Bills Receivable for Premiums, and Amounts Due from Agents and Brokers for related items that were directly impacted by Hurricane Ida.  This INT is consistent with previous temporary extensions granted for other nationally significant catastrophes.  The INT will expire January 23, 2022.

Updates from prior meetings are available in Gain’s growing library of resources.

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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