The Statutory Accounting Principles Working Group (“SAPWG”) met virtually and in person at the NAIC Fall National Meeting held on November 17, 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 Definition Implementation Questions and Answers – INT 24-01 addresses specific questions related to the implementation of the principles-based bond definition. This item will be classified as a SAP clarification. The revisions to the SSAPs impacted by this guidance have a January 1, 2025 effective date.
- Ref #2024-11: ASU 2023-09, Improvements to Income Tax Disclosures – This item adopts revisions to SSAP No. 101 – Income Taxes to reject ASU 2023-09 for statutory accounting purposes and deletes the disclosure detailed in SSAP No. 101, paragraph 23.b (the cumulative amount of each type of temporary difference for which a DTL has not been recognized), as it was determined to be no longer relevant due to changes made to federal tax codes through the Tax Cuts and Jobs Act.
- Ref #2024-17: Clearly Defined Hedging Strategy – This item modifies SSAP No. 108 – Derivatives Hedging Variable Annuity Guarantees to update the definition of a clearly defined hedging strategy (CDHS) to reflect the revised guidance captured in VM-01 versus the guidance formerly referenced in VM-21.
- Ref #2024-18: Clarification of Accounting Guidance for Recognition of Tax Credits – This item modifies SSAP No. 93 – Investments in Tax Credit Structures to clarify the accounting guidance for recognizing allocated and purchased tax credits in relation to the journal entry example. It modifies SSAP No. 94 – State and Federal Tax Credits to fix an inconsistency between the accounting guidance and the journal entry examples and modifies SSAP No. 48 – Joint Ventures, Partnerships and Limited Liability Companies to revise a sentence inadvertently not updated as part of the project. The revisions to the SSAPs impacted by this guidance have a January 1, 2025 effective date.
- Ref #2024-19: ASU 2024-02, Codification Improvements – Amendments to Remove References to the Concepts Statements – This item adopts revisions to Appendix D – Nonapplicable GAAP Pronouncements to reject ASU 2024-02 as not applicable to statutory accounting. The guidance is not considered relevant to the existing statutory accounting reference to FASB Concept statements.
On September 12, 2024, the SAPWG adopted via e-vote the following revisions th the AP&P Manual, effective January 1, 2025.
- Ref #2024-01: Bond Definition – Debt Securities Issued by Funds – This item modifies SSAP No. 26 – Bonds to clarify guidance in the principles-based bond definition on the treatment of debt securities issued by funds. With this adoption, debt securities issued by non-SEC registered funds that reflect operating entities can qualify as issuer credit obligations. The guidance requires assessment as to the purpose of the issued debt security and is explicit that debt securities issued for the raising of debt capital are required to be assessed as asset-backed securities.
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