The Statutory Accounting Principles Working Group (“SAPWG”) held a conference call on October 24, 2022. 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 item that was previously exposed for comment. This item was adopted with minor revisions recommended by interested parties during the exposure period and discussed during the call. The temporary interpretation is effective for Third Quarter 2022, will be automatically nullified on December 1, 2022 and applies to all lines of business (Life/Fraternal, Property, Health and Title).
- Ref #INT22-02: INT 22-02: Third Quarter 2022 Reporting of the Inflation Reduction Act – Corporate Alternative Minimum Tax – This INT provides specific guidance for third quarter 2022 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.
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 third quarter 2022 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 third quarter 2022 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 third quarter statutory financial statement or filing date shall not be recognized as Type I subsequent events.
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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