The Statutory Accounting Principles Working Group (“SAPWG”) held a conference call on September 21, 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 #2023-12: Residuals in SSAP No. 48 Investments – This item revises SSAP No. 48 – Joint Ventures, Partnerships and Limited Liability Companies, SSAP No. 43R – Loan-Backed and Structured Securities and the Annual Statement Instructions for Schedule BA to clarify the scope and reporting for investment structures that represent residual interests within statutory accounting principles.
- Ref #INT23-02T: Third Quarter 2023 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 INT will expire on November 16, 2023.
While most insurers will not be subject to the CAMT, this interpretation provides temporary third quarter 2023 statutory accounting guidance for all reporting entities that are or expect to be applicable entities with respect to CAMT. A separate interpretation has been adopted for year-end 2023 and periods thereafter.
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 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 it expects to be liable for CAMT in 2023. The third quarter 2023 financial statements should disclose the estimated impact of the CAMT.
- 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.
- INT 23-03T: Corporate Alternative Minimum Tax Guidance – This Interpretation provides comprehensive statutory accounting guidance for all reporting entities with respect to the CAMT for year-end 2023 and the reporting periods after. It incorporates a principles-based approach for purposes of statutory accounting for the CAMT. The most recent NAIC exposure draft can be located here, under the “Exposure Drafts” tab.
As always, Gain Compliance integrates the latest changes into the NAIC guidelines to streamline the reporting process. If there are any questions or comments, please do not hesitate to reach out.
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