SSAP and Blank Updates to the Statutory Financial Statements – May 28, 2020 BWG Conference Call (Part 1)

The Blanks Working Group (“BWG”) held a conference call on May 28, 2020, to review and adopt the previously exposed positions outlined below as well as consider the exposure of three new items. In total, there were 25 adoptions, three new exposures, one item withdrawn, and one exposure deferred until the August BWG call. Our subsequent post will discuss Notes-related adoptions, while this update will focus on adopted items that do not directly impact the Notes.

Adopted Items

Each of the items below were adopted as proposed or modified with minor editorial or friendly amendments, with no additional comments from the BWG, regulators, or other interested parties. All adoptions are applicable to either the Life/Fraternal, Property, Health, and Title blanks, as specified by “L” for Life/Fraternal, “P” for Property, “H” for Health, and “T” for Title, or some combination thereof. Adopted items are effective for the 2020 Annual Statement (or Q1 2021 for applicable schedules).

  • 2019-25BWG Modified: This adoption modifies the instructions in Schedule F, Part 3 – Property and Schedule F, Part 2 – Life/Fraternal Workers’ Compensation Carve-out supplement, to remove the instructions to exclude “adjusting and other reserves” from Column 10. The modification adds instructions to include the adjusting and other reserves with defense and cost containment reserves in both Columns 10 and 12 in the aforementioned schedules. Lastly, crosschecks are proposed to be added to Schedule P, Part 1 (L/P).
  • 2019-28BWG: This item modifies the instructions for the Supplemental Investment Risk Interrogatories, Lines 13.02 through 13.11, clarifying when to identify the actual equity interests within a fund and aggregate those equity interests for determination of the ten largest equity interests. Look-through will not be required for diversified funds (L/P/H/T).
  • 2019-29BWG: This adoption modifies the instructions and blank for Supplemental Investment Risk Interrogatories Question 14.01. Specifically, the purpose of the proposal is to clarify that Interrogatories 14.06 through 14.15 are to be completed regardless of the answer to question 14.01 (L/P/H/T).
  • 2019-30BWG Modified: This modification adds a category and instructions for Reciprocal Jurisdiction Companies in Schedule S for the Life/Fraternal and Health blanks and to Schedule F for the Property and Title blanks. A list of identification numbers will be added to the instructions for Schedule Y, Part 1A, Schedule Y, Part 2 and Schedule D, Part 6, Section 1 for Reciprocal Jurisdiction Companies. A reference to Reciprocal Jurisdiction Companies will be added in the Trusteed Surplus Statement instructions for Life/Fraternal, Health and Property statements (L/P/H/T).
  • 2020-01BWG: This adoption adds crosschecks to Lines 13 and 14 of the Exhibit of Premiums, Enrollment and Utilization (State Page) and to Lines 10 and 11 of the Underwriting and Investment Exhibit (“UIE”), Part 1 in the Health blank. Lastly, this item adds crosschecks to Lines 9, 10, and 11 of the UIE Part 1 and Schedule T, Line 61 (H).
  • 2020-09BWG: This adoption modifies the instructions for Schedule F, Part 3 to reflect the factors for all uncollateralized reinsurance recoverables from unrated reinsurers be the same for authorized, unauthorized, certified and reciprocal reinsurance (P).
  • 2020-10BWG: This item ushers in the new Variable Annuities (“VA”) Framework, which is effective for 2020. The supplement blank changes include changing the header for Column 10, changing Lines 1-3 and adding Line 4. The instructions will be adjusted to correspond with changes made to the blanks as well as changes in the 2020 Valuation Manual for the new VA Framework (L).
  • 2020-11BWG: This adoption splits Part 1 of the VM-20 Reserves Supplement into Part 1A and Part 1B, removes Part 2 and renumbers the remaining parts. This item also changes the reporting units to be in dollars rather than in thousands of dollars, which requires expanding all columns to allow room for numbers as large as 999 billion and changing the product labels for clarity (L).
  • 2020-12BWG: This adoption requires appointed actuaries to attest to meeting Continuing Education (“CE”) requirements and participate in the CAS/SOA CE review procedures, if requested. The changes were adopted by the Task Force on January 28, 2020 (P).
  • 2020-13BWG Modified: This modification removes Line 24.04 from the General Interrogatories, Part 1 and renumbers the remaining lines for Interrogatory Question 24. This also modifies Lines 24.05 and 24.06 to require reporting amounts for conforming and non-conforming collateral programs (L/P/H/T).
  • 2020-14BWG Modified: This item modifies the columns and rows on the blank pages for the Long-Term Care Experience Reporting Forms 1 through 5 and makes appropriate changes to the instructions for those forms. Changes were made to allow entities to provide more accurate and useful information to regulators and their customers, as well as to facilitate greater consistency among and ease of reporting by insurers (L/P/H).
  • 2020-15BWG Modified: This adoption adds a new Private Flood Insurance Supplement collecting residential and commercial private flood insurance data to be filed by April 1 each year by Property insurers. This item also revises the Credit Insurance Experience Exhibit (“CIEE”) to collect lender-placed flood coverages in order to provide a more complete picture of the private flood insurance market. During the conference call revised materials related to incurred claims in this supplement were also adopted with no further comment by staff, regulators, or interested parties (L/P).
  • 2020-16BWG Modified: This item was adopted during the call with a friendly amendment to include minor editorial changes. The adoption modifies Questions 3.1 and 3.2 of the General Interrogatories Part 2 on the Property blank to clarify capturing of whether reporting entities have written participating policies in the current calendar year and for reporting the amount of premium written for both participating and non-participating policies (P).
  • 2020-17BWG: This adoption adjusts the Asset Valuation Reserve (“AVR”) presentation to include separate lines for each of the expanded bond designation categories. The BWG and the SVO have adopted 20 bond designations for 2020 reporting. The reported designations will flow into the RBC but will not include factors. The current factor for designations 1-6 will remain in the RBC until an impact analysis can be done to confirm the new factors for the 20 designations. This proposal applies the same expanded presentation to the AVR as it is used to populate the Life RBC formula (L).
  • 2020-18BWG Modified: This modification clarifies where to find the list of funds that must have NAIC Designation, NAIC Designation Modifier, and SVO Administrative Symbol provided on Schedule D, Part 2, Section 2 (annual) and Schedules D, Parts 3 and 4 (quarterly). It also modifies the reference to the Purposes and Procedures Manual of the NAIC Investment Analysis Office found in other investment instructions due to changes in the manual. The following Investment instructions will be modified: Investment Schedule General Instructions, Summary Investment Schedule, Schedule D, Part 1, Sections 1 and 2 part 2, Schedule E, Part 2, and Supplemental Investment Interrogatories (L/P/H/T).
  • 2020-19BWG Modified: This adoption adds an additional code of “%” to the code column for all investments which have been reported on either Schedule DA, Part 1 and Schedule E, Part 2 for more than one consecutive year. A certification will be added to the General Interrogatories, Part 1 inclusion of these investments on the two schedules. The intent of this addition is to identify instances where cash equivalents and/or short-term investments (or substantially similar investments) remain on the applicable investment schedule for more than one reporting period due to the investment being re-underwritten and renewed. This also changes Question 36 on General Interrogatories, Part 1 and renumbers the “Other” General Interrogatories for the questions that follow (see also Ref #2019-20) (L/P/H/T).
  • 2020-20BWG Modified: This modification adds code “10” to Schedule D, Part 1 Column 26 – Collateral Type for ground lease financing, renumbering “Other” code to 11 (L/P/H/T).
  • 2020-21BWG Modified: This adoption adds a new Line 4.05 for valuation allowance for mortgage loans to the Summary Investment Schedule and renumbers existing Line 4.05 to 4.06. This item also modifies the instructions to include a cross-check for new Line 4.05 back to Schedule B – Verification Between Years and clarifies the instructions for Lines 4.01-4.04 to explicitly show crosschecking to Column 8 of Schedule B, Part 1 (L/P/H/T).
  • 2020-22BWG Modified: This adoption modifies the instructions and illustrations for Note 3.A and a new Note 3.E with instructions and illustrations to be data captured. This item also modifies the blank and instructions for Schedule D, Part 6, Sections 1 and 2. The modifications were made to reflect changes that have been adopted for SSAP No. 68 – Business Combinations and Goodwill and SSAP No. 97 – Investments in Subsidiary, Controlled and Affiliated Entities by the Statutory Accounting Principles (E) Working Group (“SAPWG”) (see Ref #2020-03) (L/P/H/T).
  • 2020-23BWG Modified: This adoption adds a footnote to Exhibit 5 (Life/Fraternal and Health – Life supplement) and Exhibit 3 (Separate Accounts) to disclose cases where a mortality risk is no longer present or a significant factor (possibly due to a policyholder electing a payout benefit) (see Ref #2019-08) (L).

Exposed Items

Lastly, the BWG exposed three items for public comment that, if adopted, would be effective in 2021 (Q1 2021 or 2021 Annual, as appropriate):

  • 2020-24BWG: This exposure would remove questions 29, 30, 31, and 32 from the Supplemental Exhibits and Schedules Interrogatories and renumber the remaining questions on the schedule to appropriately reflect the removal. These items are being removed now that certifications for business subject to Actuarial Guideline XLIII will be provided in the PBR Actuarial Report as required by VM-31 (L).
  • 2020-25BWG: This exposure adds a new Column 5 to the blank for Sch T with instructions to specifically capture the Children’s Health Insurance Premium (“CHIP”). Existing columns after the new column 5 will be renumbered. This change will assist regulators in identifying CHIPs/SCHIPs plan premiums associated with the Federal/State partnership created by Title XXI of the Social Security Act as it relates to guaranty fund assessments (H).
  • 2020-26BWG: The purpose of this proposal is to reflect on Sch DB, Part D, Section 1 and the NTF the disclosure changes to SSAP No. 86 – Derivatives adopted by SAPWG. A new column 5 will be added to the schedule and the remaining columns will be renumbered. Instructions will be added for the new column 5, a column reference will be added to Column 7, and other column references to crosschecks will be adjusted. Column references to this schedule will also be adjusted on the Liability Page, Asset Page and Schedule DB Verification. Instruction language will be modified for the Note 8.A(8) disclosure (L/P/H/T).

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