The Statutory Accounting Principles Working Group (“SAPWG”) held a conference call on October 13, 2020, to review and discuss five non-contested positions and to hear comments and discuss the exposed SSAP No. 43R – Loan-backed and Structured Securities Issue Paper. The adoptions are summarized in this post to keep our readers abreast of what is changing as a result of the conference call.
Five items were adopted without further comment by NAIC staff, regulators, and other interested parties. The items were adopted effective immediately for all lines of business (Life/Fraternal, Property, and Health), unless otherwise noted.
- Ref #2020-31: Early Application of SSAP No. 32R – Preferred Stock – On July 30, 2020, the SAPWG adopted Issue Paper No. 164 – Preferred Stock and substantially revised SSAP No. 32R – Preferred Stock with an effective date of January 1, 2021. After adoption, in response to industry requests, the SAPWG exposed non-substantive edits to Paragraph 21 of SSAP No. 32R to allow for early adoption for year-end 2020. The revisions update definitions of preferred stock and reporting values based on characteristics of the preferred stock.
- Ref #2020-26: ASU 2015-10, Technical Corrections & Improvements – This item adopts the exposed revisions to Appendix D – Nonapplicable GAAP Pronouncements to reject ASU 2015-10, Technical Corrections & Improvements as not applicable for statutory accounting.
- Ref #2020-27: ASU 2019-09, Financial Services – Insurance; Effective Date – This item exposed revisions to Appendix D – Nonapplicable GAAP Pronouncements to reject ASU 2019-09 – Financial Services – Insurance as not applicable to statutory accounting. FASB issued ASU 2019-09 to defer the effective date of the amendments in ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts. ASU 2018-12 was previously rejected for statutory accounting.
- Ref #2020-28: ASU 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 – This item adopts the exposed revisions to reject ASU 2020-01 for statutory accounting in SSAP No. 48 – Joint Ventures, Partnerships and Limited Liability Companies, SSAP No. 86 – Derivatives and SSAP No. 97 – Investments in Subsidiary, Controlled and Affiliated Entities.
- Ref #2020-29: ASU 2020-05 – Effective Dates for Certain Entities – This item adopts the exposed revisions to Appendix D – Nonapplicable GAAP Pronouncements to reject ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 82), Effective Dates for Certain Entities as not applicable for statutory accounting.
One item was exposed with a comment deadline of December 4, 2020.
- Ref #2019-21: SSAP No. 43R – Loan-backed and Structured Securities – The SAPWG initiated discussion among interested parties and regulators on the SSAP No. 43R Issue Paper. NAIC Staff exposed and requested comments on the Iowa Insurance Division’s recommendation to consider a principle-based definition when determining which assets qualify for Schedule D, Part 1 bond treatment.
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.