The NAIC recently kicked off its Summer National Meeting, to be held virtually over the course of three weeks starting July 28, 2020, and concluding on August 14, 2020. This post will share the highlights of adoptions and other actions taken by the Statutory Accounting Principles Working Group (“SAPWG”) during the meeting, which was hosted via conference call on July 30, 2020.
The Blanks Working Group (“BWG”) did not meet during the 2020 Summer National Meeting. The next conference call to be held by the BWG will take place on August 27, 2020, and the results will be communicated thereafter.
We hope you find this short summary helpful in accelerating your determination of the impacts of the adoptions and modifications. As always, our customers can rest assured that each of the updates below will be implemented into our software according to NAIC specifications, as necessary, based upon the effective date.
The SAPWG first reviewed and adopted the following non-contested positions, which are all effective immediately unless otherwise noted. One item, Ref #2020-13, was rejected as noted below:
- Ref #2019-38: Financing Derivatives – This item adopted revisions to SSAP No. 86 – Derivatives to clarify the guidance and improve uniform application. Revisions ensure consistency through gross reporting of derivatives without the inclusion of financing components, along with the specification that amounts owed to or from the reporting entity from the acquisition or writing of derivatives should be reflected separately in the balance sheet, unless the amounts qualify under the legal right to offset.
- Ref #2020-01: Update / Remove SVO Listings – The item revises SSAP No. 26R – Bonds to eliminate references to the “NAIC Bond Fund List” and revises SSAP No. 30R – Unaffiliated Common Stock by adding reference to the “NAIC Fixed Income-Like SEC Registered Funds List”.
- Ref #2020-04: Commissioner Discretion in the Valuation Manual – This item revises SSAP No. 51R – Life Contracts, SSAP No. 52 – Deposit-Type Contracts, and SSAP No. 54R – Individual and Group Accident and Health Contracts to specify that voluntary decisions to choose one allowable reserving methodology over another should be reported as a change in valuation basis. Decisions to change reserving methodologies still require commissioner approval per the Valuation Manual.
- Ref #2020-05: Repeal of the Affordable Care Act Section 9010 Assessment – This adoption nullifies INT 18-02: ACA Section 9010 Assessment Moratoriums and the revisions supersede SSAP No. 106 – Affordable Care Act Section 9010 Assessment. To support this adoption, a Blanks proposal will be sponsored to incorporate reporting changes for 2021 reporting and recommend guidance for 2020 year-end reporting. The narrative guidance will be included on the BWG webpage.
- Ref #2020-13: Health Industry Request on 2020 Health Insurance Assessment – This item was withdrawn at the request of the original sponsor and was moved to the rejected listing.
- Ref #2020-16EP: Editorial Maintenance Update – This adoption completes various editorial revisions to SSAP No. 2R – Cash, Cash Equivalents, Drafts and Short-Term Investments to update the reporting line for cash pools and make clarifying edits.
Next, the SAPWG reviewed and adopted the following non-contested positions with minor edits:
- Ref #2019-04: SSAP No. 32 – Investment Classification Project – This item substantively revises SSAP No. 32R – Preferred Stock to update the definitions, measurement and impairment guidance for preferred stock pursuant to the investment classification project. This revision is effective January 1, 2021.
- Ref #2020-02: Accounting for Bond Tender Offers – This adoption includes revisions to SSAP No. 26R – Bonds that clarify the accounting and reporting of investment income and capital gains/losses due to early liquidation through a called bond or a tender offer should be similarly applied. This adoption is effective January 1, 2021, and early adoption is permitted.
The meeting continued with a discussion reviewing previously adopted interpretations for possible extension. The following interpretations have a comment period extending to August 14, 2020. If there are not any concerns with extensions raised during the comment period, the SAPWG plans to proceed with adopting the revised INTs with extensions to Q3 2020 via an email vote.
- Ref #INT 20-02: Extension of Ninety-Day Rule for the Impact of COVID-19
- Ref #INT 20-04: Mortgage Loan Impairment Assessment Due to COVID-19
- Ref #INT 20-05: Investment Income Due and Accrue
Two other previously adopted interpretations were discussed and will be in effect for Q3 2020, as the National Emergency related to COVID-19 will presumably not be terminated prior to August 1, 2020.
- Ref #INT 20-03: Troubled Debt Restructuring Due to COVID-19
- Ref #INT 20-07: Troubled Debt Restructuring of Certain Debt Investments Due to COVID-19
The meeting continued with a discussion reviewing the comments of exposed items. The following was adopted and is effective as of January 1, 2021:
- Ref #2020-03: Enhanced Goodwill Disclosures – The adoption revises SSAP No. 68 – Business Combinations and Goodwill to add disclosure elements for reported goodwill as well as provide additional disclosures to improve the validity and accuracy of the financial statements. A concurrent Blanks exposure, 2020-22BWG-MOD, is also expected to be adopted and effective as of January 1, 2021.
For a comprehensive list of all actions taken by the SAPWG at the 2020 Summer National Meeting, please refer to the NAIC Meeting Summary Report.
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.
Updates from prior meetings are available in Gain’s growing library of resources.