Statutory Accounting Update Ohio Chapter IASA November 24, 2014 Connie Jasper Woodroof StoneRiver, NAIC Liaison Proprietary 2014 StoneRiver, Inc. Proprietary 2014 StoneRiver, Inc. Various Issue Papers Add reference to original SSAP and current authoritative guidance on face of each Issue Paper Example: Statutory Issue Paper No. 8 - Accounting for Pensions Current Authoritative Guidance for Pensions: SSAP No. 102 This issue paper may not be directly related to the current authoritative statement. Original SSAP from Issue Paper: SSAP No. 8 Proprietary 2014 StoneRiver, Inc. SSAP Changes for FHLB Transactions • • • • • Associated SSAP changes: Nos. 1, 15, 30, 52 Establishes needed definitions including concept that FHLB stock is considered a restricted asset Disclosure as restricted asset in Note 5 Additional disclosures regarding type of FHLB stock owned, redeemability of stock, and any borrowed amounts in Note 11 Identification of individual securities involved in any FHLB lending transaction as collateral Proprietary 2014 StoneRiver, Inc. Adopted Accounting Changes • • Preamble, Appendix D, Issue Paper 99 • AICPA SOPs no longer reviewed for statutory accounting; not considered authoritative accounting guidance SSAPs No. 3 – Changes/Corrections & No. 68 – Business Combinations • Merger footnote clarification • • Proprietary 2014 StoneRiver, Inc. Mergers with shell company (reporting entity with no outstanding liabilities) exempt from prior year restatements Mid-year mergers with shell company reflected as of January 1 of current year SSAP No. 16R – EDP Equip and Software • Capitalization policy from previous SSAP No. 87 was to be incorporated into No. 16R; was missed • • Disclosure of capitalization policies was NOT limited to audited financial statements only Revisions clarify should be in both sets of financials, making consistent with other SSAPs Proprietary 2014 StoneRiver, Inc. SSAP No. 19 – F&E; SSAP No. 22 - Leases • Service concession arrangements Proprietary 2014 StoneRiver, Inc. • • • Not within the scope of SSAP No. 22 Not property, plant or equipment under SSAP No. 19 No interest from industry in developing accounting guidance for these arrangements SSAP Nos. 23 and 43R • Structured Notes • • Proprietary 2014 StoneRiver, Inc. SSAP No. 23 • • • Requires identification of structured notes Specifies not securities governed by SSAP No. 43R References definition contained in the Purposes and Procedures Manual of the NAIC Securities Valuation Office SSAP No. 43R • Language changes from structured “notes” to structured “securities” to conform to definition in Purposes and Procedures Manual of the NAIC Securities Valuation Office SSAP No. 35R • • • • Added balance disclosures for the three different types of risk provisions found in the Affordable Care Act (ACA) • Quarterly and annual statements Exposed (March) additional roll forward disclosure for comment In June exposed revisions to balance disclosures • If write A&H business but does not have anything to report, must zero-fill table, not mark as None, and provide reason for zero balances New SSAP being developed Proprietary 2014 StoneRiver, Inc. • • Will incorporate all of the above Hope to have done for year-end SSAP No. 86 - Derivatives • • Adopts ASU 2013-10 • Defines benchmark interest rate • Eliminates the prior restriction for using different benchmark rates for similar hedges • Including Fed Funds Effective Swap Rate (i.e., Overnight Index Swap Rate) Reconciliation of DB to balance sheet Proprietary 2014 StoneRiver, Inc. SSAPs Nos. 92 and 102 • Multiemployer Plans • SSAP No. 92 • • • • Proprietary 2014 StoneRiver, Inc. Adopts by reference ASC 715-80 as detailed in ASU 2011-09 with limited disclosures Current disclosure updated to indicate if current contributions are more than 5% of total contributions to the plan Additional disclosure regarding rehabilitation plans, surcharges paid, minimum future contributions, future obligations SSAP No. 102 • Same revisions as in SSAP 92 SSAP No. 97 – Investments in Subs……. • • Incorporates changes to decision tree clarifying valuation method for downstream affiliates • Does not change current accounting Modifies Appendix B (Valuation Method flowchart) to reference accounting for downstream holding companies Proprietary 2014 StoneRiver, Inc. SSAP No. 104R – Share-Based Payments • Equity-based payments to non-employees Proprietary 2014 StoneRiver, Inc. • • Adopted in 2013, but effective December 31, 2014 Adopts GAAP fair value with modifications • • • Nonadmit prepaid assets Disallows minimum value method Requires midpoint range to estimate New SSAP No. 105 • Working Capital Finance Investments Proprietary 2014 StoneRiver, Inc. • • • • • Effective 1/1/2014 Admitted assets if meet guidelines of SSAP Disclosure in Note #5 Must have SVO approval Although short-term investment, required to be reported on Schedule BA New SSAP No. 106 • Affordable Care Act Assessments Proprietary 2014 StoneRiver, Inc. • • • Effective 1/1/2014 Moved language from SSAP No. 35R to new SSAP June amendment expanded disclosure required Current Exposed Items • • Investment Classification Review • Discussion topics and prioritization Issue Paper 149 • • Proprietary 2014 StoneRiver, Inc. Revisions to SSAP No. 40 – Real Estate and SSAP No. 48 – Joint Ventures, Partnerships & Limited Liability Companies Wholly-Owned Single Real Estate Property in an LLC Currently Exposed Items • SSAP No. 1 – Disclosure of Accounting Policies, Risk and Uncertainties, and Other Disclosures and SSAP No. 4 – Asset and Nonadmitted Assets • • • Restricted assets clarification • Restricted assets does not mean nonadmitted assets SSAP No. 41 – Surplus Notes • Comments on revising thresholds SSAP No. 54 – Individual and Group Accident & Health Contracts • Proprietary 2014 StoneRiver, Inc. Medicare Advantage and Medicare Part D Risk Adjustment Premium Receivables and Payables Currently Exposed Items • • • • • SSAP No. 55 – Unpaid Claims, Losses and LAE • Extra contractual obligations & bad faith lawsuits SSAP No. 56 – Separate Accounts • Disclosure clarifications SSAP No. 57 – Title Insurance • New premium disclosure categories SSAP No. 62R - Reinsurance • Asbestos & Pollution Reinsurance Reporting Exception SSAP No. 69 – Statement of Cash Flows Proprietary 2014 StoneRiver, Inc. • Treatment of non-cash items in the Cash-Flow Statements Exposed at August Meeting • • • • SSAP No. 101 – Income Taxes • Clarification of income tax footnote SSAP No. 104R – Share-Based Payments • Adopt ASU 2014-12 Appendix A • Updates to allow the 2012 Group Long-Term Disability Table Appendix C Proprietary 2014 StoneRiver, Inc. • Health Actuarial Guideline XLVII Questions • Connie Jasper Woodroof Proprietary 2014 StoneRiver, Inc. • • • • NAIC Liaison 800.373.3366 ext 85761 connie.woodroof@stoneriver.com (until January) connie.woodroof@stoneriverfc.com