Spring Midwest IASA Conference
Ankeny, Iowa
September 17 - 18, 2015
NAIC
STATUTORY
UPDATE
September 18, 2015
Sara Cork
Statutory Accountant, StoneRiver
Agenda
• 2015 Statement Changes
• Accounting Revisions
2015
STATEMENT CHANGES
2014 Items No Longer Deferred
• Schedule A, B, BA
– Electronic columns for Postal Code, Property
Type
• Reporting was deferred in 2014 for
Property/Casualty and Health Companies
• Must report for 2015
All Statements
• Removal of bar code listing from
instructions
• Asset Page
– New Line 15.3 description
• “Accrued retrospective premiums ($____) and
contracts subject to redetermination
($____)
• Resulted from revisions to SSAP No 54 –
Individual and Group Accident and Health
Contracts
All Statements
• Cash flow
– Do not include non-cash items
– Additional disclosure on page for reporting
non-cash operating items included
– Resulted from changes to SSAP No. 69 –
Cash Flow
Notes to Financials
• Note 1D – Summary of Significant
Accounting Policies and Going Concern
– On going disclosures and Note title change
• Annual and interim statement requirement
– Revision to SSAP No. 1 – Disclosure of
Accounting Policies …..
– Also revisions to SSAPs No. 48, 68, 97
• Affiliate holdings whose audited financials indicate
substantial doubt as to ongoing concern ability
must be nonadmitted
Notes to Financials
• Note 5 Investments
– New part 5A(8) for disclosure of mortgage
loans derecognized as a result of foreclosure
• From revisions to SSAP No 37 – Mortgage Loans
– Additional 5G disclosure for low-income
housing tax credits
• Revisions to SSAP No. 93 – Accounting for Low
Income Housing Tax Credits Property Investments
Notes to Financials
Note 5J – Offsetting & Netting of Assets &
Liabilities
Notes to Financials
• Note 11 – Debt
– Crosschecks added to 11B and instructions
for 11B(2)b clarifying the inclusion of FHLB
Class A and B membership stock not eligible
for redemption
• Note 12 – Retirement
– Changes to defined benefit plan disclosure
– From revisions to SSAP No. 11 –
Postretirement Benefits and Compensated
Balances
Notes to Financials
• Note 22 – Events Subsequent
– Changes to the ACA assessment disclosure
– Adds ties to 5-Yr Historical Data
Investment Schedules
• Schedule A – Part 1
– New code to use for reporting of certain real
estate owned by a LLC meeting SSAP 40R
requirements
• Schedule D – Part 1
– New instructions for CUSIP and Description
columns
– New electronic columns for name of issuer,
issue, ISIN identification, capital structure
code
Investment Schedules
Schedule DB – Part D – Section 1
Supplemental Health Care Exhibit
• Remove aggregate 2% column; replaced
with column for Medicare Part C and D
reporting
• Clarify reporting for retrospectively rated
contracts
• Additional section for reporting of ACA
3Rs receivables
• Cautionary Statement reference added
– To be posted on Blanks website
Property/Casualty Statement
• Schedule P
– Changes in pooling agreements
• If impacts prior accident years, historical data in
Schedule P – Parts 1 thru 6 to be restated
– Use new pooling percentages
• If only impacts current/future years, no restatement
necessary
Property/Casualty Statement
• Definitions of LOBs moved to Appendix
• Cybersecurity and Identity Theft Insurance
Coverage Supplement
– Due April 1
• No Terrorism Insurance Supplement for 2015
LAH Statements
• Notes 32 and 34
– Modifications to correct inconsistencies in the
use of market value and fair value within the
instructions
– Now aligns with terminology used in SSAP
No. 56 – Separate Accounts
LAH Statement
• Changes to XXX/AXXX supplement
– Numerous instructional changes
– Previous Part 2 divided into Part 2A
(grandfathered or special exemption) and Part
2B (non-grandfathered)
Health Statement
Line 3, CY amount
should equal Gen Int
- Part 2, Line 11.4
Health Statement
• U&I – Part 2B, Line 10
– Instructions revised to provide methodology of
tying Part 2B to Exhibit 3, Health Care
Receivables
ACCOUNTING CHANGES
SSAP No. 40R
• Single-member/single-asset LLC holding
real estate
• Report on Schedule A; no longer Schedule
BA
• Not optional
• Subject to Schedule A accounting requirements
• Results in cumulative effect of accounting
change
• SSAP contains instructions for conversion of
valuation
• Effective 1/1/2015
Since March NAIC Meeting
• AP&P Manual in general
• Shortening of SSAP titles
• Revisions and technical changes to several
SSAPs to make Manual more consistent
• SSAP No. 24
• No accounting changes for extraordinary
items and discontinued operations; only
formally adopted GAAP
Since March NAIC Meeting
• SSAP No. 40R – Real Estate
• Encumbrance on wholly owned real estate
held in wholly-owned LLC not considered
risk-sharing
• SSAP No. 54 – Individual and Group A&H
Contracts
• Clarifies accounting and reporting for
•
contracts subject to redetermination
Added definition of and disclosure for charity
care
Since March Meeting
• SSAP No. 61R – LAH and Health Reins.
• New statement disclosure requirements for
XXX/AXXX reinsurance
• SSAP No. 92 and 102
• Incorporate guidance from INT 13-03 into
SSAP
• INT 13-03 clarified that the deferral option was
not intended to allow for a more favorable
surplus position related to pension or OPEB
plans
Since March Meeting
• SSAP No. 93
• Accounting for investments in qualified
affordable housing projects
• Appendix A-821
• Incorporates 2012 Individual Annuity
Mortality Table
Issue Papers Being Drafted
• SSAP No. 41 – Surplus Notes
• Revisions for valuation revisions
• SSAP Nos. 86 and 103
• Changes regarding short-sales and secured
borrowing transactions
Issue Paper Being Drafted
• SSAP No. 97 – Affiliates
•
•
•
•
Nonadmitted assets being admitted through
ownership of non-insurance SCA
Insurance SCAs having permitted or prescribed
practices that affect valuation
Are all the adjustments being made that should be
made to adjust non-stat equity to statutory basis of
accounting?
IPs – most of these items have been previously
discussed and decided; current NAIC staff
unaware because it was “before their time”
Exposed During June Call
• SSAP No. 1
• Would require disclosure of restricted assets
in quarterly
• SSAP No. 16R
• Licensing of internal-use computer software
• SSAP No. 68
• Goodwill limitation test done on individual
company level
Exposed During June Call
• SSAP No. 92 and 102
• Reject GAAP; maintain current guidance
• AP&P Manual – in general
• Remove issue papers from printed copy of
•
•
Manual
Maintain on password protected website
Remain in Manual CD-ROM format
Still Pending
• SSAP No. 62R – P&C Reinsurance
• Accounting and reporting for certain
•
asbestos and environmental reinsurance
with retroactive counterparties
Re-exposed in March, no action during June
call, revised copy exposed for comment until
9/11.
Concept Exposures • SSAP No. 26 – Bonds (not loan-backed)
1.
2.
3.
4.
5.
Definition of security
Contractual amount of principal due
Non-bond definitions
ETF analysis
Prepayment penalties & acceleration fees reported
as realized gains instead of investment income
6. Amortization guidance for continuously callable
bonds
7. Revised measurement method for bonds with
make-whole call provisions
Concept Exposures -
• SSAP No. 22
• Asks for feedback on three specific items for
sale-leaseback transactions
• SSAP No. 25
• Rejects some GAAP guidance but expands
disclosures
Concept Exposures -
• All investment schedules to be included in
•
Quarterly Statement
Disband Emerging Accounting Issues
Working Group
• Incorporate new interpretation process
Questions?
• Sara Cork
• StoneRiver Statutory Accountant
• Phone 800.373.3366 x5778
• sara.cork@stoneriverfc.com