Spring Midwest IASA ConferenceAnkeny, Iowa

September 17 - 18, 2015

NAIC

STATUTORY

UPDATE

September 18, 2015Sara CorkStatutory Accountant, StoneRiver

AgendaAgenda

• 2015 Statement Changes

• Accounting Revisions

2015STATEMENT 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 SchedulesInvestment 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 StatementHealth 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. 40RSSAP 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 MeetingSince 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 MeetingSince 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 MeetingSince 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 MeetingSince 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 DraftedIssue 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 DraftedIssue 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 CallExposed 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 CallExposed 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 PendingStill 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 -Concept Exposures -

• SSAP No. 26 – Bonds (not loan-backed)1. Definition of security

2. Contractual amount of principal due

3. Non-bond definitions

4. ETF analysis

5. 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 - 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 -Concept Exposures -

• All investment schedules to be included in Quarterly Statement

• Disband Emerging Accounting Issues Working Group• Incorporate new interpretation process

Questions?Questions?

• Sara Cork• StoneRiver Statutory Accountant

• Phone 800.373.3366 x5778

• sara.cork@stoneriverfc.com