wisconsin chapter iasa statutory update · implementation ; for example, changes to jumpstart...

Wisconsin IASA

1

Wisconsin ChapterIASA

Statutory Update

September 22, 2017

Connie Jasper Woodroof

NAIC Liaison, StoneRiver

AgendaAgenda

• Statement Update• Risk-Based Capital• Other NAIC Stuff

Statement Update

Wisconsin IASA

2

JuratJurat

• Life insurance policy locator contact

• Added as electronic section to all statements; but only applicable to entities with life products

• Name, address, telephone number, email address

• Some states require signed Jurat as part NAIC filing

• Instructions on how to accommodate in General Electronic Filing Directive www.naic.org/cmte_e_app_blanks.htm

NotesNotes

• Note #1

• Additional disclosure for mandatorily convertible securities and SVO-identified funds

• From revisions to SSAP No. 26R

Note #5

• Repurchase and reverse repurchase agreements– Removed previous disclosure including what was in Note #17– New disclosures put in place (still in Note 5)

• Repurchase agreements accounted for as secured borrowings

• Reverse repurchase agreements accounted for a secured borrowings

• Repurchase agreements accounted for as a sale• Reverse repurchase agreements accounted for as a sale• Where quarterly info indicated, only need to complete 4th

quarter for 2017 year-end– Will be required in quarterly beginning 2018

• A lot of detailed information required– Revisions to SSAP No. 103R

http://www.naic.org/cmte_e_app_blanks.htm

Wisconsin IASA

3

NotesNotes

• Note #5

• Mortgage Loans – participant or co-lender (SSAP No. 37)

• Prepayment penalties & acceleration fees (SSAP No. 26R)

• Short sales (SSAP No. 103R)

• Note #12

• Defined benefit plan – funded status

NotesNotes

• Note #14 (SSAP No. 35R)

• Discount rate used for reporting long-term care (LTC) guaranty fund liabilities and assets

• Specific, separate information on LTC insolvencies and assessments

• Note #25 (SSAP No. 55)

• Significant changes in methodology and assumptions used for calculating unpaid losses and loss adjustment expenses

General Interrogatories General Interrogatories

• Self-designated 5*GI securities

• Notes to Financials #5

• Serves as company self-certification• No longer file certification with SVO

• 5*GI codes added for use in investment schedules

Wisconsin IASA

4

Investment SchedulesInvestment Schedules

• Money Market Mutual Funds (MMMFs) (SSAP Nos. 2R and 26R

• Blank and instructional changes to report all MMMFs as cash equivalents on Schedule E – Part 2

Money Market Mutual Funds (MMMFs)

• Schedule E – Part 2 – Cash Equivalents

Investment SchedulesInvestment Schedules

• Money Market Mutual Funds

• Removal from Schedule DA and Schedule D – Part 2

• CUSIP column also removed from Schedule DA

• Reclassification on Summary Investment Schedule

• Removal from Summary by Country

• Exclusion from Schedule D – Part 1A

• AVR instructions updated

Wisconsin IASA

5

Schedule DSchedule D

• Mandatory Convertible Bonds (SSAP No. 26R)

• Reported book/adjusted carrying value to be lower of amortized cost or fair value during the period prior to conversion

• Short Sale Reporting (SSAP No. 103R)

• New code – SS – added to code listing

• Instructions to Schedule D – Parts 1 and 2; Schedule DA –Part 1; Schedule E – Part 2

Schedule DSchedule D

• SVO-Identified Funds (SSAP No. 26R)• BACV equals fair value or systemic value unless

designated as qualifying security for 2018 systemic value• Systemic value can be deferred to 1/1/2018

• Use * in Code Column to identify SVO-identified funds that will use systemic value in 2018; for 2017 use measurement method used through out year

• Systemic value can be used as of 12/31/2017

• Election of systemic value irrevocable

• Can use fair value instead of systemic value

• Fair value column – report fair value or net asset value

• IMR• Holding period is weighted-average life of underlying bonds

Schedule D – Part 1Schedule D – Part 1

• Collateral Type Column

• Reduction of codes

• Capital Structure Column

• Option 4 changed from “Other” to “Not Applicable”

Wisconsin IASA

6

Schedule DBSchedule DB

• Swaptions

• “Notional” definition and instructions updated

• Both from revisions of SSAP No. 86

Schedule DLSchedule DL

Subtitle clarification

Schedule DLSchedule DL

• CUSIP Column instructions now conform to corresponding Schedule D CUSIP instructions

• Addition of International Security Identification Numbering (ISIN) Column

• Electronic only reporting column

Wisconsin IASA

7

Long-Term Care SupplementLong-Term Care Supplement

• Instructional changes for completing LTC Form 5

• Grand total page to be filed

• Added crosschecks to Columns 1, 2 and 3 to LTCForm 2, Part C and Form 3

Lines of Business (LOB)Lines of Business (LOB)

• Clarifies determining LOB reporting for riders, endorsements and floaters• If acts like a separate policy with separate premium,

deductible and limit, treat like a stand-alone policy in LOB it most nearly resembles

• If not additional premium, separate deductible or limit, report in same LOB as base policy

• In addition for LAH and Fraternal:

• Incidental benefits like permanent disability, accidental death, accidental death and dismemberment in same LOB as contracts associated with

Property/Casualty & TitleProperty/Casualty & Title

• Statement of Actuarial Opinion & Actuarial Opinion Summary

• Instructional clarifications to assist actuaries in understanding regulatory expectations.

Wisconsin IASA

8

Property/CasualtyProperty/Casualty

• Notes to Financials


• Greatly expanded disclosures for high deductibles• Applies to all lines of business


• Additional information on use of tabular discounting

Property/Casualty

• Additional LOB definitions of sublines to match P&C Uniform Product Code Matrix.

– Inland Marine

– Other Accident & Health

– Other Liability

– Write-ins

Property/Casualty

• New active status code on Schedule T

• Cybersecurity & Identity Theft Insurance Coverage Supplement

– Reorganization

– New format

Wisconsin IASA

9

2017 LAH/Fraternal/Separate Accounts Annual


• New instructions for Actuarial Opinion

• Reporting of VM-20 reserves (Principles-Based Reserves - PBR)(SSAP No. 51R)

• New line on Analysis of Increase in Reserves During Year

• Exhibit 5 – Aggregate Reserves for Life Contracts

• Five-Year Historical

• New supplement



• Variable annuities with guarantees

• Delete General Interrogatories – Part 2, 9.1 and 9.2 in LAH, 24.1 and 24.2 in Fraternal, 2.2 in SA

• Changes Actuarial Memorandum

• Add variable annuities with guarantees supplement

• Interest Maintenance Reserve (IMR)

• Holding period for SVO-identified funds designated for systemic value is weighted-average life of underlying bonds

LAH/FraternalLAH/Fraternal

• Previous Supplemental XXX/AXXX Reinsurance Exhibit

• New name “Supplemental Term and Universal Life Reinsurance Exhibit”

• New formatting and instructions

• Due date remains April 1

Wisconsin IASA

10

Other StatementsOther Statements

• Health

• Delete Property/Casualty Supplement & IEE

• Title

• Same changes made to 2016 and 2017 P/C Actuarial Opinion

Blanks Working GroupBlanks Working Group

• Combining of Fraternal and Life blanks

• An electronic only filing as of June 30 listing owned Schedule D investments

• Only 4 columns

• CUSIP, par value, book/adjusted carrying value, and fair value

• Now being debated at Financial E Committee

• Would take policy change

Risk-Based Capital

Wisconsin IASA

11

All Formulas

• All adopted proposals posted on Capital Adequacy Task Force’s website until November 1

http://www.naic.org/cmte_e_capad.htm

• Click on Related Documents tab at right

All FormulasAll Formulas

• Treatment of money market mutual funds changed to match statement changes

• Operational Risk add-on approach adopted

• 2017 Factor 0%

• Change of factor for supplemental benefits within stand-alone Medicare Part D coverage

• 50%

• Stop Loss line of business subject to a “tiered-factor” approach

PRBCPRBC

• Investment affiliates (Type 7) now with set factor of .225

• Catastrophe Risk Charge

• Now official part of formula; no longer information only

• Line 1 Underwriting Risk Factors updated

• Line 4 Underwriting Risks updated

• First time since 2010

http://www.naic.org/cmte_e_capad.htm

Wisconsin IASA

12

RBCRBC

• Life Risk-Based Capital (LRBC)

• Addition of Authorized Control Level RBC ratio

• Already disclosed in PRBC and HRBC

• Instructional changes to Primary Security Shortfall

• Only list cessions subject to AG 48

• If treaties include some AG 48 policies and some Model #787 policies, only AG 48 cessions included

• Health Risk-Based Capital (HRBC)

• Guidance for start-up companies for Excessive Growth Charge

Investment RBC Working GroupInvestment RBC Working Group

• Several projects not finalized yet

• RBC bond reporting categories

• Bond factors

• Same for all insurers? Or difference between LRBC (FRBC) and other formulas?

• Academy’s Bond Factors Report on website

• Bond size factor

• Probably maintaining current format but revising factors

• Real Estate

• Current factors too high in relation to materiality?

• ACLI proposal re-exposed for comment

Other NAIC Stuff

Wisconsin IASA

13

December NAIC Meeting

• Many groups are not meeting

• Will most likely see a big increase in the number of conference calls between August and end of the year

37

Valuation Of SecuritiesTask Force (VOSTF)

Remember -

The Purposes and Procedures Manual of the NAIC’sInvestment Analysis Office is only published annually. Adopted revisions during year posted at

http://www.naic.org/cmte_e_vos.htm

VOSTF

• Valuation guidance for SCA companies removed from SVO Manual and placed into AP&P Manual as appendix to SSAP No. 97

• Expansion of NAIC Bank List to include eligible non-banks

– Monthly publication can be found at http://www.naic.org/prod_serv_publications.htm

39

http://www.naic.org/cmte_e_vos.htm

http://www.naic.org/prod_serv_publications.htm

Wisconsin IASA

14

VOSTF• Proposed modification of FE process

– Policy changes that would allow the IAO (Investment Analysis Office) oversight of FE designations

– Five major policy change being considered

• IAO have ability to change automated FE designations

• Production of designations for Private Letter Ratings

• Resolve discrepancies between official NAIC designations and insurer’s designations

• Review of requiring rated securities to be filed with IAO

• Changes to regulatory process because of above implementation ; for example, changes to Jumpstart report

– Current target date 1/1/2018 for Private Letter Ratings; year-end 2018 for others

Other

• Group Capital Requirement Working Group

• Group Solvency Issues Working Group

• Reinsurance Task Force

• Please contact:

• Connie Jasper Woodroof

• 800.373.3366 x5761

• [email protected]

Questions? Questions?

Wisconsin IASA

15

Thank You