Article
Updates from the Statutory Accounting Principles Working Group’s August 2021 virtual meeting
Sept. 7, 2021 · Authored by Daniel E. Buttke, Jeff Maffitt
This report summarizes key activities of the National Association of Insurance Commissioners (NAIC) Statutory Accounting Principles (E) Working Group (SAPWG) who met virtually on August 26, 2021 to discuss revisions to statutory accounting guidance. Our insurance Value Architects™ attended this virtual meeting to monitor regulatory updates.
SAPWG Updates
SAPWG discussed a variety of topics including levelized commissions, the proposed bond definition project, and more.
Insurance organizations should take note of these changes as they may significantly affect their accounting in 2021 and beyond.
Adopted revisions to statutory guidance
All adopted revisions to statutory guidance noted below are considered effective immediately after adoption by SAPWG unless specifically noted otherwise.
Ref #2021-04: SSAP No. 97 – Valuation of Foreign Insurance SCAs
SSAP No. 97 – Investments in Subsidiary, Controlled and Affiliated Entities and SSAP No. 48 - Joint Ventures, Partnerships and Limited Liability Companies
Nonsubstantive revisions restrict the SSAP No. 97, paragraph 9 limited statutory adjustments for foreign insurance SCAs (8.b.iv entities) and will result in a valuation floor of zero if the entity is not engaged in providing services to, or holding assets on behalf of, the U.S. insurers and to clearly indicate that the equity method valuation referenced in SSAP No. 97 can result in a negative equity valuation for SSAP No. 48 entities.
Ref #2021-10: SSAP No. 32R – Clarification of Effective Call Price
SSAP No. 32R – Preferred Stock
SAPWG adopted nonsubstantive revisions to SSAP No. 32R to clarify that the ‘effective call price’ valuation limitation, for all instruments within scope of the standard, shall only apply if the call is currently exercisable by the issuer or if the issuer has announced that the instrument will be redeemed or called.
Exposed revisions to statutory guidance
The public comment period for all exposed agenda items noted below ends October 1, 2021.
