Updates from the Statutory Accounting Principles Working Group’s August 2025 summer national meeting and May 2025 interim meeting

At the 2025 spring interim meeting, SAPWG adopted revisions to Issue Paper No.171 for historical records of Generally Accepted Accounting Principle (GAAP) impairment guidance which existed prior to the implementation of ASU 2016-13, Financial Instruments - Credit Losses. 

At the 2025 spring interim meeting, SAPWG adopted revisions to Statement of Statutory Accounting Principle (SSAP) No.1 to require restricted asset disclosures on a quarterly and annual basis. This agenda item also communicates support of the Blanks (E) Working Group proposal 2025-10 BWG to expand the restricted asset note disclosure to capture information, by investment schedule, of fund withheld assets that are related to/affiliated with the reinsurer. 

At the 2025 spring interim meeting, SAPWG adopted revisions to SSAP No. 84 – Health Care and Government Insured Plan Receivables to add disclosures around the Medicare Prescription Payment Program (MP3). The adoption accompanies a Blanks (E) Working Group proposal to allow for initial reporting for year-end 2025, meaning data capture should begin immediately. Key disclosure elements include balances before and after non-admission, aging and write offs. 

At the 2025 summer national meeting, SAPWG adopted revisions to INT 23-01 to extend the effective date to Dec. 31, 2026. Revisions also clarify guidance and incorporate additional requirements to admit net negative IMR, as follows:  

• Clarification on the adjusted capital and surplus calculation (from financials filed previously), with an additional cap to limit admittance to 10% of current unadjusted capital and surplus.  
• New paragraph requiring completion of the data-captured template disclosures to admit net negative IMR.  
• New paragraph requiring net negative IMR to be captured in the life principle-based reserves (PBR) calculation or asset adequacy testing using the cash flow testing methodology (AAT/CFT) pursuant to VM-20, with a requirement to prepare a reconciliation to ensure that reserves are not overstated.  
• Clarification on the derivative disclosure roll-forward and to ensure that the amount disclosed for “net negative disallowed IMR” reflects the total.  
• Revised effective date guidance to Dec. 31, 2026, with automatic nullification on Jan. 1, 2027.  

ASU 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20), Induced Conversions of Convertible Debt Instruments clarifies how to determine whether a settlement of convertible debt at terms that differ from the original conversion terms should be accounted for under the induced conversion or extinguishment guidance. Under the ASU, to account for the settlement of a convertible debt instrument as an induced conversion, an inducement offer is required to provide the debt holder with the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument. Current statutory accounting guidance requires recognition of an expense for the fair value of the additional consideration issued to induce conversion. The majority of the guidance adopted by the ASU relates to paragraphs in GAAP guidance that had previously been rejected for statutory accounting purposes. 

At the 2025 summer national meeting, SAPWG adopted revisions to clarify that the additional consideration provided by the inducement offer shall be recognized when the offer is accepted by the debt holder, including when the inducement shall be recognized as an expense by the issuer as well as the fair value measurement on that expense. This may defer slightly the recognition of the expense under SSAP No. 15 – Debt Company Obligations and Holding, but aligns with GAAP on this guidance. Aligning the recognition with the acceptance of the inducement is not expected to have a significant impact on insurers. 

At the summer national meeting, SAPWG adopted minor consistency revisions to SSAP No.51 – Life  Contracts to reflect updates to the Valuation Manual in VM-22 PBR: Requirements for Principle-Based Reserves for Non-Variable Annuities to incorporate new PBR requirements between the different methods of reserving.