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Updates from the NAIC Statutory Accounting Principles Working Group’s (SAPWG) 2023 spring national meeting
April 20, 2023 · Authored by Daniel E. Buttke, Jeff Maffitt
The most recent article from our insurance specialists summarizes key activities of the National Association of Insurance Commissioners (NAIC) Statutory Accounting Principles (E) Working Group (SAPWG) at its interim meeting on May 16, 2023.
SAPWG discussed a variety of topics including the Inflation Reduction Act, tax credits and investments, and more.
Insurance organizations should take note of these changes as they may significantly affect their accounting in 2023 and beyond.
This report summarizes key activities of the National Association of Insurance Commissioners (NAIC) Statutory Accounting Principles (E) Working Group (SAPWG) at the 2023 Spring National Meeting.
SAPWG discussed a variety of topics including the proposed bond definition and Schedule D reporting, negative interest maintenance reserve (IMR) and the Inflation Reduction Act.
Insurance organizations should take note of these changes as they may significantly affect their accounting in 2023 and beyond.
Adopted revisions to statutory guidance
All adopted revisions to statutory guidance noted below are classified as Statutory Accounting Principle (SAP) clarifications and considered effective immediately after adoption by SAPWG, unless specifically noted otherwise.
Issue Paper No. 16X – Derivatives and Hedging
SAPWG adopted an issue paper that details the historical consideration of ASU 2017-12 within the three previously adopted agenda items noted below and their statutory revisions which were classified as new SAP concepts.
- Ref #2018-30 – Hedge Effectiveness Documentation: Adopted Nov. 15, 2018, with a Jan. 1, 2019 effective date.
- Ref #2021-20 – Effective Derivatives - ASU 2017-12: Adopted Aug. 10, 2022, with a Jan. 1, 2023 effective date (early adoption permitted).
- Ref #2022-09 – ASU 2022-01 – Fair Value Hedging – Portfolio Layer Method: Adopted Dec. 13, 2022, with a Jan. 1, 2023 effective date (early adoption permitted).
SSAP No. 25 - Affiliates and Other Related Parties
This agenda item clarifies elements which were adopted in agenda item 2021-21: Related Party Reporting. The adopted revisions clarify that any invested asset held by a reporting entity which is issued by an affiliated entity, or which includes the obligations of an affiliated entity, is an affiliated investment.
SSAP No. 100R - Fair Value
Adopted revisions to SSAP No. 100R adopt ASU 2022-03 with modification to be consistent with statutory language in the respective SSAPs. This agenda item excludes the GAAP disclosures on sales restrictions, but identifies that items restricted as to sale would be captured as restricted assets per SSAP No. 1 and be subject to admittance considerations under SSAP No. 4.
SSAP No. 34 – Investment Income Due and Accrued
This adopted agenda item, classified as SAP clarification, revises SSAP No. 34 to add additional disclosures to data capture the gross, non-admitted and admitted amounts for interest income due and to add disclosure of the cumulative amount of paid-in-kind (PIK) interest included in the current principal balance. The revisions are effective for year-end 2023 reporting. A corresponding blanks revision will be exposed at the next meeting of the Blanks (E) Working Group. The revisions in this agenda item are aggregate disclosures with the intent for a separate agenda item in the future to add investment level disclosure starting with 2025 reporting.
SSAP No. 105R – Working Capital Finance Investments
Adopted revisions to SSAP No. 105R reject ASU 2022-04 as insurance reporting entities are not the buyers (obligors) of supplier chain finance programs.
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