Updates from the Statutory Accounting Principles Working Group’s Nov. 17 fall national meeting and NAIC/AICPA (E) Working Group

SSAP No. 34 — Investment Income Due and Accrued, SSAP No. 48 — Joint Ventures, Partnerships and Limited Liability Companies, SSAP No. 93 — Low Income Housing Tax Credit Property 

Investments and SSAP No. 94R — Transferable and Non-Transferable State Tax Credits 

During the spring 2024 meeting, SAPWG adopted, as final, agenda item 2022-14 which exposed revisions to SSAP No. 34 — Investment Income Due and Accrued, SSAP No. 48 — Joint Ventures, Partnerships and Limited Liability Companies, SSAP No. 93 — Low Income Housing Tax Credit Property Investments and SSAP No. 94R — Transferable and Non-Transferable State Tax Credits to expand and amend statutory guidance to include all tax credit investments regardless of structure and type of state or federal tax credit program, and all state and federal purchased tax credits. 

At the fall national meeting, SAPWG adopted, with modification, revisions to SSAP No. 48 — Joint Ventures, Partnerships and Limited Liability Companies, SSAP No. 93R — Investments in Tax Credit Structures and SSAP No. 94R — State and Federal Tax Credit, to be effective as of Jan. 1, 2025, most notably to incorporate feedback received from interested parties to address inconsistencies with journal entry examples in the previously adopted guidance. 

SSAP No. 101 – Income Taxes 

At the spring 2024 meeting, there were proposed revisions to SSAP No. 101 to adopt with modification ASU 2023-09 to remove disclosure of the cumulative amount of each type of temporary tax difference when a deferred tax liability is not recognized for undistributed foreign earnings and add the following disclosures: 

• Income/loss before income tax expense/benefit, disaggregated by domestic and foreign 
• Income tax expense/benefit and income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign 
• Income taxes paid (net of refunds received) to each individual jurisdiction in which income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes paid (net of refunds received) 
• Qualitative disclosures on tax rate reconciling items 

At the fall national meeting, SAPWG adopted revisions to reject Accounting Standards Update (ASU) 2023-09, Improvements to Income Tax Disclosures in SSAP No. 101 – Income Taxes, and removed the disclosure detailed in SSAP No. 101, paragraph 23b, and consolidated paragraph 23a into a single paragraph. 

SSAP No. 108—Derivatives Hedging Variable Annuity Guarantees 

At the fall national meeting, SAPWG adopted, with modification, SSAP No. 108—Derivatives Hedging Variable Annuity Guarantees, which updated the definition of a clearly defined hedging strategy (CDHS) to reflect the revised guidance pursuant to guidance adopted by the Life Actuarial (A) Task Force in 2022, in effect with the 2023 version of the Valuation Manual (VM)-01. 

At the summer national meeting, SAPWG had adopted an issue paper for the principles-based bond project. As a second action, it was recommended that SAPWG expose a Question-and-Answer Implementation Guide (Q&A) that addresses issues brought from industry to the bond/American Institute of Certified Public Accountants (AICPA) small group. This Q&A details interpretations on how the SAP guidance should be applied to specific investment structures or investment characteristics.  

On Oct. 4, 2024, the Working Group exposed (via e-vote) an updated Q&A to incorporate three additional topics including commercial mortgage-backed securities (CMBS) interest-only (IO) strips, commercial mortgage loan (CML) single asset single borrower investments (SASBs) and hybrids. With this exposure, it was identified that interested parties had not provided comment on any of the prior bond implementation questions and answers in the first exposure but had provided comment on the classification of issue papers in the statutory hierarchy. The updated Q&A included minor edits to paragraph 9.2 to eliminate this aspect from the Q&A without changing the intent of the guidance. As the discussion of an issue paper’s classification in the statutory hierarchy is broader than the Q&A, discussion of issue paper classification was noted to occur at the fall national meeting. 

At the fall national meeting, SAPWG adopted the exposed Q&A in a new interpretation to SSAP No.21 -- Other Admitted Assets and SSAP No.26 -- Bonds with edits suggested by interested parties. This was classified as level two in the hierarchy for statutory guidance as it was included as an interpretation. With respect to the hierarchy, SAPWG also directed NAIC staff to prepare an agenda item to classify issue papers in level five of the statutory hierarchy. 

The Federal Accounting Standards Board (FASB) issued ASU 2024-02, Codification Improvements —Amendments to Remove References to the Concepts Statements, which removes references to FASB concept statements from the codification. The main rationale for this amendment is to simplify the codification by removing concept statements in the guidance and drawing a clear distinction between authoritative and nonauthoritative literature. The FASB was concerned that references to concept statements would result in users incorrectly inferring that the referenced concept statements were authoritative. 

At the fall national meeting, SAPWG adopted revisions to Appendix D — Nonapplicable GAAP Pronouncements to reject ASU 2024-02, Codification Improvements — Amendments to Remove References to the Concepts Statements as not applicable to statutory accounting. This guidance is not considered relevant to the existing statutory accounting references to FASB concept statements.