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Statutory Accounting Principles (E) Working Group

The Statutory Accounting Principles (E) Working Group is responsible for developing and adopting substantive, nonsubstantive and interpretation revisions to the NAIC Accounting Practices and Procedures Manual (AP&P Manual). The AP&P Manual provides the basis for insurers to prepare financial statements for financial regulation purposes.

Substantive statutory accounting revisions introduce original or modified accounting principles. Substantive revisions can be reflected in an existing Statement of Statutory Accounting Principles (SSAP) or a new SSAP. Nonsubstantive statutory accounting revisions are characterized as language clarifications that do not modify the original intent of a SSAP. SSAPs are considered the highest authority (Level 1) in the statutory accounting hierarchy.

An interpretation to an existing SSAP may be developed to provide timely application, interpretation or clarification guidance. Revisions classified as an interpretation shall not amend, supersede or conflict with existing, effective SSAPs. Interpretations are considered the second highest authority (Level 2) in the statutory accounting hierarchy.

Items for consideration by the Working Group can be submitted via a SAPWG Maintenance Agenda Submission Form (Form A) to the NAIC support staff listed on this Web page.

2020 Proposed Charges

The Statutory Accounting Principles (E) Working Group will:

  1. Maintain codified statutory accounting principles by providing periodic updates to the guidance that address new statutory issues and new generally accepted accounting principles (GAAP) pronouncements. Provide authoritative responses to questions of application and clarifications for existing statutory accounting principles. Report all actions and provide updates to the Accounting Practices and Procedures (E) Task Force.
  2. At the discretion of the Working Group chair, develop comments on exposed GAAP and International Financial Reporting Standards (IFRS) pronouncements affecting financial accounting and reporting. Any comments are subject to review and approval by the chairs of the Accounting Practices and Procedures (E) Task Force and the Financial Condition (E) Committee.
  3. Coordinate with the Life Actuarial (A) Task Force on changes to the Accounting Practices and Procedures Manual (AP&P Manual) related to the Valuation Manual VM-A, Requirements, and VM-C, Actuarial Guidelines, as well as other Valuation Manual requirements. This process will include the receipt of periodic reports on changes to the Valuation Manual on items that require coordination.
  4. Obtain, analyze and review information on permitted practices, prescribed practices or other accounting treatments suggesting that issues or trends occurring within the industry may compromise the consistency and uniformity of statutory accounting, including, but not limited to, activities conducted by insurers for which there is currently no statutory accounting guidance or where the states have prescribed statutory accounting that differs from the guidance issued by the NAIC. Use this information to consider possible changes to statutory accounting.
  5. Review and possibly modify Schedule F and any corresponding annual financial statement pages to determine how best to reflect the expected changes to the Credit for Reinsurance Model Law (#785) and the Credit for Reinsurance Model Regulation (#786). Give due consideration to alternatives, including whether an allowance for doubtful accounts is appropriate. Complete by the 2020 Fall National Meeting.

2019 Charges

The Statutory Accounting Principles (E) Working Group will:

  1. Maintain codified statutory accounting principles by providing periodic updates to the guidance that address new statutory issues and new generally accepted accounting principles (GAAP) pronouncements. Provide authoritative responses to questions of application and clarifications for existing statutory accounting principles. Report all actions and provide updates to the Accounting Practices and Procedures (E) Task Force.
  2. At the discretion of the Working Group chair, develop comments on exposed GAAP and International Financial Reporting Standards (IFRS) pronouncements affecting financial accounting and reporting. Any comments are subject to review and approval by the chairs of the Accounting Practices and Procedures (E) Task Force and the Financial Condition (E) Committee.
  3. Coordinate with the Life Actuarial (A) Task Force on changes to the Accounting Practices and Procedures Manual (AP&P Manual) related to the Valuation Manual VM-A, Requirements, and VM-C, Actuarial Guidelines, as well as other Valuation Manual requirements. This process will include the receipt of periodic reports on changes to the Valuation Manual on items that require coordination.
  4. Obtain, analyze and review information on permitted practices, prescribed practices or other accounting treatments suggesting that issues or trends occurring within the industry may compromise the consistency and uniformity of statutory accounting, including, but not limited to, activities conducted by insurers for which there is currently no statutory accounting guidance or where the states have prescribed statutory accounting that differs from the guidance issued by the NAIC. Use this information to consider possible changes to statutory accounting.
  5. Develop specific statutory accounting guidance for certain limited derivative contracts hedging variable annuity guarantees, subject to fluctuations as a result of interest rate sensitivity, reserved for in accordance with Actuarial Guideline XLIII—CARVM for Variable Annuities (AG 43). This guidance shall place an emphasis on reducing non-economic surplus volatility for these specific hedges in situations where strong risk management is in place, with safeguards to ensure appropriate financial statement presentation and disclosures, sufficient transparency, and regulatory oversight. This charge shall be a high priority, with the earliest effective date feasible that allows for adequate development of guidance and related reporting schedules. Complete by the 2019 Summer National Meeting
  6. Consider whether current or future changes to reserves resulting from implementation of the Variable Annuities Framework will be reported in the annual financial statement as a “change in basis.” Complete by the 2019 Summer National Meeting
  7. Review and possibly modify Schedule F and any corresponding annual financial statement pages to determine how best to reflect the expected changes to the Credit for Reinsurance Model Law (#785) and the Credit for Reinsurance Model Regulation (#786). Give due consideration to alternatives, including whether an allowance for doubtful accounts is appropriate. Complete by the 2020 Fall National Meeting.
  8. Develop a model guideline that represents narrowly defined statutory language the states may use in removing the limitations that may exist within their investment statutes that may otherwise limit the extent of hedges an insurer may use in its risk management. Complete by the 2019 Fall National Meeting.

For revisions adopted by the Working Group, please refer to the Accounting Practices and Procedures Manual Updates Web page

Statutory Accounting Principles (E) Working Group

2019 Fall National Meeting
Austin Texas
Statutory Accounting Principles (E) Working Group
Saturday, December 07, 2019
9:00 AM - 11:30 AM CT

Lone Star Ballroom E - Level 3

SAPWG 1.8.2020 Call

Conference Call
Wednesday, January 08, 2020
11:00 AM ET, 10:00 AM CT, 9:00 AM MT, 8:00 AM PT
Expected Length of Call: 2 hrs

The purpose of this call is to consider comments on Agenda Item 2019-21: SSAP No. 43R – Equity Interests. As this item is being discussed on this separate call, it is not anticipated that detailed discussion on this agenda item will take place during the NAIC 2019 Fall National Meeting. Materials will be distributed when available.


Education & Training Events

Introduction to Statutory Accounting Principles Two-Week Online Self-Study Course

Related NAIC Publications

Contacts

Media Inquiries
(816) 783-8909
news@naic.org


Julie Gann
Assistant Director - Solvency Policy
816-783-8966

Robin Marcotte 
Senior Manager, Accounting Policy
816-783-8124

Jim Pinegar 
Manager II - Accounting Policy
816-783-8130

Fatima Sediqzad
Senior SCA Valuation & Accounting Policy Advisor
816-783-8894

Jake Stultz
Senior Accounting and Reinsurance Policy Advisor
816-783-8481

Please see the current Committee List for a complete list of committee members.

 

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