Am Assoc of State Compensation Insurance Fund

Transcription

1 NAIC Update Am Assoc of State Compensation Insurance Fund Connie Jasper Woodroof NAIC Liaison October 4, 2012

2 Agenda 2012 Statement Accounting Activity Valuation of Securities Task Force Risk-Based Capital

3 The 2012 Statement

4 Change in Country Codes US States, Territories, & Possession continue with 2-digit postal codes Non US jurisdiction will be designated by a 3-digit code Codes found in instructions Appendix Affects Jurat, reinsurance schedules, Schedule T, Schedule Y

5 Notes to Financials General instructions for Notes Companies must use format shown in examples Examples show minimum amount of information to be disclosed, companies may enhance this information Chart indicates which Notes and/or sections are data captured

6 Notes to Financials Changes adopted for Note 9 Updated for SSAP No. 101 changes Note 20 Reflects changes to SSAP No. 100 Note 21F New inclusion of non-transferable tax credits in disclosures

7 General Interrogatories Interrogatory on letters of credit (LOCs) Revised instructions require disclosure of all LOCs not related to reinsurance where issuing or confirming bank NOT on SVO s Bank List Previous 3rd interrogatory on Sc DL PT 2 now in General Interrogatories; disclosure expanded

8 Reinsurance Schedules New line numbering to add category of certified reinsurers P&C; Schedule F Parts 3 & 4 New part added and other parts renumbered P&C; Schedule F Part 6 Sections 1 & 2 Section 1, collateral test Section 2, overdue certified amounts

9 Reinsurance Schedules Status of certified reinsurer determined by state of domicile of reporting entity New line report and new schedule part will not be used by most companies for 2012 FL, NY, NJ, IN, CT, CA, LA, PA, DE, VA adopted Only FL and NY have approved companies If contract under collateralized, penalty is booked Penalty could be more than original collateral requirement

10 Investment Schedules Fair Value Hierarchy Level and Method Used to Obtain Fair Value Code column Fair Value Hierarchy Level 1 Level 1 2 Level 2 3 Level 3 Method Codes a pricing service b stock exchange c broker/custodian d reporting entity e SVO Combine the two indicators: 1a, 2c, etc. Modified in Schedule D Added to Schedules DB, DL, A, BA

11 Investment Schedules Source Used to Obtain Fair Value Column Added to Schedules A, BA, various parts of DB and DL Change in GNMA, FNMA, FHLMC, FHLB reporting All GNMAs in US Gov t category All FNMA, FHLMC, FHLB obligations in Special Revenue Deleted bond designation suffix of SM; added bond designation suffix of S

12 Schedule D Part 1 Previous Maturity Date column now Stated Contractual Maturity Date Also Part 4 3 new electronic columns added Call Date Call Price Effective Date of Maturity

13 Specific To P&C Insurers New requirements for Actuarial Opinion Additional crosschecks Between U&I and IEE Between GT State Page and IEE

14 Accounting Activity

15 Statutory Accounting Both groups continuing to review INTs for incorporation into SSAPs and combining associated SSAPs 2000 & 2001 INT recommendations adopted 2003, 2004 & 2005 INT recommendations exposed for comment SSAPs that are revisions of another SSAP, combined into original SSAP Nos. 92 & 102 adopted Pensions and other postretirement benefits Effective 1/1/ yr transition period incorporated Early adoption allowed

16 Adopted Adopted SSAP No. 103 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities Effective 1/1/2013 Prospective application SSAP No. 104 Share-Based Payment Replaces SSAP No. 13 Stock Options and Stock Purchase Plans More nearly aligns with GAAP Adopted QA for SSAP No. 101

17 Substantive Revisions SSAP No. 77 Real Estate Sales Nullified and incorporated into SSAP No. 40 No changes in accounting Appendix A-785 Revisions for change to Credit for Reinsurance Model Law, establishing certified reinsurers

18 Nonsubstantive revisions SSAP No. 1 Excludes stress liquidity questions and templates SSAP No. 11 Postemployment Benefits and Compensation Absences GAAP guidance for Sabbatical leave SSAP No. 26 Bonds, Excluding Loan-backed and Structured Securities Delete audited disclosures for Credit Tenant Loans SSAPs No. 27 & 86 Clarifies that certain financial instruments with embedded derivatives features subject to SSAP 86, not SSAP 27

19 Nonsubstantive Revisions SSAP No. 36 Troubled Debt Restructuring GAAP clarification on whether restructuring constitutes troubled debt restructuring; new disclosures SSAPs No. 48, 68, 97 Joint Ventures, Partnerships & Limited Liability Companies Clarification of amortization of goodwill and basis difference for minority-owned interests

20 Nonsubstantive Revisions SSAP No. 86 Accounting for Derivative Instruments and Hedging Activities Definition of hedged forecasted transaction vs. fair value hedge SSAP No. 90 Account for the Impairment or Disposal on Real Estate Investments & SSAP No. 95 Exchanges of Nonmonetary Assets Moving paragraph 18 of SSAP 95 into SSAP No. 90

21 Exposed Items Discussion in November SSAP No. 1 Reference back to Note #1 in other Notes where amounts reported according to prescribed or permitted practices SSAP No. 62R Language for certified reinsurers Additional disclosures SSAP No. 65 Clarification of benefits payable under loyalty programs Clarifying guidance for extended reporting coverage issued at no additional or reduced charge

22 Exposed Items Discussion in November SSAP Nos. 64, 86, 103 Basically rejects ASU New disclosures covering the occurrence of offsetting Clarification that offsetting of derivative transactions not allowed Remove language allowing offsetting of repurchase and reverse repurchase agreements SSAP Nos. 92 and 102 Additional implementation examples Nullify INT Clarification of effective date & additional transition information if additional minimum liability

23 In the Works SSAPs No. 34 & 37 Investment Income Due & Accrued More disclosures for mortgage loans Waiting on referral response from NAIC/AICPA Working Group New SSAP to supersede SSAP No. 100 Waiting on several referral items to other groups

24 Valuation of Securities Task Force

25 Credit Rating Providers (CRP) Valuation of Securities Task Force Eased requirements for NRSROs to become CRPs (credit rating providers; new term to replace AROs) Adopted during June 26 conference call; reflected in July SVO manual C-1 Factor Review Subgroup Membership: investment regulators, RBC regulators, actuaries, industry Develop new RBC bond factors Possible new process to turn NRSRO ratings into NAIC designations

26 GNMA, FNMA, FHLMC, FHLB New handling of GNMA, FNMA, FHLMC, FHLB reporting All GNMAs in US Gov t category All FNMA, FHLMC, FHLB obligations in Special Revenue Refers to specific list for exempt RBC and AVR securities Was first reflected in July edition of SVO s Purpose and Procedures Manual Further revision coming for December edition on RBC/AVR exempt securities

27 Investments Modernize classification methodology Permits SVO to notch the NAIC designation of a security subject to classification methodology, instead of insurer to report it in a different reporting classification Applies only to SVO rated securities; not FE Working Capital Finance Investments Approved by VOSTF; referred to SAPWG to be named as admitted asset Recommended Schedule BA reporting

28 Exposed for Comment at August Meeting 45 day comment period Acceptance of audited financials from foreign issues prepared using national GAAP or national IFRS Currently must be reconciled to US GAAP or official IFRS Discussion at November NAIC meeting

29 Risk-Based Capital

30 Shared Changes Off-Balance Sheet and Other Items Deferred Tax Changes Response to first question determines factor to be used in next line. Yes = factor of.005 No = factor of.010 N/A = factor of.000

31 Shared Changes Tax Sensitivity Test Now referred to as Ex DTA ACL RBC Ratio Sensitivity Test Name change only; no change in calculation Credit Risk Reinsurance Ceded New line references to statement reinsurance schedules based on new blanks line numbering system

32 Specific Formulas PRBC Previous FIT Recoverable line eliminated Catastrophe losses proposal New columns added to Schedule P Pt 1 worksheets, requiring manual entry

33 Questions Connie Jasper Woodroof NAIC Liaison ext