2013 NAIC ANNUAL STATEMENT INSTRUCTIONS LIFE DEC 2013 REVISIONS

Transcription

1 2013 NAIC ANNUAL STATEMENT INSTRUCTIONS LIFE DEC 2013 REVISIONS PAGE 43: LIABILITIES, SURPLUS AND OTHER FUNDS Revision: Modify instruction for Details of Write-ins Aggregated at Line 25 for Liabilities Reason: Correct the name reference for SSAP No. 104 PAGE 126: Revision: Reason: NOTES TO FINANCIAL STATEMENTS Modify the instruction for Note 5D(3) SAPWG modified the disclosure language PAGE 197 & 197.1: NOTES TO FINANCIAL STATEMENTS Revision: Add disclosure Note 21for Joint and Several Liability Arrangements Reason: SAPWG adopted new disclosure for SSAP No. 5R in November PAGE 276: Asset Valuation Reserve Equity and Other Invested Asset Component Basic Contribution, Reserve Objective and Maximum Reserve Calculations Revision: Modify instruction for Lines 66 through 71 Reason: Adding words do not in reference to requirements. PAGE 307: SCHEDULE S, PART 3, SECTION 1 Revision: Modify the instruction for Column 7 Reason: Clarify which line should tie to the Exhibit of Life Insurance PAGE 413 & 414: Revision: Reason: SCHEDULE BA GENERAL INSTRUCTIONS Correct reference to Mortgage Obligations in the category line definitions Mortgage Loans now have their own lines. EDITOR S NOTE: The above changes are highlighted within the attached instructions that follow this page. Recent Blanks Working Group Agenda Items (Exposure Drafts) may be viewed in detail at the following web site: National Association of Insurance Commissioners 1

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3 Line 36 Treasury Stock, at Cost Treasury stock is the corporation s own shares that have been issued, fully paid, and reacquired by the issuing corporation but not canceled. Treasury stock is included in issued capital stock but is not part of outstanding stock. In the description the number of shares and the value in the appropriate spaces provided in Lines 36.1 and 36.2 for the current year. Cost method of accounting should determine the cost basis of treasury stock acquired. Cost of reacquired suspense shares of an employee stock ownership plan. Line 37 Surplus (including $ in Separate Accounts Statement) In the parenthetical portion of the caption, disclose the total amount of surplus funds reported on Page 3, Line 21 of the Separate Accounts Statement. Details of Write-ins Aggregated at Line 25 for Liabilities List separately each category of liability for which there is no pre-printed line on Page 3. Uncashed drafts and checks that are pending escheatment to a state. Interest paid in advance on mortgage loans, rents paid in advance and retroactive reinsurance amounts, if any. Estimated amount of rate credits to group policyholders on premiums earned to and including December 31, if not included elsewhere. Servicing liabilities as described in SSAP No. 103, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. Unearned compensation for employee stock ownership plan stock options issued and stock purchase and award plans. Refer to SSAP No. 12, Employee Stock Ownership Plans and SSAP No. 104, Share-Based Payments, for accounting guidance. Amount recorded as required by the additional minimum liability calculation with a description of additional pension liability. See SSAP No. 102, Accounting for Pensions, A Replacement of SSAP No. 89, for guidance. Exclude: Accumulations of coupons, guaranteed annual pure endowments not exceeding the annual premium and similar benefits. All voluntary and general contingency reserves, group life contingency reserves, and other special surplus funds not in the nature of liabilities. Details of Write-ins Aggregated at Line 31 for Items Other-Than-Special Surplus Funds Enter separately by category the amount of guaranty fund notes, contribution certificates, statutory deposits of alien insurers, or similar funds other than capital stock, with appropriate descriptions. The aggregate amount of all surplus notes required or which are a prerequisite for purchasing an insurance contract and are held by the policyholder should be listed as a separate item. Details of Write-ins Aggregated at Line 34 for Special Surplus Funds Enter separately only voluntary and general contingency reserves, group life contingency reserves, and other special surplus funds that are not in the nature of liabilities National Association of Insurance Commissioners 43 Revised 12/2013 L/H 2013

4 SUMMARY OF OPERATIONS The purpose of the Summary of Operations is to identify earned income, incurred disbursements, and increase in reserves, (much of which is displayed in the supporting exhibits), in order to calculate net gain from operations for the year. This summary should be completed on the accrual, i.e., earned and incurred basis. Certain items may be either positive or negative and should be entered accordingly. The various investment items of interest, rent, profit and loss, depreciation, appreciation, etc., appearing in the exhibits supporting this summary must check with the data relating to the same transactions as set forth in the appropriate schedules. Profit and loss items must be itemized. The lists of items to be included in the various lines of the Summary of Operations and supporting exhibits are not intended to exclude analogous items that are omitted from the lists. The results of an insurance entity s discontinued operations and extraordinary items shall be reported consistently with the company s reporting of continuing operations (i.e., no separate line item presentation in the balance sheet or statement of operations aggregating current and future losses from the measurement date). Include in the premium, deposit, benefit, withdrawal or other appropriate captioned lines of this Summary of Operations, all separate accounts premiums, deposits, benefit, withdrawal or other types of transactions that are transferred to or from the Separate Accounts Statement (Line 26). Such transactions are also to be reported as premiums, deposits, benefits, withdrawals or other types of transactions in the Summary of Operations of the Separate Accounts Statement. Lines 1 through 33 to agree to Analysis of Operations by Lines of Business, Lines 1 through 33, Column 1. Line 1 Premiums and Annuity Considerations for Life and Accident and Health Contracts Report premium and annuity considerations for life and accident and health contracts including experience rating refunds, assumed reinsurance and net of reinsurance ceded. Refer to SSAP No. 50, Classifications and Definitions of Insurance or Managed Care Contracts in Force, SSAP No. 51, Life Contracts, SSAP No. 52, Deposit-Type Contracts, SSAP No. 54, Individual and Group Accident and Health Contracts for life, accident and health and deposit-type contract definitions, and SSAP No. 66, Retrospectively Rated Contracts for experience rating refunds. Deduct: Exclude: Premiums and annuity considerations returned (other than cash surrender values) including amounts returned during the year due to rescission of contracts not taken, free-look provision, reformation of contract, other contractual return premium provisions, erroneously computed premiums or similar returns. Amounts attributable to uninsured accident and health plans and the uninsured portions of partially insured accident and health plans. Line 2 Considerations for Supplementary Contracts With Life Contingencies Proceeds retained at death, disability or upon surrender or maturity of policy or annuity contract to be settled by a supplementary contract involving life contingencies. Line 3 Net Investment Income Investment income earned from all forms of investments, including investment fees earned relating to uninsured plans. Dividends from SCA entities, Joint Ventures, Partnership, and Limited Liability Companies, less investment expenses, taxes (excluding federal income taxes), licenses, fees, depreciation on real estate, and other invested assets. Investment income credited to uninsured plans. Interest on borrowed money National Association of Insurance Commissioners 44 L/H 2013

5 (6) For impaired loans disclose the amounts, aggregated by type (Farm, Residential Insured, Residential All Other, Commercial Insured, Commercial All Other, Mezzanine), related to the following: Average recorded investment Interest income recognized Recorded investments on nonaccrual status pursuant to SSAP No. 34, Investment Income Due and Accrued Unless not practicable, the amount of interest income recognized using a cash-basis method of accounting during the time within that period that the loans were impaired (7) For each period for which results of operations are presented, the activity in the allowance for credit losses account, including: a. The balance in the allowance for credit losses account at the beginning of each period. b. Additions charged to operations. c. Direct write-downs charged against the allowance. d. Recoveries of amounts previously charged off. e. The balance in the allowance for credit losses account at the end of each period. (8) The policy for recognizing interest income on impaired loans, including the method for recording cash receipts. B. Debt Restructuring For restructured debt in which the reporting entity is a creditor, disclose the following: (1) The recorded investment in the loans for which impairment has been recognized in accordance with SSAP No. 36, Troubled Debt Restructuring. (2) The related realized capital loss. (3) The amount of commitments, if any, to lend additional funds to debtors owing receivables whose terms have been modified in troubled debt restructuring. (4) The creditor s income recognition policy for interest income on an impaired loan. C. Reverse Mortgages For reverse mortgages, disclose the following: (1) A description of the reporting entity s accounting policies and methods, including the statistical methods and assumptions used in calculating the reserve. (2) General information regarding the reporting entity s commitment under the agreement. (3) The reserve amount that is netted against the asset. (4) Investment income or loss recognized in the period as a result of the re-estimated cash flows National Association of Insurance Commissioners 125 L/H 2013

6 D. Loan-Backed Securities For loan-backed securities, disclose the following: (1) Descriptions of sources used to determine prepayment assumptions. (2) All securities within the scope of this statement with a recognized other-than-temporary impairment, disclosed in the aggregate, classified on the basis for the other-than-temporary impairment: Intent to sell. Inability or lack of intent to retain the investment in the security for a period of time sufficient to recover the amortized cost basis. (3) For each security, by CUSIP, with an other-than-temporary impairment, recognized in the current reporting period by the reporting entity, as the present value of cash flows expected to be collected is less than the amortized cost basis of the securities: The amortized cost basis, prior to any current-period other-than-temporary impairment. The other-than-temporary impairment recognized in earnings as a realized loss. The fair value of the security. The amortized cost basis after the current-period other-than-temporary impairment. (4) All impaired securities (fair value is less than cost or amortized cost) for which an other-than-temporary impairment has not been recognized in earnings as a realized loss (including securities with a recognized other-than-temporary impairment for non-interest related declines when a non-recognized interest related impairment remains): a. The aggregate amount of unrealized losses (that is, the amount by which cost or amortized cost exceeds fair value); and b. The aggregate related fair value of securities with unrealized losses. The disclosures in (a) and (b) above should be segregated by those securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 months or longer using fair values determined in accordance with SSAP No. 27, Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk. (5) Additional information should be included describing the general categories of information that the investor considered in reaching the conclusion that the impairments are not other-than-temporary National Association of Insurance Commissioners 126 Revised 12/2013 L/H 2013

7 (2) Number and balance of retained asset accounts in force at the end of the current year and prior year segregated within aging categories of up to 12 months, 13 to 24 months, 25 to 36 months, 37 to 48 months, 49 to 60 months, over 60 months. (3) Disclose the following segregated between individual and group contracts: Number and balance of retained asset accounts in force at the beginning of the year; Number and amount of retained asset accounts issued during the year; Investment earnings credited to retained asset accounts; Fees and other charges assessed to retained asset accounts during the year; Number and amount of retained asset accounts transferred to state unclaimed property funds; Number and amount of retained asset accounts closed/withdrawn during the year; and Number and balance of retained asset accounts in force at the end of the year. H. Offsetting and Netting of Assets and Liabilities The following quantitative information shall be disclosed (separately for assets and liabilities) when derivative, repurchase and reverse repurchase, and securities borrowing and securities lending assets and liabilities are offset and reported net in accordance with a valid right to offset per SSAP No. 64, Offsetting and Netting of Assets and Liabilities: The gross amounts of recognized assets and recognized liabilities The amounts offset in accordance with a valid right to offset per SSAP No. 64, Offsetting and Netting of Assets and Liabilities The net amounts presented in the statement of financial positions. Assets and liabilities that have a valid right to offset, but are not netted as they are prohibited under SSAP No. 64, Offsetting and Netting of Assets and Liabilities, are not required to be captured in the disclosures. I. Joint and Several Liabilities Disclose the following information for each joint and several liability arrangements accounted for under SSAP No. 5R, Liabilities, Contingencies and Impairment of Assets. If co-obligors are related parties, disclosure requirements in SSAP No. 25, Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties also apply. The nature of the arrangement including: How the liability arose. The relationship with co-obligors. The terms and conditions of the arrangements. The total outstanding amount under the arrangement, which shall not be reduced by the effect of any amounts that may be recoverable from other entities. The carrying amount, if any, of the entity s liability and the carrying amount of a receivable recognized, if any. The nature of any recourse provisions that would enable recovery from other entities of the amounts paid, including any limitations on the amounts that might be recovered. In the period the liability is initially recognized and measured or in a period the measurement changes significantly: The corresponding entry. Where the entry was recorded in the financial statements National Association of Insurance Commissioners 197 Revised 12/2013 L/H 2013

8 Illustration: A. Extraordinary Items On November, 20, the Company prepaid the holders of its % senior notes. Accordingly, the Company recorded a loss of $ related to the early retirement of debt. The loss comprised a $ million prepayment penalty and a write off of premium associated with the debt. This loss is reflected in Line of the Income Statement. B. Troubled Debt Restructuring (1) The Company has one mortgage loan payable with restructured terms. The principal changes in terms include the modification of terms from years to years and an increase in the interest rate from % to %. (2) The aggregate gain on restructuring the payable and the related income tax effect were $ and $, respectively. (3) The aggregate gain on the transfer of assets during 20 was $. (4) As of December 31, 20, the Company has $ that is considered contingently payable on the restructured loan, of which $ is included in the loan s carrying amount. The Company will be required to pay the contingent amount if its financial condition improves to the degree specified in the loan agreements. C. Other Disclosures and Unusual Items The following amounts were not represented in the financial statements as of December 31, 20X1 as they represent segregated funds held for others: Cash deposits of $ were not reported in the financial statements as of December 31, 20X1, as these deposits represented funds held in an escrow account. This is an increase of $ from the prior year December 31, 20X1 financial statements. NOTE The above is just an example of disclosing one item. The reporting entity could have more than one item to disclose National Association of Insurance Commissioners Revised 12/2013 L/H 2013

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10 D. The company received $ and $ in 20 and 20, respectively, in business interruption insurance recoveries related to flooding that occurred at the company s main administrative office in August 20. The recoveries were reported within the line item xxx on the Summary of Operations. E. State Transferable and Non-transferable Tax Credits THIS EXACT FORMAT MUST BE USED IN THE PREPARATION OF THIS NOTE FOR THE TABLE BELOW. REPORTING ENTITIES ARE NOT PRECLUDED FROM PROVIDING CLARIFYING DISCLOSURE BEFORE OR AFTER THIS ILLUSTRATION. (1) Carrying Value of Transferable and Non-transferable State Tax Credits Gross of any Related Tax Liabilities and Total Unused Transferable and Non-transferable State Tax Credits by State and in Total Description of State Transferable and Non-transferable Tax Credits State Carrying Value Unused Amount Total (2) Method of Estimating Utilization of Remaining Transferable and Non-transferable State Tax Credits The Company estimated the utilization of the remaining transferable and non-transferable state tax credits by projecting future premium taking into account policy growth and rate changes, projecting future tax liability based on projected premium, tax rates and tax credits, and comparing projected future tax liability to the availability of remaining transferable and non-transferable state tax credits. (3) Impairment Loss The Company recognized an impairment loss of $ related to the write-down as a result of impairment analysis of the carrying amount for state transferable and non-transferable tax credits. THIS EXACT FORMAT MUST BE USED IN THE PREPARATION OF THIS NOTE FOR THE TABLE BELOW. REPORTING ENTITIES ARE NOT PRECLUDED FROM PROVIDING CLARIFYING DISCLOSURE BEFORE OR AFTER THIS ILLUSTRATION. (4) State Tax Credits Admitted and Nonadmitted Total Admitted Total Nonadmitted a. Transferable b. Non-transferable National Association of Insurance Commissioners 198 L/H 2013

11 Exclude: Any investments believed by the reporting entity to possess the underlying characteristics of a preferred stock, but for which the Securities Valuation Office (SVO) has not yet affirmed that the specific BA asset (identified by CUSIP) fits in this category (as identified in the Valuation of Securities product). Until affirmed by the SVO, these investments are to be reported in Line 74 (Other Invested Assets Schedule BA) of this schedule. All surplus debentures and capital notes that do NOT possess an CRP rating equivalent to the NAIC 1 designation. These surplus debentures are to be reported in Line 74 (Other Invested Assets Schedule BA) of this schedule. Lines 39 through 54 Other Invested Assets with Underlying Characteristics of Mortgage Loans Report the book/adjusted carrying value of all Schedule BA assets owned where the characteristics of the underlying investment are similar to mortgage loans (Lines , , and ), excluding any mortgage-backed/asset-backed securities included in Lines 23 through 29 above, in Columns 1 and 4. Categorize the mortgage loans as indicated in Lines 39 through 54. Multiply the amount in Column 4 for each category by the reserve factors in Columns 5, 7 and 9, Lines 35 through 50. Report the products by category in Columns 6, 8 and 10, respectively. Lines 56 through 60 Other Invested Assets with Underlying Characteristics of Common Stocks Report the book/adjusted carrying value of all Schedule BA assets owned where the characteristics of the underlying investments are similar to common stock (Lines and ) in Columns 1 and 4. Line 59 should show all Schedule BA assets owned where the characteristics of the underlying investments are similar to subsidiary, controlled or affiliated company common stocks owned and these assets should be valued according to the Purposes and Procedures Manual of the NAIC Securities Valuation Office. Categorize these assets consistent with the directions for Page 32, Lines 1 through 4, 16 and 17. For Line 56, the reserve factor must be calculated on an individual company basis. It is equal to 13% times the beta factor as discussed in the Page 32, Line 1 instructions, and must be at least 10% but not more than 20%. Multiply the amount in Column 4 by the calculated reserve factors in Columns 5, 7 and 9 and report the products in Columns 6, 8 and 10, respectively. For Lines 57 through 60, multiply the amounts in Column 4 by the reserve factors provided in Columns 5, 7 and 9 and report the products in Columns 6, 8 and 10, respectively. Line 65 Total Other Invested Assets with Underlying Characteristics of Real Estate Report the book/adjusted carrying value of all Schedule BA assets owned where the characteristics of the underlying investment are similar to real estate (Lines and items that are not reported in AVR category of Other Invested Assets with Underlying Characteristics of Mortgage Loans) in Column 1, any related encumbrances on these assets in Column 2, and any third party encumbrances on these assets in Column 3. Report the sum of Columns 1, 2, and 3 in Column 4. Column 4 may not be less than zero. Multiply the amount in Column 4 by the reserve factors provided in Columns 5, 7 and 9 and report the products in Columns 6, 8 and 10, respectively. NOTE: Related party encumbrances are loans from the reporting entity and the amount reflected in Column 2 should be deducted in Column 2 in the corresponding section of the AVR worksheet. If the real estate entity to which the loan was made is not wholly owned by the reporting entity, the related party encumbrance amount reflected in Column 2 should be based on the reporting entity s ownership percentage. The amount of the third party encumbrances without recourse to be reflected in Column 3 is limited to the extent that the maximum reserve (Column 10) should not exceed the sum of the book/adjusted carrying value (Column 1) plus related party encumbrances (Column 2) and third party encumbrances with recourse which are included in Column National Association of Insurance Commissioners 275 L/H 2013

12 Lines 66 through 71 Low-Income Housing Tax Credit Investments Report Column 1 in accordance with SSAP No. 93, Accounting for Low Income Housing Tax Credit Property Investments. For Line 66, report guaranteed low-income housing tax credit (LIHTC) investments. There must be an all-inclusive guarantee from CRP-rated entity that guarantees the yield on the investment. Line 66 should equal Schedule BA, Part 1, Column 12, Line Line For Line 67, report non-guaranteed LIHTC investments with the following risk mitigation factors: I. A level of leverage below 50%. For LIHTC Fund, the level of leverage is measured at the fund level. II. III. There is a Tax Credit Guarantee Agreement from General Partner or managing member. This agreement requires the General Partner or managing member to reimburse investors for any shortfalls in tax credits due to errors of compliance, for the life of the partnership. For an LIHTC Fund, a Tax Credit Guarantee is required from the developers of the lower tier LIHTC properties to the upper tier partnership. There are sufficient operating reserves, capital replacement reserves and/or operating deficit guarantees present to mitigate foreseeable foreclosure risk at the time of the investment. Line 67 should equal Schedule BA, Part 1, Column 12, Line Line Only federal low-income housing tax credit investments can be reported on Lines 66 and 67. State low-income housing tax credit investments that meet the requirements of SSAP No. 93 and that at a minimum meet the requirements for federal guaranteed programs should be reported on Line 68. Line 68 should equal Schedule BA, Part 1, Column 12, Line Line State low-income housing tax credit investments that do not meet the requirements of SSAP No. 93 and that do not at a minimum meet the requirements for federal non-guaranteed programs should be reported on Line 69. Line 69 should equal Schedule BA, Part 1, Column 12, Line Line Any other low-income housing tax credit investments that meet the requirements of SSAP No. 93 and cannot be reported on Lines 66 through 69 should be reported on Line 70. Line 70 should equal Schedule BA, Part 1, Column 12, Line Line Multiply the amount in Column 4 for each category by the reserve factors for Page 34, Columns 5, 7 and 9, Lines 66 through 70. Report the products by category in Columns 6, 8 and 10, respectively. Line 72 & 73 Working Capital Finance Investments Report the book/adjusted carrying value of all working capital finance investments owned (Schedule BA, Part 1, Line ) in Columns 1 and 4. Categorize the working capital finance investments into NAIC designations 1 or 2 as directed by the Purposes and Procedures Manual of the NAIC Securities Valuation Office. Multiply the amount in Column 4 for each designation by the reserve factors provided in Columns 5, 7 and 9, and report the products by designation in Columns 6, 8 and 10, respectively National Association of Insurance Commissioners 276 Revised 12/2013 L/H 2013

13 Column 6 Type of Reinsurance Ceded Use the following abbreviations to identify the plan and type of reinsurance. For example, group coinsurance with funds withheld should be identified as COFW/G. (If there is more than one type of reinsurance in the same reinsurance company, show each type on a separate line.) NOTE: The type should be entered in all capital letters, and ALL reinsurance types must be followed by /G (for Group) or /I (for Individual). Abbreviations: I G Individual Group { All Reinsurance Types should be followed by /I or /G. REINSURANCE TYPES CO Coinsurance ACO Annuity coinsurance COFW Coinsurance with funds withheld ACOFW Annuity coinsurance with funds withheld MCO Modified coinsurance AMCO Annuity modified coinsurance MCOFW Modified coinsurance with funds withheld AMCOFW Annuity modified coinsurance with funds COMB COMBW Combination coinsurance/modified coinsurance Combination coinsurance/modified coinsurance with funds ACOMB ACOMBW withheld Annuity combination coinsurance/modified coinsurance Annuity combination coinsurance/modified coinsurance with funds withheld withheld YRT Yearly renewable term GMDB Guaranteed minimum death benefit CAT Catastrophe GMDBFW Guaranteed minimum death benefit funds withheld OTH Other reinsurance ADB Accidental death benefit DIS Disability benefits NOTE: The insurance type should be entered in all capital letters. Column 7 Amount in Force at End of Year Report the ceded amount of the basic life insurance policy only. The Total Line for the schedule should agree with Line 22 of the Exhibit of Life Insurance x For catastrophe-reinsurance (CAT), disability reinsurance (DIS), accidental death benefit reinsurance (ADB) and annuity reinsurance (ACO and AMCO), leave this column blank National Association of Insurance Commissioners 307 Revised 12/2013 L/H 2013

14 Column 8 Reserve Credit Taken Current Year Column 10 Premiums To agree with appropriate lines in Exhibit 5 and Exhibit 7. See examples for modco transactions contained in the general instructions for Schedule S. Amounts included in this column should represent reinsurance ceded premiums on an incurred basis, to agree with Line 20.3 of Exhibit 1, Part 1, Column 1 less Columns 8, 9 and 10. For deposit funds and other liabilities without life or disability contingencies, leave this column blank. Columns 11 & 12 Outstanding Surplus Relief Outstanding surplus relief means the amount of surplus not yet reported as income in Commissions and Expense Allowance on Reinsurance Ceded, in the Summary of Operations, attributable to reinsurance agreements described in SSAP No. 61, Life, Deposit-Type and Accident and Health Reinsurance. Report the amount of initial commissions and expense allowance not yet recovered by the reinsurer for the following types of treaties (individual or group): CO, ACO, MCO, AMCO, COFW, ACOFW, MCOFW, AMCOFW, COMB, ACOMB, ACOMBW AND COMBW. This column does not apply to CAT, DIS, ADB, YRT or other non-proportional reinsurance treaties. Include the outstanding surplus resulting from reinsurance of separate accounts business. Column 13 Modified Coinsurance Reserve Report the amount of reserves held under modified coinsurance contracts. Include separate accounts modified coinsurance reserves. The General Account total for Column 13 must agree with the sum of the parenthetical amounts on Page 3, Lines 1 and 3. Column 14 Funds Withheld Under Coinsurance Report the amount of funds withheld on coinsurance contracts National Association of Insurance Commissioners 308 L/H 2013

15 Mineral Rights Investments in extractive materials. Timber Deeds. Fixed or Variable Interest Rate Investments that Have the Underlying Characteristics of a Bond, Mortgage Loan or Other Fixed Income Instrument Fixed income instruments that are not corporate or governmental unit obligations (Schedule D) or secured by real property (Schedule B). For Life and Fraternal Insurers: Any investments deemed by the reporting entity to possess the underlying characteristics of a bond or other fixed income instrument which qualify for Filing Exemption or that have been reviewed and approved by the Securities Valuation Office (SVO) within this category. Exclude: For Life and Fraternal Insurers: Any investments deemed by the reporting entity to possess the underlying characteristics of a bond or other fixed income investment, but for which the Securities Valuation Office (SVO) has not yet affirmed that the specific BA investment (identified by CUSIP) fits in this category (as identified in the Valuation of Securities product). Until affirmed by the SVO, report these BA investments in the category for Any Other Class of Assets. Joint Ventures or Partnership Interests for Which the Primary Underlying Investments are Considered to Be: Fixed Income Instruments Leveraged Buy-out Fund. A fund investing in the Z strip of Collateralized Mortgage Obligations. For Life and Fraternal Insurers: Any investments deemed by the reporting entity to possess the underlying characteristics of fixed income instruments which qualify for Filing Exemption or that have been reviewed and approved by the Securities Valuation Office (SVO) within this category. Exclude: For Life and Fraternal Insurers: Any investments deemed by the reporting entity to possess the underlying characteristics of fixed income instruments, but for which the Securities Valuation Office (SVO) has not affirmed that the specific BA investment (identified by CUSIP) fits in this subcategory. Until affirmed by the SVO, report these BA investments in the Other subcategory of this category National Association of Insurance Commissioners 413 Revised 12/2013 Investments 2013

16 Common Stocks Venture Capital Funds. Real Estate Real estate development interest. Mortgage Loans Mortgage Obligations. Other Limited partnership interests in oil and gas production. Forest product partnerships. Investments within the Joint Venture and Partnership Interests category that do not qualify for inclusion in the Fixed Income Instruments, Common Stocks, Real Estate or Mortgage Loans subcategories. For Life and Fraternal Insurers: This includes investments believed by the reporting entity to have the underlying characteristics of Fixed Income Instruments but which do not qualify for Filing Exemption and have not been reviewed by the SVO, as well as those that have been reviewed by the SVO and were determined to have the underlying characteristics of Other instruments. Surplus Debentures, etc. That portion of any subordinated indebtedness, surplus debenture, surplus note, debenture note, premium income note, bond, or other contingent evidence of indebtedness that is reported in the surplus of the issuer. Collateral Loans Refer to SSAP No. 21, Other Admitted Assets, for a definition of collateral loans. In the description column, the name of the actual borrower and state if the borrower is a parent, subsidiary, affiliate, officer or director. Also include the type of collateral held. Non-collateral Loans For purposes of this section, non-collateral loans are considered the unpaid portion of loans previously made to another organization or individual in which the reporting entity has a right to receive money for the loan, but for which the reporting entity has not obtained collateral to secure the loan. Non-collateral loans shall not include those instruments that meet the definition of a bond, per SSAP No. 26, Bonds, excluding, Loan-backed and Structured Securities, a mortgage loan per SSAP No. 37, Mortgage Loans, loan-backed or structured securities per SSAP No. 43R, Loan-backed and Structured Securities, or a policy or contract loan per SSAP No. 49, Policy Loans. In the description column, the name of the actual borrower. For affiliated entities, state if the borrower is a parent, subsidiary, affiliate, officer or director. Refer to SSAP No. 20, Nonadmitted Assets and SSAP No. 25, Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties, for accounting guidance National Association of Insurance Commissioners 414 Revised 12/2013 Investments 2013