Draft: 8/23/2017 Financial Cnditin (E) Cmmittee Technical Changes Backgrund Infrmatin. At the 2009 Fall Natinal Meeting, the Natinal Assciatin f Insurance Cmmissiners (NAIC) membership apprved a new prcess fr the final adptin f technical matters cming frm the Financial Cnditin (E) Cmmittee. The new prcess was enacted t prvide these technical changes t the industry and affected parties as quickly as pssible, in an effrt t allw them mre time t mdify their systems and prcesses fr such changes. Details f Prcess Adpted 1. A list f technical items (shwn n the page(s) that fllw) will be prvided frm the Financial Cnditin (E) Cmmittee t the Executive (EX) Cmmittee and Plenary within ne week f the cmpletin f the natinal meeting. 2. The list cntains nly what the Financial Cnditin (E) Cmmittee cnsiders technical and rutine, and des nt include items that are significant by NAIC standards (e.g., it wuld nt include prpsed mdel laws, mdel regulatins r guidelines) r items cnsidered cntrversial. 3. Members f the Executive (EX) Cmmittee and Plenary have 10 days t review the attached list and vice any bjectin with respect t a specific item. 4. If n bjectins are raised n a particular item, r any f the items, each and all items will be cnsidered adpted by the Executive (EX) Cmmittee and Plenary, similar t the cnsent agenda prcess. 5. If there is an bjectin n any ne r multiple items, a jint cnference call f the Executive (EX) Cmmittee and Plenary will be scheduled t address the particular item(s). 6. Items receiving n bjectin will be cnsidered adpted and thus inserted int the apprpriate publicatin and/r made available t the industry and ther parties fr implementatin. Request fr Apprval. Under the abve prcess, the Executive (EX) Cmmittee and Plenary members are hereby requested t review the attached list and vice any bjectins t a specific item(s) by Sept. 5, 2017. Any item(s) receiving an bjectin will be pulled frm this autmatic cnsideratin, and a cnference call will be scheduled t address the issue. 2017 Natinal Assciatin f Insurance Cmmissiners 1
Financial Cnditin (E) Cmmittee Technical Changes Actin Taken During 2017 Summer Natinal Meeting Date Released t Executive (EX) Cmmittee and Plenary Members: Aug 24, 2017 Objectins Due frm Executive (EX) Cmmittee and Plenary Members: Sept 5, 2017 The fllwing technical items were adpted by the Financial Cnditin (E) Cmmittee at the 2017 Summer Natinal Meeting: 1. Accunting Practices and Prcedures Manual (AP&P Manual) Changes and Related Items Adpted the fllwing nnsubstantive revisins t statutry accunting: Statement f Statutry Accunting Principles (SSAP) N. 26R Bnds: Revisins clarify that recgnized lsses frm ther-than-temprary impairments (OTTI) shall be recrded entirely t either the asset valuatin reserve (AVR) r the interest maintenance reserve (IMR) in accrdance with the annual financial statement instructins. (Ref #2016-41) Revisins reject Accunting Standards Update (ASU) 2017-08: Premium Amrtizatin n Purchased Callable Debt Securities and retains the yield-t-wrst amrtizatin methdlgy. (Ref #2017-13) SSAP N. 37 Mrtgage Lans: Revisins clarify investments within the scpe f the SSAP, identifying that in additin t directly riginated mrtgages, the scpe als includes mrtgage lans acquired thrugh a participatin, assignment r syndicatin. (Ref #2016-39) SSAP N. 65 Prperty and Casualty Cntracts: Revisins incrprate enhanced disclsures fr highdeductible cntracts and data-capture existing disclsures. A materiality threshld was added t an existing disclsure n prfessinal emplyer rganizatins (PEOs). (Ref #2017-11) SSAP N. 69 Statement f Cash Flw: Revisins adpt ASU 2016-18: Statement f Cash Flws Restricted Cash, effective Dec. 31, 2019, with early adptin permitted. The adptin clarifies that restricted cash and cash equivalents shall nt be reprted as perating, investing r financing activities, but shall be reprted with cash and cash equivalents when recnciling beginning and ending amunts n the cash flw statement. The actin als incrprated a change t SSAP N. 1 Accunting Plicies, Risks & Uncertainties and Other Disclsures t ensure infrmatin n restricted cash, cash equivalents and shrt-term investments is reprted in the restricted asset disclsure. (Ref #2017-02) SSAP N. 101 Incme Taxes: Revisins reject ASU 2016-16: Intra-Entity Transfers f Assets Other Than Inventry. (Ref #2016-45) Appendix A-010 Minimum Reserve Standards fr Individual and Grup Health Insurance Cntracts: Revisins incrprate the 2016 Cancer Claim Cst Valuatin Table. The revisins are effective fr cntracts issued n r after Jan. 1, 2019, with early applicatin permitted fr cntracts issued n r after Jan. 1, 2018. (Ref #2017-09) Appendix D GAAP Crss-Reference t Statutry Accunting Principles: Revisins reject the fllwing generally accepted accunting principles (GAAP) guidance as nnapplicable t statutry accunting: ASU 2017-02: Clarifying When a Nt-fr-Prfit Entity That is a General Partner r a Limited Partner Shuld Cnslidate a Fr-Prfit Limited Partnership r Similar Entity. (Ref #2017-06) ASU 2017-03: Amendments t SEC Guidance. (Ref #2017-07) 2. Financial Cnditin Examiners Handbk Changes, Other Examinatin Tls and Related Items Adpted revisins t incrprate reference t the Own Risk and Slvency Assessment (ORSA) infrmatin sharing best practices dcument. 2017 Natinal Assciatin f Insurance Cmmissiners 2
Financial Cnditin (E) Cmmittee Technical Changes 3. Financial Analysis Handbk Changes and Related Items Nne. 4. Implementatin Guide fr the Annual Financial Reprting Mdel Regulatin (#205) Changes and Related Items Nne. 5. Annual Statement Instructins Changes and Related Items Adpted the fllwing changes t the financial annual statement blanks and/r instructins: 2017-01BWG Deletes the Health Prperty Supplement instructins and blank pages. Updates the Supplemental Exhibits and Schedules Interrgatries t reflect the deletin. 2017-02BWG Replaces the descriptin f Other fr Cde 4 with Nt Applicable fr clumn 34, Capital Structure Cde n Schedule D, Part 1. 2017-03BWG Mdifies the Cmmittee n Unifrm Security Identificatin Prcedures (CUSIP) clumn fr Schedule BA and Schedule DL and adds an internatinal securities identificatin number (ISIN) clumn t Schedule DL fr cnsistency with changes made t Schedule D. Adds an additinal header fr Schedule DL t identify which schedule reflects securities included in ther investment schedules and which reflects ne-line reprting. 2017-04BWG Clarificatins n current requirements fr 2017 P&C Statement f Actuarial Opinin and Actuarial Opinin Summary instructins. Fr 2017 title Statement f Actuarial Opinin instructins, the changes include incrpratin f the same changes made t the 2016 and prpsed 2017 instructins fr the P&C Statement f Actuarial Opinin. 2017-05BWG Adds clarificatin t the line f business definitins fr prperty and health fr determining which line f business t reprt riders, endrsements and flaters. Adds clarificatin t the Analysis f Operatin by Lines f Business instructins fr life, health and fraternal. 2017-06BWG Adds definitins t the prperty line f business definitins appendix in the instructins. 2017-08BWG Mdifies Statement f Actuarial Opinin Instructins t incrprate Valuatin Manual requirements. 2017-09BWG Mdifies the instructins fr the Supplemental XXX/AXXX Reinsurance Exhibit t reflect changes t the Valuatin f Life Insurance Plicies Mdel Regulatin (#830). Mdifies sme f the clumn header descriptins in Part 1. Adds additinal clumns t Part 1, Part 2A and Part 2B and remve clumns frm Part 2A and Part 2B t allw rm n the page fr the clumns added. Mdify the lines used n Part 3. 2017-10BWG Remves the definitin fr ntinal amunt frm the Schedule DB General Instructins, Schedule DB, Part A General Instructins and replaces with the definitin f ntinal amunt adpted by the Statutry Accunting Principles (E) Wrking Grup fr SSAP N. 86 Derivatives in the general instructins fr Schedule DB. Mdifies the instructin fr the Ntinal Amunt clumn fr Schedule DB, Part A and Part B. 2017-11BWG Mdifies the instructins and illustratins fr Nte 5A(4) and Nte 5A(5) t reflect additinal disclsures required by SSAP N. 37. 2017-12BWG Adds a cde t the Cde clumn t allw designatin f Securities Valuatin Office (SVO) Identified Funds fr valuatin using systematic value and make the apprpriate mdificatins t the instructins fr the Bk Adjusted/Carrying Value clumn, the Unrealized Valuatin Increase/(Decrease) clumn and the Current Year s (Amrtizatin)/Accretin clumn fr Schedule D (Part 1, Part 4 and Part 5) and Schedule DA (Part 1). 2017-13BWG Remves the repurchase agreement and reverse-repurchase agreement disclsures frm Nte 5E and adds new disclsures fr them as Nte 5F thrugh Nte 5I and renumbers the remaining Nte 5 2017 Natinal Assciatin f Insurance Cmmissiners 3
Financial Cnditin (E) Cmmittee Technical Changes disclsures accrdingly. The illustratins fr Nte 5F thrugh Nte 5I will be data-captured. Als, Nte 17B(5) and mdify Nte 17B(7) instructins t remve references t repurchase agreements and reverse-repurchase agreements. 2017-14BWG Mdifies the current illustratin fr Nte 31, High Deductibles and data-capture. Adds additinal illustratin t Nte 31 als fr data-capture. 2017-15BWG Adds additinal disclsure item t Nte 25, Change in Incurred Lsses and Lss Adjustment Expenses (life, health, prperty, fraternal and title) and Nte 32, Discunting f Liabilities fr Unpaid Lsses r Unpaid Lss Adjustment Expenses (prperty). 2017-16BWG Adds a new disclsure t Nte 14, Liabilities, Cntingencies and Assessments fr Lng-Term Care inslvencies related guaranty funds liabilities and assets and data capture the new illustratin. 2017-17BWG Adds a new line B10 t the bnd sectin f the Cash frm Investments Wrksheet in the Cash Flw Statement instructins, renumber the remaining lines in the bnd sectin (B10 and B11) and update the frmula fr the existing line B11 t reflect the line additin. 2017-18BWG Mves the ttal cunt f L (and D fr prperty) status cdes prvided fr Clumn 1 f Schedule T t ftnte and prvide in the ftnte a cunt fr each status prvided in clumn 1. Adds a crsscheck t ensure a status is prvided fr each jurisdictin n Line 1 thrugh Line 57. 2017-19BWG Adds a questin t the General Interrgatries, Part 2 t help identify insurers that assume reinsurance business cvering risks in at least tw states. Editrial changes/nn-substantive crrectins including the instructinal additin f an NAIC 2 reference t the Asset Valuatin Reserve-Equity and Other Investment Asset Cmpnent exhibit and a clarificatin fr the use f cessin ID used in the Supplemental Term and Universal Life Insurance Reinsurance Exhibit (aka XXX/AXXX Exhibit). 6. Purpses and Prcedures Manual f the NAIC Investment Analysis Office (P&P Manual) and Related Items Adpted revisins t the List f Qualified U.S. Financial Institutins t clarify hw the mnitring functin wuld be cnducted. Adpted plicy revisins fr Enhancements t the Filing Exempt (FE) Rule. Adpted revisins deleting the SVO-administered prcess fr 5*/6* certificatins. Certificatin f the 5* qualificatins will nw ccur thrugh a General Interrgatry in the annual statutry financial statements. Adpted revisins t add filing, dcumentatin and analytical methdlgy instructins fr Pwer Generatin and Renewable Energy Prjects. 7. NAIC Risk-Based Capital (RBC) Frmula Changes and Related Items Adpted R3 credit risk charge implemented frm an infrmatinal-nly page in the calculatin in the prperty/casualty (P/C) frmula fr 2018 reprting. Adpted Nn-Gvernment Mney Market Mutual Funds (MMMF) t remve the factr n the cmmn stck RBC page t avid duble cunting. Adpted the Operatinal Risk Instructins fr 2017 year-end reprting; the factr is set t zer fr 2017. Adpted the Line 4 Ex-cat factrs and Line 1 factrs fr PR017 and PR018 RBC pages. Adpted the Life instructins t crdinate Actuarial Guideline XLVIII Actuarial Opinin and Memrandum Requirements fr the Reinsurance f Plicies Required t be Valued Under Sectins 6 and 7 f the NAIC Valuatin f Life Insurance Plicies Mdel Regulatin (AG 48) and the NAIC Term and Universal Life Reserve Financing Mdel Regulatin (#787) fr guidance fr the shrtfall reflected in the authrized cntrl level. 8. Unifrm Certificate f Authrity Applicatin (UCAA) and Cmpany Licensing Best Practices Handbk and Related Items Adpted revisins t the primary applicatin instructins. 2017 Natinal Assciatin f Insurance Cmmissiners 4
Financial Cnditin (E) Cmmittee Technical Changes Adpted revisins t the crprate amendments applicatin instructins. Adpted revisins t the expansin applicatin instructins. Adpted mdificatins t the independent third-party vendr listing. Adpted frequently asked questins (FAQ) fr the pr frma financial spreadsheet. Adpted the Frm A Review Best Practices. 9. ORSA Guidance Manual and Related Items Nne. 10. Receivers Handbk fr Insurance Cmpany Inslvencies and Related Items Nne. 11. Prcess fr Develping and Maintaining the NAIC List f Qualified Jurisdictins and Related Items Nne. 12. Prcess fr Develping and Maintaining the NAIC List f Certified Reinsurers and Related Items Nne. 2017 Natinal Assciatin f Insurance Cmmissiners 5