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Changes to Statutory Accounting for Insurance Companies


Insurance, filingThe National Association of Insurance Commissioners (NAIC) continues to make changes to existing standards and has adopted new authoritative pronouncements that will have an impact on the reporting requirements of insurance carriers for the 2015 and 2016 year-ends. Here are some highlights we think you should be aware of as 2015 comes to a close:

Statement of Cash Flows – Non-cash Transactions and Statutory Disclosures [Changes to SSAP No. 69]

The NAIC added clarity to non-cash disclosure items pertaining to operating activities of insurance companies, for example, settling reinsurance transactions with exchange of non-cash financial assets.

Be on the lookout for anticipated changes to the NAIC instructions to assist in capturing non-cash activity. Under the revised standard, management must be aware of non-cash activities to appropriately prepare the statutory statement of cash flows and required footnotes to the financial statements.

Note: These changes are anticipated to occur in conjunction with the filer’s 2015 annual reporting requirements; however, the instructional changes to the annual statement convention blank have not yet been publicized.

Presentation of Financial Statements – Going Concern Disclosures and the Admissibility of Subsidiary Investments [Changes to SSAP 48, SSAP 68, and SSAP 97]

The adopted changes require reporting entities to assess the ability of their subsidiaries and controlled affiliates (SCA) to continue as a going concern. Under previous interpretations of the standards, insurance carriers were allowed to admit investments in SCAs on their balance sheets by fulfilling the audit requirement for the SCA. Now carriers reporting investments in SCAs must non-admit the carrying value of their investments when there is substantial doubt surrounding their ability to continue as a going concern. Accordingly, any positive goodwill associated with the subsidiary investment shall be non-admitted under the revised standards.

Management must give consideration to the overall health of subsidiary investments to avoid the reduction of surplus.

Note: Effective for reporting periods ending December 31, 2016, management will be required to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern. Disclosure requirements related to an entity’s ability will be required under adopted revisions to SSAP 1.

Classification of Mortgage Loans upon Foreclosure [Changes to SSAP 36, SSAP 37, and SSAP 40]

The revised standards clarify when a creditor shall reclassify foreclosed mortgage loans to the appropriate asset account, such as real estate or other invested assets.

Insurance companies must now evaluate the criteria established in SSAP 37 to establish the carrying value of the reclassified mortgage loan due to default and foreclosure. For mortgage loans that are government-guaranteed, Management must also determine the amount that is expected to be recovered from the guarantor. The revised standard includes additional disclosure requirements.

Single-member real estate held in an LLC – Now Reported on Schedule A [Changes to SSAP 40R and SSAP 48]:

Single-member real estate held in an LLC should be reported on Schedule A (formerly reported on schedule BA), which will have an impact on your RBC Calculations. Therefore, you will want to evaluate the impact of this change sooner rather than later on your overall RBC amount.

Alan J. Fine, CPA, JDIf you have any questions regarding these recent changes in professional literature that may affect your company, please contact Alan Fine, Partner in Charge, Insurance Services, at 314.983.1292 or

We are here to help with the implementation of the above mentioned changes and other planning needs required for year-end 2015.



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