Date: 10/27/14
2014 Fall National Meeting
Washington, District of Columbia
ACCOUNTING PRACTICES AND PROCEDURES (E) TASK FORCE
Monday, November 17, 2014
12:00 – 1:00 p.m.
Washington Marriott Wardman Park—Thurgood Marshall Northeast—Mezzanine Level
ROLL CALL
Dave Jones, Chair
Susan L. Donegan, Vice Chair
Jim L. Ridling
Lori K. Wing-Heier
Jay Bradford
Thomas B. Leonardi
Karen Weldin Stewart
Chester A. McPherson
Kevin M. McCarty
Artemio B. Ilagan
Andrew Boron
Stephen W. Robertson
Nick Gerhart
Sandy Praeger
Sharon P. Clark
Eric A. Cioppa
Therese M. Goldsmith
Joseph G. Murphy
Annette E. Flood
Mike Rothman
California
Vermont
Alabama
Alaska
Arkansas
Connecticut
Delaware
District of Columbia
Florida
Guam
Illinois
Indiana
Iowa
Kansas
Kentucky
Maine
Maryland
Massachusetts
Michigan
Minnesota
Bruce R. Ramge
Roger A. Sevigny
Kenneth E. Kobylowski
Benjamin M. Lawsky
Wayne Goodwin
Mary Taylor
John D. Doak
Laura N. Cali
Michael F. Consedine
Ángela Weyne
Joseph Torti III
Julie Mix McPeak
Julia Rathgeber
Todd E. Kiser
Jacqueline K. Cunningham
Mike Kreidler
Michael D. Riley
Ted Nickel
Tom C. Hirsig
Nebraska
New Hampshire
New Jersey
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
Tennessee
Texas
Utah
Virginia
Washington
West Virginia
Wisconsin
Wyoming
AGENDA
1.
2.
Consider Adoption of its Minutes—Kim Hudson (CA)
• Aug. 17 Summer National Meeting Minutes
• Sept. 19 Minutes to Approve Blanks Proposal
Attachment One
Attachment Two
Consider Adoption of its Working Group Reports—Kim Hudson (CA)
• Statutory Accounting Principles (E) Working Group—Dale Bruggeman (OH)
• Blanks (E) Working Group—Jacob Garn (UT)
• Emerging Accounting Issues (E) Working Group—Jim Armstrong (IA)
Attachment Three
Attachment Four
No actions to report
3. Any Other Matters Brought Before the Task Force—Kim Hudson (CA)
4. Adjournment
NOTE: Attachments Three and Four will be posted during the Fall National Meeting.
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© 2014 National Association of Insurance Commissioners
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Attachment One
Draft Pending Adoption
Draft: 8/25/14
Accounting Practices and Procedures (E) Task Force
Louisville, Kentucky
August 17, 2014
The Accounting Practices and Procedures (E) Task Force met in Louisville, KY, Aug. 17, 2014. The following Task Force
members participated: Dave Jones, Chair, represented by Kim Hudson (CA); Jim L. Ridling represented by Richard Ford
(AL); Lori K. Wing-Heier represented by Maxine Froemling (AK); Jay Bradford represented by Mel Anderson (AR);
Thomas B. Leonardi represented by Kathryn Belfi and William Arfanis (CT); Chester A. McPherson represented by N.
Kevin Brown (DC); Karen Weldin Stewart represented by Linda Sizemore (DE); Kevin M. McCarty represented by Robin
Brown (FL); Artemio B. Ilagan represented by John Carlos (GU); Andrew Boron represented by Patrick Hyde (IL); Stephen
W. Robertson represented by Cindy Donovan (IN); Nick Gerhart represented by Jim Armstrong (IA); Sandy Praeger
represented by Ken Abitz (KS); Sharon P. Clark represented by David Hurt (KY); Joseph G. Murphy represented by John
Turchi (MA); Therese M. Goldsmith represented by Christopher Buchanan (MD); Ann Flood represented by Judy Weaver
(MI); Mike Rothman represented by Kathleen Orth (MN); Bruce R. Ramge represented by Justin Schrader (NE); Roger A.
Sevigny represented by Colin Wilkins (NH); Kenneth E. Kobylowski represented by Steve Kerner (NJ); Benjamin M.
Lawsky represented by Stephen Wiest (NY); Wayne Goodwin represented by Tony Riddick (NC); Mary Taylor represented
by Dale Bruggeman (OH); John D. Doak represented by Eli Snowbarger and Joel Sander (OK); Laura N. Cali represented by
Russell Latham (OR); Michael F. Consedine represented by Steve Johnson and Annette Szady (PA); Angela Weyne
represented by Ruben Gely (PR); Joseph Torti III represented by Jack Broccoli (RI); Julie Mix McPeak represented by Mark
Jaquish (TN); Julia Rathgeber represented by Doug Slape and Shawn Frederick (TX); Todd E. Kiser represented by Jake
Garn (UT); Jacqueline K. Cunningham represented by David Smith (VA); Mike Kreidler represented by Patrick McNaughton
(WA); Ted Nickel represented by Rebecca Easland and Tom Houston (WI); Michael D. Riley represented by Jamie Taylor
(WV); and Tom C. Hirsig represented by Linda Johnson (WY).
1.
Adopted the Report of the Statutory Accounting Principles (E) Working Group
Mr. Bruggeman provided the Aug. 16 report of the Statutory Accounting Principles (E) Working Group. The Working Group
adopted its Aug. 15, Aug. 11, July 16, June 12, June 3, June 2, May 19, May 7 and April 18 minutes, and adopted the
Restricted Asset (E) Subgroup’s July 15 and May 8 minutes.
The Working Group adopted nonsubstantive revisions to Statement of Statutory Accounting Principles (SSAP) No. 86—
Accounting for Derivative Instruments and Hedging, Income Generation and Replication (Synthetic Asset) Transactions, as
modified during the meeting, to clarify the reporting of derivatives on Schedule DB and the balance sheet.
The Working Group exposed two substantive items that request input: 1) agenda item 2013-36, which requests comments on
the proposed investment classification project discussion topics and their suggested prioritization; and 2) agenda item 201423, which requests information on the cash and non-cash transactions currently reflected in cash flow statements and
preferences on what should be included. In addition, NAIC staff was directed to conduct a confidential state survey to collect
regulator responses on the use of the cash flow statement.
The Working Group exposed the following nonsubstantive items that include revisions to statutory accounting and/or
requests for comments: 1) proposed revisions to clarify the difference between restricted assets and admitted assets, as well
as the reporting requirements for restricted assets; 2) requested comments on the need to clarify existing surplus notes
guidance and whether to revise the thresholds used when applying a statement factor for surplus note valuation; 3) requested
information on the reporting for amounts resulting from Medicare Part D and Medicare Advantage; 4) proposed revisions to
delete the disclosure for title insurance premium revenue reported on the gross all-inclusive and gross risk rate premium
basis, with corresponding revisions to the related title insurance guidance; 4) proposed revisions to include prior
interpretation guidance on extra contractual obligations and prepaid adjustment expenses; 5) proposed revisions to detail the
separate accounts disclosure categories currently captured in Note 34 including direction to NAIC staff to prepare a proposal
to the Blanks (E) Working Group to reflect corresponding language revisions; 6) proposed revisions clarifying that the RBC
authorized control level used in the annual realization threshold table for deferred tax asset (DTA) calculation is from the
RBC ratio in process of being filed; 7) proposed revisions to adopt ASU 2014-12: Accounting for Share-Based Payments
When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period with
an effective date of Jan. 1, 2016, and early adoption permitted; 8) proposed revisions to reject ASU 2014-10: Development
© 2014 National Association of Insurance Commissioners
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Attachment One
Draft Pending Adoption
Stage Entities as not applicable; and 9) proposed revisions to consolidate all rejected generally accepted accounting
principles (GAAP) guidance from INT 99-00: Compilation of Rejected EITFs into Issue Paper No. 99—Nonapplicable GAAP
Pronouncements.
The Working Group exposed two options, with proposed revisions to SSAP No. 62R—Property and Casualty Reinsurance
and requested comments on the preferred reporting between the options for when asbestos and pollution exceptions are
granted by a state. This agenda item 2014-28 has a 30-day exposure ending Sept. 16. The Working Group also agreed to
request withdrawal of the related blanks proposal 2014-15BWG.
The Working Group also exposed revisions to Appendix A-010, Minimum Reserve Standards for Individual and Group
Health Insurance Contracts and Appendix C, Actuarial Guidelines to require the 2012 Group Long-Term Disability Table
adopted by the Health Actuarial (B) Task Force and the related health actuarial guideline XLVII, with preference for a Jan. 1,
2016, effective date with early adoption permitted.
The Working Group considered comments from the Capital Adequacy (E) Task Force on agenda item 2013-17: SingleMember and Single-Asset LLCs, Underlying Asset is Real Estate and directed NAIC staff to draft guidance to move these
specific assets into SSAP No. 40—Real Estate Investments, with a caveat that this guidance might change subsequently
pursuant to decisions made under the investment classification project.
The Working Group directed NAIC staff to redraft the exposed issue paper on Accounting for the Risk-Sharing Provisions of
the Affordable Care Act to address several issues for the risk adjustment and risk corridors programs, including, but not
limited to: 1) replacing the nonadmission guidance with criteria that incorporates conservatism and sufficiency of data; 2)
removing the exposed 90-day guidance and adding language to be consistent with other government receivables; and 3)
removing a reference to a Health and Human Services (HHS) document. Input was requested from industry on balance sheet
presentation and other topics. Additional details on other issues that were reviewed are in the Working Group minutes.
The Working Group referred consideration of ASU 2014-11: Repurchase-to-Maturity Transactions, Repurchase Financings
and Disclosures to the Restricted Asset (E) Subgroup.
The Working Group reviewed an agenda item on ASU 2014-01: Accounting for Investments in Qualified Affordable Housing
Projects and directed NAIC staff to prepare revisions to SSAP No. 93—Accounting for Low Income Housing Tax Credit
Property Investments to continue a modified amortized cost methodology and gross presentation in investment income.
The Working Group received an update that the Restricted Asset (E) Subgroup is discussing repurchase agreements and has
directed NAIC staff to: 1) solicit information from states regarding long-term transactions; 2) conduct additional research on
key topics; and 3) begin drafting guidance for disclosures and short-term transactions.
The Working Group received a referral from the Principle-Based Reserving Implementation (EX) Task Force, which is
pending Executive (EX) Committee approval related to XXX/AXXX Reinsurance Framework. The referral includes charges
to develop a proposed definition for “primary security” and an audited note to financial statements.
The Working Group is not planning comment letters on current GAAP exposures.
The Working Group disbanded the SSAP No. 43R (E) Subgroup, noting that SSAP No. 43R will be included as part of the
investment classification project and discussed by the full Working Group.
The Working Group announced that comments on agenda item 2014-28 related to asbestos and pollution reinsurance are due
Sept. 16. Comments on all other exposed items and the deadline to submit new items is Oct. 17.
Upon a motion by Mr. Bruggeman, seconded by Mr. Ford, the Task Force unanimously adopted the report of the Statutory
Accounting Principles (E) Working Group (Attachment One). Mr. Hudson noted that the progress on the federal Affordable
Care Act (ACA) risk-sharing provisions issue paper, and the work of all parties involved, was encouraging.
2.
Adopted the Report of the Blanks (E) Working Group
© 2014 National Association of Insurance Commissioners
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Attachment One
Draft Pending Adoption
Mr. Garn provided the report of the Blanks (E) Working Group’s Aug. 16 meeting. The Working Group adopted its July 22
and June 17 minutes and an editorial listing. The Working Group adopted the report of the Investment Reporting (E)
Subgroup, which included its Aug. 6, June 30, June 5 and May 9 minutes.
The Working Group adopted an amendment to proposal 2014-11BWG, which had previously been adopted on its June 17
conference call, to add postal codes to certain investment schedules. The amendment was in response to concerns from
industry regarding the ability to obtain the postal code data for 2014. The changes to this proposal indicate that for lines on
annual statement Schedule BA regarding joint venture, partnership or limited liability company interests that have the
underlying characteristics of real estate unaffiliated, mortgage loans unaffiliated and mortgage loans affiliated, Life and
Fraternal companies may leave the postal code column blank for 2014 annual reporting only if information is not available.
The Working Group adopted proposal 2014-17BWG to add two footnote lines to annual statement Schedule DB, Part D,
Section 1; add a crosscheck to the instructions for the derivatives lines on the asset and liability pages; and add a reference for
the illustration.
The Working Group adopted a guidance document regarding reporting the transitional ACA reinsurance program in the
reinsurance schedules and guidance that answers frequently asked questions about structured notes.
The Working Group, at the request of the Statutory Accounting Principles (E) Working Group, agreed to withdraw the
agenda item on the asbestos and environmental reporting exception for reinsurance to allow for redrafting.
The Working Group deferred proposal 2014-18BWG to add a new Principles-Based Reserve Supplemental XXX/AXXX
Reinsurance Exhibit (Parts 1, 2 and 3) to the Life and Fraternal blank with a comment deadline of Sept. 16. In addition, a
referral of the comments received was approved for submission to the Principle-Based Reserving Implementation (EX) Task
Force for review and comment.
The Working Group exposed guidance for reporting Medicare Advantage and Medicare Part D standalone business in the
Supplemental Health Care Exhibit that is subject to the ACA medical loss ratio requirement. There will be a subsequent
blanks proposal on this issue for 2015 reporting.
Upon a motion by Mr. Garn, seconded by Ms. Donovan, the Task Force unanimously adopted the report of the Blanks (E)
Working Group (Attachment Two).
3.
Adopted its 2015 Proposed Charges
Mr. Hudson noted that the 2015 Proposed Charges of the Task Force and its working groups and subgroup were previously
distributed. The changes from the prior-year charges are shown as tracked. Mr. Hudson summarized the changes, noting that
the Blanks (E) Working Group charge for the contingent deferred annuity (CDA) definition is being deleted because it has
been completed. The changes to the charges for the Statutory Accounting Principles (E) Working Group: 1) provide a charge
for the Restricted Asset (E) Subgroup; 2) consolidate the wording related to the charges that were provided by the PrincipleBased Reserving Implementation (EX) Task Force last year; and 3) include two new charges related to principle–based
reserving (PBR), which will be formally approved by the Executive (EX) Committee at its Summer National Meeting. If
changes are required related to principle-based reserving, they will be updated subsequently. Mr. Hudson noted that these
are relatively minor changes to the 2014 charges. Upon a motion by Mr. Bruggeman, seconded by Mr. Houston, the Task
Force unanimously adopted its 2015 Proposed Charges (Attachment Three).
Having no further business, the Accounting Practices and Procedures (E) Task Force adjourned.
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Attachment Two
Draft: 10/24/14
Accounting Practices and Procedures (E) Task Force
Conference Call
September 19, 2014
The Accounting Practices and Procedures (E) Task Force met via conference call Sept. 19, 2014. The following Task Force
members participated: Dave Jones, Chair, represented by Al Bottalico and Kim Hudson (CA); Susan L. Donegan, Vice Chair,
represented by David Provost and Kaj Samsom (VT); Jim L. Ridling represented by Richard Ford (AL); Lori K. Wing-Heier
represented by Maxine Froemling (AK); Jay Bradford represented by Mel Anderson (AR); Thomas B. Leonardi represented
by William Arfanis (CT); Chester A. McPherson represented by Nathaniel Kevin Brown (DC); Karen Weldin Stewart
represented by Linda Sizemore (DE); Kevin M. McCarty represented by Robert Ballard, Sandra Dupont and Champa
Whitaker Burns (FL); Artemio B. Ilagan represented by John Carlos (GU); Andrew Boron represented by Susan Christy (IL);
Stephen W. Robertson represented by Cindy Donovan (IN); Nick Gerhart represented by Mike Yanacheak (IA); Sandy
Praeger represented by Ken Abitz (KS); Joseph G. Murphy represented by James McCarthy (MA); Therese M. Goldsmith
represented by Lynn Beckner (MD); Eric A. Cioppa and Kendra Coates (ME); Annette E. Flood represented by Dan Schaefer
(MI); Bruce R. Ramge represented by Lindsay Crawford and Amy Orth (NE); Roger A. Sevigny represented by Patricia
Gosselin (NH); Kenneth E. Kobylowski represented by Steve Kerner (NJ); Benjamin M. Lawsky represented by Stephen
Wiest (NY); Mary Taylor represented by Dale Bruggeman (OH); John D. Doak represented by John McCarter and Joel
Sander (OK); Laura N. Cali represented by Russell Latham (OR); Michael F. Consedine represented by Steve Johnson (PA);
Ángela Weyne represented by Carla Colon (PR); Joseph Torti III and Jack Broccoli (RI); Julia Rathgeber represented by
Mike Boerner and Jamie Walker (TX); Todd E. Kiser represented by Tomasz Serbinowski (UT); Jacqueline K. Cunningham
represented by David Smith (VA); Mike Kreidler represented by Patrick McNaughton, Bill Michels and Steven Drutz (WA);
Ted Nickel represented by Elena Vetrina (WI); Michael D. Riley represented by Leah Cooper (WV); and Tom C. Hirsig
represented by Linda Johnson (WY).
1.
Adopted Blanks Proposal 2014-18BWG
Mr. Hudson referred to blanks proposal 2014-18BWG as adopted by the Blanks (E) Working Group Sept. 19. He asked if
there were any issues to discuss by members, interested regulators or interested parties, but there were no responses.
Superintendent Torti made a motion, seconded by Mr. Ford, to adopt blanks proposal 2014-18BWG (Attachment A) for 2014
annual financial statement reporting. The motion was unanimously adopted.
Having no further business, the Accounting Practices and Procedures (E) Task Force adjourned.
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Attachment Three
SAPWG Report
(not yet available)
Attachment Four
BWG Report
(not yet available)