The NAIC Gift Giving Continues...
By Jean Adams-Harris, Partner and Kia Bickel, Senior Manager, Johnson Lambert LLP

Although the holiday season is behind us, here are three of the many gifts the Statutory Accounting Principles Working Group (SAPWG) gave us during the NAIC 2016 Fall National Meeting: 

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SSAP No. 2R, Cash, Cash Equivalents, Drafts and Short-Term Investments


NAIC Ref# 2016-18 and 2016-35

This topic takes the spotlight, as the SAPWG adopted substantive revisions that classify money market mutual funds as cash equivalents and require they be reported at fair value or net asset value as a practical expedient. When this revision becomes effective on December 31, 2017, reporting entities that do not file an asset valuation reserve (AVR) will record any related unrealized gains and losses as a direct charge to surplus. Entities with an AVR will account for unrealized gains and losses in accordance with SSAP No. 7, Asset Valuation Reserve and Interest Maintenance Reserve.

SSAP No. 35R, Guaranty Fund and Other Assessments


NAIC Ref# 2016-38

The changes to this SSAP represent an important victory for many health insurers who previously couldn’t factor short-term contract renewal expectations into the determination of assets to recognize as relief against retrospective-premium-based assessments.

Effective January 1, 2017, in cases where retrospective-premium- based assessments are imposed on short-term health contracts for insolvencies of insurers that wrote long term care contracts, the affected insurers will be able to use appropriate renewal rates in the asset determination to the extent it is probable the accrued liability assessments will result in a recoverable amount in the future period.

SSAP No. 103R, Transfers and Servicing of Financial Assets and Extinguishments of Liabilities


NAIC Ref# 2016-16

Although a nonsubstantive revision, impacted entities need to be prepared to draft the newly required disclosures for repurchase and reverse repurchase agreements. Effective December 31, 2017, the following disclosures are required:

  • The strategy behind entering into such agreements
  • Whether the agreements are bilateral or tri-party trades
  • Details of the maturity time frame

Pictured Left to Right: Jean Adams-Harris, Partner and Kia Bickel, Senior Manager, Johnson Lambert LLP

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