The Statutory Accounting Principles Working Group (SAPWG) met on March 22, 2023, in Louisville, KY for the Spring National Meeting. The group adopted one new SAP concept and several SAP clarifications that will be incorporated into the Accounting Practices and Procedures Manual.
The following is a summary of the adoptions and modifications made:
The SAPWG adopted the following new SAP concept to statutory accounting guidance:
- SSAP No. 86 – Issue Paper No. 167, Derivatives and Hedging – Adoption of Issue Paper No. 167 – Derivatives and Hedging to detail the historical actions of the authoritative guidance resulting in new SAP concepts within SSAP No. 86 – Derivatives. As the statutory accounting guidance has already been adopted, the issue paper adoption is for historical documentation and does not change authoritative guidance. This new SAP concept is effective immediately (March 22, 2023).
The SAPWG adopted the following SAP clarifications to statutory accounting guidance:
- SSAP No. 25 – Affiliate Reporting Clarification – Revisions clarify that any invested asset held by a reporting entity which is issued by an affiliated entity, or which includes the obligations of an affiliated entity, is an affiliated investment. This clarification is effective immediately (March 22, 2023).
- SSAP No. 100R – ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions – Revisions adopt, with modifications (to be consistent with statutory language), the fair value measurement guidance from ASU 2022-03 to incorporate updated guidance for restricted securities for statutory accounting. The new GAAP disclosures on sales restrictions from ASU 2022-03 were not adopted. This clarification is effective immediately (March 22, 2023).
- SSAP No. 34 – Interest Income Disclosure Updated – Revisions adopt additional disclosures in SSAP No. 34 to data capture the gross, nonadmitted, and admitted amounts of interest income due and accrued, and to reflect the cumulative amount of paid-in-kind interest income included in the current principal balance. This clarification is effective December 31, 2023.
- SSAP No. 105R – ASU 2022-04, Disclosure of Supplier Finance Program Obligations – Revisions reject ASU 2022-04, Disclosure of Supplier Finance Program Obligations for statutory accounting. This clarification is effective immediately (March 22, 2023).
- Appendix C – Actuarial Guideline XLIX-A – The Application of the Life Illustrations Model Regulation to Policies with Index-Based Interest Sold (On or After December 14, 2020) – Revisions to AG 49-A intend to improve illustrations for indexed universal life (IUL) products with uncapped volatility-controlled funds and a fixed bonus. The guideline applies to policies sold on or after May 1, 2023. This clarification is effective May 1, 2023.
- Appendix C – Actuarial Guideline LIV – Nonforfeiture Requirements for Index-Linked Variable Annuity Products – The purpose of this new guideline is to specify the conditions under which an Index-Linked Variable Annuity (ILVA) is consistent with the definition of a variable annuity and exempt from Model 805 and specify nonforfeiture requirements consistent with variable annuities. The guideline applies to all contracts (including associated riders, endorsements, or amendments) issued on or after July 1, 2024. This clarification is effective July 1, 2024.
Our insurance industry advisors are available to address any questions or concerns you may have on how these SAP changes will specifically affect your organization.