The Statutory Accounting Principles (E) Working Group is responsible for developing and adopting substantive, nonsubstantive and interpretation revisions to the NAIC Accounting Practices and Procedures Manual (AP&P Manual). The AP&P Manual provides the basis for insurers to prepare financial statements for financial regulation purposes.
Substantive statutory accounting revisions introduce original or modified accounting principles. Substantive revisions can be reflected in an existing Statement of Statutory Accounting Principles (SSAP) or a new SSAP. Nonsubstantive statutory accounting revisions are characterized as language clarifications that do not modify the original intent of a SSAP. SSAP’s are considered the highest authority (Level 1) in the statutory accounting hierarchy.
An interpretation to an existing SSAP may be developed to provide timely application, interpretation or clarification guidance. Revisions classified as an interpretation shall not amend, supersede or conflict with existing, effective SSAPs. Interpretations are considered the second highest authority (Level 2) in the statutory accounting hierarchy.
Items for consideration by the Working Group can be submitted via a SAPWG Maintenance Agenda Submission Form (Form A) to the NAIC staff support listed on this web page.
- Maintain codified statutory accounting principles by providing periodic updates to the guidance that address new statutory issues and new generally accepted accounting principles (GAAP) pronouncements as they develop.—Essential and Ongoing
- At the discretion of the chair, comment on exposed GAAP pronouncements affecting financial accounting and reporting.—Essential
- Report its findings relative to these developing issues to the Accounting Practices and Procedures (E) Task Force.—Essential
- Provide comments on issues related to evaluating and or implementing to International Financial Reporting Standards (IFRS) for possible U.S. statutory accounting use and provide input on the solvency modernization project as it relates to accounting and reporting issues.—Essential and Ongoing
- Coordinate with the Life Actuarial (A) Task Force on changes to the Accounting Practices and Procedures Manual related to the Valuation Manual VM-A, Requirements, and VM-C, Actuarial Guidelines, and other valuation manual requirements. This process will include the receipt of periodic reports on changes to the valuation manual on items that require coordination as well as the development of an accounting mechanism to address reserve volatility.—Essential and Ongoing
- Obtain, analyze and review information on permitted practices, prescribed practices or other accounting treatments suggesting that issues or trends occurring within the industry may compromise the consistency and uniformity of statutory accounting, including but not limited to activities conducted by insurers for which there is currently no statutory accounting guidance or where states have prescribed statutory accounting that differs from the guidance issued by the NAIC. Utilize this information to consider possible changes to statutory accounting.—Essential
- Develop and adopt changes to SSAP No. 86—Accounting for Derivative Instruments and Hedging Activities, with an effective date of Jan. 1, 2017, or earlier, which allow hedge accounting treatment under SSAP No. 86 for certain limited derivative contracts (e.g., interest rate hedges with counterintuitive effects) that otherwise do not meet hedge effectiveness requirements. In adopting such an allowance, consider if the requirement to meet hedge effectiveness can be replaced by some other information that demonstrates strong risk management is in place over the identified hedges.—Essential
- Finalize public disclosure on variable annuity risks as developed by the Variable Annuities Issues (E) Working Group.—Essential
- Consider whether current or future changes to reserves resulting from implementation of the Variable Annuities Framework will be reported in the Annual Statement as a “Change in basis.”—Essential
- Provide authoritative guidance on current statutory accounting issues, generally relating to application, interpretation and clarification of existing statutory accounting principles, by conducting meetings at NAIC national meeting sites and other meetings and conference calls when necessary.—Essential and Ongoing
- Evaluate individual statutory accounting issues based on its established timeline and report its findings to the Accounting Practices and Procedures (E) Task Force.—Essential and Ongoing
The following Subgroup reports to the Statutory Accounting Principles Working Group:
Statutory Accounting Principles Working Group
Last Updated: June 13, 2016
For revisions adopted by the Working Group, please refer to the Accounting Practices and Procedures Manual Updates Web page
Exposure Drafts Outstanding
Statutory Accounting Principles Working Group
Last Updated June 10, 2016
Please address comment letters to Dale Bruggeman, Chair of the Statutory Accounting Principles (E) Working Group, and direct to email@example.com, firstname.lastname@example.org, email@example.com and firstname.lastname@example.org.
*Please forward all comment letters to email@example.com, firstname.lastname@example.org, email@example.com and firstname.lastname@example.org.
||Issue Paper/ SSAP No./ Appendix
|EXPOSURES With COMMENT DEADLINE OF July 20, 2016
|SSAP No. 26
||Investment Classification Project: SVO-Identified ETFs in SSAP No. 26
||Exposed draft revisions to SSAP No. 26—Bonds to incorporate revised guidance for SVO-Identified Exchange Traded Funds (ETFs)
||SSAP No. 86
||Nonsubstantive revisions incorporate information on swaptions as an example of a derivative instrument.
||SSAP No. 51
||Change in Valuation Basis for Life Contracts
||Substantive revisions for the change in valuation basis guidance in SSAP No. 51 to reflect principal-based reserving.
|EXPOSURE With COMMENT DEADLINE OF JULY 10, 2016
||Appendix F – Policy Statement on Coordination with P&P Manual, SVO and VOSTF
||Nonsubstantive revisions propose a new policy statement detailing coordination with the P&P Manual and the Valuation of Securities (E) Task Force.