Accounting Practices and Procedures (E) Task Force
September 30, 2007

The Accounting Practices and Procedures Task Force met on Sunday, Sept. 30, 2007. During this meeting, the task force took the following actions:

Action Items (See the below for details of the actions at each group):

• Adopted the report of the Emerging Accounting Issues Working Group;
• Adopted the report of the Statutory Accounting Principles Working Group;
• Adopted the report of the Blanks Working Group.
• Adopted charges of the Accounting Practice and Procedures Task Force

Emerging Accounting Issues Working Group:

• Adopted two Consensus Positions as final:
• INT 07-02: Rejecting EITF 06-1 (Consideration Given to Manufacturers). as not applicable to statutory accounting
• INT 07-03: Adopting EITF 06-3 (Taxes Collected from Customers and Remitted) with modifications
• The Working Group exposed the following tentative positions with a Nov. 9, 2007 comment deadline:
• Adopt EITF 06-4 (Endorsement Split-Dollar Life Insurance-Deferred Compensation and Postretirement Benefits) with modifications
• Adopt EITF 06-10 (Deferred Compensation and Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life Insurance Arrangements) with modifications
• Reject FSP EITF 85-24-1 (Cash for the Right to Future Distribution Fees for Shares Previously Sold is Received)
• The Working Group referred two issues to the Statutory Accounting Principles Working Group for additional review:
• EITF 06-5 (Purchases of Life Insurance – Determining the Amount That Could Be Realized)
• Referred a question related to the goodwill after a merger under SSAP 68 (Business Combinations)

Statutory Accounting Principles Working Group:

• Adopted the following Nonsubstantive changes to:
• SSAP 55 (Unpaid Losses) to require certain quarterly disclosures and to clarify that information obtained after March 1 issuance of the financial statements should not be recorded in the audit report unless the result of an error.
• SSAP 72 (Surplus) to require certain dividend disclosures as modified during the meeting.
• SSAP 62 (P&C Reinsurance) to conform disclosure requirements on finite reinsurance to blanks changes.
• Reject FSP APB 18-1 (Equity Method Accounting upon Loss of Significant Influence), FAS 134 (Mortgage-Backed Securities Held for Sale by a Mortgage Banking Enterprise), FSP AUG AIR-1 (Planned Major Maintenance Activities), FSP FAS 143-1 (Electronic Equipment Waste Obligations), as not applicable to statutory accounting.
• Exposed the following nonsubstantive changes for comment with a Nov. 9, 2007 comment deadline:
• A dditional modifications to SSAP No. 43 (Loan Backed Securities) to clarify impairment guidance.
• Issue Paper 99, rejecting SOP 02-2 (Derivative and Hedging by Not-for-Profit Health Care Organizations), SOP No. 98-2 (Activities of Not-for-Profit Organizations -Fund Raising) and SOP No. 03-02 (Greenhouse Gas Emissions) as not applicable to statutory accounting principles.
• Modification to SSAP No. 26 (Bonds) to separately reference commercial paper
• FAS 129 (Capital Structure Disclosure) to update references to specified paragraphs
• SOP No. 97-1 (Participating Mortgage Loans Borrowers) directed staff to draft an issue paper
• Sale Leaseback of Real Estate revised wording in SSAP No. 22 (Leases) restricting gain recognition
• Exposed modifications SSAP No. 97 (Investments in SCA Entities) a fourth quarter conference call is planned.
• The Working Group received updates that the following issues are still in process:
• FIN 48 – Accounting for Uncertainty in Income Taxes Subgroup is continuing to meet
• FSP FTB 85-4-1(Life Settlement Contracts) reviewed VOSTF response and asked industry for more information.
• FAS 150 (Certain Financial Instruments)VOSTF response due in December
• Issue paper on FAS 158 (Pension and Other Postretirement Plans) is in progress. USAA provided a letter supporting of adoption of FAS 158. Interested Parties will forward a survey on pension benefits.
• Issue paper on debt securities subsequent to an other-than-temporary impairment is in progress.
• Rejected a proposal to change the service fee income of ASO and ASC Fee-for-Service Income
• Rejected a proposal to allow audited tax basis valuation for SCA entities
• Deferred modifications to SSAP No. 26 ( Bonds) pending resolution of the Blanks Working Group proposal.

Next, the Working Group reviewed any other matters:

• Discussed the Finite Re Survey and directed staff to forward the survey to the Property and Casualty Reinsurance Study Group for future reference.
• Adopted Interim meeting minutes for calls on Aug. 14, Aug. 20 and Aug. 24.
• Received interested parties’ comments on the Summer 2007 Principles Based Reserving Presentation and directed staff to draft a letter to LHATF.
• Received update on activities of the Property and Casualty Reinsurance Study Group.
• Directed staff to draft and distribute a comment letter on FASB invitation to comment on the IASB exposure draft ‘Accounting for Insurance Contracts by Insurers and for email approval.
• Received international accounting update
• Discussed letter from American Health Insurance Plans indicating areas of general agreement, and intent to develop a future blanks proposal to clarify the Annual Statement Instructions for the disclosure on extra contractual obligations.
• Requested interested parties to provide additional information on their concerns with SSAP No. 63—Underwriting Pools and Associations, Including Intercompany Pooling

Blanks Working Group:

• Adopted 11 proposals including proposals to add general interrogatories to regarding the most recent exam report, delete various categories of bonds from schedule D, add negative IMR instructions and to add various codes to schedule D.
• Exposed twelve new proposals for comment, the comment period ends Nov. 5, 2007.
• Adopted a list of editorial changes.
• Received reports from the Investment Schedules Subgroup, and the Schedule T Subgroup.