Emerging Accounting Issues (E) Working Group
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The Emerging Accounting Issues (E) Working Group of the Accounting Practices and Procedures (E) Task Force met Sept. 21, 2009.

During this meeting, the Working Group:

• Adopted as final the following Interpretation:
  • INT 09-05—EITF 08-3: Accounting by Lessees for Maintenance Deposits (INT 09-05) This interpretation adopts with modification EITF 08-3, and indicates that reimbursable maintenance deposit assets shall be nonadmitted for statutory accounting. When the maintenance deposit is less than probable of being returned, the deposit shall be recognized as an additional lease expense.
• Adopted as final the following Interpretation Rejecting GAAP Guidance as Not Applicable:
  • INT 09-06—EITF 08-8: Accounting for an Instrument (or an embedded feature) with a Settlement Amount That is Based on the Stock of an Entity’s Consolidated Subsidiary (INT 09-06)
• Exposed the following tentative Interpretations:
  • INT 09-07: Accounting for Re-Securitizations of Loan-backed and Structured Securities (e.g., Re-REMICS)
    The Working Group exposed a revised tentative consensus for Re-REMIC transactions, reflecting the interested parties’ proposal, as follows:

  1. To the extent consideration is received in the exchange is solely beneficial interests, the transfer does not qualify for sale treatment. If the transaction does not qualify for sale treatment, it should be evaluated under paragraph 10 of SSAP No. 91R to determine whether secured borrowing accounting would apply.
  2. A transfer of a structured security qualifying as a sale under paragraph 5 of SSAP No. 91R would result with the allocation of statutory book values of the underlying securities to the new beneficial interests created, with any gain or loss being realized by the insurer only to the extent of any beneficial interests not retained. Transfers of structured securities to an affiliate (not including a trust that is beyond the control of the insurer or its subsidiaries) shall be accounted for in accordance with SSAP No. 25. To the extent that the underlying securities are transferred to a trust that is beyond the control of the insurer and subsidiaries and 100% of the beneficial interests are retained by the insurer, no sale has occurred and the statutory book values of the underlying securities are transferred to the new beneficial interests created, with no gain or loss recognized.
  3. Re-securitization transactions where an insurer’s intent is to obtain a re-rating of asset-backed securities and to continue to hold a portion of the underlying cash flows, the re-securitization is not an intent to sell those securities for which the insurer retains beneficial interests. Once re-securitized, the beneficial interests retained shall be reviewed for impairmen

  • Statutory Accounting for Loans Received Under the Federal TALF Program
    The Working Group exposed a tentative consensus indicating that loans received and collateral provided under the TALF program do not meet the SSAP No. 64—Offsetting and Netting of Assets and Liabilities (SSAP No. 64) criteria for offset. Furthermore, no specific provisions shall be established that permit a net reporting presentation for transactions under the TALF program. This tentative consensus indicates that accounting guidance for collateral included within SSAP No. 91— Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SSAP No. 91) shall be followed. Under this guidance, the collateral shall be reported separately, on a gross basis, until time of default on the received loan. At time of default, the collateral claimed shall be removed from the balance sheet, with a corresponding reduction of the loan liability
  • Compilation of Rejected Interpretations
    The Working Group exposed a tentative consensus to remove all interpretations within Appendix B of the NAIC Accounting Practices and Procedures Manual that reject GAAP guidance as “not applicable to statutory accounting” or that “reject” GAAP guidance without providing additional statutory accounting guidance and include a listing of the rejected GAAP guidance within the new interpretation. The interpretation will be continuously updated to reflect EITFs that are rejected as considered appropriate. Reference of this new INT will replace previous references to the “rejected” interpretations on the face of impacted SSAPs.

• Conducted the following actions and discussions:
  • Electronic Prescribing Transaction Service Fees
    The Working Group deferred consideration of this agenda submission form until the Winter National Meeting
  • Interim Meeting Minutes
    The Working Group approved interim minutes from June 13, 2009.

The deadline for submission of comments and for new items is Oct. 28, 2009.