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Accounting Practices and Procedures Manual As of March 2010

TABLE OF CONTENTS

Statements of Statutory Accounting Principles (SSAP) - Volume I

No. 1 2 3 4 5 6 7 8 9 10 10R 11 12 13 14 15 16 17 18 19 Title Page Preamble .......................................................................................................................... P-1 Disclosure of Accounting Policies, Risks & Uncertainties, and Other Disclosures......... 1-1 Cash, Drafts, and Short-term Investments ....................................................................... 2-1 Accounting Changes and Corrections of Errors .............................................................. 3-1 Assets and Nonadmitted Assets ...................................................................................... 4-1 Liabilities, Contingencies and Impairments of Assets .................................................... 5-1 Uncollected Premium Balances, Bills Receivable for Premiums, and Amounts Due From Agents and Brokers ......................................................................................... 6-1 Asset Valuation Reserve and Interest Maintenance Reserve .......................................... 7-1 Pensions ........................................................................................................................... 8-1 Subsequent Events ........................................................................................................... 9-1 Income Taxes .................................................................................................................. 10-1 Income Taxes ­A Temporary Replacement of SSAP No. 10 ......................................... 10R-1 Postemployment Benefits and Compensated Absences .................................................. 11-1 Employee Stock Ownership Plans .................................................................................. 12-1 Stock Options and Stock Purchase Plans ........................................................................ 13-1 Postretirement Benefits Other Than Pensions ................................................................. 14-1 Debt and Holding Company Obligations ........................................................................ 15-1 Electronic Data Processing Equipment and Software ..................................................... 16-1 Preoperating and Research and Development Costs ....................................................... 17-1 Transfers and Servicing of Financial Assets and Extinguishments of Liabilities 18-1 Furniture, Fixtures and Equipment; Leasehold Improvements Paid by the Reporting Entity as Lessee; Depreciation of Property and Amortization of Leasehold Improvements............................................................................................................. 19-1 Nonadmitted Assets ......................................................................................................... 20-1 Other Admitted Assets .................................................................................................... 21-1 Leases .............................................................................................................................. 22-1 Foreign Currency Transactions and Translations ............................................................ 23-1 Discontinued Operations and Extraordinary Items ......................................................... 24-1 Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties ........................................................................................................................ 25-1 Bonds, excluding Loan-backed and Structured Securities .............................................. 26-1 Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk ................................ 27-1 Nonmonetary Transactions ............................................................................................. 28-1 Prepaid Expenses ............................................................................................................. 29-1 Investments in Common Stock (excluding investments in common stock of subsidiary, controlled, or affiliated entities) ............................................................. 30-1 Derivative Instruments .................................................................................................... 31-1

20 21 22 23 24 25 26 27 28 29 30 31

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No. 32 33 34 35 36 37 38 39 40 41 42 43R 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62R 63 64 65 66 67 68 69 70 71 72 73

74

Title Investments in Preferred Stock (including investments in preferred stock of subsidiary, controlled, or affiliated entities) .............................................................. Securitization ................................................................................................................... Investment Income Due and Accrued .............................................................................. Guaranty Fund and Other Assessments ........................................................................... Troubled Debt Restructuring ............................................................................................ Mortgage Loans ............................................................................................................... Acquisition, Development and Construction Arrangements ............................................ Reverse Mortgages ........................................................................................................... Real Estate Investments ................................................................................................... Surplus Notes ................................................................................................................... Sale of Premium Receivables ........................................................................................... Loan-backed and Structured Securities ............................................................................ Capitalization of Interest .................................................................................................. Repurchase Agreements, Reverse Repurchase Agreements and Dollar Repurchase Agreements ................................................................................................................. Investments in Subsidiary, Controlled, and Affiliated Entities ........................................ Uninsured Plans ............................................................................................................... Joint Ventures, Partnerships and Limited Liability Companies ....................................... Policy Loans ..................................................................................................................... Classifications and Definitions of Insurance or Managed Care Contracts in Force Life Contracts ................................................................................................................... Deposit-Type Contracts ................................................................................................... Property Casualty Contracts­Premiums ........................................................................... Individual and Group Accident and Health Contracts ..................................................... Unpaid Claims, Losses and Loss Adjustment Expenses .................................................. Separate Accounts ............................................................................................................ Title Insurance .................................................................................................................. Mortgage Guaranty Insurance .......................................................................................... Credit Life and Accident and Health Insurance Contracts................................................ Financial Guaranty Insurance .......................................................................................... Life, Deposit-Type and Accident and Health Reinsurance .............................................. Property and Casualty Reinsurance ................................................................................. Underwriting Pools and Associations Including Intercompany Pools ............................. Offsetting and Netting of Assets and Liabilities .............................................................. Property and Casualty Contracts ...................................................................................... Retrospectively Rated Contracts ...................................................................................... Other Liabilities ............................................................................................................... Business Combinations and Goodwill ............................................................................. Statement of Cash Flow ................................................................................................... Allocation of Expenses .................................................................................................... Policy Acquisition Costs and Commissions ..................................................................... Surplus and Quasi-reorganizations .................................................................................. Health Care Delivery Assets - Supplies, Pharmaceuticals and Surgical Supplies, Durable Medical Equipment, Furniture, Medical Equipment and Fixtures, and Leasehold Improvements in Health Care Facilities .................................................... Accounting for the Issuance of Insurance-Linked Securities Issued by a Property and Casualty Insurer through a Protected Cell ..................................................................

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No. 75 76 77 78 79 80

81 82 83 84 85 86 87 88 89 90 91R 92 93 94 95 96

97 98 99 100

Title Reinsurance Deposit Accounting - An Amendment to SSAP No. 62R, Property and Casualty Reinsurance............................................................................................... Reporting on the Costs of Start-Up Activities ................................................................. Real Estate Sales ­ An Amendment to SSAP No. 40, Real Estate Investments .............. Multiple Peril Crop Insurance .......................................................................................... Depreciation of Nonoperating System Software ­ An Amendment to SSAP No. 16-- Electronic Data Processing Equipment and Software.............................................. Life Contracts, Deposit-Type Contracts and Separate Accounts, Amendments to SSAP No. 51 ­ Life Contracts, SSAP No. 52 ­ Deposit-Type Contracts, and SSAP No. 56 ­ Separate Accounts .......................................................................... Software Revenue Recognition ........................................................................................ Accounting for the Costs of Computer Software Developed or Obtained for Internal Use and Web Site Development Costs .................................................................... Mezzanine Real Estate Loans ......................................................................................... Certain Health Care Receivables and Receivables Under Government Insured Plans .. Claim Adjustment Expenses, Amendments to SSAP No. 55--Unpaid Claims, Losses and Loss Adjustment Expenses ............................................................................... Accounting for Derivative Instruments and Hedging, Income Generation, and Replication (Synthetic Asset) Transactions ............................................................. Capitalization Policy, An Amendment to SSAP Nos. 4, 19, 29, 73, 79 and 82 ............... Investments in Subsidiary, Controlled and Affiliated Entities, A Replacement of SSAP No. 46 ............................................................................................................ Accounting for Pensions, A Replacement of SSAP No. 8 ............................................... Accounting for the Impairment or Disposal of Real Estate Investments ......................... Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities ................................................................................................................ Not included in Manual as further discussion is planned. ............................................... Accounting for Low Income Housing Tax Credit Property Investments ........................ Accounting for Transferable State Tax Credits ................................................................ Exchanges of Nonmonetary Assets, A Replacement of SSAP No. 28--Nonmonetary Transactions ............................................................................................................. Settlement Requirements for Intercompany Transactions, An Amendment to SSAP No. 25--Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties ............................................................................................... Investments in Subsidiary, Controlled and Affiliated Entities, A Replacement of SSAP No. 88 ............................................................................................................ Treatment of Cash Flows When Quantifying Changes in Valuation and Impairments, an Amendment of SSAP No. 43 ............................................................................. Accounting for Certain Securities Subsequent to an Other-Then-Temporary Impairment............................................................................................................... Fair Value Measurements ................................................................................................

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96-1 97-1 98-1 99-1 100-1 Page 1 Page 15

INDEX to Statements of Statutory Accounting Principles - Volume I ...................................

GLOSSARY to Statements of Statutory Accounting Principles - Volume I ..........................

© 1999-2010 National Association of Insurance Commissioners

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Appendix A ­ Excerpts of NAIC Model Laws ­ Volume I

No. A-001 A-010 A-200 A-205 Title Investments of Reporting Entities ..................................................................................... Minimum Reserve Standards for Individual and Group Health Insurance Contracts ........ Separate Accounts Funding Guaranteed Minimum Benefits Under Group Contracts ....... Illustrative Disclosure of Differences Between NAIC Statutory Accounting Practices and Procedures and Accounting Practices Prescribed or Permitted by the State of Domicile ....................................................................................................................... Managing General Agents ................................................................................................. Interest-Indexed Annuity Contracts .................................................................................. Variable Annuities ............................................................................................................. Modified Guaranteed Annuities ........................................................................................ Variable Life Insurance ..................................................................................................... Insurance Holding Companies .......................................................................................... Universal Life Insurance ................................................................................................... Modified Guaranteed Life Insurance ................................................................................. Accelerated Benefits .......................................................................................................... Title Insurance ................................................................................................................... Mortgage Guaranty Insurance ........................................................................................... Long-Term Care Insurance ................................................................................................ Synthetic Guaranteed Investment Contracts ...................................................................... Credit for Reinsurance ....................................................................................................... Life and Health Reinsurance Agreements ......................................................................... Smoker/Nonsmoker Mortality Tables for Use in Determining Minimum Reserve Liabilities...................................................................................................................... Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities...................................................................................................................... Determining Reserve Liabilities for Credit Life Insurance Model Regulation ................. Minimum Life and Annuity Reserve Standards ................................................................ Annuity Mortality Table for Use in Determining Reserve Liabilities for Annuities.......... Asset Adequacy Analysis Requirements ........................................................................... Valuation of Life Insurance Policies (Including the Introduction and Use of New Select Mortality Factors) Page A001-1 A010-1 A200-1

A-225 A-235 A-250 A-255 A-270 A-440 A-585 A-588 A-620 A-628 A-630 A-641 A-695 A-785 A-791 A-812 A-815 A-818 A-820 A-821 A-822 A-830

A205-1 A225-1 A235-1 A250-1 A255-1 A270-1 A440-1 A585-1 A588-1 A620-1 A628-1 A630-1 A641-1 A695-1 A785-1 A791-1 A812-1 A815-1 A818-1 A820-1 A821-1 A822-1 A830-1

Appendix B - Interpretations of Emerging Accounting Issues Working Group - Volume I

In 2009, the Emerging Accounting Issues Working Group reached a consensus to incorporate "rejected" and "non-applicable" FASB EITFs that do not provide additional statutory accounting guidance in a listing within a designated interpretation. This interpretation (INT 99-00) includes reference of all FASB EITFs, including those previously included in Appendix B as a statutory accounting interpretation, that were 1) rejected as not applicable to statutory accounting; 2) rejected without providing additional statutory guidance; or 3) rejected on the basis of issues rejected in an SSAP. INT 99-00 will be updated as needed to reference future GAAP interpretations as appropriate. No. INT 99-00 INT 99-01 INT 99-02 INT 99-03 INT 99-04 Title Compilation of Rejected EITFs ................................................................................. Accounting for Tax Benefits of Operating Losses and Tax Credits in QuasiReorganizations .................................................................................................... Accounting for Collateral in Excess of Debt Principal ............................................. Accounting for Investment in Subsidiary, Controlled or Affiliated (SCA) Entities with Subsequent Downstream Investment in an Insurance Company.................. Recognition of Prepayment Penalties Upon Adoption of Codification .....................

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No. INT 99-10 INT 99-14 INT 99-16 INT 99-17 INT 99-18

INT 99-21 INT 99-22 INT 99-23 INT 99-24 INT 99-25 INT 99-26 INT 99-27 INT 99-28 INT 99-29 INT 00-01 INT 00-02 INT 00-03 INT 00-04 INT 00-05 INT 00-06 INT 00-08 INT 00-10 INT 00-11 INT 00-12 INT 00-20 INT 00-21 INT 00-22 INT 00-23 INT 00-24

INT 00-26 INT 00-27

Title EITF 97-8: Accounting for Contingent Consideration Issued in a Purchase Business Combination.......................................................................................... EITF 96-19: Debtor's Accounting for a Modification or Exchange of Debt Instruments ........................................................................................................... EITF 97-11: Accounting for Internal Costs Relating to Real Estate Property Acquisitions.......................................................................................................... EITF 97-12: Accounting for Increased Share Authorizations in an IRS Section 423 Employee Stock Purchase Plan under APB Opinion No. 25 ........................ EITF 97-13: Accounting for Costs Incurred in Connection with a Consulting Contract or an Internal Project That Combines Business Process Reengineering and Information Technology Transformation .............................. EITF 98-7: Accounting for Exchanges of Similar Equity Method Investments ....... EITF 98-8: Accounting for Transfers of Investments That Are in Substance Real Estate .................................................................................................................... Disclosure of Premium Deficiency Reserves ............................................................ Accounting for Restructuring Charges ...................................................................... Accounting for Capital Improvements ...................................................................... Offsetting Pension Assets and Liabilities .................................................................. Nonadmitting Installment Receivables ...................................................................... Accounting for SCA Mutual Funds, Broker-Dealers and Similar Entities Under SSAP No. 46 ........................................................................................................ Classification of Step-up Preferred Stock .................................................................. Investment in Foreign SCA Entity ............................................................................ Accounting for Leveraged Leases Involving Commercial Airplanes Under SSAP No. 22 --Leases.................................................................................................... Illustration of the Accounting/Reporting of Deposit-Type Contracts in Accordance with SSAPs No. 51, 52 and 56 ......................................................... Student Loan Insurance ............................................................................................. Exemption to Merger Disclosure in SSAP No. 3 ...................................................... EITF 97-14: Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested ................................... EITF 98-5: Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios ..................................... EITF 98-14: Debtor's Accounting for Changes in Line-of-Credit or RevolvingDebt Arrangements............................................................................................... EITF 98-15: Structured Notes Acquired for a Specified Investment Strategy ........ EITF 99-4: Accounting for Stock Received from the Demutualization of a Mutual Insurance Company ................................................................................. Application of SEC SAB No. 99, Materiality to the Preamble of the AP&P Manual.................................................................................................................. Disclose Requirement of SSAP No. 10 Paragraphs 17 & 18 .................................... Application of SSAP No. 10 to Admissibility of Deferred Tax Assets ..................... Reinsurance of Deposit Type Contracts .................................................................... EITF 98-13: Accounting by an Equity Method Investor for Investee Losses When the Investor Has Loans to and Investments in Other Securities of the Investee and EITF 99-10: Percentage Used to Determine the Amount of Equity Method Losses...................................................................................................... EITF 98-3: Determining Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business .................................................................. EITF 98-9: Accounting for Contingent Rent .............................................................

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No. INT 00-28 INT 00-29 INT 00-30 INT 00-31 INT 00-32 INT 01-01 INT 01-03 INT 01-04 INT 01-05 INT 01-07 INT 01-10 INT 01-11 INT 01-12 INT 01-14 INT 01-16 INT 01-17

INT 01-18 INT 01-19 INT 01-20 INT 01-21 INT 01-22 INT 01-23 INT 01-24 INT 01-25 INT 01-26 INT 01-27 INT 01-28 INT 01-29 INT 01-31 INT 01-32 INT 01-33 INT 02-01 INT 02-02 INT 02-03

Title EITF 99-12: Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination......................... EITF 99-17: Accounting for Advertising Barter Transactions .................................. Application of SSAP No. 51 Paragraph 6 to Waiver of Deduction on Flexible Premium Universal Life Insurance Policies ......................................................... Application of SSAP No. 55 Paragraph 12 to Health Entities ................................... EITF 00-8: Accounting by a Grantee for an Equity Instrument to Be Received in Conjunction with Providing Goods or Services ................................................... Application of SSAP No. 6 Paragraph 9 a. to de minimus Receivable Balances of Group Accident and Health Policies .................................................................... Assets Pledged as Collateral or Restricted for the Benefit of a Related Party ........... SSAPs No. 18 and 33 and Issues Surrounding Securitizations ................................. Classification of Accrued Interest on Policy Loans ................................................... EITF 98-2: Accounting by a Subsidiary or Joint Venture for an Investment in the Stock of Its Parent Company or Joint Venture Partner ........................................ EITF 00-1: Investor Balance Sheet and Income Statement Display under the Equity Method for Investments in Certain Partnerships and Other Ventures ...... EITF 00-10: Accounting for Shipping and Handling Fees and Costs ....................... EITF 00-14: Accounting for Certain Sales Incentives ............................................... EITF 00-16: Recognition and Measurement of Employer Payroll Taxes on Employee Stock-Based Compensation................................................................. Measurement Date for SSAP No. 8 Actuarial Valuations ......................................... Accounting for Nonqualified Retirement Plans, Nonvested Ancillary Benefits Within Retirement Plans, and Protected Benefits Such as Early Retirement Subsidies in Retirement Plans .............................................................................. Consolidated or Legal Entity Level ­ Limitations on EDP Equipment, Goodwill and Deferred Tax Assets Admissibility................................................................ Measurement of Deferred Tax Assets Associated with Nonadmitted Assets ............ Utilization of Tax Planning Strategies for the Admissibility of Deferred Tax Assets ................................................................................................................... SSAP Nos. 16, 19, 68 and 79 ­ Reestablishment of Previously Expensed Software and Furniture, Fixtures and Equipment and Goodwill.......................... Use of Interim Financial Statements in Computing Reporting Entity's Investment in Subsidiary Under the GAAP Equity Method ................................................... Prepaid Legal Insurance Premium Recognition ........................................................ Application of SSAP No. 46 and 48 to Certain Noninsurance Subsidiary, Controlled or Affiliated Entities........................................................................... Accounting for U.S. Treasury Inflation-Indexed Securities ...................................... SSAP No. 51 and Reserve Minimum or Required Amount ...................................... Accounting Change versus Correction of Error ........................................................ Margin for Adverse Deviation in Claim Reserve ...................................................... SSAP No. 59 and Application to Credit Life ............................................................ Assets Pledged as Collateral ...................................................................................... EITF 01-10: Accounting for the Impact of the Terrorist Attacks of September 11, 2001...................................................................................................................... Extension of 9-Month Rule in SSAP No. 62R .......................................................... Disclosure Requirements Under SSAP for Differences Between A-785 and Individual State Requirements as a Result of September 11th .............................. SSAP No. 6 and Billing of Premium Before Effective Date ..................................... Accounting for the Impact of the Terrorist Attacks of September 11th on Commercial Mortgage Loans ...............................................................................

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No. INT 02-04 INT 02-05 INT 02-06 INT 02-07 INT 02-08 INT 02-09 INT 02-10 INT 02-11 INT 02-15

INT 02-17 INT 02-18 INT 02-19

INT 02-20 INT 02-21 INT 02-22 INT 03-01 INT 03-02 INT 03-03 INT 03-05 INT 03-12 INT 03-16 INT 03-17 INT 03-18 INT 04-01 INT 04-02 INT 04-03

INT 04-05 INT 04-07 INT 04-10 INT 04-12 INT 04-13

Title Recognition of CARVM and CRVM Expense Allowances by the Assuming Reinsurer in a Modified Coinsurance Agreement ................................................ Accounting for Zero Coupon Convertible Bonds ...................................................... Indemnification in Modeled Trigger Transactions .................................................... Definition of Phrase "Other Than Temporary" ......................................................... Application of A-791 to YRT Reinsurance of a Block of Business .......................... A-785 and Syndicated Letters of Credit .................................................................... Statutory Audit Report Notes and the Reporting Requirements Related to Disclosures Containing Multiple Year Information ............................................. Recognition of Amounts Related to Earned but Unbilled Premium ......................... EITF 00-11: Lessors' Evaluation of Whether Leases of Certain Integral Equipment Meet the Ownership Transfer Requirements of FASB Statement 13.......................................................................................................................... EITF 01-13: Income Statement Display of Business Interruption Insurance Recoveries ............................................................................................................ Accounting for the Intangible Asset as Described in SSAP No. 8 Paragraph 9 d.v. and 9 f. ................................................................................................................. EITF 01-1: Accounting for a Convertible Instrument Granted or Issued to a Nonemployee for Goods or Services or a Combination of Goods or Services and Cash ............................................................................................................... Due Date for Installment Premium Under an Agency Relationship ......................... Accounting for Prepaid Loss Adjustment Expenses and Claim Adjustment Expenses............................................................................................................... Accounting for the U.S. Terrorism Risk Insurance Program .................................... Application of SSAP No. 35 to the Florida Hurricane Catastrophe Fund ................. Modification to an Existing Intercompany Pooling Arrangement ............................ Admissibility of Investments Recorded Based on the Audited GAAP Equity of the Investee when a Qualified Opinion is Provided ............................................. EITF 01-07: Creditor's Accounting for a Modification or Exchange of Debt Instruments ........................................................................................................... EITF 02-4: Determining Whether a Debtor's Modification or Exchange of Debt Instruments is within the Scope of FASB Statement No. 15................................ Contribution of Stock ................................................................................................ Classification of Liabilities from Extra Contractual Obligation Lawsuits ................ Accounting for a Change in the Additional Minimum Liability in SSAP No. 8-- Pensions (SSAP No. 8) ........................................................................................ Applicability of New GAAP Disclosures Prior to NAIC Consideration ................... Surplus Notes Issued by Entities Under Regulatory Action ...................................... Clarification for Calculating the Additional Minimum Pension Liability Under SSAP No. 89--Accounting for Pensions, A Replacement of SSAP No. 8, paragraph 16f........................................................................................................ Clarification of SSAP No. 5 Guidance on when a Judgment is Deemed Rendered EITF 02-15: Determining Whether Certain Conversions of Convertible Debt to Equity Securities Are Within the Scope of FASB Statement No. 84................... EITF 02-18: Accounting for Subsequent Investments in an Investee after Suspension of Equity Method Loss Recognition ................................................. EITF 03-4: Determining the Classification and Benefit Attribution Method for a "Cash Balance" Pension Plan ............................................................................... EITF 03-5: Applicability of AICPA Statement of Position 97-2 to Non-Software Deliverables in an Arrangement Containing More-Than-Incidental Software ....

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No. INT 04-15

INT 04-17 INT 04-18 INT 04-20 INT 04-21 INT 05-04 INT 05-05 INT 05-06 INT 06-02 INT 06-07 INT 06-10 INT 06-12 INT 06-13 INT 06-14 INT 07-01 INT 07-03

INT 08-02 INT 08-03

INT 08-04 INT 08-05 INT 08-06 INT 08-07 INT 08-08 INT 08-10 INT 09-03 INT 09-04 INT 09-05 INT 09-08

Title EITF 03-07: Accounting for the Settlement of the Equity-Settled Portion of a Convertible Debt Instrument That Permits or Requires the Conversion Spread to Be Settled in Stock (Instrument C of Issue No. 90-19) ................................... Impact of Medicare Modernization Act on Postretirement Benefits ......................... EITF 00-21: Revenue Arrangements with Multiple Deliverables ............................. EITF 01-08: Determining Whether an Arrangement Contains a Lease .................... EITF 02-09: Accounting for Changes that Result in a Transferor Regaining Control of Financial Assets Sold.......................................................................... Extension of Ninety-day Rule for the Impact of Hurricane Katrina, Hurricane Rita and Hurricane Wilma ................................................................................... Accounting for Revenues Under Medicare Part D Coverage .................................... Earned But Uncollected Premium ............................................................................. Accounting and Reporting for Investments in a Certified Capital Company (CAPCO) ............................................................................................................. Definition of Phrase "Other Than Temporary" ......................................................... Determining the Amortization Period for Leasehold Improvements Purchased after Lease Inception or Acquired in a Business Combination ............................ Tax Deposits Submitted in Accordance with Section 6603 of the Internal Revenue Service (IRS) Code................................................................................ EITF 01-2: Interpretations of APB Opinion No. 29 .................................................. Reporting of Litigation Costs Incurred for Lines of Business in which Legal Expenses Are the Only Insured Peril ................................................................... Application of the Scientific (constant yield) Method in Situations of Reverse Amortization......................................................................................................... EITF 06-3: How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation) ...................................................................................... EITF 06-8: Applicability of the Assessment of a Buyer's Continuing Investment under FASB Statement No. 66 for Sales of Condominiums ................................ EITF 06-9: Reporting a Change in (or the elimination of) a Previously Existing Difference between the fiscal Year-End of a Parent Company and That of a Consolidated Entity or between the Reporting Period of an Investor and That of an Equity Method Investee .............................................................................. EITF 07-3: Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities ....... EITF 02-11: Accounting for Reverse Spinoffs .......................................................... FSP EITF 00-19-2: Accounting for Registration Payment Arrangements ................ EITF 07-6: Accounting for the Sale of Real Estate Subject to the Requirements of FASB Statement No. 66 When the Agreement Includes a Buy-Sell Clause........ INT 08-08: Balance Sheet Presentation of Funding Agreements Issued to a Federal Home Loan Bank..................................................................................... Contractual Terms of Investments and Investor Intent .............................................. EITF 08-7: Accounting for Defensive Intangible Assets .......................................... Application of the Fair Value Definition ................................................................... EITF 08-3: Accounting by Lessees for Maintenance Deposits ................................. Accounting for Loans Received under the Federal TALF Program ..........................

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Appendix C - Actuarial Guidelines - Volume II

Title Actuarial Guidelines.......................................................................................................................... Actuarial Guideline I ......................................................................................................................... Actuarial Guideline II........................................................................................................................ Actuarial Guideline III ...................................................................................................................... Actuarial Guideline IV ..................................................................................................................... Actuarial Guideline V........................................................................................................................ Actuarial Guideline VI ...................................................................................................................... Actuarial Guideline VII..................................................................................................................... Actuarial Guideline VIII.................................................................................................................... Actuarial Guideline IX ...................................................................................................................... Actuarial Guideline IX-A .................................................................................................................. Actuarial Guideline IX-B .................................................................................................................. Actuarial Guideline IX-C .................................................................................................................. Actuarial Guideline X........................................................................................................................ Actuarial Guideline XI ...................................................................................................................... Actuarial Guideline XII..................................................................................................................... Actuarial Guideline XIII.................................................................................................................... Actuarial Guideline XIV ................................................................................................................... Actuarial Guideline XV..................................................................................................................... Actuarial Guideline XVI ................................................................................................................... Actuarial Guideline XVII .................................................................................................................. Actuarial Guideline XVIII................................................................................................................. Actuarial Guideline XIX ................................................................................................................... Actuarial Guideline XX..................................................................................................................... Actuarial Guideline XXI ................................................................................................................... Actuarial Guideline XXII .................................................................................................................. Actuarial Guideline XXIII................................................................................................................. Actuarial Guideline XXIV ................................................................................................................ Actuarial Guideline XXV.................................................................................................................. Actuarial Guideline XXVI ................................................................................................................ Actuarial Guideline XXVII ............................................................................................................... Actuarial Guideline XXVIII.............................................................................................................. Actuarial Guideline XXIX ................................................................................................................ Actuarial Guideline XXX.................................................................................................................. Actuarial Guideline XXXI ................................................................................................................ Actuarial Guideline XXXII ............................................................................................................... Actuarial Guideline XXXIII.............................................................................................................. Actuarial Guideline XXXIV.............................................................................................................. Actuarial Guideline XXXV............................................................................................................... Actuarial Guideline XXXVI.............................................................................................................. Actuarial Guideline XXXVII ............................................................................................................ Actuarial Guideline XXXVIII ........................................................................................................... Actuarial Guideline XXXIX.............................................................................................................. Actuarial Guideline XL ..................................................................................................................... Actuarial Guideline XLI.................................................................................................................... Actuarial Guideline XLII .................................................................................................................. Actuarial Guideline XLIII ................................................................................................................. Actuarial Guideline XLIV................................................................................................................. Page C-3 C-8 C-9 C-11 C-12 C-15 C-17 C-19 C-21 C-22 C-23 C-26 C-30 C-33 C-35 C-36 C-37 C-39 C-41 C-43 C-44 C-45 C-46 C-47 C-53 C-54 C-55 C-56 C-63 C-67 C-69 C-74 C-75 C-77 C-79 C-80 C-82 C-89 C-101 C-111 C-123 C-130 C-137 C-139 C-143 C-145 C-150 C-231

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Title Page Actuarial Guideline XLV .................................................................................................................. C-239 Actuarial Guideline XLVI ................................................................................................................. C-242 Appendix to Guidelines ­ Maximum Reserve Valuation and Maximum Life Policy Nonforfeiture Interest Rates ........................................................................................... C-244

Appendix D - GAAP Cross-Reference to SAP - Volume II

Title Accounting Standards Updates ......................................................................................................... Pre-FASB Codification Category A - FASB Statements and Interpretations, APB Opinions, and AICPA Accounting Research Bulletins ...................................................................................... Pre-FASB Codification Category B - FASB Technical Bulletins, FASB Staff Positions, AICPA Industry Audit and Accounting Guides, and AICPA Statements of Position............................. Pre-FASB Codification Category C - Consensus positions of the FASB Emerging Issues Task Force and AICPA Practice Bulletins ......................................................................................... Pre-FASB Codification Category D - AICPA Accounting Interpretations ...................................... FASB Codification to Pre-Codification GAAP ................................................................................ Page D-1 D-3 D-33 D-55 D-97 D-99

Appendix E - Issue Papers - Volume II includes Issue Papers 1 to 54 Volume III includes Issue Papers 55 to 140

No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 16 17 19 20 21 22 23 24 25 26 27 28 Title Vol. II Consolidation of Majority-owned Subsidiaries .................................................................. Definition of Cash............................................................................................................... Accounting Changes ........................................................................................................... Definition of Assets and Nonadmitted Assets .................................................................... Definition of Liabilities, Loss Contingencies and Impairments of Assets.......................... Amounts Due From Agents and Brokers ............................................................................ Asset Valuation Reserve and Interest Maintenance Reserve .............................................. Accounting for Pensions ..................................................................................................... Subsequent Events .............................................................................................................. Uncollected Premium Balances .......................................................................................... Compensated Absences....................................................................................................... Accounting for Drafts Issued and Outstanding................................................................... Employers' Accounting for Postemployment Benefits....................................................... Employers' Accounting for Postretirement Benefits Other Than Pensions........................ Electronic Data Processing Equipment and Software......................................................... Preoperating and Research and Development Costs........................................................... Furniture, Fixtures and Equipment ..................................................................................... Gain Contingencies............................................................................................................. Bills Receivable For Premiums........................................................................................... Leases.................................................................................................................................. Property Occupied by the Company ................................................................................... Discontinued Operations and Extraordinary Items ............................................................. Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties ............................................................................................................................ Bonds, excluding Loan-backed and Structured Securities ................................................. Disclosure of Information about Financial Instruments with Concentration of Credit Risk................................................................................................................................ Short-term Investments ....................................................................................................... Page IP 1-1 IP 2-1 IP 3-1 IP 4-1 IP 5-1 IP 6-1 IP 7-1 IP 8-1 IP 9-1 IP 10-1 IP 11-1 IP 12-1 IP 13-1 IP 14-1 IP 16-1 IP 17-1 IP 19-1 IP 20-1 IP 21-1 IP 22-1 IP 23-1 IP 24-1 IP 25-1 IP 26-1 IP 27-1 IP 28-1

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No. 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54

Title Prepaid Expenses (excluding Deferred Policy Acquisition Costs and other underwriting expenses, income taxes and Guaranty Fund Assessments) .................... Investments in Common Stock (excluding investments in common stock of subsidiary, controlled, or affiliated entities) ................................................................................... Leasehold Improvements Paid by the Reporting Entity as Lessee ..................................... Investments in Preferred Stock (excluding investments in preferred stock of subsidiary, controlled, or affiliated entities) ................................................................................ Disclosures about Fair Value of Financial Instruments ...................................................... Investment Income Due and Accrued ................................................................................. Accounting for Guaranty Fund and Other Assessments ..................................................... Troubled Debt Restructurings............................................................................................. Mortgage Loans .................................................................................................................. Acquisition, Development and Construction Arrangements .............................................. Reverse Mortgages.............................................................................................................. Real Estate Investments ...................................................................................................... Surplus Notes...................................................................................................................... Sale of Premium Receivables ............................................................................................. Loan-backed and Structured Securities .............................................................................. Capitalization of Interest..................................................................................................... Repurchase Agreements, Reverse Repurchase Agreements and Dollar Repurchase Agreements................................................................................................................. Accounting for Investments in Subsidiary, Controlled and Affiliated Entities .................. Uninsured Plans .................................................................................................................. Investments in Joint Ventures, Partnerships and Limited Liability Companies ................. Policy Loans ....................................................................................................................... Classifications and Definitions of Insurance or Managed Care Contracts in Force Life Contracts ..................................................................................................................... Deposit-Type Contracts ...................................................................................................... Property Casualty Contracts­Premiums ............................................................................. Individual and Group Accident and Health Contracts ........................................................ Vol. III Unpaid Claims, Losses and Loss Adjustment Expenses..................................................... Universal Life-Type Contracts, Policyholder Dividends, and Coupons............................. Title Insurance .................................................................................................................... Credit Life and Accident and Health Insurance Contracts.................................................. Property and Casualty Contracts......................................................................................... Accounting for Retrospectively Rated Contracts................................................................ Depreciation of Property and Amortization of Leasehold Improvements .......................... Business Combinations and Goodwill ................................................................................ Financial Guaranty Insurance ............................................................................................. Policy Acquisition Costs and Commissions ....................................................................... Statutory Surplus................................................................................................................. Nonmonetary Transactions ................................................................................................. Life, Deposit-Type and Accident and Health Reinsurance................................................. Property and Casualty Reinsurance .................................................................................... Offsetting and Netting of Assets and Liabilities................................................................. Disclosure of Accounting Policies, Risks & Uncertainties, and Other Disclosures Employee Stock Ownership Plans ...................................................................................... Debt..................................................................................................................................... Foreign Currency Transactions and Translations ............................................................... Stock Options and Stock Purchase Plans............................................................................

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55 56 57 59 65 66 67 68 69 71 72 73 74 75 76 77 78 80 81 82

IP 55-1 IP 56-1 IP 57-1 IP 59-1 IP 65-1 IP 66-1 IP 67-1 IP 68-1 IP 69-1 IP 71-1 IP 72-1 IP 73-1 IP 74-1 IP 75-1 IP 76-1 IP 77-1 IP 78-1 IP 80-1 IP 81-1 IP 82-1

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No. 83 84 85 86 87 88 89 90 92 94 95 96 97 99 100 101 103 104 105 106 107 108 109 110

111 112 113 114 116 118 119 121 122 123 124 125 126 127

Title Accounting for Income Taxes............................................................................................. Quasi-reorganizations ......................................................................................................... Derivative Instruments........................................................................................................ Securitization ...................................................................................................................... Other Admitted Assets ........................................................................................................ Mortgage Guaranty Insurance............................................................................................. Separate Accounts............................................................................................................... Nonadmitted Assets ............................................................................................................ Statement of Cash Flow ...................................................................................................... Allocation of Expenses ....................................................................................................... Holding Company Obligations ........................................................................................... Other Liabilities .................................................................................................................. Underwriting Pools and Associations Including Intercompany Pools................................ Nonapplicable GAAP Pronouncements.............................................................................. Health Care Delivery Assets - Supplies, Pharmaceuticals and Surgical Supplies, and Durable Medical Equipment....................................................................................... Health Care Delivery Assets - Furniture, Medical Equipment and Fixtures, and Leasehold Improvements in Health Care Facilities.................................................... Accounting for the Issuance of Insurance-Linked Securities Issued by a Property and Casualty Insurer through a Protected Cell.................................................................. Reinsurance Deposit Accounting - An Amendment to SSAP No. 62R--Property and Casualty Reinsurance ................................................................................................. Reporting on the Costs of Start-Up Activities .................................................................... Real Estate Sales ­ An Amendment to SSAP No. 40--Real Estate Investments............... Certain Health Care Receivables and Receivables Under Government Insured Plans ....... Multiple Peril Crop Insurance............................................................................................ Depreciation of Nonoperating System Software ­ An Amendment to SSAP No. 16-- Electronic Data Processing Equipment and Software Life Contracts, Deposit-Type Contracts and Separate Accounts, Amendments to SSAP No. 51--Life Contracts, SSAP No. 52--Deposit-Type Contracts, and SSAP No. 56--Separate Accounts .............................................................................................. Software Revenue Recognition........................................................................................... Accounting for the Costs of Computer Software Developed or Obtained for Internal Use and Web Site Development Costs ...................................................................... Mezzanine Real Estate Loans ............................................................................................. Accounting for Derivative Instruments and Hedging Activities......................................... Claim Adjustment Expenses, Amendments to SSAP No. 55--Unpaid Claims, Losses and Loss Adjustment Expenses Investments in Subsidiary, Controlled, and Affiliated Entities, A Replacement of SSAP No. 46.............................................................................................................. Capitalization Policy, An Amendment to SSAP Nos. 4, 19, 29, 73, 79 and 82.................. Accounting for the Impairment or Disposal of Real Estate Investments ........................... Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities ................................................................................................................... Accounting for Pensions, A Replacement of SSAP No. 8................................................. Treatment of Cash Flows When Quantifying Changes in Valuation and Impairments, an Amendment of SSAP No. 43 ................................................................................ Accounting for Low Income Housing Tax Credit Property Investments ........................... Accounting for Transferable State Tax Credits .................................................................. Exchanges of Nonmonetary Assets, A Replacement of SSAP No. 28--Nonmonetary Transactions...............................................................................................................

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IP 110-1 IP 111-1 IP 112-1 IP 113-1 IP 114-1 IP 116-1 IP 118-1 IP 119-1 IP 121-1 IP 122-1 IP 123-1 IP 124-1 IP 125-1 IP 126-1 IP 127-1

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No. 128

131 134 137 138 140

Title Settlement Requirements for Intercompany Transactions, An Amendment to SSAP No.25--Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties ................................................................................................. Accounting for Certain Securities Subsequent to an Other-Then-Temporary Impairment................................................................................................................. Servicing Assets/Liabilities, An Amendment of SSAP No. 91 .......................................... Transfer of Property and Casualty Reinsurance Agreements in Run-off ........................... Fair Value Measurements ................................................................................................... Substantive Revisions to SSAP No. 43--Loan-Backed and Structured Securities .........

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Appendix F - Policy Statements - Volume III

Title NAIC Policy Statement on Maintenance of Statutory Accounting Principles .................................. NAIC Policy Statement on Comments to GAAP Exposure Drafts ................................................... NAIC Policy Statement on Statutory Accounting Principles Maintenance Agenda Process NAIC Policy Statement on Emerging Accounting Issues Agenda Process....................................... NAIC Policy Statement on the Impact of Statements of Statutory Accounting Principles on NAIC Publications ................................................................................................................... NAIC Policy Statement on Coordination of the Accounting Practices and Procedures Manual and the Annual Statement Blank.............................................................................................. Page F-1 F-3 F-5 F-9 F-11 F-13

Appendix G ­ Implementation Guide (Guide) for the Annual Financial Reporting Model Regulation (Model) - Volume III

Title Definitions ......................................................................................................................................... General Requirements Related to Filing and Extensions for Filing of Annual Audited Financial Reports and Audit Committee Appointment .................................................................................... Qualifications of Independent Certified Public Accountant ............................................................. Communication of Internal Control Related Matters Noted in an Audit .......................................... Requirements for Audit Committees ................................................................................................ Management's Report of Internal Control over Financial Reporting ............................................... Exemptions and Effective Dates ....................................................................................................... Appendix 1 ........................................................................................................................................ Page G-2 G-4 G-4 G-10 G-11 G-13 G-17 G-21

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