Issues & Trends   |   September 2016
 

Insurance: NAIC 2016 Meeting

KPMG reports on NAIC 2016 Summer Meeting in San Diego. NAIC discussed the status and implementation timing of principles-based reserving, recently issued FASB standards, and other insurance hot topics.

Applicability

An insurance company that:

  • Is in the process of adopting Principle-Based Reserving (PBR)
  • Enters into renewal reinsurance transactions
  • Has derivative contracts
  • Has money market mutual funds
  • Could be impacted by the FASB’s new guidance on credit losses
  • Is exposed to cyber security
  • Has variable annuities
Relevant dates
  • January 1, 2017 – PBR is effective
  • January 1, 2017 – Revisions to SSAP No. 26 (bonds) and SSAP No. 43R (loan-backed and structured securities) are effective
  • January 1, 2017 – Revisions to SSAP No. 103 (transfers and servicing of financial assets and extinguishment of liabilities) are effective
  • January 1, 2018 – Revisions to SSAP No. 2 (cash, drafts and short-term investments) are effective

Key impacts

  • Adopted the Credit for Reinsurance Model Regulation that establishes standards governing reserve financing arrangements for life insurance policies with guaranteed non-level gross premiums, guaranteed non-level benefits, and universal life insurance policies with secondary guarantees
  • Exposed an issue paper allowing special accounting treatment for hedging variable annuities guarantees that do not meet hedge effectiveness requirements
  • Exposed revisions to SSAP No. 2 to reclassify money market mutual funds from short-term investments to cash equivalents
  • Exposed a request for feedback on how the new FASB guidance on credit losses should be considered for statutory accounting
  • Exposed a revised Model Law about cybersecurity intended to establish consistent standards for data security, investigation, and notification of a breach of data security for licensees in all states
  • Exposed revisions to SSAP No. 61R and SSAP No. 56 related to variable annuities disclosures and a new variable annuities supplement
  • Exposed the results of the variable annuities quantitative impact study

Report Contents

  • Principle-Based Reserving
  • Credit for Reinsurance Model Regulation
  • Variable annuities
  • Investments
  • FASB Accounting Standards Update
  • Cybersecurity
  • Group capital calculation
  • Investment risk-based capital
  • Other accounting highlights
  • Other regulatory highlights
  • Other actuarial highlights

 

 

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