SAPWG exposes COVID-19 and TALF program guidance

The Statutory Accounting Principles Working Group has exposed an INT providing guidance on participation in the TALF program, plus three INTs and a revision to SSAP No. 26R in response to COVID-19. 

Applicability

• All insurance companies preparing financial statements in accordance with statutory accounting principles

Relevant dates

• Proposals issued May 5, 2020
• Comments due on proposals by May 14, 2020

Key impacts

• INT 20-05 proposes an exception to the collectability and nonadmittance interest guidance in SSAP No. 34 for certain financial instruments modified in response to COVID-19, and provides guidance on how interest would be recognized when a payment holiday is given and interest is not accrued.
• INT 20-06 proposes guidance for direct borrowers in the Terms Asset-Backed Securities Lending Facility (TALF) program and those that participate as an investor to a direct TALF borrower. Direct TALF borrowers would be allowed to admit pledged assets even though the TALF program does not permit the pledged assets to be substituted.
• INT 20-07 proposes certain practical expedients in assessing whether modifications to debt instruments in response to COVID-19 are insignificant under SSAP No. 36 and whether a change is substantive under SSAP No. 103R.
• INT 20-08 proposes that premium refunds issued in response to COVID-19, issued outside of policy terms, be reported as a reduction of premium (and not as an expense). It also proposes guidance on premium refunds required under the policy terms, premium rate reductions and policyholder dividends; and would require aggregate disclosure of these items to allow for easy identification of the full effect from COVID-19.
• A proposed revision to SSAP No. 26R would clarify that after a modification under SSAP No. 36 or SSAP No. 103R, future assessments of other-than-temporary impairment would be based on the post-modification contractual terms of the debt instrument.