12 Days of SSAP: INT 23-01 Net Negative IMR

JLK Rosenberger is carrying on our holiday tradition of taking a new perspective on a holiday classic – the Twelve Days of Christmas. Rather than filling your head with turtle doves and gold rings, we are focusing on the latest changes to SSAP and how they will impact your insurance entity in 2026 and beyond.

Our Day 8 post to the 12 Days of SSAP lands us in the somewhat controversial reporting realm of net negative IMR for life companies.  This topic originated when interest rates rose quickly and dramatically primarily from the inflationary impact of substantial Covid spending and buildup of supply demands. Many company fixed income portfolios submerged into heavy (yet temporary) unrealized loss territory, thereby creating substantial net negative IMR scenarios. Industry requested relief and the Statutory Accounting Principles Group (SAPWG) accommodated with temporary relief for a one-year sabbatical and specific rules for admitting some of the outstanding IMR negative balances. With the expiration of the original temporary deadline, industry has requested extended relief and has now asked for further review of original IMR parameters. Day 8 addresses this additional extension plus strengthened rules on determining negative IMR admittance.

Adopted revisions extend the effective date of the INT to December 31, 2026, and add additional requirements and clarifications to the guidance in the INT.

The general consensus in this interpretation was initially adopted on August 13, 2023, to provide temporary guidance related to SSAP No. 7 and the annual statement instructions for reporting net negative (disallowed) IMR. The original provisions were intended as a short-term solution through December 31, 2025, and were scheduled to expire automatically on January 1, 2026. On August 11, 2025, the Statutory Accounting Principles (E) Working Group approved a one-year extension of the interpretation through December 31, 2026, including clarifications and a new current-period admittance limit outlined in paragraph 9.a:

“The adjusted capital and surplus calculation intends to reflect the most recently filed financial statements for all admitted components (e.g., a subtraction of admitted positive goodwill, EDP equipment/software, net DTAs and net negative (disallowed) IMR as reported in the third quarter financial statements to determine the limit for year-end.) However, to safeguard from situations in which the company has experienced a decline in capital & surplus and/or had significant increases in net admitted (disallowed) IMR in the current period, the admittance of net negative (disallowed) IMR shall also not exceed 10% of the current period unadjusted capital and surplus.”

This interpretation is now set to expire automatically on January 1, 2027.

Effective Date

August 11, 2025

Deep Dive

For a deeper dive on this topic, click here.