Accounting Standard Updates
12 Days of SSAP – Non-substantive Revisions: SSAP No. 68, Business Combinations and Goodwill
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As the holidays approach, JLK Rosenberger is 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 company in 2021 and beyond.
This article summarizes the non-substantive revision related to SSAP No. 68, Business Combinations and Goodwill.
Another interesting non-substantive revision is related to SSAP No. 68, Business Combinations and Goodwill. The issue was noted by NAIC staff during the assessment of industry filings of past SCA Sub 2 filings. It appeared that many carriers did not calculate the amortization of goodwill correctly, and therefore resulting goodwill was inaccurately reported and disclosed.
This revision requires additional disclosure information through the collection of detailed admissibility evidence to verify goodwill admissibility, detailed below:
- Original amount of goodwill at acquisition
- Each SCA investment book value
- Total admitted goodwill
- The subcomponents and calculation of adjusted surplus and total admitted goodwill as a percentage of adjusted surplus
The disclosures will be reported in Schedule D – Part 6 – Section 1 – Valuation of Shares of SCA Companies.
January 1, 2021
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