This INT addresses additional suggestions posed by interested industry parties in their request to expand the initial scope of INT 20-03 – Troubled Debt Restructuring Due to COVID-19, to include all debt securities within the purview of SSAP No. 26R and SSAP No. 43R. Further, interested parties inquired whether exceptions should also be acknowledged to provide additional direction on determining what qualifies as “insignificant modifications” in accordance with SSAP No. 36, Troubled Debt Restructuring, paragraph 10.
INT 20-07 provides limited-time practical expedients in determining whether modifications in response to COVID-19 are insignificant under SSAP No. 36, Troubled Debt Restructuring and in assessing whether an exchange is substantive under SSAP No. 103R, Transfers and Servicing of Financial Assets and Extinguishments of Liabilities requiring extinguishment and new debt recognition.
- Does not apply to insignificant modifications that reflect a 10% or lesser deficit in the contractual amount due or payment terms extensions of less than three years.
- Does not apply to assessment or recognition of impairment for debt instruments that have been modified as assessment of other than temporary impairment is based on current contract terms of the debt instrument.
- Does not apply if restructuring only affects debt covenants.
Interprets the following SSAPs:
SSAP No. 36—Troubled Debt Restructuring
SSAP No. 103R—Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
March 1, 2020 and ending on the earlier of December 31, 2020, or 60 days after the end of the national emergency for the COVID-19 outbreak. During November 15, 2020 call, NAIC staff determined that the extension of this INT is not needed at this time since the national emergency has not ended and INT is effective through the end of 2020.
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