Accounting Standard Updates


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Hot Take:

Hot Take

JLKR previously provided an update on three Statutory INTs specifically related to the COVID-19 impact on quarterly financial reporting presentation. Those INTs have now been revisited by the Statutory Accounting Principles Working Group (SAPWG) for extension in light of the COVID-19 pandemic progression. JLKR Senior Manager, Ani Zadorian, provides a status update on the August 17, 2020, SAPWG decisions to extend the reporting options on these important interim promulgations.

Full Article

On August 17, 2020, the NAIC Statutory Accounting Principles Working Group (SAPWG) extended the provision of INT 20-04, Mortgage Loan Impairment Assessment Due to COVID-19 to be applicable for the September 30, 2020, quarterly financial statements.

The Interpretation defers impairment assessment for mortgage loans, investments which principally hold underlying mortgage loans, and bank loans. Bank loans are defined as fixed income instruments, representing obligations of a borrower, made by a financial institution. The Interpretation explicitly excludes, with the exception of bank loans, investments within the scope of SSAP No. 26R – Bonds, or investments included in other noted standards that are not directly impacted by underlying mortgage loans.

To be eligible for the limited time assessment of impairment, the applicable loan must have been current as of December 31, 2019 (i.e. not more than 30 days past due). Other SSAP promulgations included within the scope of the Interpretation include:

  • SSAP No. 37 – Mortgage Loans – all mortgage loans applicable to SSAP 37;
  • SSAP No. 30 – Common Stock – SEC-registered investments with mortgage loan underlying aspects (e.g. mortgage-backed mutual funds);
  • SSAP No. 43R – Loan-backed and Structured Securities – securities with underlying mortgage loans (RMBS, CMBS, CRTs);
  • SSAP No. 48 – Joint Ventures, Partnerships and Limited Liability Companies – (e.g. private equity mortgage loan funds).

The Interpretation will automatically expire on December 30, 2020. However, SAPWG will assess and review circumstances to determine if an extension is required beyond September 30, 2020.

Other Updated Interpretation Related to COVID-19: 

You can read more about the other INTs revisited and extended by the SAPWG during their August 17 meeting by clicking below.

INT 20-02: Extension of Ninety-Day Rule for the Impact of COVID-19

INT 20-05: Investment Income Due and Accrued