Leases – SSAP 22 – SSAPWG Reference 2016-02:
The majority of the insurance accounting community is aware the SAPWG has determined the current SSAP No. 22 accounting for leases will be retained, and effectively rejects ASU 2016-02 – Leases calling for recognition of the right of use assets and related liabilities. For statutory accounting purposes, all leases will follow the original treatment to account for all leases as operating leases. Preparers should also review the sale-leaseback language and definitions as they have been enhanced. SSAP 22 has been significantly adjusted to follow the language and disclosure requirements of ASU 2016-02. SSAP 22 is effective on January 1, 2020. The FASB has since postponed the implementation of ASU 2016-02 to periods beginning after December 31, 2020. I would expect to see some SAPWG language to coordinate the SSAP 22 implementation date with the revised ASU timing.
SSAP 43R – Reporting NAIC Designations as Weighted Averages:
Provides clarification for the accounting and reporting for instruments acquired in lots under SSAP 43 – Loan-backed and Structured Securities. Principally, the amendment addresses the question if securities acquired under the same CUSIP, at different prices, can report NAIC designations using the weighted average method as defined within the SVO standards, or whether these individual lots should be separately designated with different rating even if under the same CUSIP ID. Adopted revisions require securities with differing NAIC designations by lot to be reported in the aggregate at the lowest NAIC designation or separately by lot.
SSAP No. 101 – Income Taxes – Update to Implementation Q & A:
In conjunction with the changes imposed by the Tax Cuts and Jobs Act, SAPWG adopted revisions and updates to the supporting Q & A to SSAP No. 101. The Q&A revisions also include clarifications with respect to deferred tax admittance and the offsetting of deferred tax assets and deferred tax liabilities, with particular emphasis on various handling of items under paragraph 11.c. of SSAP 101. The SAPWG changes do not modify the body of SSAP 101 rules.
Rejected ASU promulgations:
- ASU 2015-08 – Pushdown Accounting, Amendments to the SEC Paragraphs Pursuant to the Staff Accounting Bulletin No. 115 – rejected as not-applicable to statutory accounting. SAPWG cited SSAP No. 68 – Business Combinations and Goodwill and SSAP No. 97 – Investments in Subsidiary, Controlled and Affiliated Entities as the guidance controlling business combinations, which does not permit the use of pushdown accounting.
- ASU 2018-12 – Targeted Improvements to the Accounting for Long-Duration Contracts – this promulgation is a material procedural adjustment within the GAAP realm and does not fit with the various reserving and expense recognition criteria of current statutory accounting. It has been rejected for statutory accounting purposes.