In the next few posts for the 12 Days of SSAP series, we will cover non-substantive revisions adopted earlier this year and are worthy of attention as 2020 comes to an end. We will start with SSAP No. 26R, Bonds.
Current guidance provides the industry direction for reporting investment income and capital gain or loss associated with callable bonds. However, there is no specific guidance for tender offer situations, as such industry constituents have posed questions on how to account for bonds retired early due to a tender offer.
Bondholders generally see no significant difference between a called bond and a tendered bond other than in a tender situation; the bondholder must accept the tender offer for it to be valid. The NAIC staff recognized the similarity between the call and tender circumstances and proposed that accounting for investment income and capital gain or loss under either situation should be applied similarly.
Additionally, SAPWG removed the existing references to the NAIC Bond Fund List from SSAP No. 26R, Bonds, as it was discontinued in 2020.
January 1, 2021, with early adoption permitted.
Deeper dive on this topic:
Click here to read more about this statement.