This report summarizes key activities of the National Association of Insurance Commissioners (NAIC) Statutory Accounting Principles (E) Working Group’s (SAPWG) interim meeting that took place on Sept. 21, 2023.
Several topics were discussed, including new guidance on the Inflation Reduction Act (IRA), the Corporate Alternative Minimum Tax (CAMT), and updates on loan-backed and structured securities and SSAP No. 48.
Insurance organizations should take note of these changes as they may significantly impact their accounting in 2024 and beyond.
This report summarizes key activities of the National Association of Insurance Commissioners (NAIC) Statutory Accounting Principles (E) Working Group at its Sept. 21, 2023 interim meeting. Insurance organizations should take note of these changes as they may significantly affect their accounting in 2023 and beyond.
All adopted revisions to statutory guidance noted below are classified as Statutory Accounting Principle (SAP) clarifications and are considered effective immediately after adoption by SAPWG, unless specifically noted otherwise.
SSAP No. 101 - Income taxes
During the 2022 fall national meeting, SAPWG adopted INT 22-02: Third Quarter 2022 through First Quarter 2023 Reporting of the Inflation Reduction Act - Corporate Alternative Minimum Tax (CAMT) to provide temporary guidance related to the CAMT through first quarter 2023 reporting. This was later extended to allow the INT to be applied for second quarter of 2023 reporting.
SAPWG adopted INT 23-02: Third Quarter 2023 Inflation Reduction Act – Corporate Alternative Minimum Tax. INT 23-02 states that for third quarter 2023 reporting, entities should disclose the information that is available regarding their applicable reporting entity status. When an entity is able to make a reasonable estimate regarding the CAMT 2023 liabilities, that estimate should be disclosed. If a reasonable estimate is not possible because of pending material information, the fact that a reasonable estimate is not feasible should be disclosed. INT 23-02 is automatically nullified on Nov. 16, 2023.
SSAP No. 101 - Income taxes and INT 23-03: Inflation Reduction Act - Corporate Alternative Minimum
INT 23-03: Inflation Reduction Act - Corporate Alternative Minimum Tax provides guidance regarding the CAMT for periods on and after year-end 2023. The INT provides guidance for
Reporting entities which may be subject to CAMT should review their tax allocation agreements and INT 23-03 as they may need to amend and refile those tax allocation agreements to address CAMT. As discussed in the INT, time is of the essence for reporting entities to take these actions. The transition guidance below does not apply if a Form B request for a CAMT-related tax allocation agreement amendment or a new tax allocation agreement is not filed prior to the end of 2023. If a Form D request is not filed prior to the end of 2023 then the reporting entity must apply the accounting from the original tax allocation agreement.
If the final approved tax allocation agreement differs in its treatment of the CAMT allocation from the tax allocation agreement originally requested on the Form D, the difference shall be recorded as follows:
SSAP No. 43R - Loan-backed and structured securities and SSAP No. 48 - Joint ventures, partnerships and limited liability companies
Beginning with year-end 2022 reporting residual interests, as defined in SSAP No. 43, were required to be reported on Schedule BA on designated reporting lines. From its review of 2022 reporting results, SAPWG believes information for residuals may be underreported due to the various legal forms of residual investments.
The adoption of this agenda item, which is effective Dec. 31, 2023, clarifies the reporting of in-substance residuals regardless of the structure of the investment vehicle.