Statutory Accounting Principles Working Group (SAPWG) Makes Revisions to APP Manual

During the Statutory Accounting Principles Working Group’s (SAPWG) Summer National Meeting, the group adopted a new SAP concept and various SAP clarifications that will be incorporated into the Accounting Practices and Procedures (APP) Manual.

New SAP Concept to Statutory Accounting Guidance

The SAPWG adopted the following new SAP concept to statutory accounting guidance:

• Issue Paper No. 169 – Principles-Based Bond Definition (Ref #2019-21): Adopted issue paper No. 169 documents the discussions and decisions related to the principles-based bond project. The adopted SSAPs impacted by the principles-based bond definition are effective January 1, 2025, and should be used as the source of authoritative guidance. Issue papers are not authoritative.

SAP Clarifications to Statutory Accounting Guidance

The SAPWG adopted the following SAP clarifications to statutory accounting guidance:

• INT 03-02 – Review of INT 03-02: Modification to an Existing Intercompany Pooling Arrangement (Ref #2022-12): Adopted revisions to SSAP No. 25 (Affiliates and Other Related Parties) and SSAP No. 63 (Underwriting Pools) address transfers of assets when modifying intercompany pooling agreements. This agenda item also nullifies INT 03-02. This clarification is effective August 13, 2024.
• ASU 2023-06, Disclosure Improvements (Ref #2023-26): Revisions in SSAP No. 15 (Debt and Holding Company Obligations) and SSAP No. 86 (Derivatives) adopt, with modification, certain disclosure from AUS 2023-06. The ASU 2023-06 disclosures originally recommended for inclusion in SSAP No. 103R (Transfers and Servicing of Financial Assets and Extinguishments of Liabilities) are to be added to agenda item 2024-04: Conforming Repurchase Agreements for further consideration as part of the larger project looking at statutory guidance for repurchase agreements and secured lending. This clarification is effective August 13, 2024.
• ASU 2023-01, Leases (Topic 842), Common Control Arrangements (Ref #2024-02): Adopted revisions in SSAP No. 19 (Furniture, Fixtures, Equipment, and Leasehold Improvements) and SSAP No. 73 (Health Care Delivery Assets and Leasehold Improvements in Health Care Facilities), with modification, ASU 2023-01. This clarification is effective August 13, 2024.
• ASU 2023-08, Accounting for and Disclosure of Crypto Assets (Ref #2024-03): Revisions in SSAP No. 20 (Nonadmitted Assets) adopt, with modification, ASU 2023-08 and nullify INT 21-01: Accounting for Cryptocurrencies. Crypto assets are nonadmitted assets for statutory accounting. This clarification is effective August 13, 2024.
• Residual Consistency Revisions (Ref #2024-08): Adopted revisions result with identified SSAPs referring to SSAP No. 21 (Other Admitted Assets) for the formal residual definition for accounting and reporting guidance. This clarification is effective January 1, 2025.
• SSAP No. 2 (Cash, Cash Equivalents, Drafts, and Short-Term Investments) Clarification (Ref #2024-09): Adopted revisions eliminate lingering references implying that asset-backed securities, mortgage loans, or other Schedule BA items are permitted to be reported as cash equivalents or short-term investments. This clarification is effective January 1, 2025.
• Spring 2024 (Ref #2024-14EP): Adopted editorial revisions to the Accounting Practices and Procedures Manual remove “Revised” and “R” identifiers from SSAP titles and SSAP references throughout the Manual. This clarification is effective August 13, 2024.

Next Steps for the Insurance Industry

We will continue to monitor development from the SAPWG when additional meetings are held. The next meeting of the SAPWG is scheduled for November 2024 in Denver, Colorado. If you have any questions regarding how these changes will affect your organization, please reach out.