Carolinas Chapter IASA Carolinas IASA Carolinas IASA - - PDF document

Carolinas Chapter IASA

StoneRiver, Inc. 1

Proprietary  2014 StoneRiver, Inc. Proprietary  2014 StoneRiver, Inc.

• Carolinas IASA

August 21, 2014

Connie Jasper Woodroof

StoneRiver, NAIC Liaison

Carolinas IASA

August 21, 2014

Connie Jasper Woodroof

StoneRiver, NAIC Liaison

Proprietary  2014 StoneRiver, Inc.

• 2014 Annual Statement
• 2014 RBC
• Accounting Update

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Carolinas Chapter IASA

StoneRiver, Inc. 2

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• Proprietary  2014 StoneRiver, Inc.
• Working Capital Finance Investments (5I)
• Aggregate disclosure by NAIC designation
• Gross assets
• Nonadmitted asset amounts
• Net admitted asset amounts
• Aggregate maturity distribution
• Defaults during reporting period
• From adoption of SSAP No. 105

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StoneRiver, Inc. 3

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• FHLB
• Description of agreement
• Data-captured tables designed to disclose
• Amount of capital stock owned by class
• Stock eligible for redemption
• Collateral pledged
• Aggregate amount of borrowings
• Maximum aggregate amount of borrowings
• Are current borrowings subject to prepayment penalties

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• Additional disclosure for multiemployer plans
• Has funding improvement or rehabilitation plan been

implement or is pending

• Did reporting entity pay surcharge to plan
• Description of minimum contributions required for

future

• Qualitative description of possible obligation, including

benefits earned by other employer

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• Move Joint and Several Liabilities disclosure from

Note 21 to Note 14

• Note 14 renamed to Liabilities, Contingencies and

Assessments

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StoneRiver, Inc. 4

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• Modification of PY Affordable Care Act (ACA)

assessment information.

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• Risk sharing provisions of the Affordable Care Act

(ACA)

• “Balance” disclosure in annual and quarterly beginning

1st quarter 2014

• “Roll-forward” disclosure in annual and quarterly

beginning annual 2014

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! !

• Instructional clarification of NAIC Company Code,

Alien Insurer Identification Number (AIIN), Pool/Association Number and Certified Reinsurer Number (CRIN)

• Which entities are assigned which numbers
• NAIC Contact information for obtaining numbers

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StoneRiver, Inc. 5

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!"# $ !"# $

• Columnar heading change
• Federal ID Number now ID Number
• Enter appropriate identification number
• Federal Employers Identification Number (FEIN)
• Alien Insurer Identification Number (AIIN)
• Certified Reinsurer Identification (CRIN)

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• General Interrogatories – Part 1
• Is the reporting entity a member of an Insurance

Holding Company System consisting of two or more affiliated persons, one or more of which is an insurer?

• If yes, complete Schedule Y
• If no, not necessary to complete Schedule Y

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%!# %!#

Carolinas Chapter IASA

StoneRiver, Inc. 6

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%! %!

• Schedules A, B, BA
• Add postal code electronic column
• Schedule A – location of real estate
• Schedule B – location of real estate securing mortgage

loans

• Schedule BA – location of properties for investments

having the underlying characteristics of real estate and/or mortgage loans

• If multiple properties, list all zips from highest to lowest

in property value

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%! %!

• Schedules A, B, BA
• Property type electronic column
• Primary use of property

OF – Office RT – Retail MU – Apartment/Multifamily IN – Industrial HC – Medical/Health Care MX – Mixed use LO – Lodging OT - Other

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%! %!

• Schedule A, B, BA
• State column now accepts 3-character country code
• Schedules B, BA
• Maturity date electronic column
• Mortgage loans and those investments having the

underlying characteristics of mortgage loans

• State date mortgage loan matures

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StoneRiver, Inc. 7

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&'!( &'!(

• New format for Part 2 – Officers and Employees

Listing still for top 10 employees/officers, but now must include PEO, PFO; next 3 most highly compensated executive employees if >$100,000; next 5 most highly compensated employees if >$100,000.

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&'!( &'!(

• New format for Part 3 – Directors

Applies to all Directors

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• Provide a narrative description of any material

factors necessary to gain an understanding of the information disclosed in the tables. New Part 4 – Narrative Description of Material Factors

Carolinas Chapter IASA

StoneRiver, Inc. 8

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)* )*

• Exhibit 5
• Modified definition of contingent deferred annuities

(CDA) in instructions

• Actuarial Opinion
• Actuary must be appointed directly by, or by the

authority of, Board of Directors; and report to Board or Audit Committee

• Actuary must meet certain qualifications
• Opinion must follow guidelines and standards
• Each company filing an annual statement

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)* )*

• Asset Valuation Reserve (AVR)
• New format for calculating mortgage loan and

underlying characteristics of mortgage loan portion of AVR

• Utilized RBC mortgage loan division and treatment
• Supplemental Exhibits & Schedules

Interrogatories

• Will Regulatory Asset Adequacy Issues Summary be

filed with state by March 15

• Will Actuarial Memorandum required by Actuarial

Guidelines be filed with state by April 30

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)*+*! )*+*!

General Interrogatories – Part 2

1 2 3 4 Assets Supporting Reserve Credit 5 6 7 Company Name NAIC Company Code Domiciliary Jurisdiction Reserve Credit Letters of Credit Trust Agreements Other

Are any of the captive affiliates reported on Schedule S, Part 3 as authorized reinsurers? Yes [ ] No [ ] If the answer to 28.1 is yes, please provide the following:

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StoneRiver, Inc. 9

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)*+*! )*+*!

• Schedule S – Part 3 – format changes

6 Type of Reinsurance Ceded 7 Type of Business Ceded Insert available code to indicate type of business Does NOT completely align With Analysis of Ops by Line Of Business For 2014, must provide for captive reinsurance, A&H products; may report “Other” for other non-captive reins

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*! *!

• Formal adoption of Exhibit 3A instructions issued

in 2013 as guidance

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$,-, $,-,

• Actuarial Opinion and Actuarial Opinion Summary

Supplement (also Title companies)

• Includes revised reporting for pooled companies and
• ther technical changes
• Add new line (2.4) to state page, IEE - Parts II and

III for Private Crop

• Schedule P instructions regarding restatement as

a result of a change in pooling percentage (2015 implementation)

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StoneRiver, Inc. 10

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$,-, $,-,

• Combined Statement
• Add statement contact person’s email address
• Will be shown on printed copy
• Will be data captured

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./0

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• Federal Home Loan Bank
• Under non-controlled assets section
• Same treatment and factor as other non-controlled

assets

• Comes from information added to General

Interrogatory 25 for FHLB

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StoneRiver, Inc. 11

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• ACA Fee RBC Ratio Sensitivity Test
• Deducts ACA fees from TAC
• Computes RBC ratio of TAC less ACA fees to

Authorized Control Level RBC

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• Operational Risk
• Format different for each of the formulas
• FYI only for 2014
• No factors will be used for 2014
• Currently would not be subject to covariance

calculation Current total RBC after Covariance + Operational Risk = Total RBC after Covariance

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$ 0* 0 $ 0* 0

• New lines added to Other Long-Term Assets section

for Working Capital Finance Notes

• Additional lines added to Asset Concentration
• PRBC and HRBC
• Receivables for Securities
• Factor changed from .050 to .024

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StoneRiver, Inc. 12

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*! 0 *! 0

New page XR012-A FYI only For 2014

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*! 0 *! 0

• Revisions to Credit Risk
• Excludes ACA recoverables from existing lines
• Adds ACA recoverables and separates affiliate from

non-affiliate reinsurance

• Recoverables on Paid Losses – ACA
• Recoverables on Paid Losses – Non-affiliate
• Recoverables on Unpaid Losses – ACA
• Recoverables on Unpaid Losses – Non-affiliates
• Same .005 factor applied to other receivables in Credit

Risk

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*! 0 *! 0

• Federal ACA Risk Adjustment & Risk Corridor

Sensitivity Test

• Pandemic and Bio Risk
• Only 8 companies responded in 2013

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StoneRiver, Inc. 13

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)1 02 0 )1 02 0

• Interest Rate Risk and Market Risk (Alternative)
• Only to collect information, at this time
• Companies to include description of proprietary

generated used, calibration criteria and number of scenarios

• AAA scenario required for companies with reserves of

$1b or more and admitted assets > $10b; optional for

• ther companies

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)1 02 0 )1 02 0

• AVR limited for inclusion in Total Adjusted Capital
• Only AVR not used in asset adequacy testing
• Not readily apparent reporting format; noted in

instructions and as footnote at bottom of page

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$, 0 $, 0

• Schedule P catastrophe amts
• Instructions for clarity added as footnotes

24A & 28A - Only include losses from events included on the US catastrophe list posted by the Cat Risk Subgroup available on website or numbered and labeled US by PCS as hurricane, tropical storm, or earthquake. 24B & 28B - Only include losses from events included on the non-US catastrophe list posted by the Cat Risk Subgroup available on website or numbered and labeled Non-US by PCS as hurricane, tropical storm,

• r earthquake.

Carolinas Chapter IASA

StoneRiver, Inc. 14

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$, 0 $, 0

• Underwriting risk factors updated
• Annual occurrence
• Adopted underwriting risk premium factors for

Line 4 (ex-cat factors), PR018A

• Still FYI page
• Instructions for PR026 – Catastrophe Risk Charge
• Expands upon instructions in footnotes
• Attestation for catastrophe modeling
• Modeling used for RBC catastrophe same as used

internally

• If exceptions, must disclose and explain why

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$, 0 $, 0

• New FYI PR003A that uses RBC After Covariance

including Catastrophic Risk to calculate affiliated risk

• Also new FYI PR004A to summarize affiliated risk with

catastrophic numbers included

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Carolinas Chapter IASA

StoneRiver, Inc. 15

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! !

• Preamble, Appendix D, Issue Paper 99
• AICPA SOPs no longer reviewed for statutory

accounting; not considered authoritative accounting guidance

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3$ 3$

Add reference to original SSAP and current authoritative guidance on face of each Issue Paper Example:

Statutory Issue Paper No. 8 - Accounting for Pensions Current Authoritative Guidance for Pensions: SSAP No. 102 This issue paper may not be directly related to the current authoritative statement. Original SSAP from Issue Paper: SSAP No. 8

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*)0. % *)0. %

• SSAP No. 1 – Disclosures of Accounting Policies
• Disclosure of pledged or restricted assets to total

assets and total admitted assets (FHLB capital stock; collateral pledged to FHLB); general and separate accounts individually

• SSAPs No. 15 – Debt & No. 52 – Deposit-Type

Funds

• FHLB contracts accounted for under applicable SSAP,

disclosures are required under that SSAP, as well as SSAP 30

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*)0. % *)0. %

• SSAP No. 30 – Common Stock
• FHLB stock restricted until actual redemption
• Par is fair value, unless OTTI
• Collateral pledged to FHLB considered restricted
• Collateral pledged to FHLB is admitted asset, if certain

conditions exist

• Enhanced disclosures (general and separate accounts

individually)

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! !

• SSAPs No. 3 – Changes/Corrections & No. 68 –

Business Combinations

• Merger footnote clarification
• Mergers with shell company (reporting entity with no
• utstanding liabilities) exempt from prior year

restatements

• Mid-year mergers with shell company reflected as of

January 1 of current year

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11(45% 11(45%

• New SSAP No. 106 – Affordable Care Act

Assessments

• Adopted in June, but effective date of 1/1/2014
• Moves ACA Section 9010 language from SSAP No.

35R to new SSAP; issue paper 148R

• Incorporates revisions from accounting item 2013-13,

also adopted in June

• Changes statement disclosure currently required in

paragraph 9bi, ii, and iii

• Already adopted by Blanks in June

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11(45% 11(45%

• Currently SSAP No. 35R; new separate SSAP to be

developed

• ACA Risk Sharing Programs Disclosures
• Requires quarterly and annual disclosures of “balance”

amounts

• Quarterly disclosures made retroactive to 1st

quarter 2014

• Requires quarterly and annual “roll-forward” balances
• Beginning annual 2014 and thereafter
• Examples of “roll-forward” included as an Appendix

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, ,

• ACA Fee
• Recognize liability & expense for ACA fee payable on

1/1 of fee year beginning 1/1/2014

• Include recognition of fee in special surplus as

calculated from prior data year beginning 12/31/2014

• Disclosure of fee required 12/31/2014 and thereafter

for fee payable in following year

• ACA Risk Provisions
• “Balance” disclosures – quarterly beginning 1/1/2014
• “Roll-forward” disclosures – beginning 12/31/2014 and

thereafter; includes quarterly beginning 2015

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$67/ 8%% $67/ 8%%

• Adopts ASU 2013-10
• Defines benchmark interest rate
• Eliminates the prior restriction for using different

benchmark rates for similar hedges

• Including Fed Funds Effective Swap Rate (i.e.,

Overnight Index Swap Rate)

• Nonsubstantive change

Carolinas Chapter IASA

StoneRiver, Inc. 18

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$9# $ 01$ $9# $ 01$

• Requires additional disclosure for multiemployer

benefit plans

• Nonsubstantive change

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$9:# %(;; $9:# %(;;

• Incorporates changes to decision tree clarifying

valuation method for downstream affiliates

• Does not change current accounting
• Modifies Appendix B (Valuation Method flowchart)

to reference accounting for downstream holding companies

• Nonsubstantive change

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$ # !/0$, $ # !/0$,

• Equity-based payments to non-employees
• Adopts GGAP fair value with modifications
• Nonadmit prepaid assets
• Disallows minimum value method
• Requires midpoint range to estimate
• Adopted in 2013, but effective December 31, 2014

Carolinas Chapter IASA

StoneRiver, Inc. 19

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$# <. %4<5 $# <. %4<5

• Allows as admitted asset if conditions met
• Must be valued as NAIC Designation 1 or 2 by SVO
• Audited financials of finance agent filed annually

with SVO

• Adopted in 2013, effective January 1, 2014

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$7 # &8$&=1> $7 # &8$&=1>

• Capitalization policy from previous SSAP No. 87

was to be incorporated into No. 16R; was missed

• Disclosure of capitalization policies was NOT limited to

audited financial statements only

• Revisions clarify should be in both sets of

financials, making consistent with other SSAPs

• Nonsubstantive change

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$9# 2&?$/ ) $9# 2&?$/ )

• Service concession arrangements
• Not within the scope of SSAP No. 22
• Not property, plant or equipment under SSAP No. 19
• No interest from industry in developing accounting

guidance for these arrangements

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$7# 0?$@ / )0 $7# 0?$@ / )0

• Adds definition of structured notes and disclosure

requirement to SSAP No. 26

• Specifically excludes items accounted for under SSAP
• No. 43R
• In SSAP No. 43R term “structured notes” changed

to “structured securities” to avoid confusion

• Nonsubstantive revisions

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&' &'

• SSAP Nos. 40 and 48
• Recognize single member LLCs holding real estate 9

(Schedule BA) as real estate on Schedule A

• Better RBC treatment
• No annual audit requirement
• SSAP No. 57 – Title Premium
• New premium disclosure categories
• SSAP No. 86 – Derivatives
• Revisions to Schedule DB to reconcile to Balance

Sheet Reporting

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&' &'

• SSAP No. 100R
• Fair value guidance and disclosures from ASU 2011-

04, Fair Value Measurement (Topic 820)

• Modified language on how to determine fair value; new

disclosures; changes part of project to converge U.S. GAAP fair value rules w/IFRS

• Would require disclosure of:
• Transfers between Levels 1-2,
• Sensitivity of Level 3 measurements to changes in

unobservable inputs

• Fair value levels for all financial instruments, not

just those measured at fair value

• Need to consider disclosures for audited statutory

financial statements

Carolinas Chapter IASA

StoneRiver, Inc. 21

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&' &'

• Investment matrix
• Trying to determine which investment SSAPs may

need to be revised/rewritten

• Project may result in substantive changes to SSAPs,

and ultimately statement reporting

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$A!<. $A!<.

• Review of recent FASB work on goodwill
• Single-member and single-asset LLCs
• Further work on various restricted assets
• Referral from Valuation of Securities Task Force
• n bottom-tier residual interests

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B B

• Connie Jasper Woodroof
• NAIC Liaison
• 800.373.3366 ext 85761
• connie.woodroof@stoneriver.com