proprietary 2015 stoneriver, inc. april 22, 2015 connie jasper woodroof naic liaison, stoneriver...

Proprietary 2015 StoneRiver, Inc.Proprietary 2015 StoneRiver, Inc.

April 22, 2015Connie Jasper WoodroofNAIC Liaison, StoneRiver

April 22, 2015Connie Jasper WoodroofNAIC Liaison, StoneRiver

Chicagoland Chapter IASANAIC Focus

Chicagoland Chapter IASANAIC Focus

Proprietary 2015 StoneRiver, Inc.

AgendaAgenda

• Statement Changes

• Accounting Revisions

• Risk-Based Capital

• Odd ‘N Ends

Proprietary 2015 StoneRiver, Inc.Proprietary 2015 StoneRiver, Inc.

Statements ChangesStatements Changes

Proprietary 2015 StoneRiver, Inc.

Reminder - Annual Changes in QuarterlyReminder - Annual Changes in Quarterly

• Notes to Financials

• 17C (wash sales), instructional change

• ACA risk sharing Note (24E) required in quarterly

• 21H, 21J removed and replaced

• Schedule A

• New instructions for State Column

• Electronic columns for Postal Code, Property Type

• Schedule B

• New instructions for State column

• Electronic columns for Postal Code, Property Type, Maturity Date

Proprietary 2015 StoneRiver, Inc.

Reminder - Annual Changes in QuarterlyReminder - Annual Changes in Quarterly

• Schedule BA

• New instructions for State column, where appropriate

• Electronic columns for Postal Code, Property Type, Maturity Date, where appropriate

Proprietary 2015 StoneRiver, Inc.

New Quarterly ChangesNew Quarterly Changes

• Schedule P

• Changes in pooling agreements

• If impacts prior accident years, historical data in Schedule P – Parts 1 thru 6 to be restated

• Use new pooling percentages

• If only impacts current/future years, no restatement necessary

Proprietary 2015 StoneRiver, Inc.

New Quarterly ChangesNew Quarterly Changes

Schedule DB – Part D – Section 1

Two new footnotes, beginning in 2015 quarterly

Should equal Assets page, Line 7Should equal Derivatives lineon Liabilities page

Proprietary 2015 StoneRiver, Inc.

New Quarterly ChangesNew Quarterly Changes

• Note 5J – Offsetting and Netting of Assets & Liabilities

• Now required Note in quarterly

Proprietary 2015 StoneRiver, Inc.

Notes to FinancialsNotes to Financials

Quarterly required notes

1A, 1C(6), 5D, 5E(3)b, 5I(2), 5I(3), 5J, 11B, 12A(4), 17B(2), 17B(4)a, 17B(4)b, 17C, 20, 24F, 25

And for Property/Casualty

36B

Items in red were added to the quarterly requirements at March meeting

Proprietary 2015 StoneRiver, Inc.

Approved at March MeetingApproved at March Meeting

• LAH and Fraternal Statements

• Clarification of terms “market value” and “fair value” in Notes 32 and 34

• Health Statement

• Terminology used in General Interrogatories – Part 2 and Five-Year Historical Data

• Statutory minimum capital and surplus

Proprietary 2015 StoneRiver, Inc.

Health StatementHealth Statement

Line 3, CY amount should equal Gen Int - Part 2, Line 11.2

Proprietary 2015 StoneRiver, Inc.

On June Agenda for AdoptionOn June Agenda for Adoption

• Removal of bar code lists from Instructions

• Assets page

• New description for Line 15.3, “Accrued retrospective premiums ($_____) and contracts subject to redetermination ($_____)”

• Cash flow

• Do not include non-cash items

• Disclosure of non-cash operating items

Proprietary 2015 StoneRiver, Inc.

On June Agenda for AdoptionOn June Agenda for Adoption

• Notes

• Note 1

• Note 5

• Note 11B

• Note 12

• Note 22

• Schedule A

• Instructional changes for reported wholly-owned LLC investing in single real estate property

Proprietary 2015 StoneRiver, Inc.

On June Agenda for AdoptionOn June Agenda for Adoption

• Schedule D – Part 1

• New instructions for CUSIP and Description columns

• New electronic columns for name of issuer, issue, SEDOL code, ISIN identification, capital structure code

• Supplemental Health Care Exhibit

• Remove 2% column; replace with column for Medicare Part C and D reporting

Proprietary 2015 StoneRiver, Inc.

On June Agenda for AdoptionOn June Agenda for Adoption

• P&C Statement

• Cybersecurity insurance supplement (P&C)

• Schedule F – Part 3

• Reinsurance supplement (P&C)

• Definitions of all LOBs would appear only in Appendix; additional definitions from Property Product Matrix

• Rumors that a Terrorism Insurance Supplement maybe be added yet this year

• Health Statement

• New instructions for U&I – Part 2B, Column 10

Proprietary 2015 StoneRiver, Inc.

On June Agenda for AdoptionOn June Agenda for Adoption

• Life Statement

• Changes to XXX/AXXX supplement

• Title

• Add one and two year loss development to 5-Yr Historical Data

Proprietary 2015 StoneRiver, Inc.Proprietary 2015 StoneRiver, Inc.

Accounting Changes

Proprietary 2015 StoneRiver, Inc.

Late adoptions, effective 2014Late adoptions, effective 2014

• SSAP Nos. 1 & 4

• Definition of “restricted” assets

• SSAP No. 56 – Separate Accounts

• Clarification of disclosures

• SSAP No. 55

• Claims-related losses for extra contractual obligations & bad faith lawsuits to be reported in losses

• SSAP No. 57 – Title Insurance

• Changed disclosure requirements

• SSAP No. 101 – Income Taxes

• RBC amount in DTA calc to be current YE amount in annual; PY annual amount in quarterly

Proprietary 2015 StoneRiver, Inc.

Late adoptions, effective 2014Late adoptions, effective 2014

• SSAP No. 107 – Accounting for the Risk-Sharing Provision of the Affordable Care Act

• Review carefully, as most of the assessments ARE NOT treated as reinsurance

• Appendix A-010

• Updates to allow the 2012 Group Long-Term Disability Table

• Effective 1/1/2017, with early adoption permitted

• Appendix E, Issue Paper No. 99, Appendix B, INT 99-00

• Compiles listing of rejected GAAP into one place; IP No. 99

Proprietary 2015 StoneRiver, Inc.

Emerging Actuarial Issues Working GroupEmerging Actuarial Issues Working Group

• Issues interpretation of actuarial guidelines

• Actuarial INT 38

• Actuarial INT 39

• Actuarial INT 40

• Actuarial INT 41

• AG 47

• AG 48

• Also posted on the APP Manual password protected website

Proprietary 2015 StoneRiver, Inc.

SSAP No. 40RSSAP No. 40R

• Single-member/single-asset LLC holding real estate

• 100% owned by reporting insurer

• Invests in single real estate investment

• Report on Schedule A; no longer Schedule BA

• Not optional

• Subject to Schedule A accounting requirements

• Results in cumulative effect of accounting change

• SSAP contains instructions for conversion of valuation

• Effective 1/1/2015

Proprietary 2015 StoneRiver, Inc.

Adopted at March MeetingAdopted at March Meeting

• SSAP Nos. 1 and 4

• Audited disclosure requirement regarding entity’s ability to continue as a going concern

• In addition

• SSAPs 48, 68, and 97 revised to indicate affiliate holdings whose audited financials indicate substantial doubt as to ongoing concern ability must be nonadmitted

Proprietary 2015 StoneRiver, Inc.

Adopted at March MeetingAdopted at March Meeting

• SSAP No. 11

• Delete disclosures pertaining to defined benefit and defined contribution plans

• SSAP Nos. 36, 37, 40R

• Revisions for accounting and reporting for foreclosed mortgage loans collateralized by real estate and for foreclosed mortgage loans guaranteed by a government sponsored program

Proprietary 2015 StoneRiver, Inc.

Adopted at March MeetingAdopted at March Meeting

• SSAP No. 69 – Cash Flow

• Cash flow statement to include only cash items

• Cash, cash equivalents, short-term investments

• Disclosure regarding non-cash operating items (Blanks change pending)

• SSAP No. 74

• Brings SSAP and Blank reporting of protected cell amounts in sync

• SSAP referred to write-in lines; Blanks has specific lines; SSAP changed

Proprietary 2015 StoneRiver, Inc.

Adopted at March MeetingAdopted at March Meeting

• SSAP No. 92

• Incorporate guidance from INT 13-03 into SSAP

• Clarification of Surplus Deferral

Proprietary 2015 StoneRiver, Inc.

Re-exposed ItemsRe-exposed Items

• Re-exposed

• SSAP No. 61R – New audited statement disclosure requirements (May 21 deadline)

• SSAP No. 62R – accounting and reporting for certain asbestos and environmental reinsurance with retroactive counterparties (April 30 deadline)

• SSAP No. 93 – accounting for investments in qualified affordable housing projects (May 21 deadline)

Proprietary 2015 StoneRiver, Inc.

Newly Exposed Items – May 21 deadlineNewly Exposed Items – May 21 deadline

• Nonsubstantive revisions

• SSAPs No. 24, 25, 26, 40R, 54

• Appendix A-821

• Substantive revisions

• SSAPs No. 22, 41, 86, 97

• AP&P Manual in general

• Revisions and technical changes to several SSAPs to make Manual more consistent

Proprietary 2015 StoneRiver, Inc.

Restricted Assets SubgroupRestricted Assets Subgroup

• Continuing review of restricted assets

• FHLB transactions completed for now; but will be reviewed after filing of 2014 annual statements

• Repurchase transactions• Revisions to SSAP No. 103; http://

www.naic.org/committees_e_app_restricted_asset_sg.htm

• Only short-term allowed

• Collateral % revisions changed• Must qualify as admitted assets• Collateral requirements to be changed as well

• Possible accounting changes at later date

Proprietary 2015 StoneRiver, Inc.Proprietary 2015 StoneRiver, Inc.

Risk-Based CapitalRisk-Based Capital

Proprietary 2015 StoneRiver, Inc.

Risk-Based Capital (RBC) GroupsRisk-Based Capital (RBC) Groups

• Capital Adequacy Task Force (parent group)

• Life RBC Working Group

• C-3 Phase II AG 43 (E/A) Subgroup

• Stress Testing Subgroup

• Property RBC Working Group

• Catastrophe Risk Subgroup

• Health RBC Working Group

• Investment RBC Working Group

• Operational Risk Subgroup

Proprietary 2015 StoneRiver, Inc.

2015 Formulas Not Finalized2015 Formulas Not Finalized

• Have until the end of April to finalize all formulas

• All of the formula groups have items exposed for comment and which they will vote upon prior to the end of April

Proprietary 2015 StoneRiver, Inc.

Operational RiskOperational Risk

• Debate continues

• FYI pages were added to 2014 formula; data needs to be analyzed

• Large divide between industry opinion and regulatory opinion; even a divide between regulators

Proprietary 2015 StoneRiver, Inc.

All FormulasAll Formulas

• Clarification of AVR treatment for non_AVR parents of life companies

• No RBC specific permitted practices allowed

• No changing of statement classifications, no factor changes, no formula changes

• No restating in RBC company discussion

• Still pending

• Clarifications for Jurat signatures

• Changes to ACA ratio sensitivity test

Proprietary 2015 StoneRiver, Inc.

PRBCPRBC

• Adopted changes

• Credit risk for reinsurance

• Uses reinsurers ratings

• Language for catastrophe modeling attestation

• Exemption criteria for catastrophe modeling

• Addition of Underwriting Risk – Experience Fluctuation Risk for Health business (FYI only this year)

• Addition of ACA Adjustment and Risk Corridor Sensitivity Test

• R6 and R7 contingent credit risk factors

• Curve sorting: Aggregate Exceedance Probability (AEP) vs. Occurrence Exceedance Probability (OEP)

Proprietary 2015 StoneRiver, Inc.

LRBCLRBC

• Adopted changes

• Addition of ACA Adjustment and Risk Corridor Sensitivity Test

• Addition of Underwriting Risk – Experience Fluctuation Risk for Health business (FYI only this year)

• Still pending

• XXX/AXXX Shortfall

• Schedule DB

Proprietary 2015 StoneRiver, Inc.

HRBCHRBC

• Adopted changes

• Format change to Risk Adjustment and Risk Corridor Sensitivity Test

• Removed pandemic and biological risk interrogatories

• Affiliated investment subsidiaries now 30% factor

• Affiliated instructional change indicating pro-rata amounts based on percentage of ownership to be used

• Still have other revisions to consider by April 30

Proprietary 2015 StoneRiver, Inc.

QuestionsQuestions

• Connie Jasper Woodroof

• NAIC Liaison

• 800.373.3366 ext 5761

• connie.woodroof@stoneriverfc.com