The Blanks Working Group (BWG) met August 6 at the NAIC Summer 2017 National Meeting in Philadelphia and during a June 14 conference call. Here are the latest items discussed and changed by the BWG.
New Line Added to the Statement of Cash Flows
A recently adopted proposal will add prepayment penalties and callable bonds to the Schedule D verification report. As a result, a recommendation was made to add a new line to the Statement of Cash Flows, which will similarly reflect this information, and the change was adopted. The effective date of this change aligns with the effective date of the verification change in the first quarter of 2018.
Change to Capital Structure Code
Previously, if a Capital Structure Code was not available on a security (e.g., a bond mutual fund or an ETF) the statement instructions advised reporting “Other” for this field. An update was recommended to change the wording to “Not Applicable,” since “Other” inaccurately implies the security may have another position in the Capital Structure that is not identified by the other selections. This change was adopted at the June 14 conference call and is effective for year-end 2017.
Identifier Changes on the BA and DL
Item 2017-03BWG, previously discussed at the NAIC Spring 2017 National Meeting, recommended instruction on Schedules BA and DL be deleted, which indicates the CUSIP must conform to those published by the SVO, since an insurer can now designate the International Securities Identifier Number (ISIN) when a CUSIP is unavailable. This recommendation would allow for more consistency with similar changes made to the Schedule D.
Additionally, clarification was recommended on the Schedule DL to indicate when securities identified were reported in aggregate on the assets page or when they were reported on the other investment schedules. This change was adopted during the June 14 conference call and is effective for year-end 2017.
Definition of “Notional” on the Schedule DB
“Notional” was recently clarified by the Statutory Accounting Principles Working Group (SAPWG) and the description changed to “Notional Amount” in SSAP No. 86. A recommendation was made that would similarly change the wording within the Annual Statement Instructions and was unanimously adopted during the June 14 conference call with an effective date of year-end 2017.
Instructions and Illustrations for Notes 5A(4) and 5A(5) Modified
SAPWG recently clarified that an entity can either be a participant or co-lender in a mortgage loan and recommended the Annual Statement Instructions be similarly modified. This proposal was adopted during the June 14 conference call and is effective year-end 2017.
“Code Code” Update for Securities Held at Systematic Value
A newly adopted change will allow insurers to optionally carry their bond ETFs and bond mutual funds at “systematic value.” The BWG recommended an additional change that would allow regulators to easily identify this treatment on the Schedule D through use of the already existing column “Code Code.” This proposal also recommended further accommodating the systematic value update by changing the language for “Book Adjusted Carrying Value” and “Unrealized Valuation Increase (Decrease)” on the Schedule D. This proposal was adopted during the June 14 conference call and is effective year-end 2017.
Repurchase and Reverse Repurchase Agreements
Disclosures were changed for repurchase and reverse repurchase agreements accounted for under SSAP No. 103: Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. A referral was sent to the BWG to remove the disclosure for these assets from Note 5(e) and add them to Notes 5(f) through 5(i). This change was adopted during the June 14 conference call, and the disclosure requirements are effective the fourth quarter of 2017. However, since there is no retroactive treatment, the disclosures are not required for prior quarters in 2017.