Richard Pullara
Insurance Solutions Specialist
Richard has more than 15 years of insurance investment accounting experience. He is an expert in statutory accounting and investment systems and is Clearwater’s liaison for the NAIC, NASVA, and the IASA. He has an MBA in finance from the University of Hartford and a bachelor’s in accounting from York College of Pennsylvania.
The Blanks Working Group (BWG) met during the Spring 2017 National Meeting to discuss several items, including seven adopted items—two of which pertain directly to investments—and several new exposed items.
Adopted Items:
ITEM 2016-31BWG
As discussed in NAIC Fall 2016 National Meeting Update – Blanks Working Group, item 2016-31BWG reduces the number of collateral types on the Schedule D – Part 1 from 21 to 10. Residential Mortgage-Backed Securities (RMBS), Commercial Mortgaged-Backed Securities (CMBS), and other Loan-Backed and Structured Securities (LBaSS) reported in the “Industrial” and “Miscellaneous (Unaffiliated)” categories now have the following new collateral types:
- Residential Mortgage Loans / RMBS
- Commercial Mortgage Loans / CMBS
- Home Equity
- Individual Obligations – Credit Card, Auto, Student Loans and Recreational Vehicles
- Corporate/Industrial Obligations – Tax Receivables, Utility Receivables, Trade Receivables, Small Business Loans, Commercial Paper
- Lease Transactions – Aircraft & Equipment Leases and Equipment Trust Certifications
- CLO/CBO/CDO
- Manufactured Housing and Mobile Home Loans
- Credit Tenant Loans
- Other
The adopted proposal contains examples of what to include under each category.
ITEM 2016-33BWG
Item 2016-33BWG, which modifies the annual instructions to reflect the movement of money market funds (MMFs) to Schedule E – Part 2, was adopted with an effective annual 2017 reporting date. This item was referred to the BWG by the Statutory Accounting Principles Working Group (SAPWG) based on adopted changes to SSAP No. 2 – Cash, Drafts, and Shorter-Term Investments. The adopted SSAP moves MMFs to Cash Equivalents as requested by both Industry and regulators.
Exposed Items
Exposed items will be voted on during the June conference call to ensure they will be effective for 2017 annual reporting.
ITEM 2017-02BWG
This item modifies the Capital Structure Code on the Schedule D – Part 1, with a minor change that replaces the code 4 from “Other” to “Non-Applicable.” This change is requested, as not all securities on the Schedule D have a Capital Structure Code. A “Not Applicable” code is more appropriate.
ITEM 2017-03BWG
This item modifies the instructions for the CUSIP column on Schedules BA and DL and adds a column for ISIN on Schedule DL. These changes ensure consistency with previously adopted changes to CUSIP in 2016 on the Schedule D.
ITEM 2017-07BWG
This item adds new designations to Schedules D and BA for bonds and preferred stock rated by the Private Letter (PL) and Reporting Exception (RE) suffices. This item establishes the framework for the designations as work continues on the ratings project currently adopted by the Valuation of Securities Task Force (VOSTF).
PROPOSAL 2017-10BWG
This proposal changes the definition of the notional amount (as adopted by the SAPWG) from SSAP No. 86 – Derivatives. The new definition is included on page 202 of this NAIC document.
PROPOSAL 2017-12BWG
This item is the first of future changes related to the SAPWG SSAP No. 2013-36 – Bond ETF Changes. This item updates the Code Code column of the Schedule D for SVO-identified funds. Insurance companies will need to make an election on 2017 reporting specifying whether they will use fair value or systematic value for bond ETFs for 2018 reporting. By placing the new symbol “*” in the Code Code column, the insurance companies elect to use the systematic value for 2018 reporting. This agenda item further modifies the instructions so if an insurance company elects to use fair value, that fair value option should be used for 2017. However, if a reporting entity elects systematic value, they will continue to use the current method (original cost) until 2018. The election is a one-time irrevocable election.
COMBINATION OF FRATERNAL AND LIFE BLANKS
The BWG received a request from Industry to combine Fraternal and Life Blanks and eliminate the need for a separate Fraternal statement. This item, which is jointly led by Industry and regulators, is in the discovery phase and will most likely require a two-year process to evolve the project. The NAIC will release a survey to both companies and regulators to study the potential impact.