NAIC Spring 2018 National Meeting Update – Blanks Working Group

The Blanks Working Group (BWG) met on March 24 at the NAIC Spring 2018 National Meeting in Milwaukee, Wisconsin. Here are the latest items discussed by the BWG.

Adopted Items

ITEM #2017-21BWG: ADD LANGUAGE TO GENERAL INTERROGATORY MERGER QUESTIONS

This proposal adds language to the general interrogatory merger questions (5.1 annual and 4.1 quarterly) so the historical data can be merged if the questions are answered “yes.” The goal is to reduce the number of cross-check failures that currently happen post-merger. This update allows cross checks to run across mergers of the prior year data vs. the merger data.

The item was adopted and will be effective for 2018 year-end reporting.

ITEM #2017-24BWG MODIFIED: ADD NEW CATEGORY LINES FOR BANK LOANS

This proposal adds additional lines for bank loans on the Schedule D — Parts 1, 3, 4, and 5; Schedule DA; Schedule DL — Parts 1 and 2; and Schedule E — Part 2. It also adjusts the resulting category line number references. Prior to adoption, there were no comments from Interested Parties. The only comments received came from Interested Parties clarifying the instructions for reporting.

The item was adopted and will be effective for 2018 year-end reporting.

ITEM #2017-25BWG MODIFIED: ADD LANGUAGE FOR RESTRICTED CASH

In August 2017, the Statutory Accounting Principles (E) Working Group (SAPWG) adopted changes to the cash flow statement, SSAP No. 69 — Statement of Cash Flows. SAPWG adopted a change in August 2017 effective as of December 31, 2019. As a result, the BWG also proposed changes to the cash flow statement. These are in statutory accounting and should include in language in the statement instructions for the inclusion of restricted cash and cash equivalents in the beginning and ending balance. This is effective for year-end reporting for both beginning and ending cash as of December 31, 2019.

Exposed Items

ITEM #2018-01BWG: UPDATE LANGUAGE FOR EXCHANGE-TRADED FUNDS AND CENTRALLY CLEARED DERIVATIVES

The main goal of this proposal is to update the language on Schedule DB — Part D, Section 1 for the line “cleared derivatives” specifically referring to exchange-traded funds and centrally cleared derivatives. The comment deadline for this proposal is May 14, 2018. The anticipated completion date would be prior to 2018 year-end reporting.

ITEM #2018-02BWG: UPDATE COLUMNS AND ROWS FOR INVESTMENT SCHEDULES

This proposal would update columns and rows on the Summary Investment Schedule to reconcile to the various investment schedules on the annual statement. This would be effective for 2018 year-end reporting.

ITEM #2018-03BWG: ADD DEFINITION TO THE ANNUAL STATEMENT INSTRUCTIONS

It was determined there is no specific definition for “supranational” in the Supplemental Investment Risks Interrogatories section of the Annual Statement Instructions. This exposure would add that definition. This would be effective for 2018 year-end reporting.

ITEM #2018-06BWG: ADD LINE FOR SCHEDULE DB

This was exposed to add three digits to line numbers on the Schedule DB. This will allow an increase from just short of 10,000 lines available to just short of 10 million lines available, eliminating the need to accumulate data within certain categories. This would be effective for 2018 year-end reporting.

ITEM #2018-07BWG: MODIFY REPORTING DESIGNATIONS

This proposal would add new “PL” and “PLGI” symbols to the instructions to identify private letter-rated securities. There has been a long-standing request for private letter ratings to ensure insurers are reporting designations correctly. With the new “carry-over” administrative procedure of the Securities Valuation Office (SVO), the SVO will identify securities that have been properly filed, but for which they are unable to provide a designation for by year-end. The SVO would use two new symbols, “YE” and “IF.” The “YE” would be assigned by the SVO for securities that were previously filed with the SVO and have now been refiled. The “IF” symbol would be assigned to securities that were filed with the SVO for the first time. The BWG also proposed adding “YE” and “IF” symbols. This proposal will also add modifications to the definition of a “Z” designation, indicating if a security is in transition from one reporting status to another.

In addition, this proposal moves to remove “P” and “RP” from market indicators because they will no longer be needed to track perpetual and redeemable preferred stock. The goal is to add specific line categories for perpetual preferred and redeemable preferred stock. Along with this, the BWG proposed removing the “Market Indicator” column from Schedule D — Part 2, Section 2 for common stocks. This would be effective for 2018 year-end reporting.

ITEM #2018-09BWG: MODIFY AND ADD NOTES

This agenda item calls to modify the instructions for Notes 20A, 20C, and 20D to reflect recent changes to SSAP No. 100R — Fair Value, which came into effect January 1, 2018. It also adds a new disclosure, Note 20E. In addition, this exposure calls to modify the illustrations for Notes 20A and 20C to move the NAV column and data-capture it. The updates to SSAP No. 100R modify language around the use of net asset value (NAV) as a practical expedient to fair value. This item also calls to update the language to match the guidance change. This would be effective for 2018 year-end reporting.

ITEM #2018-10BWG: MODIFY INSTRUCTIONS FOR BIFURCATION OF OTHER-THAN-TEMPORARY IMPAIRMENT INVESTMENTS

The BWG proposed modifying instructions for line two of the IMR and line two of the AVR regarding bifurcation of other-than-temporary impairment (OTTI) investments subject to SSAP No. 26R — Bonds. This would be effective for 2018 year-end reporting.

ITEM #2018-11BWG: ADDED INSTRUCTIONS FOR CATEGORIES

There are currently inconsistencies in how Industry classifies certain items such as surplus notes. This proposal would provide clarifying language and additional instructions to the “Fixed or Variable Interest Rate Investments that Have the Underlying Characteristics of a Bond, Mortgage Loan or Other Fixed Income Instrument” and “Joint Ventures or Partnership Interests for Which the Primary Underlying Investments are Considered to Be Fixed Income Instruments” categories.

ITEM #2018-14BWG: ADD ADJUSTMENTS TO PRIVATE PLACEMENT ANNUITIES

This proposal splits Column 2 for Question 1.01 in the Separate Accounts General Interrogatories into two new columns (Registered with the SEC and Not Registered with the SEC) and renumbers the remaining columns. In addition, it adds a new question, 101A, for private placement variable annuities and private life insurance. This is a concurrent exposure, and the deadline for comments is May 18, 2018.

ITEM #2018-15BWG: ADD DISCLOSURE CHANGES TO SSAP NO. 97-100

In order to reflect proposed changes to SSAP No. 97 being considered by the SAPWG, the BWG proposed adding a new disclosure to Note 10. New instructions and an illustration will be added as Note 10O, and the illustration will be data-captured. The goal is to provide the annuity investment in insurance company stocks. This would be effective for 2018 year-end reporting.

ITEM #2018-17BWG: MODIFY INSTRUCTIONS FOR WASH SALES

Due to changes adopted by the SAPWG to wash sale exclusions (exclusions include: all cash equivalents, derivative instruments, and short-term investments with an NAIC 1-2 designation), the BWG proposed modifying the instructions for Note 17C to reflect this change. This would be effective for 2018 year-end reporting.

ITEM #2018-18BWG: COMBINE REPORTING GUIDANCE FOR LIFE AND FRATERNAL

This proposal is being exposed because of a request from Industry during the Spring 2017 National Meeting. It would combine reporting guidance for both Life and Fraternal companies into one blank, which will be based on changes to the existing Life blank. The existing Life blank pages would not be modified. Industry indicated this proposal has required a lot of work and offered positive comments about the change. This would be effective for first quarter 2019 reporting.