Proprietary  2015 StoneRiver, Inc. April 22, 2015 Connie Jasper Woodroof NAIC Liaison, StoneRiver April 22, 2015 Connie Jasper Woodroof NAIC Liaison, StoneRiver Chicagoland Chapter IASA NAIC Focus

Proprietary  2015 StoneRiver, Inc. Agenda Statement Changes Accounting Revisions Risk-Based Capital Odd ‘N Ends

Proprietary  2015 StoneRiver, Inc. Statements Changes

Proprietary  2015 StoneRiver, Inc. Reminder - 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 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 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 Changes Schedule DB – Part D – Section 1 Two new footnotes, beginning in 2015 quarterly Should equal Assets page, Line 7 Should equal Derivatives line on Liabilities page

Proprietary  2015 StoneRiver, Inc. New Quarterly Changes Note 5J – Offsetting and Netting of Assets & Liabilities Now required Note in quarterly

Proprietary  2015 StoneRiver, Inc. Notes 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 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 Statement Line 3, CY amount should equal Gen Int - Part 2, Line 11.2

Proprietary  2015 StoneRiver, Inc. On 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 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 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 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 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. Accounting Changes

Proprietary  2015 StoneRiver, Inc. Late 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 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 Compiles listing of rejected GAAP into one place; IP No. 99

Proprietary  2015 StoneRiver, Inc. Emerging 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. 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 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 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 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 Meeting SSAP No. 92 Incorporate guidance from INT into SSAP Clarification of Surplus Deferral

Proprietary  2015 StoneRiver, Inc. Re-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 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 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; _sg.htm _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. Risk-Based Capital

Proprietary  2015 StoneRiver, Inc. Risk-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 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 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 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. PRBC 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. LRBC 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. HRBC 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. Questions Connie Jasper Woodroof NAIC Liaison ext 5761