Codification Update Presented by: Dave Christensen NAIC Statutory Accounting Principles Manager

© National Association of Insurance Commissioners Dave Christensen Statutory Accounting Principles Manager Supports following NAIC working groups: –Statutory Accounting Principles WG –Emerging Accounting Issues WG –NAIC/AICPA WG –Underwriting & Reinsurance Pools WG Specialize in accounting for P/C entities Joined NAIC in October 1997 Audit Manager with Deloitte & Touche Brief career as a golf professional Graduate of Kansas State University CPA, AICPA

© National Association of Insurance Commissioners Overview of Presentation Brief history of Codification project Discussion of maintenance process Review of current issues Review changes from 1999 version to 2000 version of the Accounting Practices and Procedures Manual - Effective 1/1/01 Implementation issues

© National Association of Insurance Commissioners History of the Project 1989 & 1991 solvency agenda Comprehensive guide & comparability AICPA white paper 1994 project reorganized Statement of position 95-5 Adopted by NAIC in March 1998 Current AICPA position

© National Association of Insurance Commissioners Maintenance Process Maintenance governed by Policy Statements Functions of Statutory Accounting Principles WG Functions of Emerging Accounting Issues WG Agenda process Publication of the manual

© National Association of Insurance Commissioners Maintenance Flowchart

© National Association of Insurance Commissioners Website information Statutory Accounting Principles WG –  Products and Services  Financial Date Reporting  Statutory Acctg Principles WG – Emerging Accounting Issues WG –  Products and Services  Financial Date Reporting  Emerging Accounting Issues WG –

© National Association of Insurance Commissioners Current Issues Statutory Accounting Principles WG Maintenance Agenda –Pending Listing –Active Reports –Disposition Reports –Rejected Listing EAIWG Status of Issues

© National Association of Insurance Commissioners Layout of March 2000 Version Volume I –SSAPs –Index –Glossary –Appendix A - Model Laws –Appendix B - INTs –Appendix C - Actuarial –Appendix D - GAAP X-Ref Volume II –Appendix E - IPs –Appendix F - Policy

© National Association of Insurance Commissioners Changes from 1999 Version to March 2000 Version All changes are in effect for fiscal periods beginning January 1, 2001 New rules will be reflected in 1st quarter 2001 statements

© National Association of Insurance Commissioners SSAP Update Use of “FV”, “MV” and “FMV” SSAP No. 8 - Adoption of FAS No. 132 SSAP No Adoption of FAS No. 132 SSAP No Rejection of SOP 97-3 SSAP No Added guidance for advance premiums SSAP No Language added to clarify non-tabular discounting not acceptable NAIC accounting practice

© National Association of Insurance Commissioners Other Update Index to SSAPs Glossary

© National Association of Insurance Commissioners Appendix A Update A-010 –Language added throughout SSAP in order to conform with changes made to the NAIC Health Insurance Reserves Model Regulation

© National Association of Insurance Commissioners Appendix B Update

© National Association of Insurance Commissioners Appendix C Update Appendix C now contains Actuarial Guidelines Prior to addition they resided in the NAIC Financial Examiners Handbook

© National Association of Insurance Commissioners Appendix D Update This listing has been updated to reflect the current status of GAAP Pronouncements as of December 6, 1999 This listing has been updated to reflect the current status of EITF Issues as of September 22, 1999

© National Association of Insurance Commissioners Appendix E Update IP No. 8 - Adoption of FAS No. 132 IP No Adoption of FAS No. 132 IP No Deleted language on wash sales IP No Rejection of SOP 97-3 IP No Revised to be consistent with NAIC Health Insurance Reserves Model IP No Clarification of acctg and reporting for deposit-type contracts IP No Updated for N/A GAAP

© National Association of Insurance Commissioners Appendix F Update Now contains NAIC Policy Statements specific to statutory accounting principles

© National Association of Insurance Commissioners State Implementation Named the Accounting Practices & Procedures Manual –Some states can adopt by name alone –Others require legislature States are currently reviewing their code and regulations. ACLI, AAI, AIA, NAII and NAMIC have contacted states to determine states implementation plans and have summarized these plans in a chart.

© National Association of Insurance Commissioners