Tuesday / December 15, 2015 1pm Central / 2pm Eastern 2015 Reporting Updates Tuesday / December 15, 2015 1pm Central / 2pm Eastern

Learning Objectives Describe the reporting changes for the exhibits and schedules of the annual statement filing. Explain the reporting changes to the Notes to Financial Statement and identify the related SSAP(s). Identify the common reporting issues. Identify the future issues that may impact reporting.

Mary Caswell NAIC Data Quality Manager Manages Data Quality Unit Supports Blanks Working Group Supports Health Reform Solvency Impact Subgroup Supports Investment Reporting Subgroup Joined NAIC in August 2000 MBA Contact email information: mcaswell@naic.org

Adopted Changes 2014-19BWG General Interrogatories, Part 2 reference and 5 Year Historical reference for statutory minimum capital and surplus. Health Blank: Changes the reference for Line 11 from “minimum net worth” to “statutory minimum capital and surplus.”

2014-20BWG – Note 32 & 34 Change to correct inconsistencies in the use of “market value” and “fair value”. The separate accounts disclosure, Note 34 change: Reserves by withdrawal characteristics, i.e., whether or not for the separate account:   Subject to discretionary withdrawal including the categories of: Fair Market value adjustment Withdrawal at book value without market value adjustment and with or without current surrender charge of 5% or more At fair value Withdrawal at book value without market value adjustment and with current surrender charge of 5% or less Not subject to discretionary withdrawal

2015-01BWG & 2015-02BWG 2015-01BWG – Remove barcode listing form lists from barcode instructions in the appendix. 2015-02BWG – Supplemental Health Care Exhibit Eliminate the Aggregate 2% Rule Column for Parts 1 & 2. Replace with a column to capture Medicare Advantage Part C Plans and Medicare Part D Stand Alone Plans which are no longer excluded by statute.  

2015-03BWG – Property Blank & Health Blank Supplements Property Line of Business Appendix Consolidating lines of business definitions and added some definitions. Deleted from Exhibit of Premiums and Losses Added to the Appendix (examples:) Occurrence, Claims Made Commercial Multi-peril: Builders’ Risk Policies, Business- owners, Commercial Package Policy, Manufacturers Output Policies, E-Commerce, Difference in Conditions (DIC)

Definitions – Inland Marine Animal Mortality EDP Policies Pet Insurance Plans Communication Equipment (Cellular Telephones) Event Cancellation Travel Coverage Boat owners/Personal Watercraft Other Commercial Inland Marine Other Personal Inland Marine  

2015-04BWG - Title Blank Title Insurance 5 Year Historical Page (From Parts 2 & 3 of Scheduled P) Add one year and two year loss development lines Development in estimated losses and ALAE on policies (claims) effective before current year Percent of such development to policyholders' surplus of prior year end

Polling Question # 1 Generally disclosure changes to the annual and quarterly filings Notes to Financial Statement are driven by changes in the SSAPs. True ____ False____

U&I, Part 2B – Health Blank 2015-05BWG Columns 1 through 4, line 10 of U&I, Part 2B should equal health care receivables on Exhibit 3, Columns 6 and Column 7 (excluding health care receivables, such as loans or advances to non-related party hospitals, established as prepaid assets that are not expensed until the related claims have been received from the provider.) Note U&I, Part 2B is reported on a “net of reinsurance basis”, Exhibit 3 is reported “gross of reinsurance”.   Crosschecks added to gain consistency where possible.

2015-06BWG – Note 11B, FHLB Add crosschecks to the illustrations data captured for Note 11B to clarify the inclusion of Class A and B membership stock not eligible for redemption.   1 2 Eligible for Redemption Membership Stock Current Year Total (2+3+4+5+6) Not Eligible for Redemption 3 Less Than 6 Months 4 6 months to Less Than 1 year 5 1 to Less Than 3 Years 6 3 to 5 Years 1. Class A 2. Class B Membership Stock (Class A and B) Eligible and Not Eligible for Redemption 11B(2)b1 Current Year Total (Column 1) should equal 11B(2)a1(a) Total (Column 1) 11B(2)b2 Current Year Total (Column 1) should equal 11B(2)a1(b) Total (Column 1)

2015-07BWG – Schedule A, Part 1 / SSAP 40R Modify the instructions for Schedule A, Part 1 to reflect the reporting of real estate owned by a LLC on Schedule A if it meets the requirements set forth in SSAP 40R, Real Estate Investments. Adds a code “!” to Schedule A, Part 1, to identify all single real estate property wholly-owned by an LLC that meets the criteria set forth in SSAP No. 40R.

Cash Flow 2015-08BWG/ SSAP 69 Cash Flow instructions - to reflect the inclusion of only cash transactions. Reconciliation of investment activity. Although non-cash items are included for reconciliation purposes, the Statement of Cash Flow shall only include transactions involving cash. In addition to excluding the lines that are explicitly non-cash items (e.g., change in admitted assets) from what is reported in the Statement of Cash Flow, adjustments are necessary to remove non-cash acquisitions or disposals.

SSAP 69 guidance change

2015-09BWG -Note 5A, Mortgage Loans/SSAP 37 8) Mortgage Loans Derecognized as a Result of Foreclosure:   Current Year a. Aggregate amt of mortgage loans derecognized $ b. Real estate collateral recognized $ c. Other collateral recognized $ d. Receivables recognized from a government guarantee of the foreclosed mortgage loan $

2015-11BWG – Note 1, Significant Accounting Policies/ SSAP 1 D. Going Concern   Provide disclosures regarding any going concerns of the company or plans for the entity’s ability to continue as a going concern.     (1) If doubt about an entity’s ability to continue as a going concern is alleviated, the reporting entity shall disclose in the notes to the financial statements the following information: a. Principal conditions and events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans). b. Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations. c. Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

2015-11BWG – Note 1/SSAP 1 (2) If substantial doubt is not alleviated, the entity should indicate such indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Disclose management’s plans to mitigate the conditions or events causing the doubt about the entity’s ability to continue as a going concern. (3) Going concern evaluation and disclosures are required for both interim and annual financial statements and in subsequent annual or interim reporting periods to which the condition continues. In these subsequent periods the disclosures should become more extensive as additional information becomes available. (4) For the period in which substantial doubt no longer exists (before or after consideration of management plans), an entity shall disclose how the relevant conditions or events were resolved.

2015-12BWG – Note 5G, LIHTC / SSAP 93 (2) The amount of low-income housing tax credits and other tax benefits recognized during the years presented. (3) The balance of the investment recognized in the statement of financial position for the reporting period(s) presented.

2015-13BWG – Cybersecurity Insurance (Property) Stand-alone Policies Number of Claims Reported Direct Premiums Direct Losses Adjusting and Other Expenses 1 First Party 2 Third Party 3 Written 4 Earned 5 Paid 6 Incurred 7 8   $ Direct Defense and Cost Containment Number of Policies in Force 9 Paid 10 Incurred 11 Claims Made 12 Occurrence $  

2015-13BWG – Cybersecurity Insurance Part of a package policy: Number of Claims Reported Cybersecurity Insurance Direct Losses Cybersecurity Insurance Adjusting and Other Expenses 1 First Party 2 Third Party 3 Paid 4 Case Reserves 5 6   $ Cybersecurity Insurance Direct Defense and Cost Containment Number of Policies in Force 7 Paid 8 Case Reserves 9 Claims Made 10  Occurrence $   3.1 Can the direct premium earned … be qualified or estimated? Yes [ ] No [ ] 3.11 If not, explain why not_________________ 3.2 If yes, provided premium numbers________________________

Cybersecurity proposal – Identity theft If the reporting entity writes any standalone identity theft insurance coverage, please provide the following: 2. Standalone Identity Theft Insurance Policies 1 Number of Claims Reported Direct Premiums Direct Losses Adjusting and Other Expenses 2 Written 3 Earned 4 Paid 5 Incurred 6 7   $ Direct Defense and Cost Containment 10   Number of Policies in Force 8 Paid 9 Incurred $

Cybersecurity proposal If the reporting entity writes any identity theft insurance coverage that is part of a package policy, please provide the following: 4. Identity theft insurance that is part of a package policy 1 Number of Claims Reported Direct Losses Adjusting and Other Expenses 2 Paid 3 Case Reserves 4 5 Case Resereves   $ Direct Defense and Cost Containment 8  Number of Policies in Force 6 Paid 7 Case Reserves $  

2015-14BWG – Schedule D, Part 1 Add new electronic columns for Issuer, Issue, ISIN Identification and Capital Structure Code. Issuer Column & Issue Column: The reporting entity is encouraged to use the following sources: Bloomberg Interactive Data Corporation (IDC) Thomson Reuters S&P/CUSIP Descriptions used in either the relevant SEC filing or legal documentation for the transaction. Do not report ticker symbols, either internal or otherwise.

2015-15BWG – Note 22, Events Subsequent / SSAP 106 Did the reporting entity write accident and health insurance premium that is subject to Section 9010 of the Federal Affordable Care Act (YES/NO)? TAC – 5 year historical crosschecks

Contracts Subject to Redetermination 2015-17BWG Contracts Subject to Redetermination Assets page: Line 15.3 – Accrued Retrospective Premiums ($_____) and contracts subject to redetermination ($______)   Liabilities page: Line 4 (Health), Line 2 (Life & Fraternal): Aggregate Reserves Include: payables for/accrued return premium for contracts subject to redetermination. Income statement: Line 2 (Health) Net Premium Income, Line 1 (Life and Fraternal) Premiums Include: Accrued return premium adjustments for contracts subject to redetermination.

2015-17BWG – Additional pages affected Include: Accrued return premium adjustments for contracts subject to redetermination. Health: U&I, Part 1, Direct Business (column 1) U&I, Part 2D, Aggregate Write-ins for Other Policy Reserves (line 5) Life and Fraternal: Exhibit 6, Aggregate Write-ins (line 6) Property: Liabilities page, Aggregate Write-ins for Liabilities (line 25)

XXX/AXXX Supplement - Life and Fraternal Part 1 - All XXX and AXXX Cessions Part 2A - Transactions Subject to Part 2 Disclosure (Grandfathered or Special Exemption) Part 2B - Transactions Subject to Part 2 Disclosure (Non- Grandfathered) Part 3 - Collateral for All XXX/AXXX Reinsurance Transactions Reported on Part 2A or Part 2B Part 4 - Non-Collateral Assets Supporting Reserves for All Affiliate XXX/AXXX Reinsurance Transactions Reported on Part 2A or Part 2B Part 5 - Supplemental XXX/AXXX Reinsurance Exhibit Interrogatories

Adds definitions: XXX/AXXX – Part 1 Actuarial Method Covered Policies Required Level of Primary Security   Primary Security   Other Security

Part 1 Column 10 – Special Exemption by Domestic Regulator (YES/NO)   A “yes” response means - ceding insurer’s domiciliary regulator, after consulting with the NAIC Financial Analysis Working Group (FAWG) or other group of regulators designated by the NAIC, determined that all of the following apply to risks ceded: 1) such risks are clearly outside of the intent and purpose of AG-48; and 2) such risks are included within the scope of AG-48 only as a technicality; and 3) the application of AG-48 to such risks is not necessary to provide appropriate protection to policyholders under all the facts and circumstances.

Part 2A & 2B Part 2A – Transactions Subject to Part 2 Disclosure (Grandfathered or special exemption) Part 2B – Transactions Subject to Part 2 Disclosure (Non-Grandfathered)

Part 2A TRANSACTIONS SUBJECT TO PART 2 DISCLOSURE GRAND- FATHERED OR SPECIAL EXEMPTION) 1   Cession ID 2 NAIC Company Code 3 # 4    Name of Company 5 Effective Date or Prior Year Annual Statement Date As of Effective Date or Prior Year’s Annual Statement As of Current Year’s Annual Statement 6 Reserve Credit Taken 7 Required Level of Primary Security “Economic Reserve” Level 8 Security 9 Security – Trust 10 Funds Withheld or Modified- Coinsurance 11 Other Security 12 13 14 15 Adjustment 165 176 187 9999999 Total

Part 2B Part 2B – Transactions Subject to Part 2 Disclosure (Non-Grandfathered) 1   Cssn ID 2 NAIC Cmpny Code 3 # 4 Name of Cmpny 5 Effective Date or Prior Year Annual Statement Date As of Effective Date or Prior Year’s Annual Statement As of Current Year’s Annual Statement 6    Rsrve Credit Taken 7 Rqred Level of Prmry Scrty 8 Prmy Scrty 9 Prmry Scrty – Trust 10 Prmary Funds Withheld or Modified- Coins 11 Othr Secty 12 Resrv Crdt 13 Required Level of Primary Security 14 Scurty 15 Primary Security Adjmnt 16 Primary Security – 17 18 Othr Scty 9999999 Total

Part 3 Applies to all the cessions identified in Part 2A or 2B; Provided, that if the reporting entity has not received any collateral in connection with a cession identified in Part 2A, the only information required is the Cession ID number, Name of Company, NAIC Company Code, and ID Number. The reporting entity should prepare a separate page for each Cession ID reported on Part 2. The reporting entity should also provide a Grand Total page.

Part 3 Part 2 Cession ID __________ Name of Company: ________________________________ NAIC Company Code__________ ID Number __________ Effective Date or Prior Year Annual Statement Date: __________   Security Category Description As of Effective Date or Prior Year’s Annual Statement As of Current Year’s Annual Statement 1 Assets 2 Affiliate or Parental Guarantee (YES/NO) 3 4 Primary Security 1. Cash 2. NAIC 1 SVO-Listed Securities 3. NAIC 2 SVO-Listed Securities 4. NAIC 3 SVO-Listed Securities 5. NAIC 4 SVO-Listed Securities 6. NAIC 5 SVO-Listed Securities 7. NAIC 6 SVO-Listed Securities 8. Commercial Loans 9. Policy Loans 10. Derivatives acquired in the normal course 11. Subtotal Primary Security XXX

Part 3 Other Security 12. Cash 13 NAIC 1 SVO-Listed Securities   12. Cash 13 NAIC 1 SVO-Listed Securities 14. NAIC 2 SVO-Listed Securities 15. NAIC 3 SVO-Listed Securities 16. NAIC 4 SVO-Listed Securities 17. NAIC 5 SVO-Listed Securities 18. NAIC 6 SVO-Listed Securities 19. Commercial Loans 20. Policy Loans 21. Derivatives acquired in the normal course 22. Other Investments Admissible per the NAIC AP&P Manual 23. Evergreen, Unconditional LOCs 24. Other LOCs 25. Affiliate or Parental Guarantees 26. LOC-like Assets 27. Excess of Loss Reinsurance 28. All Other Assets 29. Subtotal Other Security XXX 999999930. Total

Part 4 Applies to all the cessions identified in Part 2A or Part 2B where the assuming insurer is an affiliate of the reporting entity. The reporting entity should prepare a separate page for each Cession ID required to be reported on Part 4. The reporting entity should also provide a Grand Total page.

Part 4 Part 2 Cession ID __________ Name of Company: __________________ NAIC Company Code______ ID Number_________ Effective Date or Prior Year Annual Statement Date: __________   Asset Category Description As of Effective Date or Prior Year’s Annual Statement As of Current Year’s Annual Statement 1 Non-Collateral Assets Supporting Reserves – Affiliate Transactions 2 Affiliate or Parental Guarantee (YES/NO) 3 4 1. Cash 2. NAIC 1 SVO-Listed Securities 3. NAIC 2 SVO-Listed Securities 4. NAIC 3 SVO-Listed Securities 5. NAIC 4 SVO-Listed Securities 6. NAIC 5 SVO-Listed Securities 7. NAIC 6 SVO-Listed Securities 8. Commercial Loans 9. Policy Loans 10. Derivatives acquired in the normal course 11. Other Investments Admissible per the NAIC AP&P Manual 12. Evergreen, Unconditional LOCs 13. Other LOCs 14. Affiliate or Parental Guarantees 15. LOC-like Assets 16. Excess of Loss Reinsurance 17. All Other Assets 999999918. Total XXX

Part 5 Includes Interrogatories relating to Part 3 and Part 4 collateral Letters of credit, contingent note, or similar Pledged to a financing provider Duration less than the duration of the underlying policy liability Guaranteed by an affiliate or parent

Supplemental Health Care Exhibit 2015-19BWG - Cautionary statement and web link reference 2015-20BWG - Risk Adjustment (contracts subject to redetermination), Risk Corridor (retrospectively rated contract) References SSAP 54, 66, 107 Direct Premiums Written (SCHE Part 2) - Include: Premium adjustments for contracts subject to redetermination where premium adjustments are based on the risk scores (health status) of covered enrollees, rather than the actual loss experience of the policy (examples: Medicare Advantage risk adjustment and ACA risk adjustment). Rate Credits – instruction added for risk corridor premiums paid or received, and all other premium refunds paid or received related to retrospectively rated contracts.

Supplemental Health Care Exhibit 2015-21BWG - Footnote table addition To capture 3R’s receivables, payables and receipts by state for individual and small group plans. AFFORDABLE CARE ACT (ACA) RECEIPTS, PAYMENTS, RECEIVABLES AND PAYABLES   Current Year Prior Year Comprehensive Health Coverage 1 Individual Plans 2 Small Group Employer Plans 3 4  ACA Receivables and Payables 1. Permanent ACA Risk Adjustment Program 1.0 Premium adjustments receivable/(payable) 2. Transitional ACA Reinsurance Program 2.0 Total amounts recoverable for claims (paid & unpaid) XXX 3. Temporary ACA Risk Corridors Program 3.1 Accrued retrospective premium 3.2 Reserve for rate credits or policy experience refunds  ACA Receipts and Payments 4. 4.0 Premium adjustments receipts/(payments) 5. 5.0 Amounts received for claims 6. 6.1 Retrospective premium received 6.2 Rate credits or policy experience refunds paid

AFFORDABLE CARE ACT (ACA) RECEIPTS, PAYMENTS, RECEIVABLES and PAYABLES 2015-21BWG AFFORDABLE CARE ACT (ACA) RECEIPTS, PAYMENTS, RECEIVABLES and PAYABLES   Current Year Prior Year Comprehensive Health Coverage 1 Individual Plans 2 Small Group Employer Plans  ACA Receivables and Payables 1. Permanent ACA Risk Adjustment Program 1.0 Premium adjustments receivable/(payable) 2. Transitional ACA Reinsurance Program 2.0 Total amounts recoverable for claims (paid & unpaid) XXX 3. Temporary ACA Risk Corridors Program 3.1 Accrued retrospective premium 3.2 Reserve for rate credits or policy experience refunds  ACA Receipts and Payments 4. 4.0 Premium adjustments receipts/(payments) 5. 5.0 Amounts received for claims 6. 6.1 Retrospective premium received 6.2 Rate credits or policy experience refunds paid

Polling Question # 2 For Schedule D, Part 1 description column report only what is reported in: Electronic issuer column Electronic issue column ISIN number column D. None of the above is correct

Risk-Based Capital Changes – Year-end 2015

Learning Objectives Describe the reporting changes for the risk-based capital formula by line of business for year-end 2015 Health Life/Fraternal Property/Casualty

Crystal Brown NAIC Sr. Insurance Reporting Analyst - RBC Maintains the Health Risk-Based Capital Formula and Supports the UCAA application Supports Health Risk-Based Capital (E) Working Group Supports Health Risk-Based Capital Drafting Group (informal) Supports Company Licensing Transactions (E) Subgroup Joined NAIC in May 2006 Bachelor’s Degree – Business Administration Contact email information: cbrown@naic.org

NAIC RBC Contacts Capital Adequacy (E) Task Force Jane Barr - Manager I – Company Licensing & RBC jbarr@naic.org 816-783-8413 Health Risk-Based Capital (E) Working Group and Health RBC Formula Crystal Brown - Sr. Insurance Reporting Analyst - RBC cbrown@naic.org 816-783-8146 Life Risk-Based Capital (E) Working Group and Life & Fraternal RBC Formulas Dave Fleming - Sr. Insurance Reporting Analyst - RBC dfleming@naic.org 816-783-8121 Property/Casualty Risk-Based Capital (E) Working Group and P/C RBC Formula Eva Yeung - RBC Technical Lead/Reporting Analyst eyeung@naic.org 816-783-8407

2014-24-H, 2014-39-L and 2014-30-P – Risk Adjustment & Risk Corridor Sensitivity Test – New Page

2014-25-H – Medicare, Medicaid and Other MLR – Page XR012-A 2014-36-L & 2014-31-P – Underwriting Risk – Experience Fluctuation Risk - Info Only Page LR020-A, FR020-A & PR020-A

2014-26-H – Pandemic and Biological Risk Interrogatories

2015-01-H – Investment Affiliates – Type Code 5 and Formula 2015-02-H – Clarification to Affiliates that are Subject to RBC Instructions 2015-01-H - The purpose of the change was to simplify the calculation of the charge for Investment Affiliates by applying a straight factor times the carrying value of the common and preferred stock. A correction to the formula calculation was also made in conjunction with this change on page XR002 2015-02-H - The purpose of this proposal was to clarify the instructions for Affiliates that are Subject to RBC and to ensure that the formula and instructions matched.

2015-06-H – Instructional Change for Other Coverages on page XR012 & XR012-A

2014-32-L Treatment of Cash Collateral Pledged for Derivatives Page LR012 – Miscellaneous Assets LR017 – Off –Balance Sheet and Other Items

2014-33-L XXX and AXXX Qualified

2014-35-L Shortfall of Primary Securities

2014-42-L RBC Shortfall

2015-16-L C-3 Phase 1 Informational Filing

2014-27-CR R6 and R7 Contingent Credit Risk 2015-04-CR EP Curve Sorting 2015-10-CR OEP Basis Factors for R6 &R7

2014-37-CR Exemption Criteria (Structure & Wording

2014-40-CR Attestation for Cat Risk Charge Methodologies The structure change allows companies to indicate which of the methodologies was used to sort the net and gross probable maximum losses. The purpose is to collect data on how companies are deriving their modeled catastrophe losses.

2014-38-P R3 Credit Risk (For Informational Purposes ONLY)

2015-07-P Asset Concentration – LIHTC & WCFI

2015-08P Valuation Basis Column on the Affiliated Investments Page

2015-11P Underwriting Risk Line 1 for Reserves Industry Average Development Factors and Net Written Premiums Industry Average Loss and Expense Ratios Factors

2015-12CR Line 1 Ex-Cat Industry Average Loss and Expense Ratios and Line 4 Ex-Cat Industry Losses and Loss Adjustment Expense Ratio

2014-22-CA Instruction Clarification for RBC Requirement Amounts, TAC and RBC Factors 2015-03- CA Jurat Signature Requirements 2014-22-CA 2015-03-CA

2014-23-CA AVR is limited to the Amount not used in Asset Adequacy Testing (Health & P/C) Footnote Change: Instructions Change: “The portion of the AVR that can be counted as capital is limited to the amount not utilized in asset adequacy testing in support of the Actuarial Opinion for reserves.”

2015-05-CA ACA Fee Sensitivity Test Instruction change and reference change 2015-09-CA Broker’s Receivables Factors 2015-05-CA 2015-09-CA Health – 0.026 Life – 0.014 P/C – 0.027

2015-13-O – Operational Risk Factors (Informational Only) 2015-17-CA – RBC Procedures Developed procedures for the Capital Adequacy Task Force and all RBC related Working Groups and Subgroups. Developed procedures for proposal submissions, exposures, adoptions and posting of adopted proposals until RBC publications are available.

Closing Remarks Thank you for joining us! This presentation will be archived on the IASA website at www.iasa.org. We are interested in your thoughts about this presentation and in topics you may want to see covered in the future. Please take a few moments to complete the survey in the link below. You will also receive the link in a follow up email shortly after the event. (IASA to insert survey link) If you have difficulty viewing the archived presentation, or would like further information about this and future topics to be covered, please contact: Tricia Stillman Director of Member and Volunteer Services – IASA tstillman@iasa.org 919-489-0991 x202