1. Spring Midwest IASA Conference Ankeny, Iowa September 17 - 18, 2015

2. NAIC STATUTORY UPDATE September 18, 2015 Sara Cork Statutory Accountant, StoneRiver

3. AgendaAgenda 2015 Statement Changes Accounting Revisions

4. 2015 STATEMENT CHANGES

5. 2014 Items No Longer Deferred Schedule A, B, BA –Electronic columns for Postal Code, Property Type Reporting was deferred in 2014 for Property/Casualty and Health Companies Must report for 2015

6. All Statements Removal of bar code listing from instructions Asset Page –New Line 15.3 description “Accrued retrospective premiums ($____) and contracts subject to redetermination ($____) Resulted from revisions to SSAP No 54 – Individual and Group Accident and Health Contracts

7. All Statements Cash flow –Do not include non-cash items –Additional disclosure on page for reporting non-cash operating items included –Resulted from changes to SSAP No. 69 – Cash Flow

8. Notes to Financials Note 1D – Summary of Significant Accounting Policies and Going Concern –On going disclosures and Note title change Annual and interim statement requirement –Revision to SSAP No. 1 – Disclosure of Accounting Policies ….. –Also revisions to SSAPs No. 48, 68, 97 Affiliate holdings whose audited financials indicate substantial doubt as to ongoing concern ability must be nonadmitted

9. Notes to Financials Note 5 Investments –New part 5A(8) for disclosure of mortgage loans derecognized as a result of foreclosure From revisions to SSAP No 37 – Mortgage Loans –Additional 5G disclosure for low-income housing tax credits Revisions to SSAP No. 93 – Accounting for Low Income Housing Tax Credits Property Investments

10. Notes to Financials Note 5J – Offsetting & Netting of Assets & Liabilities

11. Notes to Financials Note 11 – Debt –Crosschecks added to 11B and instructions for 11B(2)b clarifying the inclusion of FHLB Class A and B membership stock not eligible for redemption Note 12 – Retirement –Changes to defined benefit plan disclosure –From revisions to SSAP No. 11 – Postretirement Benefits and Compensated Balances

12. Notes to Financials Note 22 – Events Subsequent –Changes to the ACA assessment disclosure –Adds ties to 5-Yr Historical Data

13. Investment Schedules Schedule A – Part 1 –New code to use for reporting of certain real estate owned by a LLC meeting SSAP 40R requirements Schedule D – Part 1 –New instructions for CUSIP and Description columns –New electronic columns for name of issuer, issue, ISIN identification, capital structure code

14. Investment Schedules Schedule DB – Part D – Section 1

15. Supplemental Health Care Exhibit Remove aggregate 2% column; replaced with column for Medicare Part C and D reporting Clarify reporting for retrospectively rated contracts Additional section for reporting of ACA 3Rs receivables Cautionary Statement reference added –To be posted on Blanks website

16. Property/Casualty Statement 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

17. Property/Casualty Statement Definitions of LOBs moved to Appendix Cybersecurity and Identity Theft Insurance Coverage Supplement –Due April 1 No Terrorism Insurance Supplement for 2015

18. LAH Statements Notes 32 and 34 –Modifications to correct inconsistencies in the use of market value and fair value within the instructions –Now aligns with terminology used in SSAP No. 56 – Separate Accounts

19. LAH Statement Changes to XXX/AXXX supplement –Numerous instructional changes –Previous Part 2 divided into Part 2A (grandfathered or special exemption) and Part 2B (non-grandfathered)

20. Health Statement Line 3, CY amount should equal Gen Int - Part 2, Line 11.4

21. Health Statement U&I – Part 2B, Line 10 –Instructions revised to provide methodology of tying Part 2B to Exhibit 3, Health Care Receivables

22. ACCOUNTING CHANGES

23. SSAP No. 40R Single-member/single-asset LLC holding real estate 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

24. Since March NAIC Meeting AP&P Manual in general Shortening of SSAP titles Revisions and technical changes to several SSAPs to make Manual more consistent SSAP No. 24 No accounting changes for extraordinary items and discontinued operations; only formally adopted GAAP

25. Since March NAIC Meeting SSAP No. 40R – Real Estate Encumbrance on wholly owned real estate held in wholly-owned LLC not considered risk-sharing SSAP No. 54 – Individual and Group A&H Contracts Clarifies accounting and reporting for contracts subject to redetermination Added definition of and disclosure for charity care

26. Since March Meeting SSAP No. 61R – LAH and Health Reins. New statement disclosure requirements for XXX/AXXX reinsurance SSAP No. 92 and 102 Incorporate guidance from INT 13-03 into SSAP INT 13-03 clarified that the deferral option was not intended to allow for a more favorable surplus position related to pension or OPEB plans

27. Since March Meeting SSAP No. 93 Accounting for investments in qualified affordable housing projects Appendix A-821 Incorporates 2012 Individual Annuity Mortality Table

28. Issue Papers Being Drafted SSAP No. 41 – Surplus Notes Revisions for valuation revisions SSAP Nos. 86 and 103 Changes regarding short-sales and secured borrowing transactions

29. Issue Paper Being Drafted SSAP No. 97 – Affiliates Nonadmitted assets being admitted through ownership of non-insurance SCA Insurance SCAs having permitted or prescribed practices that affect valuation Are all the adjustments being made that should be made to adjust non-stat equity to statutory basis of accounting? IPs – most of these items have been previously discussed and decided; current NAIC staff unaware because it was “before their time”

30. Exposed During June Call SSAP No. 1 Would require disclosure of restricted assets in quarterly SSAP No. 16R Licensing of internal-use computer software SSAP No. 68 Goodwill limitation test done on individual company level

31. Exposed During June Call SSAP No. 92 and 102 Reject GAAP; maintain current guidance AP&P Manual – in general Remove issue papers from printed copy of Manual Maintain on password protected website Remain in Manual CD-ROM format

32. Still Pending SSAP No. 62R – P&C Reinsurance Accounting and reporting for certain asbestos and environmental reinsurance with retroactive counterparties Re-exposed in March, no action during June call, revised copy exposed for comment until 9/11.

33. Concept Exposures - SSAP No. 26 – Bonds (not loan-backed) 1.Definition of security 2.Contractual amount of principal due 3.Non-bond definitions 4.ETF analysis 5.Prepayment penalties & acceleration fees reported as realized gains instead of investment income 6.Amortization guidance for continuously callable bonds 7.Revised measurement method for bonds with make-whole call provisions

34. Concept Exposures - SSAP No. 22 Asks for feedback on three specific items for sale-leaseback transactions SSAP No. 25 Rejects some GAAP guidance but expands disclosures

35. Concept Exposures - All investment schedules to be included in Quarterly Statement Disband Emerging Accounting Issues Working Group Incorporate new interpretation process

36. Questions?Questions? Sara Cork StoneRiver Statutory Accountant Phone 800.373.3366 x5778 sara.cork@stoneriverfc.com