NAIC SSAP No. 43R: A Practical Analysis -- Interpreting the Latest Guidance for Insurance Companies Accounting for "Loan-backed and Structured Securities"


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Date: December 2009
Type: White Paper
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Overview: On Sept. 23, 2009, The National Association of Insurance Commissionersí (NAIC) Statutory Accounting Principles Working Group adopted SSAP No. 43R, providing insurance companies with guidance on recording other-than-temporary impairments (OTTI) on loan-backed and structured securities. For insurance companies, SSAP No. 43R applies to all investments held by the reporting entity subsequent to Sept. 30, 2009. This article provides a framework for insurers to understand the implications of SSAP No. 43R, and includes recommendations for responding to SSAP No. 43R in a way that will satisfy regulators. Features of this article include: - How SSAP No. 43R aligns with an earlier FASB pronouncement on OTTI; - NAICís key adjustments in guidance; - Distinctions on how SSAP No. 43R differs from SSAP No. 43; - A graphic decision tree for insurers determining OTTI for loan-backed securities; - Detailed scenarios and instances of OTTI; - SSAP No. 43R-related guidance on calculating present value of future expected cash flows; and - Recommended further reading. Webinar Available: Join Clearwater Analytics for a SSAP 43R webinar. This is a great opportunity to put SSAP 43R guidance into practice by reviewing several investment scenarios that insurers will likely face as they engage in OTTI analysis and implementation of the new designation process. Consultations Available: Clearwater Analytics provides leading web-based, investment portfolio reporting and analytics for insurance companies.

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