| Q&A for Filers Compiled from NASVA members over the last few years |
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Please use these convenient bookmarks to choose a topic: Filing | RSAT | Schedule BA | Filing Exemption AVS/ISIS System | Annual/Qtrly Statement Reporting | Pricing | Billing | Miscellaneous |
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Section 6: Annual/Quarterly Statement Reporting Q & AQ: There is continual confusion as to whether Leveraged Loans/Bank Loans should be reported as Schedule D assets or Schedule BA assets. Industry would like clarifying language added to the Instructions so that it explicitly states these instruments should be reported on Schedule D. Should I submit a Blanks Change? A: SSAP No. 26 includes Bank Participations in the definition of bonds. Per Robert Carcano, syndicated loans of banks and participations generally refer to the same thing. If this is the only change that is pursued, then industry could submit a blanks proposal to add an instruction that indicates syndicated loans of banks are included in Schedule D, Part 1, since they are synonymous with bank participations defined as bonds in SSAP No. 26. If there are other types of bank loans that are in question, then the SVO/VOS TF would need to determine that they do or do not qualify as bank participations.Back to top Q: Why are ARO-rated Surplus Notes required to be reported on Schedule BA instead of the Schedule D? A: There has never been any accounting or reporting guidance to indicate that rated surplus notes should be reported in a different location than unrated surplus notes. Schedule BA has the reporting category for surplus notes, and unless and until some other methodology is adopted by an NAIC committee, they are all to be reported in that category.Back to top Q: Please clarify why the Examination Jumpstart report identifies FE securities under the “CUSIPs Not Found on VOS Database” report when these securities are only found in the FE database, not the VOS database. Shouldn’t this report only identify those securities which are reported without a suffix (i.e. non-Z or non-FE) and compare them to the VOS database? Also, why does it identify affiliated securities since these have never been part of the VOS database? A: There are several issues with Exam Jumpstart reports that need to be addressed in light of the PE and now FE rules and other concerns. However, the first question is actually supposed to be handled already; if an investment exists in the FE datafile (either current or history), then it should not kick out as a CUSIP not found exception. I would need to look at the specific situation to determine the cause of the exceptions. As to affiliated securities, keep in mind that all affiliated securities are not private. Thus, we would want the publicly traded affiliated securities to be subject to the same checks as publicly traded non-affiliated securities. For the privately held securities, I believe those do have to be filed with the SVO - and thus, should actually show up in the VOS datafile. If this latter question is focused on equities, the problem is we cannot distinguish between the privately held and publicly traded equities in the SCA category of Schedule D Part 2, Section 2.Back to top Q: What types of securities are included under the scope of the General Interrogatories question regarding SVO compliance? Does it include all Schedule D assets, Schedule DB-Part F and fixed income-like Schedule BA assets? A: The general interrogatory replaced the separate supplemental filing (SVO Compliance Certification). Thus, it includes any and all investments for which the insurer is required to comply with SVO procedures. For example, a life insurer that has separate account investments that are not subject to SVO requirements would not answer the interrogatory in terms of those separate account investments. Regarding the BA fixed income-like investments, remember that the filing of those securities is optional. As long as the insurer is complying with the reporting requirements (including the investment in one of the "Other" categories of BA) if they choose not to file with the SVO, they are still in compliance with the SVO requirements.Back to top Q: Where should bank loans be reported, Schedule D or Schedule BA? A: All Bank Loans are eligible for Schedule D reporting.Back to top Q: When a new filing/reporting requirement is approved by the VOS/TF, such as for BA Assets, what type of coordination occurs between the NAIC’s Accounting and Financial Reporting Groups at the SVO to ensure all of the necessary publications are up-to-date and provides consistent guidance? Is there a standing group of people who work on these types of updates? A: SVO and KC staff meet on a period basis to discuss these issues, and to coordinate the work of the SAPWG, EAIWG and Blanks Working Group and VOS Task Force. These groups work hard to ensure coverage within each of their areas for any conference call and or meeting that takes place where issues may overlap. In addition, both groups meet prior to the national meeting to share their perspective on overlapping issues. Follow up among these staff takes place where necessary in order to incorporate any adopted guidance into the respective area publications.Back to top Q: Where should Class One Money Market Funds, Commercial paper and Cash Equivalents be reported? Schedule DA or Schedule E? A: Class One Money Market Funds are included in the appropriate line number range of Schedule DA, Part1.Commercial paper is define s a bond in SSAP No. 26; thus if the term is longer than a year, it goes on Schedule D, Part1; if the term is less than a year but greater than 90 days, it goes on Schedule DA, Part. ; if the term is less than 90 days and it qualifies as a cash equivalent, then it is reported in Schedule E as described below. Cash Equivalents as defined in SSAP No. 2 are included in Schdule E, Part 2 (annual 2004 and quarterly 2005; Schedule E, part 1 along with cahs depositories for quarterlies 2004 only). Back to top Q: There used to be a designation column for DA. This column is required on the quarters for Schedule D Part 1b and annually for Schedule D Part 1a Section 1. I called the number for annual report preparation questions and was told that the decision was made to delete the column (no documentation was available as to why the decision was made) and was told that I would still have to determine the designations for these parts. As we have to share information with another company quarterly and annually, they have also asked me to include the designation column on all parts of DA when sending to them. They need to know the designations for IMR/AVR purposes. As our DA securities generally have designations of 1 to 3, it is taking a lot of time to look up the information. Can the column be reinstated, or how are other filers dealing with this issue? A: The referenced schedules are limited in terms of the amount of information that can be reported using even the very small 6-point font. Regulators have made a decision to not require this particular column based on:
Back to top Q: The CUSIP column was deleted on Schedule DA Part 1 and combined with the description. Securities under 90 days have to be moved to Schedule E Part 2 where the columns are separated, it is taking time to manipulate the information. Can the CUSIP column be returned? A: As mentioned in the previous answer, anyone can submit a blanks proposal to make a change. However, as a point of clarification, no manipulation should be required because only securities purchased with maturities of less than 90 days to maturity are reported on Schedule E, part 2.Back to top Q: The NAIC Annual Statement instructions say to report cap corridors & collars on Schedule DB, Part C. The question is, should the pieces (i.e. buy a cap and write a cap – our current corridor we bought) be reported individually or should the transactions be combined and shown as one item with the data netted for the columns? This is not clearly stated, what is the expectation? A: As the question indicates, the instructions don’t explicitly state how the item is to be reported but, generally speaking, we believe it is more transparent to show them individually. We suggest that any company with a concern may want to contact their state of domicile to determine how the state would like it to be reported.Back to top Q: Schedule E, Part 2 – Cash Equivalents currently does not have a Verification Between Years to disclose the disposal and acquisition activity and reconcile beginning balances to ending balances. Will a VBY be added at some point in the future? A: As previously mentioned, a blanks proposal can be submitted to make a change by any individual. Recently a subgroup (Investment Schedules Subgroup) has been formed by the Blanks Working Group to review the inconsistencies between the various investment schedules, and this particular issue is one item that was noted for discussion by that group. It is uncertain at this point what the subgroup with conclude with respect to this issue.Back to top Q: Schedule E, Part 2 – Cash Equivalents currently does not have a place to report income on investments held in prior periods and disposed of during the current period. Since you only report holdings at the end of the period, the gross investment income reported is only for investments still held. At year end, the YTD income is reported in the Exhibit of Net Investment Income, but where should it be reported on the quarters? A: The NAIC has made decisions within its committee structure that place more emphasis on the annual filing and - as a result - this amount will only show up in the total net investment income line on a quarterly statement and will not be detailed out in a separate schedule.Back to top Q: What is the purpose/benefit of collecting the information on the Quarterly Schedule DA Part 1 Column 4 (Interest Collected YTD) and Column 5 (Paid for Accrued Interest YTD) only for the securities owned at quarter end? A: This is an issue that we will place on our list for discussion with the Blanks Working Group.Back to top Q: How do you determine what goes on Schedule D and what goes on Schedule BA? Given the new filing requirements of BA, the line seems to have blurred. A: Determination of whether a security is a Schedule BA asset is made by the reporting entity from accounting guidance. The SVO accepts this determination. If the security is considered a Schedule BA asset, then the company must then determine if it is fixed income-like. If so, the company decides whether it wants to file the security with the SVO or take a 6 designation.Back to top Q: For holding companies listed on Schedule BA that serve as investment subsidiaries, should the AVR/RBC instructions and the AVR/RBC forms be updated to clarify that a look-through approach for purposes of calculating the AVR and RBC should be applied to investments held within the holding company, similar to SCA Investment Subsidiaries on Schedule D? A: Generally investment in holding companies should be listed on Schedule D Part 2 Section 1 or Section 2 as applicable and not Schedule BA. It should also be pointed out that the instructions for Schedule D Part 6 Section 1 specifically exclude holding companies from being an investment subsidiary.Back to top Q: What should be done with surplus notes that do not appear on the approved list? How should these be reported? Should they be filed with the SVO just as any other corporate bond or are their special filing requirements? A: Not all surplus notes need to be filed with the SVO. Only those rated A or higher are included on the List of Capital and Surplus Notes Eligible for Amortized Value Accounting which is maintained by the SVO. In order to get on this list, the insurance company must submit an Initial Filing Surplus Notes ATF. Filers do not need to submit annual updates for these notes. All surplus notes regardless of whether they are on the list or not, are Schedule BA assets and their treatment is detailed in SSAP No. 41.Back to top Q: Where in the schedules would you report non-tradable rights from hybrid securities? A: You report your non-tradable rights (not Hybrids) on Schedule D, Part 2, Section 2. Hybrid long term guidance still has not been formalized.Back to top
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