US NAIC Summer 2026 National Meeting Highlights: Statutory Accounting Principles Working Group

The Statutory Accounting Principles (E) Working Group (“SAPWG”) met on August 12, 2026 at the Summer 2026 National Meeting of the US National Association of Insurance Commissioners (“NAIC”). This update highlights specific SAPWG agenda items of particular relevance to insurer investments. Meeting materials and exposure drafts are available at the SAPWG web page.

IMR and ALM Derivatives

The August 12 meeting addressed the continued development of the comprehensive overhaul of the Interest Maintenance Reserve (“IMR”) framework. In April 2026, the SAPWG exposed for comment a revised SSAP No. 7—Asset Valuation Reserve and Interest Maintenance Reserve, together with a corresponding issue paper, revisions to other SSAPs, and proposed reporting revisions. At the August 12 meeting, NAIC staff proposed further revisions, and the SAPWG voted to re-expose the revised documents for a new comment period ending October 2, 2026, with a proposed new effective date of January 1, 2028.

The proposed revised SSAP No. 7 consolidates into the SSAP the IMR accounting guidance that was previously contained in the annual statement instructions. Key elements of the revised framework include: clarification of the definition of IMR as a valuation adjustment to maintain consistency between the valuation manual basis for insurance liabilities and the amortized cost of assets needed to support them; elimination of the concept of “hypothetical IMR”; elimination of the excess withdrawal test, with immediate recognition of realized losses from known liquidity sales; inclusion of all market value adjustments in IMR; a proof of reinvestment requirement as a condition for deferring current-year net realized losses that exceed current-year realized gains; clarification that only gains and losses from accounting-effective derivatives may be allocated to IMR when the hedged item’s corresponding gain or loss is also allocated to IMR; and expanded disclosures and attestations regarding negative IMR and known liquidity sales.

The admittance of net negative IMR remains an area of discussion. Under the current interim guidance (INT 23-01), net negative IMR may be admitted as an asset up to 10% of adjusted surplus. Industry commenters, including the American Council of Life Insurers (“ACLI”), urged the elimination of the admittance cap and full admittance of net negative IMR. NAIC staff reported that net negative IMR has grown significantly, from approximately $11.3 billion in 2023 to approximately $21.5 billion in 2025, while net positive IMR has declined from approximately $15.8 billion to approximately $8.8 billion over the same period. NAIC staff suggested that a decision on whether to retain, increase, or eliminate the admittance cap could be deferred until after initial compliance with the new framework’s safeguards (including proof of reinvestment and known liquidity sale attestation requirements) can be verified. To bridge the gap to the proposed new effective date of January 1, 2028 for the revised SSAP No. 7 and related items, the SAPWG voted to extend the INT 23-01 interim guidance through December 31, 2027, with automatic nullification on January 1, 2028.

Separately, the SAPWG re-exposed a revised version of a proposed new SSAP No. 109—Asset Liability Management (ALM) Derivatives and a related issue paper, also contemplating a January 1, 2028 effective date. The proposed SSAP No. 109 would permit amortized-cost accounting and deferral of gains and losses for qualifying ALM derivatives. Revisions from the prior exposure include elimination of the accelerated amortization provision (in response to regulator concerns about potential manipulation of surplus), new requirements for immediate capital gain or loss recognition when the hedged liability portfolio is derecognized due to a reinsurance arrangement, and inclusion of deferred derivative gains and losses in cash flow testing and principles-based reserving calculations. A referral was directed to the Life Actuarial (A) Task Force requesting consideration of a pilot review in early 2027, and the SAPWG directed staff to sponsor the development of a blanks proposal to incorporate new reporting lines on Schedule DB for these derivatives.

IMR Impact on Reinsurance Collateral Adopted

The SAPWG adopted revisions to SSAP No. 61—Life, Deposit-Type and Accident and Health Reinsurance to clarify the treatment of IMR derecognized as part of a reinsurance transaction for purposes of calculating collateral requirements. Under the adopted asymmetrical approach, derecognized net positive IMR increases the collateral required from reinsurers, but derecognized net negative IMR does not reduce collateral requirements. Industry commenters, including the ACLI, had advocated for symmetrical treatment (under which negative IMR would reduce collateral requirements), but NAIC staff noted that permitting negative IMR to reduce collateral could bring collateral below the level of policy reserves and could incentivize surplus-enhancing reinsurance transactions.

Securities Lending Restricted Asset Reporting Adopted

The SAPWG adopted revisions to SSAP No. 1—Accounting Policies, Risks & Uncertainties and Other Disclosures to clarify restricted asset reporting for securities lending transactions. The adopted revisions provide that the restricted asset for securities lending transactions is the security lent by the reporting entity that remains on its financial statements—not the collateral received. This change was intended to eliminate potential double-counting and align the restricted asset disclosure with the risk-based capital (“RBC”) reference to securities “loaned to others.” The SAPWG directed NAIC staff to sponsor a corresponding blanks proposal and to send a referral to the Capital Adequacy (E) Task Force.

AVR Reporting Clarifications Adopted

The SAPWG adopted an agenda item directing NAIC staff to sponsor a blanks proposal for the 2027 Life, Accident & Health/Fraternal Annual Statement to clarify reporting of subsidiary, controlled, or affiliated (“SCA”) common stock in the asset valuation reserve (“AVR”) schedule. The item responds to a referral from the Life Risk-Based Capital (E) Working Group regarding ambiguity in the AVR equity reporting lines for SCA common stock, and clarifies that SCAs with statutory accounting-impacted valuations (excluding life SCAs with an AVR) should be reported in the “SCA—Certain Other” category, receiving a lower RBC charge.

Funds Withheld Valuation Guidance Re-Exposed

The SAPWG exposed modified guidance for SSAP No. 61 to clarify how funds withheld assets and liabilities shall be recorded. The exposure addresses the inconsistency in the valuation of funds withheld liabilities under life and health reinsurance agreements based on the fair value of the funds withheld assets, when the assets themselves are reported at statutory book adjusted carrying value (“BACV”). As a result, if the fair value of funds withheld assets increases, a ceding insurer would take a hit to surplus because its liability would increase along with the fair value while the BACV on the asset side of its balance sheet would stay the same. Therefore, NAIC staff have proposed changing the guidance so that the funds withheld liability will also be based on the BACV of the funds withheld assets (to the extent that such funds were included as a part of the total assets and were not offset by a directly related credit on the asset page).

Fair Value Disclosures Re-Exposed

The SAPWG re-exposed proposed revisions to SSAP No. 100—Fair Value to eliminate the disclosure exclusion for investments accounted for under the equity method from the aggregate fair value financial instrument disclosure (Note 20C). In response to industry concerns about audit implications (given that fair values reported in investment schedules may not have been determined under SSAP No. 100), NAIC staff requested that industry propose guidance to differentiate equity investments between “operating entities” and structures that merely hold investments. A referral from the Investment Analysis (E) Working Group (“INVAWG”) also expressed concerns about the structure and data quality of Note 20C, and NAIC staff indicated that a future blanks proposal at the 2026 Fall National Meeting may convert Note 20C into a more standardized template.

New Items Exposed for Comment

The SAPWG also exposed the following new items for public comment:

SSAP No. 21—ICOLI Reporting: The SAPWG exposed a request for comment on whether amounts realizable under insurer company-owned life insurance (“ICOLI”) policies should be captured on Schedule BA in a new reporting category to better reflect the investment risk, with a referral to the Capital Adequacy (E) Task Force to assess RBC implications.

SSAP No. 86—RSATs: The SAPWG exposed proposed concept changes to the accounting and reporting of replication synthetic asset transactions (“RSATs”), including new definitions, restrictions limiting cash components to high-quality NAIC 1- or 2-designated securities, requirements that replicated assets be investment-grade long-term bonds, and guidance on Schedule DB-Part C reporting.

SSAP No. 26—Embedded ALM Risk: The SAPWG exposed revisions to expand requirements for asset-backed security structures to qualify as bonds under the principles-based bond definition. Under the proposal, non-self-liquidating ABS structures would need to overcome the rebuttable presumption under paragraphs 6.a. to 6.d. of SSAP No. 26 that debt collateralized by equity interests does not qualify as a bond, and self-liquidating ABS with significant embedded asset-liability management risk would not qualify as bonds.

Residential Mortgage Loan Definition: The SAPWG received an INVAWG referral and exposed an agenda item to clarify the definition of a residential mortgage loan and assess risk characteristics for more granular reporting and accounting guidance, including questions regarding condominium properties, non-owner-occupied properties, loan-to-value ratios, and whether residential mortgage loans should be reported in predefined aggregate categories rather than traditional Schedule B reporting.

SSAP No. 62—Retroactive Reinsurance Exception: The SAPWG exposed a new disclosure requirement and requested conceptual comments regarding the exception to retroactive reinsurance accounting for intercompany transactions between insurers 100% owned by a common parent (SSAP No. 62, paragraph 36.d), including whether the exception should remain unchanged, be narrowed, or be eliminated.

SSAP No. 23—Canadian Translation Exception: The SAPWG exposed revisions to remove the Canadian exception for foreign currency translation, which would require all foreign currency operations to be translated into US dollars within each financial statement reporting line. The rationale was that the Canadian and US dollars are no longer close equivalents (with 1 Canadian dollar representing approximately US$0.70 as of July 2026).

SSAP No. 24—Government Grants: The SAPWG exposed revisions to reject FASB ASU 2025-10, Accounting for Government Grants Received by Business Entities, while incorporating terminology changes and clarifying that government grants are to be accounted for as gain contingencies.

Medicaid Updates: The SAPWG exposed revisions to SSAP No. 47 and SSAP No. 54 to specify that Medicaid contract payments classified as capitated payments are included in insured plans, with notice to the Health Risk-Based Capital (E) Working Group.

SSAP No. 101/INT 18-03: The SAPWG exposed revisions to nullify INT 18-03 (addressing provisions of the Tax Cuts and Jobs Act) effective January 1, 2027, and incorporate continuing guidance in SSAP No. 101.

Other Matters

NAIC staff reported on significant reporting errors on Schedule BA, where 57% of investments reported with SVO-assigned designations for non-bond debt securities either lacked an SVO-assigned designation or were misreported with a more favorable designation. Staff emphasized that only investments directly filed with the SVO and for which an SVO-assigned designation has been received may be reported in the corresponding Schedule BA lines.

The SAPWG received a referral from the Life Risk-Based Capital (E) Working Group requesting additional disclosures for collateral loans, including whether independent verification of collateral fair value was obtained, verification details, and a valuation range. The SAPWG directed staff to develop an agenda item on this topic for the Fall National Meeting.

The SAPWG also received status updates on ongoing projects regarding SSAP No. 48—Joint Ventures, Partnerships and Limited Liability Companies, commitments and contingencies disclosures (with proposals on both topics expected at the Fall National Meeting), current US GAAP exposures, a Life Actuarial (A) Task Force coordination memo, and the IAIS Accounting and Auditing Working Group.

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