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PA Bulletin, Doc. No. 01-2150

NOTICES

Disclosure of Departures from Codified Statutory Accounting Principles; Notice 2001-10

[31 Pa.B. 6588]

   The National Association of Insurance Commissioners (NAIC) adopted codified statutory accounting principles in March 1998. By Insurance Department Notice Nos. 1998-04 and 2000-02, all types of domestic insurers were advised of the requirement to adhere to the NAIC's codified Accounting Practices and Procedures Manual (Manual) in preparing financial statements to be filed with the Insurance Department (Department) beginning with quarterly financial statements filed as of March 31, 2001. The Manual is not intended to preempt the legislative and regulatory authority of the states. It is intended to establish a comprehensive basis of accounting to be recognized and adhered to if not in conflict with the statutes or regulations of an insurer's domiciliary state (for example, state laws relating to permissible investments) or when the domiciliary state's statutes and regulations are silent.

   This notice is to advise all domestic insurers that the Department has identified the following Commonwealth laws and regulations relating to statutory financial statement presentation that may require disclosure as a departure from the Manual in the notes to financial statements and CPA audit reports1:

Commonwealth Laws and Regulations NAIC Statements of Statutory Accounting Principles (SSAP) and Appendices
31 Pa. Code Chapter 116 (relating to discounting of worker's compensation loss reserves) SSAP No. 55 Unpaid Claims, Losses and Loss Adjustment Expenses and SSAP No. 65 Property and Casualty Contracts
31 Pa. Code Chapter 118 (relating to discounting of medical malpractice loss reserves) SSAP No. 55 Unpaid Claims, Losses and Loss Adjustment Expenses and SSAP No. 65 Property and Casualty Contracts
31 Pa. Code Chapter 84a (relating to minimum reserve standards for individual and group health and accident insurance contracts) SSAP No. 54 Individual and Group Accident and Health Contracts and Appendix A-010 Minimum Reserve Standards for Individual and Group Health Insurance Contracts
31 Pa. Code § 73.138 (relating to financial statement reserves) SSAP No. 59 Credit Life and Accident and Health Insurance Contracts
Section 320.1(b)(2) of The Insurance Company Law of 1921 (40 P. S. § 443.1(b)(2)) SSAP No. 25 Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties
Sections 322.1 and 809 of The Insurance Company Law of 1921 (40 P. S. §§ 445.1 and 919) and 31 Pa. Code Chapter 105 (relating to advances made to companies other than Mutual Life) SSAP No. 41 Surplus Notes
Section 1405 of The Insurance Company Law of 1921 (40 P. S. § 991.1405) Appendix A--440 Insurance Holding Companies
31 Pa. Code §§ 89.901--89.921 Appendix A--641 Long-Term Care Insurance
Sections 714--716 of The Insurance Company Law of 1921 (40 P. S. §§ 910-14--910-16) SSAP No. 57 Title Insurance and Appendix A-628 Title Insurance
Order of the Insurance Commissioner dated April 18, 19962 (relating to prepaid premium taxes) SSAP No. 20 Nonadmitted Assets3
Section 661 of The Insurance Company Law of 1921 (40 P. S. § 832) SSAP No. 55 Unpaid Claims, Losses and Loss Adjustment Expenses and SSAP No. 65 Property and Casualty Contracts
Section 1008 of The Insurance Company Law of 1921 (40 P. S. § 968) SSAP No. 53 Property Casualty Contracts--Premiums
31 Pa. Code § 161.8 (relating to credit for reinsurance ceded to alien nonaffiliated insurers which write no primary coverages in the United States) SSAP No. 62 Property and Casualty Reinsurance
Department Notice No. 94-14. Separate Account Modified Guaranteed Life Insurance Appendix A--588 Modified Guaranteed Life Insurance

   The laws and regulations referenced in this notice are not intended to be an all-inclusive list. This notice is intended only to provide general guidance in the review of Commonwealth laws and regulations for purposes of required disclosures in financial statements and CPA audit reports. Questions concerning this notice may be directed to Stephen J. Johnson, CPA, Deputy Insurance Commissioner, Office of Regulation of Companies, 1345 Strawberry Square, Harrisburg, PA 17120, (717) 783-2142, fax:  (717) 787-8557, e-mail:  stjohnson@state.pa.us.

M. DIANE KOKEN,   
Insurance Commissioner

______

   1 See SSAP No. 1, Disclosure of Accounting Policies, Risks & Uncertainties, and Other Disclosures in the Manual.
     2 See the Department's Financial Statement Filing Instructions on the Department's website for the Note related to prepaid premium taxes.
     3 The NAIC working group charged to maintain the Manual will be reconsidering the nonadmissibility of prepaid premium taxes.

[Pa.B. Doc. No. 01-2150. Filed for public inspection November 30, 2001, 9:00 a.m.]


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