Fannie Mae and Freddie Mac are streamlining their mortgage-backed security offerings to develop a more transparent mortgage marketplace. Part of that goal involves transitioning the existing Freddie Mac 45-day eligible and non-eligible TBA mortgage-backed securities to a security that mirrors the Fannie Mae 55-day security. It’s a big undertaking – you may have securities in your portfolio that you consider in the transition.
“Preparation is the key to success.” These famous words, spoken by Alexander Graham Bell, are universally true in all areas of life. When it comes to your company’s annual statutory insurance audit, preparation and planning can go a long way to ensure the potential for problems or issues is minimized.
Last week the Statutory Accounting Principles Working Group (SAPWG) met to discuss permitting a temporary 60-day extension of the normal 90-day rule outlined in paragraph 9 of SSAP No. 6. At issue was whether such an extension for premium receivables for impacted policies or agents should be permitted, past precedents for such a change and how to implement an extension.
With the fast-paced expansion of traditional businesses in recent years into the global economy, capital markets and computer technology, the Enterprise Risk Management process has transitioned from what was once a concept consigned to the larger organizations to one that now encompasses the mainstream business community.
The revised loss reserve discounting rules are expected to affect both current and deferred taxes for P&C insurance companies. With the higher applicable interest rate used to determine loss reserve discount factors and the extended payment period for recovering loss reserves, insurers should expect to see their tax basis discounted loss reserve decrease. This will, in turn, result in increased taxable income and loss reserve DTA amounts.
Substantive revisions to SSAP No. 21—Other Admitted Assets, were made to explicitly include accounting guidance for an insurance reporting entity that acquires structured settlement payment rights as a result of a structured settlement factoring transaction. Structure settlement payment terms can be classified in two buckets – Period Certain or Life Contingent
Nonsubstantive changes to SSAP No. 97 – Investments in Subsidiary, Controlled and Affiliated Entities to clarify how to account and disclose when an entity’s share of losses in their investments in an SCA exceeds their investment. Added language explains that entities whose share of losses in an SCA exceeds its investment shall continue to reduce its investment in the SCA to zero and shall not provide for additional losses.
On May 3, 2018, South Carolina became the first adopter of Insurance Data Security Model Law. The NAIC adopted the law in October 2017, and the law goes into effect January 1, 2019, and requires licensees of the State of South Carolina DOI to comply. The law follows the New York Department of Financial Services regulation, which paved the way for the NAIC law.
In our last note, we talked about the new tax act. Now once more we come with more insurance tax hacks. This time we look at the P&C line, with a little more news that may not be kind. This message we give deals with unpaid losses, which now have been changed by those Treasury bosses.
As we enter the new year with a new tax act, we are driven to tell you more insurance tax facts. As the TCJA came in with a bang, many old insurance rules have changed. So, here’s one that’s been long-standing for life insurance companies that will cause small insurers some obvious strife.