NAIC BLANKS (E) WORKING GROUP
Blanks Agenda Item Submission Form
DATE: 05/14/2012CONTACT PERSON:
TELEPHONE:
EMAIL ADDRESS:
ON BEHALF OF:
NAME: Joseph Fritsch
TITLE: Chair SAPWG
AFFILIATION: New York Department of Insurance
ADDRESS: 25 Beaver St.
New York, NY 10004-2319 / FOR NAIC USE ONLY
Agenda Item # 2012-27BWG MOD
Year 2013
Changes to Existing Reporting [ X ]
New Reporting Requirement [ ]
REVIEWED FOR ACCOUNTING PRACTICES AND PROCEDURES IMPACT
No Impact [ X ]
Modifies Required Disclosure [ ]
DISPOSITION
[ ] Rejected For Public Comment
[ ] Referred To Another NAIC Group
[ X ] Received For Public Comment
[ ] Adopted Date
[ ] Rejected Date
[ ] Deferred Date
[ ] Other (Specify)
BLANK(S) TO WHICH PROPOSAL APPLIES
[ X ] ANNUAL STATEMENT [ X ] QUARTERLY STATEMENT
[ X ] INSTRUCTIONS [ ] CROSSCHECKS [ ] BLANK
[ X ] Life and Accident & Health [ X ] Property/Casualty [ X ] Health
[ ] Separate Accounts [ X ] Fraternal [ X ] Title
[ ] Other Specify
Anticipated Effective Date: First Quarter 2013
IDENTIFICATION OF ITEM(S) TO CHANGE
Modify the annual statement instructions for Note 12 to reflect the disclosure requirements resulting from the adoption of SSAP No. 92 and SSAP No. 102. The illustration for Note 12A(12)b1 and 12A(12)b2 will be data captured. Modify the quarterly statement instructions to indicate that Note 12A(6) will be required in quarterly reporting and add instructions and illustration for that disclosure. Also the quarterly disclosure will be renumbered (12A(6) to 12A(4)) for 2014 quarterly reporting to match the 2013 annual reporting numbering.
REASON, JUSTIFICATION FOR AND/OR BENEFIT OF CHANGE**
At the March 2012 National Meeting, the Statutory Accounting Principles Working Group adopted SSAP No. 92, Postretirement Benefits Other Than Pensions A Replacement of SSAP No. 14 and SSAP No. 102, Accounting for Pensions, A Replacement of SSAP No. 89. This proposal implements those SSAPs into the annual and quarterly instructions.
NAIC STAFF COMMENTS
Comment on Effective Reporting Date: First Quarter 2013 should not be a problem
Other Comments:
** This section must be completed on all forms. Revised 6/13/2009
ANNUAL STATEMENT INSTRUCTIONS – LIFE, HEALTH, PROPERTY, FRATERNAL AND TITLE
NOTES TO FINANCIAL STATEMENTS
Detail Eliminated To Conserve Space
12. Retirement Plans, Deferred Compensation, Postemployment Benefits and Compensated Absences and Other Postretirement Benefit Plans
The disclosures required for this Note shall be aggregated for all of an reporting entity’s defined benefit pension plans and for all of a reporting entity’s other defined benefit postretirement plans unless disaggregating in groups is considered to provide useful information or is otherwise required by SSAP No. 92, Postretirement Benefits Other Than Pensions A Replacement of SSAP No. 14 or SSAP No. 102, Accounting for Pensions, A Replacement of SSAP No. 89. Disclosures shall be as of the date of each statement of financial position presented. Disclosures about pension plans with assets in excess of the accumulated benefit obligation generally may be aggregated with disclosures about pension plans with accumulated benefit obligations in excess of assets. The same aggregation is permitted for other postretirement benefit plans. If aggregate disclosures are presented, a reporting entity shall disclose:
The aggregate benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets as of the measurement date of each statement of financial position presented.
The aggregate pension accumulated benefit obligation and aggregate fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets.
Refer to SSAP No. 89, Accounting for Pensions, A Replacement of SSAP No. 8 and SSAP No.14, Postretirement Benefits Other Than Pensions, for additional guidance.
Refer to SSAP No. 11, Postemployment Benefits and Compensated Absences; SSAP No. 92, Postretirement Benefits Other Than Pensions A Replacement of SSAP No. 14; and SSAP No. 102, Accounting for Pensions, A Replacement of SSAP No. 89, for additional guidance.
Instruction:
A. Defined Benefit Plan
Disclose the following regarding an reporting entity employer sponsoring a Defined Benefit Plan for which the reporting entity is directly liable (i.e., the plan resides directly in the reporting entity):
(1) A reconciliation of beginning and ending balances of the projected benefit benefit obligation showing separately, if applicable, the effects during the period attributable to each of the following:
a. Beginning balance
b. Service cost
c. Interest cost
d. Contributions by plan participants
e. Actuarial gains and losses
f. Foreign currency exchange rate changes
g. Benefits paid
h. Plan amendments
i. Business combinations, divestitures, curtailments, settlements, and special termination benefits
j. Ending balance
(2) A reconciliation of beginning and ending balances of the fair value of plan assets showing separately, if applicable, the effects during the period attributable to each of the following:
a. Fair value of plan assets at beginning of year
b. Actual return on plan assets
c. Foreign currency exchange rate changes
d. Contributions by the reporting entityemployer
e. Contributions by plan participants
f. Benefits paid
g. Business combinations, divestitures, and settlements
h. Fair value of plan assets at end of year
(3) The funded status of the plans, the amounts not recognized in the statement of financial position, showing separately the assets (nonadmitted) and liabilities recognized.and the amounts recognized in the statement of financial position, including:
a. The amount of any unamortized prior service cost
b. The amount of any unrecognized net gain or loss (including asset gains and losses not yet reflected in market-related value)
c. The amount of any remaining unamortized, unrecognized net obligation or net asset existing at the initial date of application
d. The net pension or other postretirement benefit prepaid assets or accrued liabilities
e. Any intangible asset
(4) The amount of the accumulated benefit obligation for fully vested employees and partially vested employees only to the extent of their vested amounts.
(5) The amount of the projected pension obligation and accumulated benefit obligation for the nonvested portions for all employees as of the most recent actuarial valuation date.
(64) The amount of net periodic benefit cost recognized, showing separately:
a. Service cost
b. Interest cost
c. Expected return on plan assets for the period
d. Transition asset or obligationAmortization of the unrecognized transition obligation or transition asset (or incremental liability or asset for pensions, if applicable – Refer to SSAP No. 89, Accounting for Pensions, A Replacement of SSAP No. 8)
e. Amount of recognized gains Gains and losses
f. Amount of prior Prior service cost or credit recognized
g. Amount of gain Gain or loss recognized due to a settlement or curtailment
h. Total net periodic benefit cost
(5) Separately the net gain or loss and net prior service cost or credit recognized in unassigned funds (surplus) for the period and reclassification adjustments of unassigned funds (surplus) for the period, as those amounts, including amortization of the net transition asset or obligation, are recognized as components of net periodic benefit cost.
(6) The amounts in unassigned funds (surplus) expected to be recognized as components of net periodic benefit cost over the fiscal year that follows the most recent annual statement of financial position presented, showing separately the net gain or loss, net prior service cost or credit, and net transition asset or obligation.
(7) The amounts in unassigned funds (surplus) that have not yet been recognized as components of net periodic benefit cost, showing separately the net gain or loss, net prior service cost or credit, and net transition asset or obligation.
(7) The amount included in unassigned funds (surplus) for the period arising from a change in the additional minimum pension liability recognized (Refer to SSAP No. 89, Accounting for Pensions, A Replacement of SSAP No. 8)
(8) On a weighted-average basis, the following assumptions used in accounting for the plans:
· Assumed discount rate
· Rate of compensation increase (for pay-related plans)
· Expected long-term rate of return on plan assets
(9) The measurement date(s) used to determine other postretirement benefit measurements for postretirement benefit plans that make up at least the majority of plan assets and benefit obligations.
(9) The amount of the accumulated benefit obligation for defined benefit pension plans.
(10) For postretirement benefits other than pensions, the assumed health care cost trend rate(s) for the next year used to measure the expected cost of benefits covered by the plan (gross eligible charges) and a general description of the direction and pattern of change in the assumed trend rates thereafter, together with the ultimate trend rate(s) and when that rate is expected to be achieved
(11) For postretirement benefits other than pensions, the effect of a one-percentage-point increase and the effect of a one-percentage-point decrease in the assumed health care cost trend rates on: (1) the aggregate of the service and interest cost components of net periodic postretirement health care benefit cost; and (2) the accumulated postretirement benefit obligation for health care benefits. (For purposes of this disclosure, all other assumptions shall be held constant, and the effects shall be measured based on the substantive plan that is the basis for the accounting.)
(12) Information about plan assets:
The objectives of the disclosures about postretirement benefit plan assets are to provide users of financial statements with an understanding of:
· How investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies
· The classes of plan assets
· The inputs and valuation techniques used to measure the fair value of plan assets
· The effect of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets for the period
· Significant concentrations of risk within plan assets.
A reporting entity shall consider those overall objectives in providing the following information about plan assets:
a. A narrative description of investment policies and strategies, including target allocation percentages or range of percentages considering the classes of plan assets disclosed pursuant to “b” below, as of the latest statement of financial position presented (on a weighted-average basis for reporting entities with more than one plan), and other factors that are pertinent to an understanding of those policies and strategies such as investment goals, risk management practices, permitted and prohibited investments including the use of derivatives, diversification, and the relationship between plan assets and benefit obligations. For investment funds disclosed as classes as described in “b” below, a description of the significant investment strategies of those funds shall be provided.
b. The fair value of each class of plan assets as of each date for which a statement of financial position is presented. Asset classes shall be based on the nature and risks of assets in a reporting entity’s plan(s).
Examples of classes of assets include, but are not limited to, the following:
Cash and cash equivalents;
Equity securities, (segregated by industry type, company size, or investment objective);
Debt securities, issued by national, state, and local governments;
Corporate debt securities;
Asset-backed securities;
Structured debt;
Derivatives on a gross basis (segregated by type of underlying risk in the contract, for example);
· Interest rate contracts,
· Foreign exchange contracts,
· Equity contracts,
· Commodity contracts,
· Credit contracts, and
· Other contracts;
Investment funds (segregated by type of fund); and
Real estate.
These examples are not meant to be all inclusive. A reporting entity should consider the overall objectives in determining whether additional classes of plan assets or further disaggregation of classes should be disclosed.
The disclosure should include information that enables users of financial statements to assess the inputs and valuation techniques used to develop fair value measurements of plan assets at the reporting date. For fair value measurements using significant unobservable inputs, a reporting entity shall disclose the effect of the measurements on changes in plan assets for the period. To meet those objectives, the reporting entity shall disclose the following information for each class of plan assets disclosed above for each annual period:
1. The level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3)
NOTE: In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. The level in the fair value hierarchy within which the fair value measurement in its entirety falls shall be determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.
2. For fair value measurements of plan assets using significant unobservable inputs (Level3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following:
(a) Actual return on plan assets, separately identifying the amount related to assets still held at the reporting date and the amount related to assets sold during the period
(b) Purchases, sales, and settlements (each type disclosed separately)
(c) Transfers in and/or out of Level 3 (for example, transfers due to changes in the observability of significant inputs)
3. Information about the valuation technique(s) and inputs used to measure fair value and a discussion of changes in valuation techniques and inputs, if any, during the period.
c. A narrative description of the basis used to determine the overall expected long-term rate-of-return-on-assets assumption, such as the general approach used, the extent to which the overall rate-of-return-on-assets assumption was based on historical returns, the extent to which adjustments were made to those historical returns in order to reflect expectations of future returns, and how those adjustments were determined. The description should consider the classes of assets described in “b” above, as appropriate.