States’ Prescribed Differences From NAIC Statutory .

States’ Prescribed Differencesfrom NAIC StatutoryAccounting Principles2020

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Table of ContentsForeword. iiiDisclaimer . ivSummary of Changes .vALABAMA .1ALASKA .2ARIZONA .2ARKANSAS.3CALIFORNIA .3COLORADO .4CONNECTICUT.4DELAWARE .4DISTRICT OF COLUMBIA .4FLORIDA .5GEORGIA .7HAWAII.7IDAHO .8ILLINOIS .8INDIANA .9IOWA .9KANSAS .10KENTUCKY .10LOUISIANA .11MAINE .11MARYLAND .11MASSACHUSETTS .12MICHIGAN .12MINNESOTA .13MISSISSIPPI .13MISSOURI .13MONTANA .14NEBRASKA .15NEVADA .15NEW HAMPSHIRE .16 2002-2020 National Association of Insurance Commissionersi

Table of ContentsNEW JERSEY.16NEW MEXICO .17NEW YORK .18NORTH CAROLINA .19NORTH DAKOTA .20OHIO.20OKLAHOMA .20OREGON .21PENNSYLVANIA .21RHODE ISLAND .22SOUTH CAROLINA .22SOUTH DAKOTA .22TENNESSEE .23TEXAS .23UTAH .25VERMONT.25VIRGINIA .25WASHINGTON .26WEST VIRGINIA.26WISCONSIN .27WYOMING .27 2002-2020 National Association of Insurance Commissionersii

ForewordRETURN TO TABLE OF CONTENTSThe Preamble to the NAIC Accounting Practices and Procedures Manual (Manual) states that the Manual is notintended to preempt states’ legislative and regulatory authority. The purpose of the Manual is to establish acomprehensive basis of accounting recognized and adhered to if not in conflict with state statutes and/or regulations,or when the state statutes and/or regulations are silent.In the event that the domiciliary state sets forth accounting guidance that differs from the Manual, reporting entitiesare required to disclose the departure within the Notes to Financial Statements. Statement of Statutory AccountingPrinciple No. 1—Accounting Policies, Risks & Uncertainties, and Other Disclosures (SSAP No. 1), paragraph 7states:7.NAIC statutory accounting practices and procedures are those that are set forth in the AccountingPractices and Procedures Manual. If a reporting entity employs accounting practices that depart from theNAIC accounting practices and procedures, disclosure of the following information about those accountingpractices that affect statutory surplus or risk-based capital, or that result in different statutory accountingreporting (e.g., gross or net presentation, financial statement reporting lines, etc.), shall be made at thedate each financial statement is presented:a.A description of the accounting practice;b.A statement that the accounting practice differs from NAIC statutory accounting practicesand procedures1; andc.The monetary effect on net income and statutory surplus of using an accounting practicewhich differs from NAIC statutory accounting practices and procedures.d.If an insurance enterprise’s risk-based capital would have triggered a regulatory event hadit not used a prescribed or permitted practice, that fact should be disclosed in the financialstatements.These disclosures shall be disclosed in Note 1 as illustrated in Appendix A-205. Additionally, a referenceto Note 1 shall be included in the individual notes to financial statements impacted by the prescribed orpermitted practices as applicable.Footnote 1: This disclosure shall identify whether the practice is a departure from NAIC SSAP or from a state prescribedpractice and include the financial statement reporting line(s) predominantly impacted by the permitted or prescribedpractice. (Although most practices impact net income or surplus, direct reference to those lines should be avoided. Theintent is to capture the financial statement line(s) reflecting the practice which ultimately impacts net income or statutorysurplus.) For example, although a permitted practice to admit furniture would increase surplus, this should be disclosedas a permitted practice to SSAP No. 19—Furniture, Fixtures, Equipment and Leasehold Improvements, impacting line21 of the asset page (furniture and equipment) and not line 37 (surplus) of the liabilities and surplus page.The NAIC developed this publication, organized by state, as a means of providing further information to regulators,public accountants and company personnel regarding these differences. Also included is a reference to each state’sstatute or regulation that adopts the Manual.In most instances, the state’s investment law(s) has been included as a possible difference, given that most stateinvestment laws contain investment limitations and restrictions not required by the Manual. For example, a reportingentity nonadmits an asset in their annual statement because they have exceeded their state’s investment limits forthat particular investment; the Manual would allow that same investment to be admitted, as there are few investmentlimits in the Manual. This situation results in a difference in surplus that reporting entities must disclose inaccordance with SSAP No. 1. However, depending upon the nature of a state’s investment law, it may not result ina difference that reporting entities must disclose in accordance with SSAP No. 1. 2002-2020 National Association of Insurance Commissionersiii

DisclaimerRETURN TO TABLE OF CONTENTSThe information contained herein should not be relied upon solely in determining whether a state has prescribedguidance that is different from the NAIC Accounting Practices and Procedures Manual. This publication isintended to provide a summary of states’ differences, and the reviewer should in every instance refer to theindividual state’s statutes or regulations for authoritative guidance. When necessary, the state insurance departmentshould be contacted.Every effort has been made to ensure the contents of this publication are complete and factually correct, but theNAIC makes no warranty as to the completeness and accuracy of the information provided. Any errors or omissionsnoted in the publication should be submitted to Jim Pinegar, Manager II, Accounting Policy, via email atjpinegar@naic.org or forwarded to the NAIC Executive Headquarters, 1100 Walnut, Suite 1500, Kansas City, MO64106-2197, Attention: Statutory Accounting Principles. 2002-2020 National Association of Insurance Commissionersiv

Summary of ChangesRETURN TO TABLE OF CONTENTSThe following represents a summary of changes to the previous year edition of the States’ Prescribed Differencesfrom NAIC Statutory Accounting Principles to create the current year publication. Updates are shown by underlinedtext (new) and stricken text (deleted). Rows in each state’s chart with no revisions from the previous year have beenomitted to conserve space.ARKANSASSSAP orAppendicesSSAP No. 56 andA-250State Law or RegulationRule 6DescriptionEstablishes guidance on variable annuities.CALIFORNIASSAP orAppendicesA-820State Law or RegulationDescriptionThe qualified actuary shall be liable for his or her negligenceor other tortiuous conduct.§ 10489.15(ac )(46)(F)CONNECTICUTSSAP orAppendicesA-010State Law or RegulationDescription§§ 38a-78-11 to 38a-78-15With regard to morbidity tables, requires use of (1) 87CGDTfor group disability income claim reserves for claims incurredon or after 1/1/1994; (2) 85CIDA or 85CIDB for individualdisability income claim reserves for claims incurred on or after1/1/1994; and (3) 85CIDA or 85CIDB for individual disabilityincome contract reserves for contracts issued on or after1/1/1994.does not allow use of 2012 GLTD for groupdisability income claim reserves for claims incurred prior to8/31/2018 unless such table is used for all open claims.FLORIDASSAP orAppendicesState Law or RegulationA-001§§ 625.301 to 625.340;§ 641.35; Rule 69O138.021 FACSSAP No. 16R§ 625.012(11)SSAP No. 57§ 625.-330DescriptionProvides limitations on investments outside the scope of theManual.Establishes a 25,000 minimum capitalization requirement forEDP but not more than 3% of insurer’s capital/surplus asfurther adjusted by statute if applicable.See Statute for special investments by title insurers. 2002-2020 National Association of Insurance Commissionersv

Summary of ChangesRETURN TO TABLE OF CONTENTSIDAHOSSAP orAppendicesSSAP No. 40RState Law or RegulationDescriptionIdaho Code §§ 41-728(1)(a)Sets forth admissibility rules for home office real estate.Real EstateINDIANASSAP orAppendicesSSAP No. 51RState Law or RegulationBulletin 137DescriptionAllows a difference in calculating Universal Life reserves forpolicies issued prior to January 1, 2006.KANSASSSAP orAppendicesState Law or RegulationA-200K.A.R. 40-1-44A-695K.A.R. 40-1-44A-785K.S.A. 40-221aDescriptionModel 820 is not adopted. K.A.R. 40-1-44 adopts policy andprocedure by reference, which is substantially similar toModel 822.Not adoptedModel 820 is not adopted. K.A.R. 40-1-44 adopts policy andprocedure by reference, which is substantially similar toModel 822.Not adoptedIt is anticipated that K.S.A. 40-221a will be amended,effective July 1, 2020. Following the amendment, K.S.A. 40221a will be substantially similar to the 2019 version of Model785 and 786.K.S.A § 40-221a is substantially similar to ModelLaw 785: Sections 1, 2, 3, 15, 30 and 49 of A-785 were notadopted in K.A.R. § 40-1-43; most notable of these sectionsare 15–Valuation of and Requirements for Trust Assets, 30–Insolvency of grantor of trust, and 49–Credit forunencumbered funds.MICHIGANCitation adopting the Manual: Commissioner Orders 198-0062-M, 198-0073-M and 189-0084-M 2002-2020 National Association of Insurance Commissionersvi