March 27, 2026

Key SAPWG developments at Spring 2026 National Meeting of NAIC

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The Statutory Accounting Principles (E) Working Group of the National Association of Insurance Commissioners exposed several key proposed changes to statutory accounting at its meeting during the NAIC’s Spring National Meeting

The Statutory Accounting Principles (E) Working Group (SAPWG) of the National Association of Insurance Commissioners (NAIC) exposed several key proposed changes to statutory accounting at its meeting during the NAIC’s Spring National Meeting that took place in San Diego and virtually in March 2026. Among these consequential developments were the following:

• SAPWG exposed a proposed issue paper, a revised version of the proposed new Statement of Statutory Accounting Principles (SSAP) No. 109 and related guidance on asset liability management (ALM) derivatives. These are derivatives that “hedge asset/liability duration differences subject to fluctuations as a result of interest rate sensitivity”. Under this proposed guidance, insurers meeting certain requirements would be permitted to report the recognized net deferred assets representing realized fair value losses from these derivatives as admitted assets. Net deferred liabilities, representing realized fair value gains, would be recognized as liabilities. In order to qualify for this treatment, the insurer would have to have a “clearly defined hedging strategy” meeting criteria set forth in the guidance.
• SAPWG exposed a draft issue paper documenting for the historical record the conceptual changes to statutory accounting relating to residential mortgage loans (RMLs) held in statutory trusts. The guidance would extend SSAP No. 37 treatment to mortgage loans acquired through an investment in a trust meeting certain characteristics. These include the requirement that the trust be U.S.-organized and have assets that consist exclusively of single RML agreements. The guidance would permit these mortgages, under these circumstances, to be included on Schedule B.
• SAPWG exposed changes to the required disclosures under SSAP No. 1 – Accounting Policies, Risks & Uncertainties, and Other Disclosures. Categories of disclosures were added for modco assets, funds withheld (FWH) assets and collateral assets received and on the balance sheet. The guidance also recommends to the Blanks Working Group that it add these three categories into the restricted asset codes that are included in the investment schedules.
• SAPWG exposed revisions to SSAP No. 52 – Deposit-Type Contracts relating to funding agreement-backed notes (FABNs) and other funding agreement-backed structures. Under these revisions, an insurer would be required to disclose information on funding agreements that back instruments issued by special purpose vehicles (SPVs).
• SAPWG exposed guidance addressing inconsistent treatment regarding the valuation of the liability for FWH in a life or health reinsurance agreement. The guidance would clarify that FWH liabilities should be recorded in an amount equal to the book adjusted carrying value (BACV) of the FWH assets. At present, these liabilities are recorded at different values depending on whether the reinsurer is authorized, unauthorized or certified in the relevant state. Public comments are being accepted on the foregoing items until May 1.

In another SAPWG-related development arising out of the NAIC’s Spring National Meeting, the Capital Adequacy Task Force (CATF) exposed changes to risk-based capital (RBC) instructions as referred to CATF by SAPWG. RBC proposal 2026-05-CA, Remove Investment Affiliates Code 4, ** eliminates references in the RBC instructions to investment affiliates. The CATF guidance notes that this change does not prohibit insurers from owning investment affiliates; this concept is reflected in both the Investments of Insurers Model Act and the Insurance Holding Company System Regulatory Act. The CATF guidance does not specifically address how an investment affiliate would now be treated under the RBC framework.

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