Table of Contents

Accounting Practices and Procedures Manual

Effective January 1, 2001

As of March 2000

TABLE OF CONTENTS

Statements of Statutory Accounting Principles (SSAP) - Volume I

No. /
Title
/
Page
- / Preamble / P-1
1 / Disclosure of Accounting Policies, Risks & Uncertainties, and Other Disclosures / 1-1
2 / Cash, Drafts, and Short-term Investments / 2-1
3 / Accounting Changes and Corrections of Errors / 3-1
4 / Assets and Nonadmitted Assets / 4-1
5 / Liabilities, Contingencies and Impairments of Assets / 5-1
6 / Uncollected Premium Balances, Bills Receivable for Premiums, and Amounts Due From Agents and Brokers / 6-1
7 / Asset Valuation Reserve and Interest Maintenance Reserve / 7-1
8 / Pensions / 8-1
9 / Subsequent Events / 9-1
10 / Income Taxes / 10-1
11 / Postemployment Benefits and Compensated Absences / 11-1
12 / Employee Stock Ownership Plans / 12-1
13 / Stock Options and Stock Purchase Plans / 13-1
14 /

Postretirement Benefits Other Than Pensions

/

14-1

15 / Debt and Holding Company Obligations / 15-1
16 / Electronic Data Processing Equipment and Software / 16-1
17 / Preoperating and Research and Development Costs / 17-1
18 / Transfers and Servicing of Financial Assets and Extinguishments of Liabilities / 18-1
19 / Furniture, Fixtures and Equipment; Leasehold Improvements Paid by the Reporting Entity as Lessee; Depreciation of Property and Amortization of Leasehold Improvements / 19-1
20 / Nonadmitted Assets / 20-1
21 / Other Admitted Assets / 21-1
22 / Leases / 22-1
23 / Foreign Currency Transactions and Translations / 23-1
24 / Discontinued Operations and Extraordinary Items / 24-1
25 / Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties / 25-1
26 / Bonds, excluding Loan-backed and Structured Securities / 26-1
27 / Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk, Financial Instruments with Concentrations of Credit Risk and Disclosures about Fair Value of Financial Instruments / 27-1
28 / Nonmonetary Transactions / 28-1
29 / Prepaid Expenses / 29-1
30 / Investments in Common Stock (excluding investments in common stock of subsidiary, controlled, or affiliated entities) / 30-1
31 / Derivative Instruments / 31-1
No. /
Title
/
Page
32 / Investments in Preferred Stock (excluding investments in preferred stock of subsidiary, controlled, or affiliated entities) / 32-1
33 / Securitization / 33-1
34 / Investment Income Due and Accrued / 34-1
35 / Guaranty Fund and Other Assessments / 35-1
36 / Troubled Debt Restructuring / 36-1
37 / Mortgage Loans / 37-1
38 / Acquisition, Development and Construction Arrangements / 38-1
39 / Reverse Mortgages / 39-1
40 / Real Estate Investments / 40-1
41 / Surplus Notes / 41-1
42 / Sale of Premium Receivables / 42-1
43 / Loan-backed and Structured Securities / 43-1
44 / Capitalization of Interest / 44-1
45 / Repurchase Agreements, Reverse Repurchase Agreements and Dollar Repurchase Agreements / 45-1
46 / Investments in Subsidiary, Controlled, and Affiliated Entities / 46-1
47 / Uninsured Plans / 47-1
48 / Joint Ventures, Partnerships and Limited Liability Companies / 48-1
49 / Policy Loans / 49-1
50 / Classifications and Definitions of Insurance or Managed Care Contracts in Force / 50-1
51 / Life Contracts / 51-1
52 / Deposit-Type Contracts / 52-1
53 / Property Casualty Contracts–Premiums / 53-1
54 / Individual and Group Accident and Health Contracts / 54-1
55 / Unpaid Claims, Losses and Loss Adjustment Expenses / 55-1
56 / Separate Accounts / 56-1
57 / Title Insurance / 57-1
58 / Mortgage Guaranty Insurance / 58-1
59 / Credit Life and Accident and Health Insurance Contracts / 59-1
60 / Financial Guaranty Insurance / 60-1
61 / Life, Deposit-Type and Accident and Health Reinsurance / 61-1
62 / Property and Casualty Reinsurance / 62-1
63 / Underwriting Pools and Associations Including Intercompany Pools / 63-1
64 / Offsetting and Netting of Assets and Liabilities / 64-1
65 / Property and Casualty Contracts / 65-1
66 / Retrospectively Rated Contracts / 66-1
67 / Other Liabilities / 67-1
68 / Business Combinations and Goodwill / 68-1
69 / Statement of Cash Flow / 69-1
70 / Allocation of Expenses / 70-1
71 / Policy Acquisition Costs and Commissions / 71-1
72 / Surplus and Quasi-reorganizations / 72-1
73 / Health Care Delivery Assets Supplies, Pharmaceuticals and Surgical Supplies, Durable Medical Equipment, Furniture, Medical Equipment and Fixtures, and Leasehold Improvements in Health Care Facilities / 73-1
Page
INDEX to Statements of Statutory Accounting Principles - Volume I /
1
Page
GLOSSARY to Statements of Statutory Accounting Principles - Volume I /
13

Appendix A - Volume I

No. /
Title
/
Page
A-001 / Investments of Reporting Entities / A001-1
A-010 / Minimum Reserve Standards for Individual and Group Health Insurance Contracts / A010-1
A-205 / Illustrative Disclosure of Differences Between NAIC Statutory Accounting Practices and Procedures and Accounting Practices Prescribed or Permitted by the State of Domicile / A205-1
A-225 / Managing General Agents / A225-1
A-235 / Interest-Indexed Annuity Contracts / A235-1
A-250 / Variable Annuities / A250-1
A-255 / Modified Guaranteed Annuities / A255-1
A-270 / Variable Life Insurance / A270-1
A-440 / Insurance Holding Companies / A440-1
A-585 / Universal Life Insurance / A585-1
A-588 / Modified Guaranteed Life Insurance / A588-1
A-620 / Accelerated Benefits / A620-1
A-628 / Title Insurance / A628-1
A-630 / Mortgage Guaranty Insurance / A630-1
A-641 / Long-Term Care Insurance / A641-1
A-785 / Credit for Reinsurance / A785-1
A-791 / Life and Health Reinsurance Agreements / A791-1
A-812 / Smoker/Nonsmoker Mortality Tables for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits / A812-1
A-820 / Minimum Life and Annuity Reserve Standards / A820-1
A-821 / Annuity Mortality Table for Use in Determining Reserve Liabilities for Annuities / A821-1
A-822 / Asset Adequacy Analysis Requirements / A822-1
A-825 / Commissioners’ Annuity Reserve Valuation Method (CARVM) / A825-1

Appendix B - Interpretations of Emerging Accounting Issues Working Group - Volume I

No. /
Title
/
Page
INT 99-1 / Accounting for Tax Benefits of Operating Losses and Tax Credits in Quasi-Reorganizations / B-1
INT 99-2 / Accounting for Collateral in Excess of Debt Principal / B-2
INT 99-3 / Accounting for Investment in Subsidiary, Controlled or Affiliated (SCA) Entities with Subsequent Downstream Investment in an Insurance Company / B-3
INT 99-4 / Recognition of Prepayment Penalties Upon Adoption of Codification / B-4
INT 99-5 / EITF 97-1 Implementation Issues in Accounting for Lease Transactions, Including Those Involving Special-Purpose Entities / B-5
No. /
Title
/
Page
INT 99-6 / EITF 97-2 Application of FASB Statement No. 94 and APB Opinion No. 16 to Physician Practice Management Entities and Certain Other Entities with Contractual Management Arrangements / B-6
INT 99-7 / EITF 97-3 Accounting for Fees and Costs Associated with Loan Syndications and Loan Participations after the Issuance of FASB Statement No. 125 / B-8
INT 99-8 / EITF 97-6 Application of Issue No. 96-20 to Qualifying Special-Purpose Entities Receiving Transferred Financial Assets Prior to the Effective Date of FASB Statement No. 125 / B-9
INT 99-9 / EITF 97-7 Accounting for Hedges of the Foreign Currency Risk Inherent in an Available-for-Sale Marketable Equity Security / B-10
INT 99-10 / EITF 97-8 Accounting for Contingent Consideration Issued in a Purchase Business Combination / B-11
INT 99-11 / EITF 95-22 Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements That Include both a Subjective Acceleration Clause and a Lock-Box Arrangement / B-12
INT 99-12 / EITF 96-16: Investor’s Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights / B-13
INT 99-13 / EITF 96-18: Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services / B-14
INT 99-14 / EITF 96-19 Debtor’s Accounting for a Modification or Exchange of Debt Instruments / B-15
INT 99-15 / EITF 97-10 The Effect of Lessee Involvement in Asset Construction / B-16
INT 99-16 / EITF 97-11 Accounting for Internal Costs Relating to Real Estate Property Acquisitions / B-17
INT 99-17 / EITF 97-12 Accounting for Increased Share Authorizations in an IRS Section 423 Employee Stock Purchase Plan under APB Opinion No. 25 / B-18
INT 99-18 / EITF 97-13 Accounting for Costs Incurred in Connection with a Consulting Contract or an Internal Project That Combines Business Process Reengineering and Information Technology Transformation / B-19
INT 99-19 / EITF 97-9 Effect on Pooling-of-Interests Accounting of Certain Contingently Exercisable Options or Other Equity Instruments / B-20
INT 99-20 / EITF 98-1 Valuation of Debt Assumed in a Purchase Business Combination / B-21
INT 99-21 / EITF 98-7 Accounting for Exchanges of Similar Equity Method Investments / B-22
INT 99-22 / EITF 98-8 Accounting for Transfers of Investments That Are in Substance Real Estate / B-23
INT 99-23 / Disclosure of Premium Deficiency Reserves / B-24
INT 99-24 / Accounting for Restructuring Charges / B-25
INT 99-25 / Accounting for Capital Improvements / B-26
INT 99-26 / Offsetting Pension Assets and Liabilities / B-27
INT 99-27 / Nonadmitting Installment Receivables / B-28
INT 99-28 / Accounting for SCA Mutual Funds, Broker-Dealers and Similar Entities Under SSAP No. 46 / B-30
INT 99-29 / Classification of Step-up Preferred Stock / B-31
Appendix C - Actuarial Guidelines - Volume I
Title
/

Page

Actuarial GuidelinesC-3

Actuarial Guideline IC-7

Actuarial Guideline IIC-8

Actuarial Guideline IIIC-10

Actuarial Guideline IVC-11

Actuarial Guideline VC-14

Actuarial Guideline VIC-16

Actuarial Guideline VIIC-18

Actuarial Guideline VIIIC-20

Actuarial Guideline IXC-21

Actuarial Guideline IX-AC-22

Actuarial Guideline IX-BC-25

Actuarial Guideline XC-29

Actuarial Guideline XIC-31

Actuarial Guideline XIIC-32

Actuarial Guideline XIIIC-33

Actuarial Guideline XIVC-35

Actuarial Guideline XVC-37

Actuarial Guideline XVIC-39

Actuarial Guideline XVIIC-40

Actuarial Guideline XVIIIC-41

Actuarial Guideline XIXC-42

Actuarial Guideline XXC-43

1980 CSO and 1980 CET TablesC-44

Actuarial Guideline XXIC-50

Actuarial Guideline XXIIC-51

Actuarial Guideline XXIIIC-52

Actuarial Guideline XXIVC-53

Actuarial Guideline XXVC-60

Actuarial Guideline XXVIC-64

Actuarial Guideline XXVIIC-66

Actuarial Guideline XXVIIIC-71

Actuarial Guideline XXIXC-72

Actuarial Guideline XXXC-74

Actuarial Guideline XXXIC-76

Actuarial Guideline XXXIIC-77

Actuarial Guideline XXXIIIC-79

Actuarial Guideline XXXIVC-86

Appendix I Immediate Drop Percentages and Gross Assumed ReturnsC-92

Appendix II 1994 Variable Annuity MGDB Mortality TableC-93

Female Age Last BirthdayC-93

Male Age Last BirthdayC-94

Female Age Nearest BirthdayC-95

Male Age Nearest BirthdayC-96

Appendix III Description of Asset ClassesC-97

Actuarial Guideline XXXVC-98

Attachment 1 Description of Computational MethodsC-102

Attachment 2 Hedged as Required CriteriaC-104

Attachment 3 Reasonableness of Assumptions CertificationC-106

Title

/

Page

Attachment 4 Reasonableness and Consistency of Assumptions CertificationC-107

Appendix to GuidelinesC-108

Table 1 Statutory Calendar Year Interest Rates Based On NAIC Standard

Valuation and Nonforfeiture LawsC-109

Appendix A Basis for Interest Rate CalculationsC-115

Exhibit 1 Statutory Valuation Interest Rate DeterminationC-119

Appendix D - GAAP Cross-Reference to SSAPs - Volume I

Title / Page
Category A - FASB Statements and Interpretations, APB Opinions, and AICPA Accounting Research Bulletins / D-1
Category B - FASB Technical Bulletins, AICPA Industry Audit and Accounting Guides, and AICPA Statements of Position / D-18
Category C - Consensus Opinions of the FASB Emerging Issues Task Force and AICPA Practice Bulletins / D-26
Category D - AICPA Accounting Interpretations / D-46

Appendix E - Issue Papers - Volume II

No. / Title / Page
1 / Consolidation of Majority-owned Subsidiaries / IP1-1
2 / Definition of Cash / IP2-1
3 / Accounting Changes / IP3-1
4 / Definition of Assets and Nonadmitted Assets / IP4-1
5 / Definition of Liabilities, Loss Contingencies and Impairments of Assets / IP5-1
6 / Amounts Due From Agents and Brokers / IP6-1
7 / Asset Valuation Reserve and Interest Maintenance Reserve /

IP7-1

8 / Accounting for Pensions / IP8-1
9 / Subsequent Events / IP9-1
10 / Uncollected Premium Balances / IP10-1
11 / Compensated Absences / IP11-1
12 / Accounting for Drafts Issued and Outstanding / IP12-1
13 / Employers’ Accounting for Postemployment Benefits / IP13-1
14 / Employers’ Accounting for Postretirement Benefits Other Than Pensions / IP14-1
16 / Electronic Data Processing Equipment and Software / IP16-1
17 / Preoperating and Research and Development Costs / IP17-1
19 / Furniture, Fixtures and Equipment / IP19-1
20 / Gain Contingencies / IP20-1
21 / Bills Receivable For Premiums / IP21-1
22 / Leases / IP22-1
23 / Property Occupied by the Company / IP23-1
24 / Discontinued Operations and Extraordinary Items / IP24-1
25 / Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties / IP25-1
26 / Bonds, excluding Loan-backed and Structured Securities / IP26-1
27 / Disclosure of Information about Financial Instruments with Concentration of Credit Risk / IP27-1
28 / Short-term Investments / IP28-1
29 / Prepaid Expenses (excluding Deferred Policy Acquisition Costs and other underwriting expenses, income taxes and Guaranty Fund Assessments) / IP29-1
30 / Investments in Common Stock (excluding investments in common stock of subsidiary, controlled, or affiliated entities) / IP30-1
31 / Leasehold Improvements Paid by the Reporting Entity as Lessee / IP31-1
32 / Investments in Preferred Stock (excluding investments in preferred stock of subsidiary, controlled, or affiliated entities) / IP32-1
33 / Disclosures about Fair Value of Financial Instruments / IP33-1
34 / Investment Income Due and Accrued / IP34-1
35 / Accounting for Guaranty Fund and Other Assessments / IP35-1
36 / Troubled Debt Restructurings / IP36-1
37 / Mortgage Loans / IP37-1
38 / Acquisition, Development and Construction Arrangements / IP38-1
39 / Reverse Mortgages / IP39-1
40 / Real Estate Investments / IP40-1
41 / Surplus Notes / IP41-1
42 / Sale of Premium Receivables / IP42-1
43 / Loan-backed and Structured Securities / IP43-1
44 / Capitalization of Interest / IP44-1
45 / Repurchase Agreements, Reverse Repurchase Agreements and Dollar Repurchase Agreements / IP45-1
46 / Accounting for Investments in Subsidiary, Controlled and Affiliated Entities / IP46-1
47 / Uninsured Plans / IP47-1
48 / Investments in Joint Ventures, Partnerships and Limited Liability Companies / IP48-1
49 / Policy Loans / IP49-1
50 / Classifications and Definitions of Insurance or Managed Care Contracts in Force / IP50-1
51 / Life Contracts / IP51-1
52 / Deposit-Type Contracts / IP52-1
53 / Property Casualty Contracts–Premiums / IP53-1
54 / Individual and Group Accident and Health Contracts / IP54-1
55 / Unpaid Claims, Losses and Loss Adjustment Expenses / IP55-1
56 / Universal Life-Type Contracts, Policyholder Dividends, and Coupons / IP56-1
57 / Title Insurance / IP57-1
59 / Credit Life and Accident and Health Insurance Contracts / IP59-1
65 / Property and Casualty Contracts / IP65-1
66 / Accounting for Retrospectively Rated Contracts / IP66-1
67 / Depreciation of Property and Amortization of Leasehold Improvements / IP67-1
68 / Business Combinations and Goodwill / IP68-1
69 / Financial Guaranty Insurance / IP69-1
71 / Policy Acquisition Costs and Commissions / IP71-1
72 / Statutory Surplus / IP72-1
73 / Nonmonetary Transactions / IP73-1
74 / Life, Deposit-Type and Accident and Health Reinsurance / IP74-1
75 / Property and Casualty Reinsurance / IP75-1
76 / Offsetting and Netting of Assets and Liabilities / IP76-1
77 / Disclosure of Accounting Policies, Risks & Uncertainties, and Other Disclosures / IP77-1
78 / Employee Stock Ownership Plans / IP78-1
80 / Debt / IP80-1
81 / Foreign Currency Transactions and Translations / IP81-1
82 / Stock Options and Stock Purchase Plans / IP82-1
83 / Accounting for Income Taxes / IP83-1
84 / Quasi-reorganizations / IP84-1
85 / Derivative Instruments / IP85-1
86 / Securitization / IP86-1
87 / Other Admitted Assets / IP87-1
88 / Mortgage Guaranty Insurance / IP88-1
89 / Separate Accounts / IP89-1
90 / Nonadmitted Assets / IP90-1
92 / Statement of Cash Flow / IP92-1
94 / Allocation of Expenses / IP94-1
95 / Holding Company Obligations / IP95-1
96 / Other Liabilities / IP96-1
97 / Underwriting Pools and Associations Including Intercompany Pools / IP97-1
99 / Nonapplicable GAAP Pronouncements / IP99-1
100 / Health Care Delivery Assets Supplies, Pharmaceuticals and Surgical Supplies, and Durable Medical Equipment / IP100-1
101 / Health Care Delivery Assets Furniture, Medical Equipment and Fixtures, and Leasehold Improvements in Health Care Facilities / IP101-1

Appendix F - Policy Statements - Volume II

Title

/

Page

NAIC Policy Statement on Maintenance of Statutory Accounting Principles / F-1
NAIC Policy Statement on Comments to GAAP Exposure Drafts / F-3

1