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Old 10-09-2017, 03:48 PM
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Question Accounting for Additional Reserve in CFT

If an insurer set up an additional reserve in a past year due to a negative result from cashflow testing (asset/liability modeling, scenario or NY7), how is this reported in the AOM and the annual statement? Does the accounting differ from the initial year that the additional reserve is established? What if the additional reserve from the past is being decreased or increased this year?
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Old 10-09-2017, 05:55 PM
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Isn't it a Miscellaneous Reserve in Exhibit 5? Don't know answers to the other questions.
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Old 10-10-2017, 08:16 AM
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My understanding is that it is typically shown in what used to be Section G in the Annual Statement Exhibit of Reserve (old 8 new 5).

From memory, the AOM/RAAIS has a "what changed since last year" question, so last year's Asset Adequacy Analysis reserve would be mentioned even if it was released in full this year. An Appointed Actuary may wish to include a roll-forward analysis showing the impact of assumption change/experience/economics. I don't believe the AAA reserve is treated differently in accounting terms than other reserves. Is there a specific difference you are expecting?

In the cert where the reserves are classified by tested/non-tested, I would consider AAA reserves to be tested.
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Old 10-10-2017, 08:35 AM
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I seem to recall that they are not tax deductible.
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Old 10-10-2017, 09:18 AM
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Quote:
Originally Posted by Steve Grondin View Post
My understanding is that it is typically shown in what used to be Section G in the Annual Statement Exhibit of Reserve (old 8 new 5).

From memory, the AOM/RAAIS has a "what changed since last year" question, so last year's Asset Adequacy Analysis reserve would be mentioned even if it was released in full this year. An Appointed Actuary may wish to include a roll-forward analysis showing the impact of assumption change/experience/economics. I don't believe the AAA reserve is treated differently in accounting terms than other reserves. Is there a specific difference you are expecting?

In the cert where the reserves are classified by tested/non-tested, I would consider AAA reserves to be tested.
This agrees with my (somewhat fuzzy) recollection.

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I seem to recall that they are not tax deductible.
So does this.
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Old 10-17-2017, 05:50 PM
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Originally Posted by JMO Fan View Post
If an insurer set up an additional reserve in a past year due to a negative result from cashflow testing (asset/liability modeling, scenario or NY7), how is this reported in the AOM and the annual statement? Does the accounting differ from the initial year that the additional reserve is established? What if the additional reserve from the past is being decreased or increased this year?
I agree with all of the comments so far. (AAA Reserves should be in Exh 5 part G.)

Do you have a more specific question with regard to the "accounting" of the AAA reserves? For example, there's no valuation basis per se associated with the AAA reserve, so I don't think that AAA reserves, or changes in the balance, would be reported in Exh 5A as a change in valuation basis.
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Old 10-17-2017, 06:48 PM
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My quick take is the "basis" is the same, just not the amount. No adjustment in 5A.
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