By Allison Bell
National Underwriter News
March 16, 2009
Updated By FBIC March 16, 2009
U.S. life insurer use of non-standard accounting practices was common in 2007 as well as in 2008, but it seems to have had a bigger effect on 2008 capital and surplus figures.
Non-standard practices increased the users' total capital and surplus by a total of 0.07% in 2007 and by a total of 5.1% in 2008, according to an analysis of new 2007 and updated 2008
accounting practices data from the National Association of Insurance Commissioners, Washington.
The NAIC released a list of most of the U.S. life insurers using non-standard accounting practices in 2008 statutory financial statements earlier this week. The NAIC followed up later with a
more complete list of the 2008 users of non-standard practices and a list of 2007 users of non-standard practices. The report for 2008 now includes some companies left out of the original draft
and apparently includes corrections of the figures for some of the companies.
Some columns in the reports describe use of non-standard practices "prescribed," or required, by state insurance regulators.
The reports also include separate columns describing use of non-standard practices permitted by state insurance regulators.
The latest figures show that 64 U.S. life insurers have used prescribed practices in a way that affected their 2008 statutory capital and surplus, and 78 used permitted practices. The companies are
reporting a total of $33 billion in net losses for 2008 on $165 billion in capital and surplus. Prescribed practices added $31 million to capital and surplus, and permitted practices added $8.8 billion
to capital and surplus.
In 2007, prescribed practices affected capital and surplus results at 69 insurers, and permitted practices affected capital and surplus at 24 insurers. The companies reported $17 billion in net income
on $162 billion in capital and surplus. Prescribed practices added $87 million and permitted practices subtracted $315 million from capital and surplus.
Prefatory Notes To Annual Statement Permitted and Prescribed Practices Report.
Permitted and Prescribed Practices Report for 2008 Annual Statement filings [Excel]
Permitted and Prescribed Practices Report for 2007 Annual Statement filings [Excel]