2008 Annual Statement Changes

Nov 3rd, 08

The following is a list of the more significant changes made by the NAIC to the 2008 Annual Statement blank. Please refer to the Annual Statement instructions for further details.

Note: All investment schedules are now labeled as ‘SI’ and ‘E’ and are back together at the end of the annual statement

Schedule A, B, and BA:

Added a Part 3 to show all disposed and repaid amounts
There is now a Part 1, Part 2, and Part 3 for these schedules to follow the same format as Schedule D

Schedule D – Verification Between Years:

Updated to better follow all supporting schedules – changed titles and page/column references

Schedule D, Part 1A:

There is now a category for any non-rated short-term bonds within the notes to the schedule
This does not include money markets designated as ‘1’ or ‘exempt’ by the SVO
Purposes and Procedures Manual
This was added since all short-term and cash equivalents should be included in this schedule but there was no instruction as to which designation they should be included in. Therefore, continue to include in the designation you deem appropriate but then state within the notes the value of all non-rated short-term that is included in each designation

Summary Investment Schedule:

Line 2 – includes Class One Bond Mutual Funds
Line 3.1 – includes only Mutual Funds reported in Schedule D, Part 2.2
Line 8 – includes Exempt Money Market Mutual Funds and Class One Money Market Mutual Funds

Supplemental Investment Risk Interrogatories:

Top 10 issuers on page 1 –FNMA/FHLMC CMO’s are not considered US Government and therefore are to be included in the top 10. The SVO P&P Manual Appendix 14 lists those FNMA/FHLMC which are considered US Government and therefore excluded from the top 10.

Schedule D:

Code Column- several additions have been added for this column in order to avoid the securities being flagged by the NAIC due to missing CUSIPS, interest rates, etc.
M – used for securities not under exclusive control for multiple reasons such as securities on deposit
@ – used for STRIP bonds and zero coupon bonds (those with no interest rate)
& – used for TBA (To Be Announced) bonds (those with no CUSIP)
* – used for Class One Bond Mutual Funds
# – used for Exchange Traded Funds
Foreign Column – the instructions now include a new matrix in order to help determine those securities that should be labeled as a foreign security. In general all securities with foreign issuers, those exchanged on the foreign market, and those with foreign currency should be labeled as foreign for A/S purposes.
Interest Column – note that if these new additions are used, there should be a corresponding symbol in the ‘Code’ column stating the reason
Now allows rate of interest to be ‘0’ (zero)
Now allows the payment method to be ‘N/A’

Maturity Column –
Can now leave this column blank for Class One Bond MF since the Code Column will be designated with *.

Electronic Requirements:

There is now an electronic column for Schedule D for stating how the fair value, used in the Fair Value column, was obtained. The P&P Manual-Part 6 was revised to give guidance on this requirement. There are 5 levels of fair value measurement:
Pricing Service
Stock Exchange
Custodian/Broker quote
Insurance Company best estimates
Published by VOS
This does not change the valuation basis but shows how the items are calculated. This is in anticipation of FAS 157.

Footnotes:

The instructions now provide a sample disclosure for note 20(h) regarding subprime exposure. The NAIC would prefer the footnote in chart format as shown in the instructions.