Financial Reporting Section Update

Encouraging and facilitating the professional development of its members Jim Hawke

The purpose of the Financial Reporting Section is to encourage and facilitate the professional development of its members. To further our goal, we utilize activities such as our quarterly newsletter, meetings, seminars, webcasts, podcasts, research studies, and the generation and dissemination of literature in the field of life insurance company financial reporting. If you have an interest in helping with our efforts, we would love to have you join our section!

This is a particularly exciting time for financial reporting actuaries working in the arenas of U.S. statutory or generally accepted accounting principles (GAAP) reporting, as well as international financial reporting. In the United States, the National Association of Insurance Commissioners (NAIC) has adopted principle-based reserving effective for new business issued in 2017 and beyond. The change this represents versus prior formula-based minimum reserve requirements cannot be overstated. The Securities and Exchange Commission (SEC) is working through final drafts of its new guidance concerning insurance contracts, and we will most certainly see a thorough upheaval in the methods and underlying assumptions used to perform calculations under GAAP. This new GAAP regime is likely to be effective for 2021. On the international scene, revised insurance contract guidance is expected to be finalized in 2017, also possibly effective for 2021. Again, the differences seen in new guidance versus old are striking to say the least. Now more than ever, we need a vibrant section with a growing membership to keep pace with emerging requirements and provide practitioners with the information and continuing education they need.

The section has recently been focused on the new statutory requirements, sponsoring numerous meeting sessions and a multipart series of webcasts on principle-based reserves. We are also co-sponsoring research projects on principle-based methods with the Smaller Insurance Company Section and the Committee on Life Insurance Research (CLIR).

We also are pleased with progress being made on a new textbook we are sponsoring on the International Financial Reporting Standard on insurance contracts. Publication by the Society of Actuaries (SOA) should be completed in 2018. This textbook will become a mainstay of practitioner libraries, along with our GAAP book.

On the GAAP scene, we have reinstated our GAAP topics seminar and have begun a series of webcasts on GAAP practice. A third edition of the GAAP textbook is also on the horizon, incorporating the new SEC guidance on insurance contracts.

Again, if you are not currently a member of our section, please consider joining us! We need to grow just as the SOA grows in order to serve our membership. At $25 per year, the fee is very attractive (considering the benefits) if you desire to influence the flow of continuing education materials to actuaries engaged in financial reporting work.

Jim Hawke, FSA, MAAA, is chairperson of the Financial Reporting Section.