SSAP No. 101 update and Q&A observations: Disclosure requirements and implementation

Continued from SSAP No. 101 update and Q&A observations: Tax-planning strategies.

Disclosure requirements

SSAP No. 101 provides for additional disclosure requirements beyond what was required under SSAP No. 10R, including the following:

• The use of any reinsurance-related tax planning strategies
• Tax loss contingencies for which it is reasonably possible that the total liability will significantly increase within 12 months of the reporting date
• An estimate of the range of the reasonably possible increase in tax loss contingencies or state that an estimate of the range cannot be made

Reporting entities are still required to disclose the total of all deferred tax assets (gross, adjusted gross, admitted, and nonadmitted) by tax character, the total of all deferred tax liabilities by tax character, the amount of each component of the admissibility calculation by tax character, and the impact of tax-planning strategies on the determination of adjusted gross deferred tax assets and the determination of net admitted deferred tax assets.

Implementation

A change resulting from the adoption of SSAP No. 101 shall be accounted for as a change in accounting principle in accordance with SSAP No. 3 – Accounting Changes and Corrections of Errors. The cumulative effect is the difference between the amount of capital and surplus at the beginning of the year and the amount of capital and surplus that would have been reported at that date if the new accounting principle had been applied retroactively for all prior periods. This difference is recorded through the line item for Cumulative Effect of Changes in Accounting Principles in the surplus section of the Annual Statement.

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