Ohio to relax accounting rules for 20 insurers

The Ohio Department of Insurance has confirmed it will provide temporary reserve relief for 20 insurance companies headquartered in the state. The companies had applied to the department to use an accounting practice that would help them bolster statutory surplus and capital — which is the money left over after accounting for assets and liabilities and the amount of money that the insurer needs to stay in business — through an adjustment on the carriers’ financial statements. The Insurance Department approved the change for this year’s financial statements only. The department won’t identify the carriers until Monday. This month, Ohio approved three accounting treatments for insurers to help the companies raise their capital by adjusting accounting on reserves. One method addresses asset adequacy tests for variable annuities and includes a measure that requires carriers to test for policyholder behavior assumptions and investment volatility. Another provision allows insurers to use the 2001 Commissioners Standard Ordinary mortality table to determine the length of contracts. The third method grants relief by allowing carriers to count illiquid deferred tax assets as 15% of their statutory surplus and capital or to have these assets realized over the course of three years — provided the insurer has a risk-based capital level of at least 250% for life companies and 300% for property/casualty firms. Other states that permit similar accounting practices include Connecticut, Illinois and Iowa. Some of the insurers that have received the relief in their respective states include Allstate Insurance Co. of Northbrook, Ill.; The Hartford (Conn.) Financial Services Inc.; ING USA Annuity and Life Insurance Co. of Des Moines, Iowa; and Principal Life Insurance Co., also of Des Moines.