Some 97 insurers line up for accounting break

The National Association of Insurance Commissioners has released a list of carriers that have applied for a special accounting treatment aimed at helping them raise capital and surplus. Ninety-seven life insurance companies have applied for “permitted” or “prescribed” practices in their respective domiciled states, according to data released by the Kansas City, Mo.-based NAIC. Prescribed practices are state-mandated variations on the way carriers domiciled in a given jurisdiction must do their accounting, while permitted practices are accounting variations that state regulators allow for a particular insurance company. Recent permitted accounting practices include allowing deferred tax assets to count as 15% of statutory surplus and capital, realized over three years, instead of the customary 10% of statutory surplus and capital over a one-year period. Surplus levels, the amount of assets minus liabilities, at 57 of the life insurance companies were affected by state-permitted practices, while 21 said that their incomes were affected. Major carriers that received surplus relief through permitted accounting practices include Jackson National Life Insurance Co. of Lansing, Mich., which reported an $825 million increase to its surplus. Meanwhile, Lincoln National Life Insurance Co. of Fort Wayne, Ind., reported a $313 million gain in surplus because Indiana allowed it to use the 2001 Commissioners’ Standard Ordinary preferred mortality table and employ a special treatment on its deferred tax assets. A handful of carriers, such as United Fidelity Life Insurance Co., were also allowed to use their furniture as an asset. The list of insurance companies, the practices they used and the financial impact are available at http://naic.org/documents/index_08_as_permitted_prescribed_practices.pdf.