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Navigating SSAP 101 Changes

Navigating SSAP 101 Changes. Sue Leonard, PricewaterhouseCoopers November 3, 2011 Tom Gibbons, Pacific Life Steve Beaver, Nationwide. What compromise looks like…. Agenda. Current status Key changes Clarifications pending. Temporary guidance & permanent solution proposed.

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Navigating SSAP 101 Changes

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  1. Navigating SSAP 101 Changes Sue Leonard, PricewaterhouseCoopers November 3, 2011 Tom Gibbons, Pacific Life Steve Beaver, Nationwide

  2. What compromise looks like…

  3. Agenda • Current status • Key changes • Clarifications pending

  4. Temporary guidance & permanent solution proposed

  5. Next steps to permanent guidance

  6. Reasons for new guidance

  7. Key changes with SSAP 101

  8. Key changes with SSAP 101

  9. Comparison to FIN 48

  10. Tax loss contingency model

  11. Application of tax loss contingency liability • Assume: • Initial permanent tax benefit = $100 • Probability of liability is “more likely than not”, less than probable

  12. Key takeaways — new guidance is

  13. Key changes with SSAP 101

  14. Comparison to SSAP 10R

  15. More restrictive guardrails for deferred tax asset admissibility Regulators reviewed 2010 annual statement data and worked with industry to identify reasonable guardrails

  16. Calculating RBC guardrails Interim reporting ratio Adjusted Current Period ExDTA TAC • Total adjusted capital (TAC) based on current quarter surplus with current quarter TAC adjustments less DTA Prior Year RBC

  17. Application of RBC guardrails — life company example Guardrail generally more complicated for interim periods with current data requirement but simplified with use of prior year ACL RBC

  18. Statutory capital limitation for deferred tax assets

  19. Application of statutory capital limitation for deferred tax assets Increasing surplus implies option for companies

  20. Deferred tax liability offset • Consideration of reversal patterns of temporary differences but does not require scheduling beyond that required for company’s valuation allowance analysis • Scheduling dependent on valuation analysis

  21. Application of Deferred Tax Liability Offset

  22. Key changes with SSAP 101

  23. Disclosure requirements

  24. Potential clarifications pending

  25. Next Steps • Q & A • RBC Charge Conclusion

  26. IRS Circular 230 Disclosure In accordance with § 10.35 of IRS Circular 230 requirements, you are advised that, unless otherwise indicated, any discussion of tax issues in this presentation (including appendix) is not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue Code or to promote, market or recommend to another party any transaction or matter addressed herein. The persuasiveness of this presentation with regard to the tax issues in question and a taxpayer's good faith reliance on the presentation will be determined under applicable provisions of the law and regulations (§ 10.35(f)).

  27. Appendix

  28. Appendix - Comparison

  29. Appendix - Comparison

  30. Appendix - Comparison

  31. Appendix - Comparison

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