Codification of Statutory Accounting



Accounting Practices and Procedures Manual

Effective January 1, 2001

As of March 2000

TABLE OF CONTENTS

Statements of Statutory Accounting Principles (SSAP) - Volume I

|No. |Title |Page |

|- |Preamble |P-1 |

|1 |Disclosure of Accounting Policies, Risks & Uncertainties, and Other Disclosures |1-1 |

|2 |Cash, Drafts, and Short-term Investments |2-1 |

|3 |Accounting Changes and Corrections of Errors |3-1 |

|4 |Assets and Nonadmitted Assets |4-1 |

|5 |Liabilities, Contingencies and Impairments of Assets |5-1 |

|6 |Uncollected Premium Balances, Bills Receivable for Premiums, and Amounts Due From Agents and Brokers |6-1 |

|7 |Asset Valuation Reserve and Interest Maintenance Reserve |7-1 |

|8 |Pensions |8-1 |

|9 |Subsequent Events |9-1 |

|10 |Income Taxes |10-1 |

|11 |Postemployment Benefits and Compensated Absences |11-1 |

|12 |Employee Stock Ownership Plans |12-1 |

|13 |Stock Options and Stock Purchase Plans |13-1 |

|14 |Postretirement Benefits Other Than Pensions |14-1 |

|15 |Debt and Holding Company Obligations |15-1 |

|16 |Electronic Data Processing Equipment and Software |16-1 |

|17 |Preoperating and Research and Development Costs |17-1 |

|18 |Transfers and Servicing of Financial Assets and Extinguishments of Liabilities |18-1 |

|19 |Furniture, Fixtures and Equipment; Leasehold Improvements Paid by the Reporting Entity as Lessee; |19-1 |

| |Depreciation of Property and Amortization of Leasehold Improvements | |

|20 |Nonadmitted Assets |20-1 |

|21 |Other Admitted Assets |21-1 |

|22 |Leases |22-1 |

|23 |Foreign Currency Transactions and Translations |23-1 |

|24 |Discontinued Operations and Extraordinary Items |24-1 |

|25 |Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties |25-1 |

|26 |Bonds, excluding Loan-backed and Structured Securities |26-1 |

|27 |Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk, Financial |27-1 |

| |Instruments with Concentrations of Credit Risk and Disclosures about Fair Value of Financial | |

| |Instruments | |

|28 |Nonmonetary Transactions |28-1 |

|29 |Prepaid Expenses |29-1 |

|30 |Investments in Common Stock (excluding investments in common stock of subsidiary, controlled, or |30-1 |

| |affiliated entities) | |

|31 |Derivative Instruments |31-1 |

|No. |Title |Page |

|32 |Investments in Preferred Stock (excluding investments in preferred stock of subsidiary, controlled, or|32-1 |

| |affiliated entities) | |

|33 |Securitization |33-1 |

|34 |Investment Income Due and Accrued |34-1 |

|35 |Guaranty Fund and Other Assessments |35-1 |

|36 |Troubled Debt Restructuring |36-1 |

|37 |Mortgage Loans |37-1 |

|38 |Acquisition, Development and Construction Arrangements |38-1 |

|39 |Reverse Mortgages |39-1 |

|40 |Real Estate Investments |40-1 |

|41 |Surplus Notes |41-1 |

|42 |Sale of Premium Receivables |42-1 |

|43 |Loan-backed and Structured Securities |43-1 |

|44 |Capitalization of Interest |44-1 |

|45 |Repurchase Agreements, Reverse Repurchase Agreements and Dollar Repurchase Agreements |45-1 |

|46 |Investments in Subsidiary, Controlled, and Affiliated Entities |46-1 |

|47 |Uninsured Plans |47-1 |

|48 |Joint Ventures, Partnerships and Limited Liability Companies |48-1 |

|49 |Policy Loans |49-1 |

|50 |Classifications and Definitions of Insurance or Managed Care Contracts in Force |50-1 |

|51 |Life Contracts |51-1 |

|52 |Deposit-Type Contracts |52-1 |

|53 |Property Casualty Contracts–Premiums |53-1 |

|54 |Individual and Group Accident and Health Contracts |54-1 |

|55 |Unpaid Claims, Losses and Loss Adjustment Expenses |55-1 |

|56 |Separate Accounts |56-1 |

|57 |Title Insurance |57-1 |

|58 |Mortgage Guaranty Insurance |58-1 |

|59 |Credit Life and Accident and Health Insurance Contracts |59-1 |

|60 |Financial Guaranty Insurance |60-1 |

|61 |Life, Deposit-Type and Accident and Health Reinsurance |61-1 |

|62 |Property and Casualty Reinsurance |62-1 |

|63 |Underwriting Pools and Associations Including Intercompany Pools |63-1 |

|64 |Offsetting and Netting of Assets and Liabilities |64-1 |

|65 |Property and Casualty Contracts |65-1 |

|66 |Retrospectively Rated Contracts |66-1 |

|67 |Other Liabilities |67-1 |

|68 |Business Combinations and Goodwill |68-1 |

|69 |Statement of Cash Flow |69-1 |

|70 |Allocation of Expenses |70-1 |

|71 |Policy Acquisition Costs and Commissions |71-1 |

|72 |Surplus and Quasi-reorganizations |72-1 |

|73 |Health Care Delivery Assets - Supplies, Pharmaceuticals and Surgical Supplies, Durable Medical |73-1 |

| |Equipment, Furniture, Medical Equipment and Fixtures, and Leasehold Improvements in Health Care | |

| |Facilities | |

| | |Page |

|INDEX to Statements of Statutory Accounting Principles - Volume I |1 |

| | |Page |

|GLOSSARY to Statements of Statutory Accounting Principles - Volume I |13 |

Appendix A - Volume I

|No. |Title |Page |

|A-001 |Investments of Reporting Entities |A001-1 |

|A-010 |Minimum Reserve Standards for Individual and Group Health Insurance Contracts |A010-1 |

|A-205 |Illustrative Disclosure of Differences Between NAIC Statutory Accounting Practices and Procedures and |A205-1 |

| |Accounting Practices Prescribed or Permitted by the State of Domicile | |

|A-225 |Managing General Agents |A225-1 |

|A-235 |Interest-Indexed Annuity Contracts |A235-1 |

|A-250 |Variable Annuities |A250-1 |

|A-255 |Modified Guaranteed Annuities |A255-1 |

|A-270 |Variable Life Insurance |A270-1 |

|A-440 |Insurance Holding Companies |A440-1 |

|A-585 |Universal Life Insurance |A585-1 |

|A-588 |Modified Guaranteed Life Insurance |A588-1 |

|A-620 |Accelerated Benefits |A620-1 |

|A-628 |Title Insurance |A628-1 |

|A-630 |Mortgage Guaranty Insurance |A630-1 |

|A-641 |Long-Term Care Insurance |A641-1 |

|A-785 |Credit for Reinsurance |A785-1 |

|A-791 |Life and Health Reinsurance Agreements |A791-1 |

|A-812 |Smoker/Nonsmoker Mortality Tables for Use in Determining Minimum Reserve Liabilities and Nonforfeiture|A812-1 |

| |Benefits | |

|A-820 |Minimum Life and Annuity Reserve Standards |A820-1 |

|A-821 |Annuity Mortality Table for Use in Determining Reserve Liabilities for Annuities |A821-1 |

|A-822 |Asset Adequacy Analysis Requirements |A822-1 |

|A-825 |Commissioners’ Annuity Reserve Valuation Method (CARVM) |A825-1 |

Appendix B - Interpretations of Emerging Accounting Issues Working Group - Volume I

|No. |Title |Page |

|INT 99-1 |Accounting for Tax Benefits of Operating Losses and Tax Credits in Quasi-Reorganizations |B-1 |

|INT 99-2 |Accounting for Collateral in Excess of Debt Principal |B-2 |

|INT 99-3 |Accounting for Investment in Subsidiary, Controlled or Affiliated (SCA) Entities with Subsequent |B-3 |

| |Downstream Investment in an Insurance Company | |

|INT 99-4 |Recognition of Prepayment Penalties Upon Adoption of Codification |B-4 |

|INT 99-5 |EITF 97-1 Implementation Issues in Accounting for Lease Transactions, Including Those Involving |B-5 |

| |Special-Purpose Entities | |

|No. |Title |Page |

|INT 99-6 |EITF 97-2 Application of FASB Statement No. 94 and APB Opinion No. 16 to Physician Practice Management|B-6 |

| |Entities and Certain Other Entities with Contractual Management Arrangements | |

|INT 99-7 |EITF 97-3 Accounting for Fees and Costs Associated with Loan Syndications and Loan Participations |B-8 |

| |after the Issuance of FASB Statement No. 125 | |

|INT 99-8 |EITF 97-6 Application of Issue No. 96-20 to Qualifying Special-Purpose Entities Receiving Transferred |B-9 |

| |Financial Assets Prior to the Effective Date of FASB Statement No. 125 | |

|INT 99-9 |EITF 97-7 Accounting for Hedges of the Foreign Currency Risk Inherent in an Available-for-Sale |B-10 |

| |Marketable Equity Security | |

|INT 99-10 |EITF 97-8 Accounting for Contingent Consideration Issued in a Purchase Business Combination |B-11 |

|INT 99-11 |EITF 95-22 Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements |B-12 |

| |That Include both a Subjective Acceleration Clause and a Lock-Box Arrangement | |

|INT 99-12 |EITF 96-16: Investor’s Accounting for an Investee When the Investor Has a Majority of the Voting |B-13 |

| |Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights | |

|INT 99-13 |EITF 96-18: Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, |B-14 |

| |or in Conjunction with Selling, Goods or Services | |

|INT 99-14 |EITF 96-19 Debtor’s Accounting for a Modification or Exchange of Debt Instruments |B-15 |

|INT 99-15 |EITF 97-10 The Effect of Lessee Involvement in Asset Construction |B-16 |

|INT 99-16 |EITF 97-11 Accounting for Internal Costs Relating to Real Estate Property Acquisitions |B-17 |

|INT 99-17 |EITF 97-12 Accounting for Increased Share Authorizations in an IRS Section 423 Employee Stock Purchase|B-18 |

| |Plan under APB Opinion No. 25 | |

|INT 99-18 |EITF 97-13 Accounting for Costs Incurred in Connection with a Consulting Contract or an Internal |B-19 |

| |Project That Combines Business Process Reengineering and Information Technology Transformation | |

|INT 99-19 |EITF 97-9 Effect on Pooling-of-Interests Accounting of Certain Contingently Exercisable Options or |B-20 |

| |Other Equity Instruments | |

|INT 99-20 |EITF 98-1 Valuation of Debt Assumed in a Purchase Business Combination |B-21 |

|INT 99-21 |EITF 98-7 Accounting for Exchanges of Similar Equity Method Investments |B-22 |

|INT 99-22 |EITF 98-8 Accounting for Transfers of Investments That Are in Substance Real Estate |B-23 |

|INT 99-23 |Disclosure of Premium Deficiency Reserves |B-24 |

|INT 99-24 |Accounting for Restructuring Charges |B-25 |

|INT 99-25 |Accounting for Capital Improvements |B-26 |

|INT 99-26 |Offsetting Pension Assets and Liabilities |B-27 |

|INT 99-27 |Nonadmitting Installment Receivables |B-28 |

|INT 99-28 |Accounting for SCA Mutual Funds, Broker-Dealers and Similar Entities Under SSAP No. 46 |B-30 |

|INT 99-29 |Classification of Step-up Preferred Stock |B-31 |

Appendix C - Actuarial Guidelines - Volume I

|Title | Page |

Actuarial Guidelines C-3

Actuarial Guideline I C-7

Actuarial Guideline II C-8

Actuarial Guideline III C-10

Actuarial Guideline IV C-11

Actuarial Guideline V C-14

Actuarial Guideline VI C-16

Actuarial Guideline VII C-18

Actuarial Guideline VIII C-20

Actuarial Guideline IX C-21

Actuarial Guideline IX-A C-22

Actuarial Guideline IX-B C-25

Actuarial Guideline X C-29

Actuarial Guideline XI C-31

Actuarial Guideline XII C-32

Actuarial Guideline XIII C-33

Actuarial Guideline XIV C-35

Actuarial Guideline XV C-37

Actuarial Guideline XVI C-39

Actuarial Guideline XVII C-40

Actuarial Guideline XVIII C-41

Actuarial Guideline XIX C-42

Actuarial Guideline XX C-43

1980 CSO and 1980 CET Tables C-44

Actuarial Guideline XXI C-50

Actuarial Guideline XXII C-51

Actuarial Guideline XXIII C-52

Actuarial Guideline XXIV C-53

Actuarial Guideline XXV C-60

Actuarial Guideline XXVI C-64

Actuarial Guideline XXVII C-66

Actuarial Guideline XXVIII C-71

Actuarial Guideline XXIX C-72

Actuarial Guideline XXX C-74

Actuarial Guideline XXXI C-76

Actuarial Guideline XXXII C-77

Actuarial Guideline XXXIII C-79

Actuarial Guideline XXXIV C-86

Appendix I Immediate Drop Percentages and Gross Assumed Returns C-92

Appendix II 1994 Variable Annuity MGDB Mortality Table C-93

Female Age Last Birthday C-93

Male Age Last Birthday C-94

Female Age Nearest Birthday C-95

Male Age Nearest Birthday C-96

Appendix III Description of Asset Classes C-97

Actuarial Guideline XXXV C-98

Attachment 1 Description of Computational Methods C-102

Attachment 2 Hedged as Required Criteria C-104

Attachment 3 Reasonableness of Assumptions Certification C-106

|Title | Page |

Attachment 4 Reasonableness and Consistency of Assumptions Certification C-107

Appendix to Guidelines C-108

Table 1 Statutory Calendar Year Interest Rates Based On NAIC Standard

Valuation and Nonforfeiture Laws C-109

Appendix A Basis for Interest Rate Calculations C-115

Exhibit 1 Statutory Valuation Interest Rate Determination C-119

Appendix D - GAAP Cross-Reference to SSAPs - Volume I

|Title |Page |

|Category A - FASB Statements and Interpretations, APB Opinions, and AICPA Accounting Research Bulletins |D-1 |

|Category B - FASB Technical Bulletins, AICPA Industry Audit and Accounting Guides, and AICPA Statements of Position |D-18 |

|Category C - Consensus Opinions of the FASB Emerging Issues Task Force and AICPA Practice Bulletins |D-26 |

|Category D - AICPA Accounting Interpretations |D-46 |

Appendix E - Issue Papers - Volume II

|No. |Title |Page |

|1 |Consolidation of Majority-owned Subsidiaries |IP1-1 |

|2 |Definition of Cash |IP2-1 |

|3 |Accounting Changes |IP3-1 |

|4 |Definition of Assets and Nonadmitted Assets |IP4-1 |

|5 |Definition of Liabilities, Loss Contingencies and Impairments of Assets |IP5-1 |

|6 |Amounts Due From Agents and Brokers |IP6-1 |

|7 |Asset Valuation Reserve and Interest Maintenance Reserve |IP7-1 |

|8 |Accounting for Pensions |IP8-1 |

|9 |Subsequent Events |IP9-1 |

|10 |Uncollected Premium Balances |IP10-1 |

|11 |Compensated Absences |IP11-1 |

|12 |Accounting for Drafts Issued and Outstanding |IP12-1 |

|13 |Employers’ Accounting for Postemployment Benefits |IP13-1 |

|14 |Employers’ Accounting for Postretirement Benefits Other Than Pensions |IP14-1 |

|16 |Electronic Data Processing Equipment and Software |IP16-1 |

|17 |Preoperating and Research and Development Costs |IP17-1 |

|19 |Furniture, Fixtures and Equipment |IP19-1 |

|20 |Gain Contingencies |IP20-1 |

|21 |Bills Receivable For Premiums |IP21-1 |

|22 |Leases |IP22-1 |

|23 |Property Occupied by the Company |IP23-1 |

|24 |Discontinued Operations and Extraordinary Items |IP24-1 |

|25 |Accounting for and Disclosures about Transactions with Affiliates and Other Related Parties |IP25-1 |

|26 |Bonds, excluding Loan-backed and Structured Securities |IP26-1 |

|27 |Disclosure of Information about Financial Instruments with Concentration of Credit Risk |IP27-1 |

|28 |Short-term Investments |IP28-1 |

|29 |Prepaid Expenses (excluding Deferred Policy Acquisition Costs and other underwriting expenses, income taxes and |IP29-1 |

| |Guaranty Fund Assessments) | |

|30 |Investments in Common Stock (excluding investments in common stock of subsidiary, controlled, or affiliated |IP30-1 |

| |entities) | |

|31 |Leasehold Improvements Paid by the Reporting Entity as Lessee |IP31-1 |

|32 |Investments in Preferred Stock (excluding investments in preferred stock of subsidiary, controlled, or affiliated|IP32-1 |

| |entities) | |

|33 |Disclosures about Fair Value of Financial Instruments |IP33-1 |

|34 |Investment Income Due and Accrued |IP34-1 |

|35 |Accounting for Guaranty Fund and Other Assessments |IP35-1 |

|36 |Troubled Debt Restructurings |IP36-1 |

|37 |Mortgage Loans |IP37-1 |

|38 |Acquisition, Development and Construction Arrangements |IP38-1 |

|39 |Reverse Mortgages |IP39-1 |

|40 |Real Estate Investments |IP40-1 |

|41 |Surplus Notes |IP41-1 |

|42 |Sale of Premium Receivables |IP42-1 |

|43 |Loan-backed and Structured Securities |IP43-1 |

|44 |Capitalization of Interest |IP44-1 |

|45 |Repurchase Agreements, Reverse Repurchase Agreements and Dollar Repurchase Agreements |IP45-1 |

|46 |Accounting for Investments in Subsidiary, Controlled and Affiliated Entities |IP46-1 |

|47 |Uninsured Plans |IP47-1 |

|48 |Investments in Joint Ventures, Partnerships and Limited Liability Companies |IP48-1 |

|49 |Policy Loans |IP49-1 |

|50 |Classifications and Definitions of Insurance or Managed Care Contracts in Force |IP50-1 |

|51 |Life Contracts |IP51-1 |

|52 |Deposit-Type Contracts |IP52-1 |

|53 |Property Casualty Contracts–Premiums |IP53-1 |

|54 |Individual and Group Accident and Health Contracts |IP54-1 |

|55 |Unpaid Claims, Losses and Loss Adjustment Expenses |IP55-1 |

|56 |Universal Life-Type Contracts, Policyholder Dividends, and Coupons |IP56-1 |

|57 |Title Insurance |IP57-1 |

|59 |Credit Life and Accident and Health Insurance Contracts |IP59-1 |

|65 |Property and Casualty Contracts |IP65-1 |

|66 |Accounting for Retrospectively Rated Contracts |IP66-1 |

|67 |Depreciation of Property and Amortization of Leasehold Improvements |IP67-1 |

|68 |Business Combinations and Goodwill |IP68-1 |

|69 |Financial Guaranty Insurance |IP69-1 |

|71 |Policy Acquisition Costs and Commissions |IP71-1 |

|72 |Statutory Surplus |IP72-1 |

|73 |Nonmonetary Transactions |IP73-1 |

|74 |Life, Deposit-Type and Accident and Health Reinsurance |IP74-1 |

|75 |Property and Casualty Reinsurance |IP75-1 |

|76 |Offsetting and Netting of Assets and Liabilities |IP76-1 |

|77 |Disclosure of Accounting Policies, Risks & Uncertainties, and Other Disclosures |IP77-1 |

|78 |Employee Stock Ownership Plans |IP78-1 |

|80 |Debt |IP80-1 |

|81 |Foreign Currency Transactions and Translations |IP81-1 |

|82 |Stock Options and Stock Purchase Plans |IP82-1 |

|83 |Accounting for Income Taxes |IP83-1 |

|84 |Quasi-reorganizations |IP84-1 |

|85 |Derivative Instruments |IP85-1 |

|86 |Securitization |IP86-1 |

|87 |Other Admitted Assets |IP87-1 |

|88 |Mortgage Guaranty Insurance |IP88-1 |

|89 |Separate Accounts |IP89-1 |

|90 |Nonadmitted Assets |IP90-1 |

|92 |Statement of Cash Flow |IP92-1 |

|94 |Allocation of Expenses |IP94-1 |

|95 |Holding Company Obligations |IP95-1 |

|96 |Other Liabilities |IP96-1 |

|97 |Underwriting Pools and Associations Including Intercompany Pools |IP97-1 |

|99 |Nonapplicable GAAP Pronouncements |IP99-1 |

|100 |Health Care Delivery Assets - Supplies, Pharmaceuticals and Surgical Supplies, and Durable Medical Equipment |IP100-1 |

|101 |Health Care Delivery Assets - Furniture, Medical Equipment and Fixtures, and Leasehold Improvements in Health |IP101-1 |

| |Care Facilities | |

Appendix F - Policy Statements - Volume II

|Title |Page |

|NAIC Policy Statement on Maintenance of Statutory Accounting Principles |F-1 |

|NAIC Policy Statement on Comments to GAAP Exposure Drafts |F-3 |

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