Insurance Spotlight — NAIC Accounting Update: 2026 Spring National Meeting (June 2, 2026)

NAIC Accounting Update: 2026 Spring National Meeting

Introduction

On March 23, 2026, as part of the National Association of Insurance Commissioners (NAIC) 2026 Spring National Meeting held on March 21–25, 2026, in San Diego, California, the Statutory Accounting Principles (E) Working Group (SAPWG) met to continue work on its focus areas. SAPWG is the working group within the NAIC that maintains revisions to the NAIC’s Accounting Practices and Procedures Manual (the “AP&P Manual”). The AP&P Manual contains guidance for insurers on preparing financial statements for financial regulation purposes.

Notably, this was the first SAPWG meeting in 12 years at which Dale Bruggeman of the Ohio Department of Insurance did not serve as chair. Kevin Clark of the Iowa Department of Insurance and Financial Services stepped into the chair role, with Mr. Bruggeman taking the role of vice chair.

This Insurance Spotlight highlights key statutory accounting topics discussed by SAPWG at the NAIC 2026 Spring National Meeting. For a comprehensive list of SAPWG agenda items that were adopted, exposed for public comment, deferred, or otherwise addressed during the event, see pages 17 through 26 of Deloitte’s NAIC Update: 2026 Spring National Meeting.

Asset Liability Management Derivatives

Asset liability management (ALM) derivatives are interest rate hedging instruments that hedge the duration difference of the designated asset and liability portfolios. These hedging programs are commonly used in the insurance industry for various risk mitigation purposes (e.g., to manage asset portfolios associated with a liability target duration). However, these programs could not meet the criteria for establishing a highly effective hedge under the current accounting frameworks in SSAP No. 861 or SSAP No. 108,2 causing volatility since the hedges are marked to market in surplus.

This issue was further brought to the forefront by the work of the Interest Maintenance Reserve (IMR) Ad Hoc Subgroup of SAPWG (see the Interest Maintenance Reserve section for further discussion). Regulators found that some insurers were deferring gains and losses from “economically effective” ALM derivatives even though those derivatives did not meet the criteria for establishing a highly effective hedge under SSAP No. 86, creating inconsistency in statutory reporting.

In response, industry representatives proposed a new statutory accounting framework specifically for ALM derivatives used to hedge asset liability duration mismatches driven by interest rate sensitivity — an activity viewed as central to protecting insurer surplus. After several years of discussion, SAPWG released an exposure draft of SSAP No. 109 3 and a draft issue paper to incorporate new statutory accounting guidance applicable to ALM hedging programs.

Under proposed SSAP No. 109, the hedging derivatives would be reported at amortized cost. When those derivatives are terminated or dedesignated, the derivative fair value would be deferred and amortized into income over a period not to exceed 10 years, and the deferred balance would qualify for admittance and recognition on the statutory balance sheet. An amount equal to the net deferred asset and deferred liability would be allocated from unassigned funds to special surplus. Hedge effectiveness would be tested by analyzing the durations of the designated asset and liability portfolios and comparing the impact of the hedging program on the difference.

Notably, proposed SSAP No. 109 would prevent the use of derivatives with asymmetrical payoff profiles or premiums at inception (e.g., options). Further, the proposal would require (1) the insurer to obtain explicit approval by the domiciliary state and (2) a financial officer to certify that the ALM hedging program is part of a formal “Clearly Defined Hedging Strategy.”

Proposed disclosure requirements include a narrative description of each ALM hedging program and quantitative information about the hedging instruments and the deferred assets and liabilities, as well as expanded disclosures in the event of terminations or ineffectiveness.

The exposure draft of SSAP No. 109 states that its proposed guidance would become effective on January 1, 2027, and would be applied on a prospective basis. However, the exposure draft also includes a one-time transition provision for approved, open qualifying programs to reclassify recognized unrealized gains and losses from derivative fair value changes to deferred assets and deferred liabilities.

The exposure draft is expected to be adopted at the NAIC Summer National Meeting in August 2026. Insurers will need to monitor the final adoption for any changes. Further, life insurers will need to reevaluate existing ALM hedging programs to determine whether hedge accounting can be achieved under the new guidance in SSAP No. 109, with a special focus on documentation, financial reporting, and internal controls.

Interest Maintenance Reserve

After the NAIC 2026 Spring National Meeting, the IMR Ad Hoc Subgroup of SAPWG achieved its goal of substantively revising SSAP No. 7.4 The draft revised SSAP No. 7 5 and a draft issue paper were exposed on April 20, 2026.

At the NAIC 2026 Spring National Meeting, SAPWG continued to consider certain matters that the Ad Hoc Subgroup had brought up for discussion, as highlighted below.

Agenda Item 2025-23

Agenda Item 2025-23 was adopted and updates SSAP No. 7 to include specific proof of reinvestment templates for those insurers with a net negative IMR balance. Net negative IMR is admissible under INT 23-01,6 subject to certain limitations.

A core premise underlying the admission of a net negative IMR is that realized losses on sold fixed-income securities may be deferred only when the related sale proceeds are reinvested in newly acquired fixed-income securities at higher yields. To support this determination, the proposal includes a prescribed calculation template to evaluate (1) whether the insurer has acquired a sufficient volume of fixed-income investments relative to investable premiums and sold fixed-income securities and (2) whether the weighted-average yield on acquired investments exceeds that of the investments sold. An insurer is required to satisfy both conditions to move from a prior positive IMR position to a current net negative IMR balance, or to further increase an existing net negative IMR balance.

Although the calculations are operationally complex, they are intended to be formulaic, drawing primarily from existing annual statement captions.

While Agenda Item 2025-23 was technically adopted by SAPWG, the adoption was meant only to approve the concepts for inclusion in the revised SSAP No. 7. SAPWG directed NAIC staff to continue to work with industry representatives to refine the templates.

Agenda Item 2025-22

Agenda Item 2025-22 exposes revisions to SSAP No. 617 to clarify how IMR that is eliminated as part of a reinsurance transaction should influence the reinsurance collateral that is required for the cedent to receive reinsurance credit.

The principal issue is whether negative IMR derecognized in a reinsurance transaction should reduce the associated collateral requirement from an unauthorized or certified reinsurer. Industry participants have advocated for symmetrical treatment, under which derecognized positive IMR would increase required collateral and derecognized negative IMR would reduce it, on the basis that ceded reserves together with IMR more appropriately reflect the economics of the transferred liabilities. NAIC staff has instead supported asymmetrical treatment, whereby derecognized positive IMR increases the collateral requirement but derecognized negative IMR does not affect it, reflecting the view that negative IMR does not constitute a transferable collateral asset; notably, this issue is distinct from whether the ceding insurer admits the negative IMR. The American Academy of Actuaries has proposed a potential compromise that would permit negative IMR in the collateral calculation if the ceding insurer can demonstrate (e.g., through asset adequacy analysis) that collateral remains sufficient under moderately adverse scenarios.

The matter has been referred to the Reinsurance (E) Task Force, and further action has been deferred pending its response.

Next Steps

Insurers should analyze the exposed changes to IMR guidance as they consider portfolio rebalancing and reinsurance transactions.

Commitments and Contingencies

In response to industry inquiries and regulator comments and directions, SAPWG developed and exposed Agenda Item 2025-24 on disclosures about commitments and contingencies, including contingent commitments, at the NAIC 2025 Fall National Meeting. Although information about commitments, contingent commitments, and contingencies is provided in various footnote disclosures and on investment schedules, regulators noted difficulty in understanding the full picture of current and potential future obligations affecting insurers.

This is especially true for investment-related commitments. For example, Schedule BA includes a column for “Commitment for Additional Investment,” yet Schedule D does not. As insurers increasingly enter into complex investments, the future commitments contained in these transactions are often not recognized as liabilities until the commitments are called. Regulators wish to obtain full transparency of these commitments since they can affect insurers’ liquidity and risk profiles.

At the NAIC 2026 Spring National Meeting, SAPWG deferred action on Agenda Item 2025-24 and did not discuss the agenda item in depth. However, SAPWG directed NAIC staff to develop (1) a formal definition of commitments for incorporation within SSAP No. 58 and (2) a new comprehensive commitments and contingent commitments disclosure. Currently, definitions of liabilities, commitments, and contingencies under statutory accounting guidance are consistent with those under U.S. GAAP. Interested parties have expressed concern about the potential for inconsistency between the accounting bases and the unintended consequences of such disclosure.

Although the extent to which additional disclosure will be required is currently unknown, insurers should monitor the status of Agenda Item 2025-24 and, in the case of investment-related commitments, ensure that they have access to all necessary information to disclose commitments on a security-by-security basis on Schedule D.

Equity Method Investments in Entities Other Than Subsidiary, Controlled, and Affiliated Entities

Agenda Item 2025-26 on reporting equity changes related to investments within the scope of SSAP No. 489 was also developed and exposed at the NAIC 2025 Fall National Meeting. SSAP No. 48 provides the accounting requirements for using the equity method of accounting if the insurer holds a minor ownership interest or lacks control. If there is a more than minor ownership interest, the equity method of accounting is applied in accordance with paragraphs 8(b)(i)–(iv) of SSAP No. 97, under which the appropriate model for applying the equity method of accounting is determined on the basis of the investee (e.g., insurance company, noninsurance company, foreign insurance company). Application of the equity method of accounting under both SSAP No. 48 and SSAP No. 9710 is based on (1) audited investee equity (sometimes under U.S. GAAP) as adjusted for periodic unrealized gains and losses, (2) amortization of the basis difference (i.e., goodwill), and (3) other items that are capital in nature. Upon analyzing annual statement filings, NAIC staff noted that there were valuation changes reported on Schedule BA that could not be explained only through review of that schedule. Thus, SAPWG is seeking more information from industry representatives.

Although no revisions were proposed at the NAIC 2026 Spring National Meeting, Agenda Item 2025-26 requests comments on various aspects of the equity method of accounting, including (1) the timing of recognition of equity value increases and declines, (2) goodwill and negative goodwill, (3) income recognition, (4) impairment, and (5) disclosures on Schedule BA.

With the goal of clarified guidance and consistent application, SAPWG directed NAIC staff to organize a limited industry focus group to assist in the development of proposed revisions. There are many disparate types of investments that fall within the scope of SSAP No. 48. In preparation for potential changes to guidance, insurers should ensure that they have a full and complete picture of their equity method investment portfolio, including the impact of the equity method of accounting on financial reporting and risk-based capital.

Contacts

If you have questions about this publication, please contact the following Deloitte professionals:

	Andrew Pidgeon Audit & Assurance Partner Deloitte & Touche LLP +1 415 783 6426 apidgeon@deloitte.com		Bala Bellur Audit & Assurance Managing Director Deloitte & Touche LLP +1 813 769 3210 bbellur@deloitte.com
	Josh Martin Audit & Assurance Managing Director Deloitte & Touche LLP +1 860 725 3153 joshmartin@deloitte.com		John Tittle Audit & Assurance Specialist Deloitte & Touche LLP +1 312 486 5486 johntittle@deloitte.com

Footnotes

NAIC Statement of Statutory Accounting Principles (SSAP) No. 86, Derivatives.

NAIC Statement of Statutory Accounting Principles No. 108, Derivatives Hedging Variable Annuity Guarantees.

NAIC Proposed Statement of Statutory Accounting Principles No. 109, Asset Liability Management (ALM) Derivatives.

NAIC Statement of Statutory Accounting Principles No. 7, Asset Valuation Reserve and Interest Maintenance Reserve.

NAIC Proposed Statement of Statutory Accounting Principles No. 7 (Revised), Asset Valuation Reserve and Interest Maintenance Reserve.

Interpretation of the Statutory Accounting Principles (E) Working Group No. 23-01, Net Negative (Disallowed) Interest Maintenance Reserve.

NAIC Statement of Statutory Accounting Principles No. 61, Life, Deposit-Type and Accident and Health Reinsurance.

NAIC Statement of Statutory Accounting Principles No. 5, Liabilities, Contingencies and Impairments of Assets.

NAIC Statement of Statutory Accounting Principles No. 48, Joint Ventures, Partnerships and Limited Liability Companies.

NAIC Statement of Statutory Accounting Principles No. 97, Investments in Subsidiary, Controlled and Affiliated Entities.