Forgot Password? | Print Page | Sign In | Create User Profile
News & Press: Industry News

NAIC Examines Statutory Accounting for Leases

Tuesday, June 18, 2019  
Share |

The Statutory Accounting Principles Working Group (SAPWG) of the National Association of Insurance Commissioners (NAIC) is holding a public hearing this month to obtain information from and views of interested individuals and organizations about the standards proposed in its Exposure Draft on statutory accounting guidance. This is being done in view of the new Financial Accounting Standards Board (FASB) rule on leases. Prior FASB rules did not require lessees to recognize assets and liabilities arising from operating leases on the balance sheet. However, in February 2016, FASB issued ASU 2016-02—Leases, that required recognition of operating leases on the balance sheet, but then treated the right to use asset inherent in a lease somewhat differently than the lease liability. This new GAAP rule generally becomes effective after December 15 for non-public companies.

On April 3, 2016, the NAIC Working Group exposed three options on how to proceed with statutory accounting lease treatment in view of the new FASB rule. The options eventually lead to the current NAIC revisions to the statutory accounting standards for leases. The revisions reject FASB's new lease rule. Instead, for statutory accounting purposes, the NAIC would treat leases as operating leases for lessees and not adopt their treatment as financing leases and would reject recognition of the associated right to use assets and liabilities.

California Land Title Association

1215 K Street #1816 Sacramento, CA 95814-3905
Email:  |  Phone: 916-444-2647  |   Fax: 916-444-2851