Request for Permitted Accounting Practice

Effective January 1, 2005, the NAIC adopted changes to the Preamble of the NAIC Accounting Practices and Procedures Manual (“Manual”) expecting domiciliary state regulators to provide a five-day advance notice to all other states in which the insurer is licensed, when considering approval of a request for a permitted accounting practice that departs from the Manual and state prescribed accounting practices.  To assist the Department in meeting this expectation, each request for a permitted accounting practice must be received by the Department no less than thirty (30) days prior to the proposed effective date.  The written request must, at a minimum, include the following information:

• Proposed effective date;
• Nature and a clear description of the permitted accounting practice request;
• Disclose whether the permitted accounting practice was granted in the previous year(s);
• Financial statement filing date in which the requested permitted accounting practice will be reflected, if approved (valid for one (1) year only);
• Identify any potential effects and quantify the potential impact to each financial statement line item affected by the request. The potential impact may be determined by comparing the financial statements prepared in accordance with NAIC Statutory Accounting Principles and the financial statements incorporating the requested permitted accounting practice;
• Effect of the requested permitted accounting practice on a legal entity basis and on all parent and affiliated U.S. insurance companies, if applicable;
• List other permitted accounting practices currently in effect, if applicable; and
• Disclose the quantitative effect of the permitted accounting practice request with all other approved permitted accounting practices currently in effect.  See Appendix A-205 of the Manual, Illustrative Disclosure of Differences Between NAIC Statutory Accounting Practices and Procedures and Accounting Practices Prescribed or Permitted by the State of Domicile.

If the requested permitted accounting practice requires a Holding Company Act filing, please submit the respective filing together with the request for permitted accounting practice through the Online Assistance System for Insurer Submittals (OASIS), where applicable. Upon submission, provide a copy to the Financial Analysis Division via e-mail at Rosa.Ruiz@insurance.ca.gov.
 

If the requested permitted accounting practice does not require a Holding Company Act filing, please submit the request, with a completed Attachment A, directly to the Financial Analysis Division via e-mail at Rosa.Ruiz@insurance.ca.gov.
 

For questions regarding this Notice, please contact the department as follows:
 

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