NAIC Accounting

Question 1

NAIC Accounting - Difference between GAAP and SAP

Answer 1

GAAP meets needs of users of financial statements measuring earnings between periods; SAP for regulators to measure ability to pay claims

Question 2

NAIC Accounting - Considerations in materiality

Answer 2

closeness to breaching covenant; loss turns into profit or trend reverses; miscategorizaiton of assets or liabilities; unusual transactions

Question 3

NAIC Accounting - Application of conservatism

Answer 3

provides margin of protection for policyholders - SAP shoud be reasonably conservative over economic cycles