NAIC Preamble

Question 1

Accounting definition

Answer 1

Process of accumulating and reporting financial information about an economic unit

Question 2

Conservatism

Answer 2

Providing a margin of protection; Valuation procedures should aim to prevent sharp fluctuations in surplus

Question 3

Codification

Answer 3

Provide comprehensive guide to statutory accounting

Question 4

Prior to codification

Answer 4

Insurers uncertain which rules to follow; regulators unfamiliar with other states’ rules

Question 5

Hierarchy of applying accounting rules

Answer 5

1. SSAPs
2. Emerging Issues Working Group
3. NAIC
4. SAP Statement of Concepts
5. Sources of non-authoritative literature

Question 6

Permitted accounting practices

Answer 6

Specifically requested by insurer, inconsistent with SAP and state prescribed accounting practices (requires approval)

Question 7

Prescribed accounting practices

Answer 7

Included directly in state laws; applicable to all insurers domiciled in the state

Question 8

Source publications for preparing and issuing statutory financial statements (US)

Answer 8

SSAPs

NAIC’s Accounting Practices and Procedures Manual (APPM)