Illinois says it will let several carriers use “permitted practices,” or exceptions to the usual capital and surplus reporting rules.
The carriers that can use the permitted practices are Allstate Life Insurance Company, Northbrook, Ill.; Allstate Insurance Company, Northbrook; and Continental Casualty Company, Chicago, according to Illinois Division of Insurance bulletins.
Allstate Life and Allstate are units of Allstate Corp., Northbrook.
Continental Casualty is a unit of CNA Financial Corp., Chicago.
Michael McRaith, Illinois division director, sent a letter Jan. 28 that gives Allstate Life permission to switch from a market-value approach to a book-value approach for market-value-adjusted annuities. Allstate Life can use the annuity valuation change for “the year ending 2008 through Sept. 30, 2009,” McRaith writes.
to increase use of deferred tax assets for reporting from Dec. 31, 2008, through Dec. 30, 2009.
The Allstate units can use either the gross DTAs expected to be realized within 3 years of the balance sheet date or an amount equal to 15% of statutory capital and surplus.
The usual rules would limit Allstate to using the amount of DTAs expected to be realized within 1 year, or an amount equal to 10% of statutory capital and surplus, McRaith writes.
The Illinois division will let Continental Casualty use the amount of DTAs expected to be realized within 3 years, or an amount equal to 25% of statutory capital and surplus, through Sept. 30, 2009, McRaith writes.
Division representatives could not immediately be reached for comment on the permitted practices letters.
Analysts with Standard & Poor’s Ratings Services., New York, today said during a conference call that state insurance department moves to grant capital and surplus reporting exceptions will lead to inconsistency and raise questions about comparability.
S&P will look at the companies granted exceptions on a case-by-case basis, according to S&P analyst Kevin Ahern.
Representatives for insurers have argued that the capital and surplus exceptions simply accelerate implementation of changes already under serious consideration by state insurance regulators.