The Financial Condition Committee at the National Association of Insurance Commissioners is seeking comments on a proposal that could change the way insurers handle deferred tax assets.
The committee has exposed proposed temporary revisions to Statement of Statutory Accounting Principles Number 10 — Income Taxes – Alternative Language Proposal – for public comment.
The proposal, SSAP No. 10R, is an alternative to another revision proposal that was exposed Sept. 24, committee officials say.
If implemented as currently written, the latest proposal would affect insurance company statutory accounting in 2010 and would not apply to subsequent annual and interim periods, according to the proposal text.
The proposal deals with topics such as accounting for deferred income taxes, admissibility of income tax assets, intercompany income tax transactions, intraperiod tax allocations, and disclosures.
“For purposes of this statement, only adjusted gross deferred tax assets that are more likely than not (a likelihood of more than 50%) to be realized shall be considered in determining admitted adjusted gross deferred tax assets,” according to the proposal text.
If a reporting entity believed that there was a less than 50% chance that it would end up realizing the DTA, it should adjust the total DTA amount by a statutory valuation allowance, to come up with a new, lower amount that is “more likely than not to be realized,” according to the proposal.