SAP v GAAP (Odomirok ch22)

Question 1

What can trigger the need for an 8-K filing?

Answer 1

change in principal officers or directors
change in certified accountant
entering or terminating a material definitive agreement

Question 2

Who is required to file quarterly (10 -Q) and annual (10 - K) financial reports with the SEC?

Answer 2

all companies with publicly traded securities

Question 3

What are the 4 parts of a 10-K?

Answer 3

• Part I — Business description, risks factors, unresolved comments from SEC staff, properties, and legal proceedings
• Part II — Financial statements and supplementary data, selected financial data, management’s discussion and analysis of financial condition and results of operations, and controls and procedures
• Part III — Directors and executive officers of the company, executive compensation, securities ownership by certain beneficial owners and management, certain relationships and related transactions, and the fees of the principal accountant
• Part IV — Reports, exhibits and schedules from 8-Ks filed during the reporting period.

Question 4

2 main SEC filing regulations

Answer 4

1. Regulation S-X — Form and Content of Financial Statements
2. Regulation S-K — Integrated Disclosure Rules

Question 5

What does regulation S-X contain?

Answer 5

rules for composition and presentation of financial statements
many schedules / exhibits are also required under GAAP
Schedules include…
reinsurance (assumed and ceded)
DAC
UEP
reserves
net investment income
WP

Question 6

What does regulation S-K contain?

Answer 6

requirements for non-financial statement portions of the 10k
these items are required:
tabular analysis of changes in aggregate reserves
method for estimating inflation
reconciliation between SAP and GAAP reserves

Question 7

Key elements of ASU 2015 -09 (introduced several new disclosures for US GAAP for short duration insurance contracts)

Answer 7

· Accident year triangles of paid and ultimate loss and ALAE for up to 10 years on a net of reinsurance basis. These triangles were required to be reconciled in another schedule to the carried reserves.
· Current reported claim frequencies and current net loss and ALAE IBNR by accident year on the same level of aggregation as the triangles.
· A description of the methodologies used to estimate the loss and ALAE IBNR.
· The average annual payout of ultimate incurred claims based on the paid triangles and current ultimate incurred loss and ALAE.
· In the aggregate, a description of any significant changes in the methodology used to estimate the IBNR or the reported claim frequencies

Question 8

Differences between US GAAP loss triangles and Schedule P?

Answer 8

GAAP requires ALAE not DCC
level of GAAP disclosure is principle based, SAP has LOBs
GAAP has IBNR and rep claim frequency not in triangle form, limiting vs schedule P which is triangle based