817 Admissibility of prepaid premium taxes in financial statements; Insurance Department notice no. 2002-02

INSURANCE DEPARTMENT

Admissibility of Prepaid Premium Taxes in Financial Statements; Insurance Department Notice No. 2002-02

[32 Pa.B. 2290]

   By Insurance Department Notice No. 1998-04, all domestic insurers were advised of the requirement to adhere to the codified Accounting Practices and Procedures Manual (Manual) adopted by the National Association of Insurance Commissioners (NAIC). Adherence to the Manual was required beginning with quarterly financial statements as of March 31, 2001. By Insurance Department Notice No. 2001-10, domestic insurers were further advised of certain laws, regulations or orders of the Insurance Commissioner that may require disclosures in notes to financial statements and CPA audit reports as departures from the Manual. The order of the Insurance Commissioner dated April 18, 1996, relating to the admissibility of prepaid premium taxes, was identified in Notice No. 2001-10 with a notation that the NAIC was reconsidering the nonadmissibility of prepaid premium taxes in the Manual.

   During its National meeting on March 2002, the NAIC adopted a modification to the Manual (SSAP No. 10) to specifically allow for the admissibility of state premium taxes recoverable. SSAP No. 10 expands the admissibility provided for under the Insurance Commissioner's order by allowing State tax recoverables, including prepayment and overpayment of State premium taxes, to be admitted assets if the recoverables are reasonably expected to be recovered in a subsequent accounting period.

   This notice is to advise domestic insurers that, because the Manual now provides for the admissibility of state premium taxes, the order dated April 18, 1996, has been revoked by order of the Insurance Commissioner, dated April 5, 2002. Therefore, prepayment and overpayment of State premium taxes will now be considered admitted assets in financial statements filed with the Insurance Department if insurers report these recoverables as prescribed by the Manual.

   Questions concerning this notice may be directed to Stephen J. Johnson, CPA, Deputy Insurance Commissioner, Office of Regulation of Companies, 1345 Strawberry Square, Harrisburg, PA 17120, [phone], fax: [phone], e-mail: [e-mail].

M. DIANE KOKEN,   
Insurance Commissioner

[Pa.B. Doc. No. 02-817. Filed for public inspection May 3, 2002, 9:00 a.m.]