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Article 7 of Regulation S-X sets forth the financial statement requirements relating to insurance companies and provides rules for the form and content of insurance company financial statements filed with the SEC. The SEC requirements are in addition to meeting all of the GAAP requirements.

12.11.1 Balance sheet presentation and disclosures (insurance)

S-X 7-03 lists the various items that, if applicable, should appear on the face of the balance sheet of an insurance company. The following line items are relevant in the context of loans and investments:
  • Investments—other than investments in related parties:
    • Fixed maturities (including bonds, notes, marketable certificates of deposit with maturities beyond one year and redeemable preferred stock)
    • Equity securities (including common stocks and nonredeemable preferred stocks)
    • Mortgage loans on real estate
    • Investment real estate
    • Policy loans
    • Other long-term investments (the amount of any class of investments included under this item should be disclosed separately in a note if it exceeds 10% of stockholder's equity)
    • Short-term investments (commercial paper maturing within one year, marketable certificates of deposit maturing within one year, saving accounts, time deposits and other cash accounts and cash equivalents earning interest)
    • Total investments
  • Securities and indebtedness of related parties (stating separately investments in related parties and indebtedness from such parties)
  • Accrued investment income
  • Accounts and notes receivable (including receivables from agents and insureds, uncollected premiums and other receivables. Any category in excess of 5% of total asset should be separately disclosed).
S-X 7-03 does not require insurance companies to present classified balance sheets; therefore, the distinction between current and noncurrent is not relevant for insurance companies. However, short-term investments (generally, investments maturing within one year) are to be presented separate from other investments.
S-X 7-03 also requires reporting entities to state parenthetically on the balance sheet the basis for determining the aggregate amount presented in the balance sheet. For investments classified as fixed maturities and equity securities, disclosure is required of amortized cost, if the securities are presented at fair value, and fair value, if the securities are presented at amortized cost.
Reporting entities are also required to disclose the name of any entity (or legal person), in which the total amount invested in the entity and its affiliates, exceeds 10% of total stockholder’s equity.
In addition, reporting entities are required to disclose the amount of fixed maturities, mortgage loans on real estate, investment real estate and other long-term investments that have been non-income producing for the 12 months preceding the balance sheet date.
ASC 944-825-50-1A requires insurance entities to disclose the carrying amount of securities deposited with state regulatory authorities. ASU 2016-01 and ASU 2016-13 superseded many of the specific requirements previously included in ASC 944 that related to presentation and disclosure of investments for insurance companies.

12.11.2 Income statement and disclosures (insurance companies)

S-X 7-04 lists the various items that, if applicable, should appear on the face of the income statement of an insurance company. It also details specific disclosure requirements. The following disclosures, among others detailed in S-X 7-04(2) and S-X 7-04(3), are relevant for loans and investments:
  • In a note to the financial statements, in tabular form, disclose the amounts of: (a) investment income from each category of investments that exceeds 5% of total investment income; (b) total investment income; (c) applicable expenses; and (d) net investment income.
  • Separately disclose net realized investment gains and losses, the method followed in determining the cost of investments sold, and realized and unrealized investment gains and losses on fixed maturities and equity securities.

12.11.3 Financial statement schedules (insurance companies)

S-X 7-05 requires that insurance companies present as Schedule I a summary of investments as of the date of the balance sheet other than investments in related parties. The format of the schedule is prescribed by S-X 12-15, and includes the cost, value, and carrying amount of the investments, presented separately by type of security (e.g., fixed maturities, equity securities, policy loans).
A schedule of valuation and qualifying accounts, required by S-X 7-05, should be filed for each period for which an audited income statement is presented. The specific requirements are prescribed in S-X 12-09, and include a reconciliation or rollforward, by major classes, of specified valuation accounts from the balance at the beginning of the period to the closing balance. This is relevant for loans and investments because the allowance for loan losses would be an account that should be included in this schedule.
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