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Do I record an unrealized statutory gain on my securities lending agreements (Schedule DL issues)

Phil Martell's Profile

Answers

David OBrien
Title: Treasury Consultant
Company: EE Treasury
(Treasury Consultant, EE Treasury) |

Phil:

Accounting guidance/treatment for Unrealized Gains/Losses on Security Lending Agreements is a very complex subject best answered by the firms Auditors. Any thoughts I could givce is based on expeiences and observastions rather than a firm grasp of the underlying accounting.I am far more a Treasury than Accounting expert.

Accordingly I must pass on your question.

David

Keith Taylor
Title: CFO
Company: Lyris, Inc.
(CFO, Lyris, Inc.) |

Phil, I just happen to have an Insurance software solutions company as one of our portfolio companies, so I modestly exposed to the heavy regulatory reporting issues in the Insurance industry...

If I'm correct Schedule DL is an NAIC requirement. As such, it is my understanding that you must report unrealized gains and losses on securities held for investment, and any associated leverage/debts/loans attached or securitized against the security. The issue of solvency is an acute issue in the industry these days, so expect more disclosures. Here is a link to an industry member I think has good online guidance:
http://www.stoneriver.com/content/naic-focus

If you're not adequately educated in the industry I STRONGLY urge you, as David did, to discuss with your company's Audit Firm, as they should have adequate training in Insurance Industry reporting.

Keith

Phil Martell
Title: Assistant Controller
Company: ProMutual Group
(Assistant Controller , ProMutual Group) |

Thanks you David and Keith for your responses. As with most regulatory reporting issues, the newly created Scedule DL's instructions for securities lending and its associated balance sheet line items are not transparent. However, after much discussion with other associates, it was agreed that unrealized gains/losses on sec lending should be treated with the same logic and rulings as the general portflio. Therefore, using the conservative statutory reporting guidelines, only unrealized losses on less than credit quality fixed income securities should be reported. Thanks again for your input.

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