IP No. 89 Issue Paper
IP 89–2
General Account Reporting
6. Insurance activities such as sales, underwriting and contract administration, premium collection
and payment of premium taxes, claims, and benefits are functions of the insurance company distinct from
the separate account and shall be accounted for as transactions of the general account.
7. For those separate account contracts classified as life contracts under Issue Paper No. 50—
Classifications and Definitions of Insurance or Managed Care Contracts In Force, premiums and annuity
considerations shall be recorded as income in the Summary of Operations of the general account, and as
transfers to premiums and considerations in the separate account statement. Deposit-type contracts shall
be recorded in the general account in accordance with Issue Paper No. 52—Deposit-Type Contracts.
Charges (e.g., fees associated with investment management, administration, and contract guarantees)
assessed on the separate accounts, as well as the net gain from operations of the separate account shall be
recorded as income in the Summary of Operations of the general account. Expenses relating to investment
management, administration, and contract guarantees pertaining to separate account operations, as well as
benefits and surrenders incurred on behalf of separate account contracts classified as life contracts, net
transfers between separate accounts, commissions, and premium taxes (if any) shall be recorded as
expenses in the Summary of Operations of the general account.
8. The general account shall include the total assets and liabilities, including transfers due or
accrued, of any separate accounts business which it maintains and, therefore, the surplus, if any, of its
separate accounts business. Transfers to the general account due or accrued shall be reported on a net
basis so that the asset and the liability totals of the general account are not overstated. Changes in the
surplus of the separate accounts business of an insurer, except for changes resulting from the net gain
from operations of the separate account, shall be charged or credited directly to the unassigned funds
(surplus) of the general account.
9. Where a variable annuity contract or variable life insurance contract contains a guaranteed
minimum death benefit, any reserve liability for such death benefit provision shall be recorded and held in
the general account based on the reserving guidance in paragraphs 24 and 25. Any differences between
the benefit paid and the separate account asset value of the contract shall be charged against or credited to
the general account in its net gain from operations.
10. Separate account surplus may not become negative. For example, for separate account contracts
which have annuitized (i.e., contracts in the payout stage), lower than expected mortality on variable
annuity contracts containing mortality guarantees may cause a deficiency in the investment funds
underlying the contract reserves. Thus the general account incurs an expense and the separate account
realizes revenue to cover this deficiency, if necessary. Conversely, excess funds from higher than
expected mortality will result in mortality gains that are included in the Summary of Operations of the
separate account and are ultimately recorded as equity in net income from separate account operations as
discussed in paragraph 7.
11. For variable products, separate account surplus created through the use of the commissioners’
reserve valuation method (CRVM), commissioners’ annuity reserve valuation method (CARVM), or
other reserving methods, shall be reported by the general account as an unsettled transfer from the
separate account. The net change on such transfers shall be included as a part of the net gain from
operations in the general account.
12. Surplus funds transferred from the general account to the separate account, commonly referred to
as seed money, and earnings accumulated thereon shall be reported as surplus in the separate accounts
until transferred or repatriated to the general account. The transfer of such funds between the separate
account and the general account shall be reported as surplus contributed or withdrawn during the year.
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