Capital Lease conversion for noninsurance SCA

[FranH-EH]

1. We account for our investment in a noninsurance SCA Under SSAP97 per paragraph 8bii. We have referred to Paragraph which 9 states that the statutory basis of accounting shall be based on audited U.S. GAAP equity adjusted for items in 9a-9d. However, it is unclear if the SCA has a capital lease under GAAP, should it be converted to an Operating lease for statutory reporting or should the Capitalized Assets be non-admitted?

2. Also, how would we convert a Capital Lease to an Operating Lease? Would it be as simple as Debiting the Capitalized Leased Liability and Credit the Capitalized Leased Asset?