Equity rollforward

[FranH-EH]

Can you provide guidance as to what particular items can be included in the equity roll-forward related to extraordinary or non-recurring items.

[Bruce]

SSAP 24 which used to be titled Discontinued Operations and Extraordinary Items was heavily modified and retitled Discontinued Operations and Unusual or Infrequent Items for the 2016 version of the NAIC Accounting Practices and Procedures Manual. This is how it now reads:

9. A material event or transaction that an entity considers to be of an unusual nature or of a type that indicates infrequency of occurrence or both, shall be reported consistently with the reporting entity's reporting of continuing operations (i.e., no separate line item presentation in the balance sheet or statement of operations). Such items shall not be charged directly to surplus unless specifically addressed elsewhere within the Accounting Practices and Procedures Manual.
a. "Unusual Nature" shall be defined as the underlying event or transaction that should possess a high degree of abnormality and be of a type clearly unrelated to, or only incidentally related to, the ordinary and typical activities of the entity, taking into account the environment in which the entity operates.
b. "Infrequency of Occurrence" is defined as the underlying event or transaction that would not reasonably be expected to recur in the foreseeable future, taking into account the environment in which the entity operates.

Unusual/Infrequent Items

16. The nature and financial effects of each unusual or infrequent event or transaction shall be disclosed in the notes to the financial statements. Gains or losses of a similar nature that are not individually material shall be aggregated. This disclosure shall include the line items which have been affected by the event or transaction considered to be unusual and/or infrequent.

The 2016 NAIC Health Annual Statement Instructions provide for this disclosure in Note 21A:

Instruction:

A. Unusual or Infrequent Items

Disclose the nature and financial effects of each unusual or infrequent event or transaction. Gains or losses of a similar nature that are not individually material shall be aggregated. This disclosure shall include the line items which have been affected by the event or transaction considered to be unusual and/or infrequent.

Refer to SSAP No. 24 Discontinued Operations and Unusual or Infrequent Items for accounting guidance.

Illustration:

A. Unusual or Infrequent Items

On November __, 20__, the Company prepaid the holders of its ___% senior notes. Accordingly, the Company recorded a loss of $ ________ related to the early retirement of debt. The loss comprised a $___ million prepayment penalty and a write off of premium associated with the debt. This loss is reflected in Line ___ of the Income Statement.