Expansion to Statutory Schedule Y

Sarah Stubbs
July 22, 2021

As we pass the midpoint of the year, many companies are already looking toward year end, trying to ready themselves for various new reporting requirements. Among those is the expansion to statutory Schedule Y where newly adopted Part 3 will join the family and require disclosures on related party insurer members of a holding company group.  

Part 3 brings a notable departure from the pattern of disclosure otherwise required by previously existing Parts. Schedule Y continues to focus on insurer members of the holding company group, but while Parts 1, 1A and 2 concern themselves with affiliate reporting, Part 3 broadens its scope to include all related party insurer members.

A control relationship must exist to be considered an affiliate.  Commonly, any one company is controlled by another entity or by an individual. It may itself control another entity. Alternatively, two or more companies may be under common control. All of these examples represent affiliate relationships, and such relationships are found among corporations and among and between partnerships, LLCs and other legal forms of collaboration.

For this purpose, control exists at an ownership level of 10% or more. As measured at the holding company level, when group ownership of any other entity or interest surpasses that 10% threshold, affiliate reporting and disclosure within the Annual Statement becomes necessary. Facts and circumstances are irrelevant in the statutory presumption of control, although it may be rebuttal in some instances.

New Schedule Y Part 3 is intended to capture a broader state of connectivity and therefore does not just require reporting of affiliates but also of related party insurance companies. Organizations may not be affiliated but could still be considered related parties. Further, Part 3 should disclose ultimate controlling parties and other groups under their control. But beware the presumption that there is nothing extra you need to do to prepare this schedule. Part 3 will draw on related party information that may not otherwise be reported in other Parts of Schedule Y. It may require knowledge of other insurance holding company groups beyond that in which the reporting entity is included. The tabular format that has been prescribed for new Part 3 means electronic data is being captured, so you will want to be sure the table is complete before submission.

Schedule Y and various Note disclosures in the statutory Annual Statement are aimed at providing regulators a global picture of control, related party status and intercompany and intergroup transactions.

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Sarah Stubbs

Sarah is a Regulatory Education Director at Booke by Sovos, helping to deliver insurance accounting education to professionals in the industry, as well as service providers. Prior to joining Booke, Sarah was in public accounting. For over 20 years, she advised clients on all areas of taxation from formation, to annual compliance, to strategic acquisitions and reorganizations. Sarah also holds a current certified public accountant’s license.
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