Sec. 96.9. Accounting requirements

(a) At the end of each calendar year, each insurer that has established a surplus management account but does not report the account as a separate line of business on the insurer's annual statement shall file a report with the superintendent at the same time as it files its annual statement, consisting of the “Analysis of Operations by Lines of Business” page, as given in the annual statement, but modified so as to incorporate a column for the surplus management account “line”.

(b) Each insurer that has established a surplus management account shall also maintain a notional balance by line of business of the portion of the surplus management account attributable to each line of business. Such notional balance shall take into account allocations and charges to the surplus management account, as well as such line's allocable share of the financial experience of the surplus management account. Such notional balance shall also reflect any difference between the book value and market value of an asset at the time of transfer of such asset to or from the surplus management account.

(c) Each insurer that has established a surplus management account shall also maintain adequate records to show that the surplus management account was maintained in accordance with the plan (including amendments thereto) approved by the superintendent. Specifically, at the end of each calendar year, the insurer shall prepare a record, and file a report at the same time as it files its annual statement, of the income and expenses accumulated in, or allocated to, the surplus management account for the year just ended, including, but not limited to, the following information, all as specified under the approved plan:

(1) the opening balance of the account at the beginning of such year;

(2) credits to the account during such year arising from:

(i) investment income (net of investment expenses) allocated to the surplus management account;

(ii) capital gains (net of capital losses) on such assets;

(iii) funds allocated to the account;

(iv) any decrease in the liabilities of the account; and

(v) any other credits specified under the plan;

(3) charges to the account during such year arising from:

(i) withdrawals from the account;

(ii) Federal income taxes and other expenses;

(iii) any increase in the liabilities of the account; and

(iv) any other charges specified under the plan; and

(4) the closing balance of the surplus management account at the end of such year.

The records required by subdivision (c) of this section shall be maintained in a manner as to be readily accessible for examination, and shall bear a date and shall identify the person(s) responsible for the preparation thereof.

(d) Bases of allocation of income and expenses to the surplus management account shall be reviewed periodically by the insurer to ascertain their suitability for continued use.