b'TABLE OF CONTENTSINSURANCE REGULATORY scope of SSAP No. 43R and should not be eligibleAn issuer credit obligation is a bond, the for reporting on Schedule D as bonds or fixed- repayment of which is supported primarily by the income securities. The insurance industrygeneral creditworthiness of an operating entity or protested vigorouslywith a consortium of lifeentities. Support consists of direct or indirect insurers submitting a highly critical 67-pagerecourse to an operating entity or entities, which comment letter in July 2020. includes holding companies with operating entity Fortunately, at the October 13, 2020 SAP WGsubsidiaries where the holding company has the meeting, the staff of the Iowa Insurance Divisionability to access the operating subsidiaries cash (IID) unveiled a new, principles-based proposalflows through its ownership rights. An operating that offered a promising path forward for buildingentity may be any sort of business entity, not-for-a consensus among SAP WG members, NAIC staff,profit organization, governmental unit, or other IID staff and industry representatives. Beginning atprovider of goods or services, but not a natural the end of 2020, representatives of those fourperson or ABS Issuer (defined below).groups began meeting informally to do the hardExamples of issuer credit obligations include, work of fleshing out the concepts set out in thebut are not limited to:IIDs proposal, leading to the exposure on May 20,A.US Treasury securities;2021 of a proposed new definition of bond for purposes of both SSAP No. 43R and SSAP No. 26RB.US government agency securities; Bonds. At the SAP WG meeting on August 26,C.Municipal securities issued by the municipality 2021, there was broad support for the approachor supported by cash flows generated by a outlined in the May 20, 2021 proposal and amunicipally owned asset or entity that provides mandate for NAIC staff to continue refining it ingoods or services (e.g., airports, toll roads, etc.);consultation with the informal working group. At the December 11, 2021 SAP WG meeting, furtherD.Corporate bonds issued by operating refinements were exposed for comment to addressentities, including Yankee bonds and the level of credit enhancement required for ABS.zero-coupon bonds;A summary of the proposal, including the mostE.Corporate bonds issued by holding companies recent refinements, follows. that own operating entities;What Qualifies as a Bond? F.Project finance bonds issued by The proposal defines a bond as any securityoperating entities;representing a creditor relationship, wherebyG.Equipment Trust Certificates, Enhanced there is a fixed schedule for one or more futureEquipment Trust Certificates and Credit payments, and which qualifies as either anTenant Leases for which repayment is fully issuer credit obligation or an ABS. Thesupported by a lease to an operating entity proposal then proceeds to explain what it(itis unclear how lease extension/renewal means by each of those two categories. options are to be treated for purposes of the fully supported requirement);MAYER BROWN |61'