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Minutes for HB2177 - Committee on Insurance

Short Title

Pertaining to the accounting treatment of certain derivative instruments of fixed index annuities.

Minutes Content for Mon, Feb 18, 2019

Chris Swickard testified in support of the bill. He said the bill allowed life insurance companies to utilize certain accounting practices that provided a truer and fairer representation of their capital position and financial results in connection with hedging of fixed index annuity products. He said Security Benefit currently employed the same accounting treatment permitted in the bill under what was referred to as a "permitted practice." They currently had to seek annual approval from Insurance Department to use the permitted accounting practice, which they had done since 2011. He added that the State of Iowa already had a law that allowed life insurers to use this practice and, if available to Kansas life insurers, would level the playing field. He said the Insurance Department said they had no issues with the bill (Attachment 2)

Questions were asked in answered in regard to: the use of the term "hedge;" specifically, how the practice impacted the companies' financials; whether the bill would be an advantage to other life insurers and how a market downfall, as occurred in 2007, affected this accounting practice.

The chairperson asked if there were any other proponents, opponents or neutral parties who wanted to testify. There were none.

Chairperson Vickrey closed the hearing on HB 2177.