Note 27 (Structured Settlements)

Does anyone work on annual statement filings who is familiar with this note? The NAIC instructions below aren’t 100% clear to me whether we are just reporting on annuities purchased in the year, or if we are supposed to be tracking the total amounts of all annuities purchased in the past which are still active (though I don’t know that we even have information on the current status of past annuities).

Disclose the amount of reserves no longer carried by the reporting entity because it has purchased annuities with the claimant as payee and to the extent to which the reporting entity is contingently liable for such amounts should the issuers of the annuities fail to perform under the terms of the annuities.

My initial thought is that it is just new annuities, but it seems like investors would want to know if there is a large amount of historical annuities that you are contingently liable for.

I would have thought active annuities, but it’s been quite a while since I dealt with it. It’s the reduction of reserves, so it’s any reserve that you’d have to put up if the annuities went away.

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And then you put up extra reserves for the annuity in case it defaults, and then you get an annuity for those reserves…