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ARTICLE · 01 FEBRUARY 2021

NAIC Working Group Extends Guidance On Restructuring Troubled Debt

Herbert Smith Freehills Kramer LLP
Herbert Smith Freehills Kramer LLP
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Herbert Smith Freehills Kramer LLP

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Debt security restructurings in response to COVID-19 that solely impact covenant requirements are not considered TDRs.

United StatesInsolvency/Bankruptcy/Re-Structuring
Daniel Rabinowitz
Daniel Rabinowitz
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Insurers with portfolio assets that are distressed because of the COVID-19 pandemic will want to consider the extension of prior guidance from the National Association of Insurance Commissioners (NAIC) on restructuring such debt.

On Jan. 25, 2021, the NAIC's Statutory Accounting Principles Working Group (SAPWG) adopted two interpretations (INT 20-03 and INT 20-07, available here) extending the NAIC's accounting methodologies that insurers are to use in restructuring mortgage loans, other loans and debt securities where issuers may be unable to make payments on the obligation due to the pandemic.

  • Under INT 20-03, when modifying mortgage loan or bank loan terms in response to COVID-19, insurers must follow the provisions detailed in

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