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QUESTIONS for Christos
Private Placement changes. Can you now create a call/put/prerefund announcement for a Private Placement? Why the change? Must the security in Issue Viewer have more than Private Placement set to Y to create the CA annoucement? Would only Insurance clients do it or would core clients too?
Should we add an example to the Corporate Action section for calls/puts/prerefunds that use this treatment?
should we document the calculated values? are they calculated at transaction level? Position?
unsure how to document report impact. more or less detail? define the new columns?
INSURANCE How do you identify a security with a make whole provision? Are clients supposed to do that as part of setup? ? BRD says you can identify on SMF. Insurance Guide says Bond Characteristic field = Y for bond when Call = Y and Make Whole Call Flag = Y. BT 140270 from 2016 says to put Make Whole Call field back on Long Term Debt panel. BT 136014 says the announcement doesn't reflect this field.
Release Note (for reference only)
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Eagle Accounting can process calls and principal repayment corporate actions, by accounting basis, in accordance with the NAIC treatment detailed. Insurance clients can set a new Entity Accounting Basis tag, Income/Prepayment Fee Treatment (tag 16739,) to one of the following values: All, Calls Only, Principal Repayments Only, None. If this new field is not set (that is, left NULL), it is treated as None in the STAR calc rules.
In conjunction with this entity basis setting, you must make an additional setting on all corporate actions set up as Tran Type (tag 1257) equal to CA_CASH_CLOSE. You can set the new corporate action field, Income/Prepayment Fee Treatment (tag 2290), to one of the following values: Call, Principal Repayment, None. If this new field is not set (that is, left NULL), it is treated as None in the STAR calc rules.
The system now processes corporate actions in entities using this new functionality when the entity basis and corporate action settings match.
Understand the Income/Prepayment Fee Treatment
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About Income/Prepayment Fee Treatment
Eagle Accounting can apply the income/prepayment fee treatment to call and/or principal repayment corporate actions during corporate action processing
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of fixed income securities. You can use the income/prepayment fee treatment to:
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Account for prepayment fees and acceleration fees and make-whole call provisions as investment income
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Identify acceleration fees and prepayment fees on dispositions and not considered them in determining realized gains/losses on dispositions
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Identify and account for make-whole call provision amounts received for an investment on disposition as investment income.
business objectives need review
Set Up Entities and Accounting Bases
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UPDATE Create Calls/Puts/Refund Panel options
UDPATE About Entity Setup for Calls, Puts, and Pre-refunds.
Eagle Insurance clients can identify this setting for each accounting basis where they want to apply this methodology by setting the Income/Prepayment Fee Treatment field. This field is available in the Corporate Action Fields section of the Create/Edit Entity panel, the Create Master Fund panel, the Add a Basis to a Portfolio panel, and the Edit Master Fund/Sector panel. A description of this option follows.
Option | Tag | Description |
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| Income/Prepayment Fee Treatment | 16739 | Identifies the types of corporate actions for the entity's selected accounting basis that use the income/prepayment fee treatment. The income/prepayment fee treatment supports NAIC accounting requirements relating to prepayment penalties, acceleration fees, and make-whole call provision fees on bonds. |
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The system uses this setting in conjunction with the Income/Prepayment Fee Treatment field |
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applied at the corporate action transaction level. Options include:
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NOTE: |
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If you enable use of the income/prepayment fee treatment for specific types of corporate actions at the entity/basis level, be aware that the system does not consider the basis level Redemption Gain/Loss Indicator field setting for transactions that use the income/prepayment fee treatment. If you set the Redemption Gain/Loss Indicator field to Amortization, the system treats those transactions as if you set the Redemption Gain/Loss Indicator field to Gain/Loss. |
Set Up Securities
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You can identify
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a security that is a private placement on the security master file
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| Highlight |
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Make Whole Callable is not in IV Long Term Debt panel. Bug to add it. PRIVATE PLACEMENT: how to identify? |
You can identify securities securities with a make whole call provision or with private placements using the following options.
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Option
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Tag
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Description
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Indicates whether the security can have make-whole call provision fees.
?????? THere are no Yes or No options to select. How do you enter a value?
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Private Placement
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1421
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Indicates whether the security is a private placement. Options include:
- Yes
- No
This field is used for reference only.
?????? Do you need to know about this for this enhancement? Already documented for IV
Set Up and Process Corporate Actions
UPDATE Create Calls/Puts/Refund Panel Options page. The annoucement current is for Call, Put, Principal Repayment Type CA, and those are the reason codes. Now?
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by setting the Private Placement (tag 1421) field to Yes. You can use Reference Data Center to create and edit securities. Otherwise, if you use Issue Viewer, you can use the entry panels for fixed income securities.
Set Up Corporate Actions
The system can identify amounts representing prepayment fees/acceleration fees/make-whole call provision amounts on disposition transactions of bonds that are called above or below par value.
When you create a corporate action announcement for a call or principal repayment, you can indicate whether to apply the income/prepayment fee treatment to transactions associated with that announcement. The following fields in the Create Calls/Put/Refund panel are related to use of the income/prepayment fee treatment. For general information about this panel, see Manage Call, Put, and Prerefund Corporate Actions.
Option | Tag | Description |
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| Private Placement | 1421 | Displays the security's Private Placement field value, A value of Y indicates that the security is a private placement |
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| . In order to add an announcement with a CA_CASH_CLOSE transaction type in this panel, a security must have its Call Flag, Put Flag, Muni Refunding Indicator, Lottery Flag, or Private Placement field set to Y. | ||
| Income/Prepayment Fee Treatment | 16739 | Indicates whether the selected call or principal repayment is eligible for the system to apply the income/prepayment fee treatment. The income/payment fee treatment supports the |
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National Association of Insurance Commissioners (NAIC) accounting requirements relating to prepayment penalties, acceleration fees, and make-whole call provision fees on bonds. |
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The system applies this accounting treatment during corporate action processing only if the transaction's accounting basis also has the Income/Prepayment Fee Treatment field set to enable processing for selected type of corporate action. This field appear only if you set the Corporate Action Type field to Call or Principal Repayment. Options include:
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Process Corporate Actions
When Eagle Accounting processes corporate actions for entities with the Income/Prepayment Fee Treatment field set to All, Calls Only, or Principal Repayments Only, it compares the accounting basis-level setting to the corporate action-level setting of the Income/Prepayment Fee Treatment of Call, Principal Repayment, or None. It applies the income/prepayment fee treatment only to those call or principal repayments that are eligible for the treatment at both the entity and corporate action transaction levels.
For corporate action transactions that qualify for the income/prepayment fee treatment, Eagle Accounting calculates these values as follows:
Local Security Gain/(Loss) = Par Value – Local Amortized Cost
Base Security Gain/(Loss) = (Par Value / Trade Date FX Rate) – Base Amortized Cost
Local Income/Prepayment Fee = Local Proceeds – Par Value
Base Income/Prepayment Fee = Base Proceeds – (Par Value / Trade Date FX Rate)
Local Principal Cash = Par Value
Base Principal Cash = Par Value / Trade Date FX Rate
Local Income Cash = Local Traded Interest + Local Income/Prepayment Fee
Base Income Cash = Base Traded Interest + Base Income/Prepayment Fee
Reporting
Eagle
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's core accounting standard report package reflects realized security gain/loss and prepayment fees/acceleration fees/make-whole call provision amounts on calls and principal repayment transactions of fixed income securities in entity bases
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- INC_REPAY_FEE_LOCAL. Tag 16741.
- INC_REPAY_FEE_BASE. Tag 16742.
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that elect this treatment.
Eagle's Insurance reports and schedules also reflect this accounting treatment. The Prepayment Penalty and Acceleration Fee disclosure displays a count of the number of positions and the aggregate amount of income for securities sold, redeemed or otherwise disposed of, which generate investment income as a result of a prepayment penalty and/or acceleration fee.