NAIC Updates
Following up on its previous meeting, the Aggregation Method Implementation Working Group (AMIWG) recently received a presentation from Ned Tyrrell (NAIC) illustrating a recommendation to revise the Group Capital Calculation (GCC) template to allow regulators to apply alternative scaling bases to better interpret differences across regimes. The ACLI raised concerns about how the analysis might be interpreted or disclosed, particularly given uncertainty around confidentiality. Regulators emphasized that the analysis is derived from existing inputs, does not introduce new data, and is intended for internal supervisory use. The working group clarified that any regulator-selected scaling scenarios and resulting ratios would remain confidential, be used at the discretion of the group-wide supervisor, and would not be subject to public disclosure or International Association of Insurance Supervisors (IAIS) reporting. To further ease industry concerns, the recommendation was updated with the following language (the updates are underlined):
The GCC template should include the full calculation (including base and local average capital levels) of the scaled results for each entity category. This would be an automatic calculation using the same inputs as the current GCC; no further data would need to be filed. GCC results would (as always) be scaled to US capital levels but other bases may be used for analysis purposes on an entity category basis by the groupwide supervisor. This tool would be available to help regulators translate between capital ratios in the US as compared to other jurisdictions and thereby facilitate the use of AM/GCC as a common language. Any selections made in this table are at the discretion of the group-wide supervisor and would be used within the Supervisory College framework. The selections and resulting ratios would not be disclosed outside of the Supervisory College, are not subject to public disclosure requirements, and will be confidential similar to other analysis that regulators perform on the GCC.
The full set of recommendations for implementation of the insurance capital standard (ICS) via the AM was approved by AMIWG and will be considered by the International Insurance Relations (G) Committee at the Summer National Meeting. Becky Easland (Chair, WI) also announced that the working group will discuss an initial draft of the Final AM at the Summer National Meeting.
In other NAIC news, the Life RBC Working Group took the following actions on its June 11, 2026 call:
Adopted Proposal 2025-16-L MOD (Option 2): After months of discussion, the working group adopted changes to the current treatment of collateral loans. Currently, all collateral loans except those backed by mortgage loans receive a flat risk charge of 6.8. This workstream was designed to incorporate look-through treatment for all non-mortgage collateral loans. The working group adopted “Option 2” without incorporating the ACLI’s proposed changes, which will ultimately result in a tiered treatment based on the LTV of the collateral loan (with a 50% haircut floor). This change will not take effect until 2025 reporting.
Adopted Proposal 2026-01-L, which incorporates certain changes to the asset valuation reserve (AVR) for collateralized loan obligations (CLOs) that were recently adopted by the Blanks Working Group.
Adopted Proposal 2026-09-L, incorporating enhanced granularity in Schedule BA collateral loan reporting and integrating these classifications into LR008. It also clarifies that if insurers own collateral loans collateralized by mortgage loans but lack loan-level details, the investments should be categorized as “collateral loans – others” and reported in LR008. The working group incorporated the ACLI’s comments on this proposal.
Received a referral from the Investment Analysis Working Group related to residential mortgage loans. This referral stems from a presentation given at the Invested Assets Task Force meeting in March. The referral requests that the working group:
- Provide input on the potential RBC implications of mortgage loan exposures that, while currently classified as residential, may exhibit characteristics more consistent with commercial or development-type lending.
- Consider whether additional guidance or clarification may be warranted regarding the application of residential RBC factors, including additional reporting items required to differentiate variations in risk, including due to underlying borrower creditworthiness.
- Evaluate whether certain exposures, such as large multi-unit, development-stage, or transitional properties, may warrant alternative RBC treatment or additional risk stratification to better align capital requirements with underlying economic risk.
Received a notice of exposure from SAPWG on AVR for affiliated common stock.
The Life Actuarial Task Force (LATF) took the following actions during its June 11 meeting:
Adopted APF 2025-18 (VM-22 Deposit-Type Contracts) and APF 2025-20 (VM-22 Aggregation): APF 2025-18 clarifies that VM-22 requirements apply only to those deposit-type contracts within the scope defined in Section 2. APF 2025-20 permits aggregation between payout annuities and deferred annuities (accumulation annuities in VM-22). The adopted approach reduces earlier conditional constraints on aggregation and instead strengthens disclosure requirements in VM-31, including more detailed reporting of impacts across product types and reserve breakdowns by category.
Adopted the Group Annuity Mortality Experience Data Collection – Company Selection Memo: This memo sets forth the process NAIC staff and regulators have taken to identify the initial list of companies to participate in the group annuity data collection approved by LATF in April. Currently, 36 companies have been identified for inclusion on this initial list, but companies will be able to seek an exemption under the criteria laid out in VM-51. Note that companies scoped into the collection likely will be notified by the end of June.
Adopted APF 2025-14 (VA Scope Clarification), which clarifies that variable annuities in payout phase, either after annuitization or account value depletion, can be reserved for as a variable annuity under VM-21 with notice to (and non-disapproval by) the domiciliary regulator. If reserved for under VM-21, the Standard Projection Amount requirements apply to these contracts.
Adopted APF 2026-04 (CSO Clarification), which clarifies that references to the 2017 CSO Mortality Table in the Valuation Manual refer to the loaded version unless otherwise indicated and corrects information about the table’s location (available on the Society of Actuaries’ website).
On June 11, the Own Risk and Solvency Assessment (ORSA) Implementation Subgroup exposed (until July 13) what regulators view as less controversial edits to the ORSA Guidance Manual, informed by survey feedback. The revisions aim to clarify expectations around summary reporting, timing of ORSA submissions, discussion of overall and individual control processes, and alignment of material risks with capital allocation. The more complex or substantive survey comments will be addressed separately through a drafting group, which will be regulator-led at first.
A few key points from the discussion:
- Survey feedback supported a unified national filing date, and regulators noted a preference for receiving ORSA submissions before October 1, largely to support more efficient holding company analysis. They indicated that when filings are submitted later, regulators may need to revisit and integrate ORSA information into ongoing reviews. The subgroup has a survey out to gauge states’ respective filing dates, and in the meantime, the draft revisions include soft language encouraging early submission while acknowledging that filing deadlines vary by state.
- The revisions add language in Section 1 noting that insurers, before describing their ERM framework, are encouraged to describe “overarching issues” that affect the ORSA filing (especially those that influence risk categorization, stress testing, or capital assessment) and would be helpful for regulators to understand up front. One example of such an overarching issue is if the insurer is a Solvency II framework filer and much of the ORSA is based on Solvency II standards and capital structure. The subgroup intends to make a referral that includes additional examples and suggested changes to the Financial Analysis Handbook ORSA template.
- The ACLI requested additional clarity on regulator expectations regarding (1) the incorporation of “overarching issues”; (2) descriptions of overall and second line controls; and (3) allocation of capital by material risk. Regulators emphasized the need to avoid overly prescriptive guidance and suggested insurers engage directly with domiciliary regulators for tailored expectations.
The subgroup also agreed to publish a presentation clarifying the differences between the Group Capital Calculation (GCC) and ORSA capital to address regulator and industry confusion. The presentation highlights that ORSA is a forward-looking, principles-based, and company-driven assessment of risk and capital, whereas the GCC is a regulator-defined methodology, and compares how certain issues are addressed under both.
The Cybersecurity Working Group heard a presentation from NetDiligence highlighting its 2025 Cyber Claims Study, which analyzed more than 10,400 claims from 2020–2024. The data show that small and mid-sized enterprises drive most of the claim volume, while large organizations experience fewer but significantly higher-cost incidents. Ransomware and social engineering remain the dominant drivers of cyber risk, with phishing and business email compromise serving as common entry points across sectors such as professional services, manufacturing, and healthcare.
Activity is still trending upward, and attackers are increasingly exploiting weak identity and access controls, including gaps in multifactor authentication and help desk manipulation. Across the dataset, the vast majority of claims are criminal in nature and involve non-public data, with business interruption, fraud, and incident response costs continuing to drive financial impact. The discussion noted that AI-related risks are expected to emerge within cyber insurance claims, though they are not yet a major driver in current data. Specifically, NetDiligence flagged potential future liability tied to the use of AI systems.
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