Federal Updates

On September 24, 2026, the NAIC issued a press release announcing its response to Senator Elizabeth Warren’s (D-MA) September 10 letter requesting information about state regulators’ approach to the regulation of private assets (and related issues). The NAIC stated that it welcomes appropriate coordination and information sharing with federal policymakers, but noted that Congress has long recognized states as the primary regulators of insurance. The NAIC’s response highlighted the history that led to the current investment landscape and regulators’ response to the changes (both at a group and individual company level). The letter does not identify any new NAIC workstreams stemming from recent headline activity (or Senator Warren’s inquiries), instead highlighting the following developments over the last four years:

• The principles-based bond definition
• The Securities Valuation Office (SVO)/regulator challenge framework on rating agency ratings
• The requirement to submit private letter rating (PLR) rationale reports
• The rating agency due diligence framework
• AG 53 and AG 55
• Enhanced reporting of private placement investments (beginning with year-end 2026 reporting)
• Revisions to the treatment of collateralized loan obligations (CLOs) and residual tranches
• Expanded affiliate and related party reporting
• Enhanced review of affiliated investment management agreements (IMAs)
• The Holistic Investment Framework

In response to a question regarding guaranty system exposure to credit risks, the NAIC noted state insurance regulators specifically considered guaranty association coverage for pension beneficiaries in pension risk transfer (PRT) transactions against the Pension Benefit Guaranty Corporation’s protections. Citing NOLHGA’s study and other research reviewed during the Macroprudential Working Group’s review of the issue, regulators concluded that guaranty associations provide adequate protection for PRT business and closed the relevant workstream. The NAIC expressed deference to NOLHGA and individual states regarding quantitative analysis, specifically relating to guaranty association exposure to private credit risk.

NAIC Updates

The NAIC Capital Markets Bureau published two Special Reports on September 25, 2026: Private Credit Analysis of the U.S. Insurance Industry and U.S. Life Insurers’ Affiliated Investments at Year-End 2025. Coming on the heels of the NAIC’s response to Senator Warren, the reports add to a flurry of recent NAIC activity on private credit and underscore regulators’ efforts to publicly demonstrate their monitoring of insurers’ private credit exposure.

Regulators will address several important substantive topics over the next few weeks, including:

• October 1 – Credit Rating Provider Working Group: Discuss and consider exposure of the revised Credit Rating Provider Due Diligence Framework
• October 6 – Life RBC Working Group: Receive comments on its exposure related to recapture risk charge for business ceded to non-reciprocal jurisdictions
• October 6 – Financial Analysis Solvency Tools Working Group: Discuss comments received on proposed revisions to the Financial Analysis Handbook (addressing topics such as cybersecurity, private asset exposures, unauthorized reinsurance, and corporate divisions/insurance business transfers)
• October 7 – Financial Stability Task Force: Discussion of the interconnectedness work plan (this workstream was announced at the Summer National Meeting as part of the Macroprudential Working Group’s report)
• October 8 – Big Data and AI Working Group: Discuss comments received on the AI Risk Evaluation Supplement version 5.0
• October 8 – RBC Model Governance Task Force: Discuss comments received on the initial list of potential gaps and Steering Group structures

On September 24, the Annuity Buyer’s Guide Working Group reviewed comments on its draft Buyer’s Guide on Deferred Annuities. Lauren Van Buren (Chair, WI) said commenters broadly agree on the guide’s purpose but disagree on how much detail should be included. Regulators praised the nature of the comments received, noting that all will be considered when developing the next version, which is expected to reflect extensive revisions to both content and format.

• Interested Consumer Comments: Peter Gould (a consumer and annuity holder) proposed 13 additions to the guide, which are noted in his letter. They cover: choosing an agent and checking the agent’s licensing and disciplinary record; evaluating the insurer’s financial strength, complaint history, and ownership structure; ongoing monitoring of the insurer and the policy; the lack of FDIC coverage and the limits of state guaranty associations; the effect of insurer insolvency on guaranteed benefits; permitted accounting practices; general account versus separate account protection; and offshoring, domicile shopping, and counterparty risk. Gould also called for earlier delivery of the guide and for consumer testing before rollout.
• Regulator & Consumer Advocate Discussion: Regulators and Brenda Cude (consumer representative) focused on balancing readability with the information needed to explain complex products. Anita Fox (MI), working with Cude, submitted edits that simplify the language and strengthen consumers’ rights after purchase. Matt Gendron (Vice Chair, RI) and Cude both suggested a need for supplemental education, such as a social media campaign or an online-only “shopper’s guide.”
• Academy & Industry Comments: The American Academy of Actuaries raised a compliance concern about insurance-only agents presenting materials that reference registered products. The Joint Trades (the Insured Retirement Institute (IRI), ACLI, CAI, and National Association for Fixed Annuities (NAFA)) focused on consistent terminology and a fuller discussion of lifetime income. The trades also asked the working group to confirm that the final guide replaces all prior versions and meets state requirements, noting the wide variation in how states reference the guide. The Federation of Americans for Consumer Choice (FACC) expressed support for the Joint Trades' comments.

International Developments

The International Monetary Fund (IMF) published its 2026 Financial Sector Assessment Program (FSAP) Review, which the Executive Board broadly supported, with reforms to make the program “more agile, focused, and impactful.” The reforms respond to growing interconnectedness among nonbank financial institutions (NBFIs), banks, and market infrastructures, as well as concerns about private credit, offshore hedge funds, and private equity–owned insurers. Two reforms are particularly notable:

• More tailored, risk-based coverage, which sharpens focus on NBFIs and private credit: Mandatory assessments would keep their three pillars (risk analysis, policy frameworks, and crisis management), but staff could tailor the depth of selected pillars, and the topics within them, based on a preliminary review of each jurisdiction’s financial system. FSAP coverage of NBFIs expanded after the 2021 Review, and future FSAPs would go further, prioritizing lesser-understood NBFI activities and, for complex financial systems, deepening analysis of hedge funds, private credit funds, and private equity–owned insurers. A supplemental NBFI Risk Assessment (see p.119 of the Review) sets out operational priorities for FSAPs, including giving greater attention to liquidity, derivatives, and margin-call risks at insurers and pension funds. It also flags asset-intensive reinsurance by life insurers as an area where capital relief “can exceed effective risk transfer and enable regulatory arbitrage.” On private credit, the paper notes that FSAPs have not yet assessed it as a stand-alone risk, but that its rapid growth in some jurisdictions calls for closer attention; where material, it would be assessed through enhanced bank stress tests and interconnection analysis rather than a standardized tool.
• A revised SIFS methodology that scopes in the Cayman Islands: The IMF would make its method for identifying jurisdictions with systemically important financial sectors (SIFS) more risk-based, raising the bar for the five-year mandatory cycle, and allow staff judgment to account for data gaps and systemically important financial market infrastructures. The SIFS list would shrink from 47 to 42 jurisdictions, with 21 (including the United States) on the five-year assessment cycle, down from 32. Resources freed up by the shorter list would be redirected, including to voluntary assessments, which currently face two- to three-year waits. Notably, the updated list would add the Cayman Islands to the 10-year assessment cycle, with staff citing its role as home to many global asset managers and crypto exchanges and its growing portfolio links with the rest of the world. Mandatory assessments are normally tied to a jurisdiction’s Article IV consultation (the IMF’s regular review of a member’s economic and financial policies), which the Cayman Islands, as a British Overseas Territory, does not have separately. The IMF would therefore amend its rules for mandatory assessments so that Cayman’s assessment cycle is not tied to one and would engage with the relevant authorities on how to follow up on the assessment’s recommendations, with staff proposing to do so through the U.K.’s Article IV consultation.

According to a new report from the Geneva Association, geoeconomic fragmentation is gradually extending into finance, and the authors view the evidence as increasingly pointing to a lasting structural shift in the financial system rather than a temporary disruption. The report considers international insurance markets as likely to remain viable but cautions that without adjustments by firms and authorities, these markets could become less efficient, more regional, and more susceptible to financial strain. Its scenario analysis suggests that gradual fragmentation, even if broad-based, would have manageable but undesirable consequences for (re)insurers, whereas fragmentation coinciding with a major market shock would act mainly as an amplifier of losses. The report identifies life insurers as particularly vulnerable to unexpected duration and liquidity mismatches. To adapt, the authors suggest that (re)insurers pursue what they call “resilient regional optimisation” by pre-positioning capital and liquidity in key jurisdictions, building fragmentation scenarios into stress tests, and treating geopolitical risk as a board-level priority. The report also encourages insurers to diversify reinsurance counterparties across jurisdictions. For policymakers, the report calls for balancing domestic resilience against the benefits of cross-border risk sharing, including by maintaining equivalence and mutual recognition arrangements, strengthening supervisory information-sharing, and preserving the interoperability of cross-border payment systems.