Vermont Commissioner Appointed, New Florida CFO Expected Soon

Vermont Governor Phil Scott has appointed Kaj Samsom as Commissioner of the Department of Financial Regulation (DFR). Samsom has private and public sector experience, including a variety of positions at DFR. Acting Commissioner Sandy Biggelstone had been appointed in December 2024 to fill a vacancy.

With the election to Congress of previous Florida Chief Financial Officer Jimmy Petronis, Gov. DeSantis will appoint a replacement, a decision reportedly coming soon.

Financial Services Committee Recommends Recission of Biden-Era FSOC Guidance

On April 1, 2025, House Financial Services Committee (HFSC) Chairman French Hill (R-AR), along with HFSC members, sent letters to various agencies requesting the rescission, modification, or re-proposal of specific Biden administration actions. In particular, Rep. Hill and the subcommittee chairs sent a letter to Treasury Secretary Bessent, who serves as Chair of the Financial Stability Oversight Council (FSOC), regarding FSOC’s approval of (1) updated guidance on its determination process for designating nonbank financial companies (“Nonbank Designations Guidance”); and (2) a new analytic framework for identifying, assessing, and responding to financial stability risk.

With respect to the Nonbank Designations Guidance, the letter argues that the updated guidance “abandon[s] responsible changes to the designation process made in 2019 and bring[s] back an Obama-era focus on entity specific designation, as opposed to a more tailored focus on certain activities.” The letter further attacks the updated guidance’s stance that FSOC need not conduct a cost-benefit analysis before designating a nonbank as systemically important. Arguing that abandoning a cost-benefit analysis “allows FSOC to be an undisciplined roving regulator,” the letter asks FSOC to rescind the updated guidance and restore cost-benefit analysis to the designation process.

In a letter to SEC Acting Chairman Uyeda, policymakers recommend the withdrawal of 14 final and proposed rules that “have made the US capital markets less attractive to existing and potential public companies.” President Trump’s nominee to lead the SEC, Paul Atkins, has characterized some Biden-era SEC regulations as overly burdensome and stifling capital formation.

NAIC Updates

The CLO Ad Hoc Group call on April 2, 2025, consisted mostly of updates from Eric Kolchinsky (NAIC). Notably, Kolchinsky highlighted that the Structured Securities Group (SSG) has not received any feedback on the probabilities proposed late last year. Multiple industry stakeholders suggested that the more severe scenarios are too punitive, and Kolchinsky urged interested parties to provide feedback or an alternative proposal (either publicly or confidentially). Dan Castaline (Athene) raised a conceptual question regarding the de facto “arbitrage gap” in the current model, including how equity is valued over the life of a CLO. Kolchinsky emphasized that the SSG does not have a way to mark assets to market, and Kevin Clark (IA) described how residuals are measured under statutory accounting principles.

Meanwhile, the American Academy of Actuaries continues to hold weekly calls that now include Kolchinsky. Steve Smith (Academy) provided an update on its work to identify Comparable Attributes to assign risk to collateralized loan obligations (CLOs), which was similar to the report given at the National Meeting. The SSG’s next step is to analyze and model 2024 deals. A call is anticipated in the next month or two.

In other CLO news, the NAIC’s Capital Markets Bureau issued its latest primer, which is on middle market collateralized loan obligations (MM CLOs). The primer highlights the significant credit enhancements and spread that MM CLOs benefit from but also notes a lack of secondary market and limited transparency into the asset class. The Capital Markets Bureau highlights that MM CLOs are becoming a larger proportion of the overall CLO market, especially as the private credit market continues to expand. Finally, the report outlines how MM CLOs are classified for statutory accounting purposes; a MM CLO typically will fall within the asset-backed security (ABS) category and will receive bond treatment if it meets the substantive credit enhancement requirement.

In other NAIC news, the Financial Examiners Handbook Technical Group adopted changes to the Financial Condition Examiners Handbook (FCEH) related to insurance departments’ use of contractors to conduct financial analysis and examination projects. Because the changes had already gone through an exposure and comment period at the Risk-Focused Surveillance Working Group, the technical group adopted the changes without any discussion or exposure.

The technical group also walked through its 2025 project list, which includes a request for guidance surrounding the Summary Review Memorandum. NAIC staff was directed to draft proposed guidance utilizing sound practices that have been developed by the financial exam peer review group. Finally, the technical group exposed two minor changes to the FCEH: (1) specifying the timing of notice of an upcoming examination that a Lead State should provide to other domestic states; and (2) providing updated Examiner-In-Charge guidance. Comments are due April 30.

On April 2, the Life and Annuity Illustration Subgroup exposed by email a draft APF reflecting proposed modifications to Section 7 (related to basic illustrations) of Actuarial Guideline (AG) 49 for comment through June 30. At the Life and Annuity Task Force meeting in Indianapolis, Rachel Hemphill (TX) reported observations that companies were supplementing their indexed universal life illustrations with comparisons between the AG 49-A maximum illustrated rates and historical averages that exceeded those rates, including indices that did not exist over the associated historical period. Regulators expressed concern that these practices limit the effectiveness of AG 49-A’s maximum illustrated rate requirements.

The draft APF attempts to address this issue and does the following: (1) clarifies that only a table for the Benchmark Index Account can show the minimum and maximum of the geometric average annual credited rates; (2) increases the historical period from 20 to 25 years; (3) for an index or indices in existence fewer than 25 years, the historical period is limited to the length of its existence or the date the index was created (irrespective of when the underlying components were created); (4) requires the table to include the historical geometric average return for the historical period shown; and (5) prohibits the basic illustration and supplemental illustration from including historical returns other than those required in Section 7.A.ii and 7.A.iii, and tables and disclosures that explicitly or implicitly compare historical returns and maximum illustrated rates.

IAIS Updates

On April 3, 2025, the International Association of Insurance Supervisors (IAIS) held a public background session on its draft Issues Paper on Structural Shifts in the Life Insurance Sector—currently out for consultation through May 19. Dieter Hendrickx (Chair, IAIS Macroprudential Committee), Monica Ruggiero (Chair, IAIS Macroprudential Supervision Working Group), and Videshree Rooplall (IAIS Senior Policy Advisor) provided a high-level overview of the issues paper and consultation process.

Several interested parties requested an extension of the comment deadline given the paper’s substantive heft, but the IAIS secretariat said that is unlikely. The IAIS encouraged stakeholders to provide their most important comments by the May 19 deadline and suggested there will be additional opportunities for stakeholder engagement throughout the year (such as a potential session during the virtual Global Seminar in July).

In other IAIS activity:

• Director Eric Dunning (NE) and Alessia Angelilli (Italy) have been appointed to the IAIS Executive Committee.
  
• Carrie Mears (IA) is the new Vice Chair of the Macroprudential Supervision Working Group (MSWG), serving alongside existing Vice Chair Carin Hamnell (UK PRA). The MSWG is the primary drafter of the structural shifts issues paper.
  
• The final Application Paper on the supervision of climate-related risks in the insurance sector (a culmination of the previous three consultation packages) will be published this month. A public background session is scheduled for April 28 at 7:00 am ET.

Privacy Updates

Democratic senators have introduced the Privacy Act Modernization Act of 2025, aimed at strengthening the 1974 Privacy Act. The bill (1) increases civil and criminal penalties for violations of the Privacy Act of 1974; (2) strengthens court authority to stop programs and actions while lawsuits are pending; (3) modernizes the law to cover information that identifies or is linked (or reasonably linkable) to an individual or device; (4) limits information sharing to the minimum amount necessary; and (5) narrows the routine of data sharing to what is “appropriate and reasonably necessary.”

In state privacy activity:

• The California Privacy Protection Agency published an updated draft of its proposed automated decision making technology regulation.
  
• Maine:LD 1224/HP 799 is substantially similar to the previously introduced Maine Consumer Data Privacy Act (LD 1088/HP 710), with notable revisions to definitions, data minimization provisions, and sensitive data provisions. From July 1, 2026, to December 31, 2027, the act will apply to persons who conduct business in Maine that produces products or services that are targeted to residents of Maine and that during the preceding calendar year: (1) controlled or processed the personal data of not less than 100,000 consumers, excluding personal data controlled or processed solely for the purpose of completing a payment transaction; or (2) controlled or processed the personal data of not less than 25,000 consumers and derived more than 25% of gross revenue from the sale of personal data. Starting in 2028, the threshold for the number of consumers whose personal data is controlled or processed will be reduced to 50,000. The act contains exemptions for financial institutions and affiliates under the Gramm-Leach-Bliley Act (GLBA) and protected health information under HIPAA.
  
• North Carolina: The Consumer Privacy Act (SB 757) applies to controllers or processors of data who (1) conduct business in North Carolina or produce a product or service that is targeted to consumers who are residents of North Carolina; (2) have annual revenue of $25 million or more; and (3) either (i) during a calendar year, control or process the personal data of 100,000 or more consumers; or (ii) derive over 50% of the entity’s gross revenue from the sale of personal data and control or process the personal data of 25,000 or more consumers. The act contains entity- and data-level exemptions for covered entities and financial institutions subject to HIPAA and Title V of the GLBA.
  
• Wisconsin:SB 166 applies to persons who conduct business in Wisconsin or produce products or services that are targeted to residents of Wisconsin and who either (1) during a calendar year, control or process the personal data of at least 100,000 consumers; or (2) control or process the personal data of at least 25,000 consumers and derive over 50% of gross revenue from the sale of personal data. The act contains entity- and data-level exemptions for covered entities and financial institutions subject to HIPAA and Title V of the GLBA.