NAIC Updates

On April 17, 2025, the NAIC’s Capital Markets Bureau (CMB) issued a special report on the increase in insurers’ outsourcing of investment management to unaffiliated investment managers. According to the report, outsourcing of investment management services increased by 2.5% in 2024. The CMB recognizes that investment in nontraditional, higher-yielding alternative investments requires specific expertise and infrastructure that some companies do not have in-house.

Small insurers continued to account for the largest number of insurers that outsourced investment management to unaffiliated investment managers. Property and casualty companies accounted for the largest company type that outsourced, at 58% of the total in 2024, which was the same as year-end 2023. The report also recognizes the increase in larger insurers’ acquisitions or joint ventures with private equity–owned firms, particularly among large life companies—thus reducing the need to outsource investment management to nonaffiliates.

In other news, the NAIC’s VM-22 Subgroup discussed the last of its remaining items (for now) on its April 16 call, taking the following actions:

• Tabled Discussion on Reserving Category for Deferred Annuities with GLBs and Depleted Fund Value: The current draft places deferred annuities with guaranteed living benefits (GLBs) in the accumulation reserving category, even when the fund value depletes. The subgroup has been weighing whether it should instead be in the payout reserving category. This is less of an issue considering the recent decision to permit aggregation of payout and accumulation annuities but still needs to be addressed for companies that may not meet the criteria for aggregation. The subgroup tabled the issue and will discuss whether changes need to be made for the 2027 Valuation Manual.
  
• Removed Automatic Exclusion for Payout Annuities from the Stochastic Exclusion Test: The subgroup voted to remove the automatic exclusion provision related to payout annuity exemption reserves. This can be revisited if the subgroup determines during the transition period that changes are needed.
  
• Replaced the Deterministic Certification Option with a Single Scenario Test: The subgroup voted to incorporate Rachel Hemphill’s (TX) proposed language that creates a Single Scenario Test (replacing the Deterministic Certification Option). The revisions are supported by the ACLI and are conceptually similar to the ACLI’s suggestions.
  
• Added Guidance Note on LATF SPA Referral: The subgroup’s decision to make the Standard Projection Amount (SPA) disclosure only was recently discussed by the Life Actuarial Task Force (LATF) in light of regulator requests to enhance disclosure requirements. LATF issued guidance directing the subgroup to implement a number of requirements and clarifications, which the subgroup agreed to reflect in a guidance note in the next draft. The guidance note clarifies that the requested changes cannot be contemplated in time for the 2026 Valuation Manual but will be addressed in the 2027 Valuation Manual. The subgroup will begin work on these items later this year.

The subgroup will expose all updated drafts (VM-22, VM-22 Supplement, VM-31, and VM-G) through May 9; the drafts will include redline edits to show the changes made since the last exposure based on subgroup discussions and the field test. The subgroup intends to vote on a final recommendation to the LATF on its May 27 call.

The International Insurance Relations (G) Committee will meet on May 22 at 4:00 p.m. Eastern Time to discuss comments on the International Association of Insurance Supervisors (IAIS) draft Issues Paper on structural shifts in the life insurance sector. Materials will be circulated before the call.

  Staff Contact - Sean McKenna

Global Insurance Symposium Held Last Week

The Global Insurance Symposium (GIS) was held April 15–16 in Des Moines, Iowa. The agenda generally focused on life and annuity issues and innovation. Perspectives shared at the event demonstrated consistent messaging among stakeholders identifying retirement security as a challenge and the need for capital to address the issue:

• A pension risk transfer (PRT) panel brought together voices from Athene, Mass Mutual, and Principal, all of whom touted the value and safety of PRTs and the need for capital to accomplish them.
  
• Carrie Mears (Chief Investment Specialist for the Iowa Division of Insurance) and Gerald Gakundi (Deputy Managing Director and Head of Insurance and Investment Funds at the Bermuda Monetary Authority) emphasized jurisdictional cooperation.

  Staff Contact - Sean McKenna

Privacy Updates

The NAIC submitted a response to the House Energy & Commerce Committee’s Request for Information on Data Privacy and Security. The letter highlights the NAIC’s Insurance Data Security Model Law, ongoing efforts to enhance model privacy protection laws, and its work on responsible AI governance. The NAIC cautioned that federal preemption in the areas of data privacy, data security, and AI oversight (without a Gramm-Leach-Bliley Act (GLBA) carve out) would “disrupt a well-established system” and urged Congress to recognize the success of state-led regulatory efforts.

The National Institute of Standards and Technology (NIST) released a draft update to the NIST Privacy Framework. The update contains targeted revisions to the “Core” section, a new section on AI and privacy risk management, and a relocation of the Privacy Framework’s use guidelines to the web. NIST is accepting public feedback on the draft until June 13, 2025.

In state activity:

• Eight state regulators have formed the Consortium of Privacy Regulators, a bipartisan effort to collaborate on the implementation and enforcement of their privacy laws with the shared goal of protecting consumers. Members include the California Privacy Protection Agency and state Attorneys General from California, Colorado, Connecticut, Delaware, Indiana, New Jersey, and Oregon.
  
• The Massachusetts Legislature’s Joint Committee on Advanced Information Technology held a hearing to discuss a range of comprehensive and targeted privacy bills under consideration. The committee heard testimony on over a dozen bills.

  Staff Contact - Sean McKenna

Beth Byrne Passes Away

Elizabeth (Beth) Byrne, former Vice President and Counsel for Voya Financial and a longtime contributor to the guaranty system, passed away on April 11, 2025. She was 62. Her obituary can be found here.

Beth began her career at the ACLI, where she served as Senior Counsel in the State Relations Department, managing legislative and regulatory initiatives impacting the life and health insurance industry. She later served as Senior Vice President with the Life Insurance Council of New York (LICONY). She retired from Voya in 2024 after 17 years with the company.

Beth spent nearly two decades in the guaranty system, serving as Chair of the Connecticut, Minnesota, and West Virginia guaranty associations and also serving on the Boards of the Colorado, Iowa, and New York associations. She will be missed by many in the guaranty community.

NOLHGA extends our deepest sympathy to Beth’s family and friends.

  Staff Contact - Sean McKenna