Legal Seminar Hotel Reservation Period Ends Today
The deadline for reservations at the Ritz-Carlton, Washington, D.C., host hotel for NOLHGA’s 2025 Legal Seminar, is today, July 3. After today, NOLHGA can no longer guarantee the special rate of $329/night plus tax. If you have not booked your room(s) for the Seminar or MPC meeting, we encourage you to do so as soon as possible.
NOLHGA’s 2025 Legal Seminar will be held on July 24–25, with an MPC meeting on July 23. The Legal Seminar/MPC meeting website offers online hotel reservations as well as registration for both meetings, speaker bios for Seminar speakers, schedules for both meetings, and more.
Registration for the Legal Seminar is $950, and guests can attend meals and social functions (but not the Seminar itself) for $125. There is no fee to attend the July 23 MPC meeting, but some sessions will be restricted to guaranty association representatives only. Please note that Legal Seminar attendance is in-person only. The July 23 MPC meeting offers both in-person and virtual attendance.
If you have any questions about the Legal Seminar or MPC meeting, please contact Sean McKenna. If you have any trouble accessing the meeting website, please contact Dan Hicks.
Staff Contact - Sean McKennaNAIC Updates
At its June 23, 2025, meeting, the RBC Investment Risk and Evaluation Working Group discussed comments received on the ACLI’s proposal to harmonize the risk-based capital (RBC) charges for certain bond funds and whether such proposed changes should be incorporated into the health and P&C RBC formulas. The ACLI proposed certain principles for consistent RBC treatment for bond exchange-traded funds (ETFs), bond mutual funds, and bond private funds that bear substantially the same economic risks regardless of legal form.
NAIC staff was directed to develop an RBC proposal, which was exposed at last week’s meeting. NAIC staff decided not to completely align RBC treatment for private bond funds “given the relatively more opaque structure of the private funds.” The proposal is exposed for a 30-day comment period ending July 23. The working group will send referrals to the Health and P&C RBC Working Groups to determine whether those formulas should be updated as well—something that almost all commenters supported. At the end of the call, Phil Barlow (Chair – DC) reported that the American Academy of Actuaries is scheduled to provide an update on its collateralized loan obligation (CLO) work on a September 8 working group call.
Following a presentation from the American Academy of Actuaries on its proposed Historical and Future Mortality Improvement (FMI) proposals, Life Actuarial Task Force Chair Rachel Hemphill (TX) exposed a handful of questions for interested parties. The Academy’s recommendations to change the basis for measuring Historical Mortality Improvement (HMI) could have a material impact on HMI. Responses are due July 25. The Society of Actuaries needs to post the HMI and FMI scales by September for use in 2026.
At the end of the call, Dave Wolf (NJ) said he wanted to learn more about the sensitivities of the investment guardrails in VM-22, particularly those related to group annuities supporting pension risk transfer (PRT) business. He said his goal is to “reduce incentive for companies to reinsure the business offshore.” Wolf recognized valid reasons for ceding business offshore but stated that regulatory arbitrage should not be one of them. No formal proposal was made, but Wolf said he is asking for the industry’s assistance in providing information and data to further study the sensitivities. Specifically, Wolf asked that the industry provide input and comparative results using the principles-based reserving (PBR) guardrails, the previous Academy proposal, and the company’s actual investment guidelines.
Task Force Chair Hemphill reminded task force members that regulators had previously asked the ACLI to provide additional information regarding the impact of using the VM-22 guardrails in VM-20 and VM-21. Brian Bayerle (ACLI) suggested that they would be happy to look at PRT while performing this review but noted that it probably makes sense to wait until the December 31, 2024, Generator of Economic Scenarios (GOES) scenarios are available. This topic likely will be further addressed at the Summer National Meeting.
The Macroprudential Working Group (MWG) published an updated status tracker of the regulatory responses to the 13 Regulatory Considerations Applicable (But Not Exclusive) to Private Equity. Notably, 12 of the 21 workstreams have been deemed “addressed and closed.” The most notable update is that the MWG has provided regulator-only reinsurance education programs this year (as previewed in its 2025 work plan).
Florida Commissioner Michael Yaworsky has been named Chair of the Innovation, Cybersecurity, and Technology (H) Committee. D.C. Commissioner Karima Woods remains a Co-Vice Chair, with the other Vice Chair spot pending.
Staff Contact - Sean McKennaIAIS Updates
On June 26, 2025, the International Association of Insurance Supervisors (IAIS) published the Global Insurance Market Report (GIMAR) mid-year update. The update reflects the interim findings of the 2025 Global Monitoring Exercise (GME) based on data collected up to June 2025. The paper details the key themes from the 2025 GME, which indicate current supervisory priorities:
- Geoeconomic fragmentation impacting insurers’ management of assets and liabilities: The paper identifies trade tensions, conflicts, and isolationist policies as the most significant geopolitical risks with the potential to impact the financial sector. Under this theme, the IAIS will focus on “potential transmission challenges to insurers,” with a particular focus on credit risk, foreign exchange risk, liquidity risk, interest rate and market risks, and underwriting risk.
- Insurers’ increased investment in private credit: The report lists diversification, access to illiquidity premium, and stable long-term cash flows as benefits of private credit; however, the paper also identifies several risks: (1) credit, concentration, and counterparty risks; (2) liquidity risk; (3) valuation and market risks; (4) governance; and (5) systemic risk amplification. The paper notes that IAIS analysis of trends and changes in asset allocations will be informed by individual-insurer and sector-wide monitoring, as well as insights from the draft Issues Paper on structural shifts in the life insurance sector.
- Insurers’ adoption and governance of AI: The GME will explore global trends in insurers’ adoption and governance of artificial intelligence (AI), focusing on two dimensions: (1) own risk—the need for insurers to mitigate risks with effective governance and risk management when deploying new uses of AI; and (2) balance sheet implications—insurers need to consider the impact of AI on asset valuation and underwriting risk. (The paper notes AI’s potential to materially change markets and disrupt certain economic sectors.)
In other IAIS news, the organization held a public background session on June 27 on the Individual Insurer Monitoring (IIM) assessment methodology consultation, which is out for comment until August 18. The IIM assessment methodology, as part of the GME, is reviewed every three years. Any changes incorporated as a result of the consultation will be applicable for the 2026–2028 GME cycle. The IAIS walked through the following proposed changes:
- Insurer pool selection criteria: Adjusts the total asset thresholds to account for inflation, which would make the new selection criteria as follows: Total assets greater than USD 70 billion (currently 65) and premiums from outside the home jurisdiction greater than or equal to 5%, or total assets greater than USD 235 billion (currently 215) and premiums from outside the home jurisdiction greater than 0%. To improve regional balance and diversity, it would also encourage the inclusion of insurers with assets greater than USD 55 billion (currently 65) and premiums from outside the home jurisdiction greater than or equal to 5%. The IAIS clarified that this is not linked in any way to the criteria used to determine whether an insurer is an internationally active insurance group (IAIG).
- Level 3 assets indicator: Expands the definition of Level 3 assets to include Level 3 physical real estate holdings and assets held at cost that would qualify as Level 3 under fair value. These changes are intended to reduce the observed impact of accounting changes (IFRS) on indicator scores and allow for more consistent accounting treatment across jurisdictions.
- Asset liquidation indicators’ adjustment factors: Stakeholders have reported that asset liquidation scores may not adequately reflect insurers’ ALM practices, so the IAIS proposes using the Insurance Liquidity Ratio (ILR) to adjust the scores for these indicators. Multipliers will be applied for low ILR values, and haircuts for high ILR values. The IAIS explained that ILR takes ALM into account very well and has good reporting quality, which is why it was chosen over other metrics such as the company projection approach.
- Intra-financial assets and liabilities indicators: Changes are intended to simplify how derivative exposures are accounted for (currently contributing to several indicators) and reduce reporting complexity and data burden. The IAIS proposes to (1) remove Potential Future Exposure of OTC derivatives from intra-financial indicators and instead include it in short-term funding; (2) combine exclusions from borrowing in the intra-financial liabilities (IFL) indicator into a single row; and (3) include combined other borrowing into the ILR.
- Indicators’ weighting: Because indicators are being revised, the weighting of the indicators (how they contribute to systemic risk scores) also requires changes. The proposed adjustments would reduce the weight of Level 3 assets, increase the weight of short-term funding within the asset liquidation category, and shift part of the weight of “number of countries” to “revenues outside home country.”
- Denominators: Denominators are currently based on 2018 data; all will be updated based on more current data.
AI Activity
The UK’s Financial Conduct Authority recently released its approach to regulating AI in the financial services sector. This Faegre Drinker report provides a detailed summary.
Staff Contact - Sean McKennaPrivacy Updates
Texas Governor Abbott signed SB 2121, amending the Texas Data Broker Law’s definition of “data broker.” The changes to the definition (1) remove the requirement that the sale of data be the entity’s principal source of revenue; and (2) modify the act’s applicability section to apply to data brokers that, in a 12-month period, derive (a) more than 50% of the data broker’s revenue directly from processing or transferring personal data not collected by the data broker directly from the individuals to whom the data pertains, or (b) revenue directly from processing or transferring the personal data of more than 50,000 individuals not collected by the data broker directly from the individuals to whom the data pertains. Financial institutions subject to Title V of the Gramm-Leach-Bliley Act (GLBA) are still exempt from the act.
Aflac was sued in Georgia federal court over allegations that it failed to safeguard customers’ personally identifiable information and protected health information during a data breach discovered on June 12, 2025.
The Electronic Privacy Information Center released a report titled Assessing the Assessments: Maximizing the Effectiveness of Algorithmic & Privacy Risk Assessments. The report details ideal elements of a risk assessment framework to provide transparency and accountability for consumers and contains an analysis of the California Privacy Protection Agency’s ongoing development of risk assessment rules and proposed automated decision-making system regulations under the California Consumer Privacy Act.
Staff Contact - Sean McKenna