Massachusetts GA Seeks Executive Director

The Massachusetts Life & Health Insurance Guaranty Association (MLHGA) is seeking candidates for its Executive Director position. The current Executive Director, Bill Fisher, will be retiring effective December 31, 2026, following a long and distinguished tenure with the association.

MLHGA is seeking an experienced leader with expertise in insurance products and regulation, insurer insolvencies, and/or guaranty association operations. The preferred start date for the selected candidate is September 2026.

Interested parties should contact MLHGA Board Chair John Deitelbaum at [email protected].

Federal Updates

The Federal Reserve’s May 2026 Financial Stability Report finds that U.S. financial system vulnerabilities remain moderate, with asset valuations elevated, business and household borrowing trending down relative to GDP, financial-sector leverage notable in pockets, and funding risks contained. The report notes that leverage at the largest life insurers remains well into the upper quartile of its historical distribution, and their reliance on nontraditional liabilities (such as funding-agreement-backed securities, Federal Home Loan Bank advances, and securities lending) continues to grow. According to the report, life insurers hold a significant proportion of illiquid assets (around 37% of total assets, compared to 14% for property and casualty insurers), further exposing them to liquidity and funding risks.

There are notable changes in the assessment of financial stability risks related to private credit compared to the November 2025 Financial Stability Report. Since November, market participants’ concerns over private credit have increased sharply, driven by increased investor redemption requests from certain nontraded business development companies (BDCs) and ongoing concerns about the credit quality of underlying assets. Additionally, the Federal Reserve revised its classification of nonbank financial institutions. New data enabled a reclassification of certain funds—previously grouped under “other financial vehicles”; “special purpose entities, CLOs, and asset-backed securities”; and “open-end investment funds”—into the “private equity, BDCs, and private credit” category. This modification notably increased the reported size and growth rate of bank loan commitments to this sector for 2025.

The report also details three risks considered most likely to interact with existing vulnerabilities and to pose near-term financial stability risks:

• The threat of cyberattacks and other cyber events, noting increased malicious activity and advances in AI as posing new challenges to the security and functioning of financial institutions and infrastructures
• The worsening of geopolitical tensions and conflict in the Middle East, which could drive inflation, an economic slowdown, and a broad pullback from riskier assets, increasing volatility in financial markets
• Continued increase in premiums for longer-term investments and higher-than-anticipated interest rates, potentially triggering asset price corrections and increasing debt-servicing costs for households, businesses, and governments

In other news, on May 8, Rep. Richard Neal (D-MA, Ranking Member of the House Ways and Means Committee) sent a letter to the Government Accountability Office (GAO) expressing concern about the growing role of private credit as an investment asset and the increasing access by retail and retirement investors as a result of recent regulatory and policy changes. The letter raises concerns about recent reports of private credit funds limiting investor redemptions and facing debt-rating downgrades, as well as broader issues involving valuation reliability, liquidity, transparency, fees, and potential conflicts of interest. The letter asks the GAO to study the extent of private credit exposure in defined-benefit and defined-contribution retirement plans, assess trends toward increased use, evaluate the benefits and risks for retirement savers and fiduciaries, consider potential conflicts of interests, and assess whether additional regulatory actions may be needed to help balance the associated risks and benefits.

On May 13, Sen. Elizabeth Warren (D-MA, Ranking Member of the Senate Banking Committee), sent a letter to Treasury Secretary Bessent and SEC Chair Atkins criticizing the “belated yet tepid” response to risks related to private credit and requesting answers to 22 questions on the topic by May 26. Sen. Warren notes Atkins’ refusal to characterize the private credit sector as carrying systemic risk and Bessent’s recent attempt at “monitoring” meetings (which would seem to include the one with insurance regulators last week). After noting “cracks in the system” related to defaults, valuation, and interconnectedness, she criticizes Bessent’s refusal to conduct stress tests on private credit–related shocks and the SEC’s role in regulatory initiatives to expose 401(k) investors to private credit and to reduce Form PF reporting requirements.

NAIC Updates

The NAIC held its 2026 International Insurance Forum in Washington, D.C., from May 7–8; for the first time, the event was hosted in partnership with the International Association of Insurance Supervisions (IAIS). There was a strong focus on regulatory clarity, consumer trust, and resilience against emerging threats, with evidence-based supervision and international collaboration seen as essential for supporting financial stability and policyholder protection. Key takeaways included:

• Private Credit: In a discussion with Commissioner Scott White (NAIC President, VA), Marc Rowan (CEO, Apollo Global Management) gave his perspectives on common misconceptions about private credit, emphasizing that most insurance exposure remains concentrated in investment-grade assets and that private and public debt share similar risk profiles and ratings. Rowan asserted that insurers and regulators have access to detailed information, and that private and public markets suffer from similar liquidity and pricing challenges. He stressed the importance of accurate understanding and definitions of private credit, prudent evaluation practices, and appropriate capital requirements based on genuine risk rather than arbitrary distinctions between public and private assets.
• Structural Shifts: Both the IAIS Leadership Dialogue and a panel moderated by Commissioner Houdek (WI) touched on how insurers and regulators are responding to the expanding insurer investment landscape, characterized by increased allocations to alternative assets and asset-intensive reinsurance. Participants discussed challenges such as valuation uncertainty, illiquidity, and concentration risks, alongside the need for advanced skills and governance among both insurers and regulators. In response to these trends, the IAIS is enhancing data collection, conducting systemic risk analysis, reviewing the sufficiency of existing supervisory materials, and strengthening collaboration with other international organizations such as the Financial Stability Board and International Monetary Fund. The Bermuda Monetary Authority touched on its evolving oversight practices, now requiring enhanced disclosure and strict approval processes for illiquid and affiliated assets. Robust risk management, stress testing, and increased transparency were identified as essential practices to ensure policyholder obligations are met.
• Insurance Capital Standard (ICS) & Aggregation Method (AM) Implementation: IAIS leadership reported that ICS and AM implementation efforts are progressing. The timing and methodology for ICS and AM assessments will be aligned, taking into consideration AM specifics. Notably, there was no discussion regarding the proposed supervisory reporting and public disclosure requirements for the AM.

In other NAIC news, on May 11, the RBC Investment Risk and Evaluation Working Group continued its discussion of the American Academy of Actuaries’ recommended approach for assigning capital charges to collateralized loan obligations (CLOs). The working group covered four main topics:

• Portfolio Adjustment Factor (PAF): The Academy has proposed two potential options for the inclusion of a PAF for CLO holdings. The PAF is used in the current C-1 framework for corporate bonds to reflect issuer diversification; a company with a bond portfolio that is more diversified than the representative portfolio will receive a reduced capital charge for its bond portfolio (the inverse is also true). For CLOs, the current Academy model contemplates a fully diversified portfolio. As such, any PAF for CLOs would increase the current proposed charge. Option 1 would incorporate a PAF of 1.00 (keeping the current charge as is). Option 2 would incorporate a tiered PAF for companies that hold 10 or fewer CLO issuances. Only a few companies hold a small number of CLOs; for those companies, CLOs make up a small percentage of their overall bond portfolio. Comments are due July 6.
• CRP Working Group Referral: In a follow-up to Kevin Clark’s (IA) comments during the working group’s previous call, the working group issued a referral to the CRP Working Group requesting additional investigation of rating agencies that use probability of default (PD)–only assessments for CLOs (see Attachment 2 of the Meeting Materials). According to the referral, the Academy’s modeling shows that a PD-only methodology does not fully capture the increased risk of several losses for thinner tranches of BSL CLOs. The request simply calls for further investigation and a consideration of steps to address PD-only ratings methodologies.
• Regulatory Judgment: The working group discussed how the use of regulatory judgment is consistent with the RBC principles adopted by the RBC Model Governance Task Force last year. Notably, the group’s previous call included discussion of (1) applying a floor to the factors based on the corresponding bond factors; (2) using the average of the two methods to determine A3 factors; and (3) how the proposed methodology would apply to middle market (MM) CLOs. Phil Barlow (Chair, DC) suggested that all three of those would constitute regulatory judgment as contemplated in the principles. He also suggested that the working group may make a formal statement on the regulatory judgment that they exercise and the reason for that judgment. Following some discussion, the working group directed the Academy to consider revising its proposal to reflect an averaging of the A3 factors.
• Regulatory Arbitrage Discussion: At the end of the call, Steve Smith (Academy) circled back to an issue that was initially raised in 2022 when the NAIC’s CLO work began—whether regulatory arbitrage exists when there is a different charge for holding a vertical slice of a CLO versus holding all of those underlying loans directly. According to Smith, under the Academy’s proposal there is practically no difference. This is driven mostly by residual tranche accounting; Smith explained that, on average, two-thirds of the value of the residual is eliminated. This analysis is included in the materials that were exposed for the group’s May 6 (see slides 27–33).

At the end of the call, Barlow recognized that there are a number of moving pieces, and the working group needs to decide on key elements of the proposals over the course of the next few months.

The Capital Adequacy Task Force took the following actions on its May 14 call:

• Adopted 2025-22-IRE MOD, which incorporates the structural changes necessary to advance the Academy’s proposed CLO framework in the life RBC formula. The proposal also incorporates more granular reporting into two buckets: CLOs and all other long-term bonds on the LR002 Bonds page. The structural changes are broad enough to apply either option currently proposed by the Academy.
• Adopted 2026-05-CA, which eliminates the investment subsidiary category from all three RBC formulas. Interested parties requested an effective date of year-end 2027, as the changes require companies to make certain structural, operational, and tax-related adjustments. This item resulted in significant discussion, with interested parties suggesting certain measures to lessen the impact, including expedited SVO review of investments that were held in the investment sub or accommodations from domiciliary regulators. Roughly 20 companies are impacted by the changes.
• Adopted 2025-15-CA, which updates the structure of several pages of all three RBC formulas based on the recommendations from the Academy’s H-2 Underwriting Risk Report. These changes also implement a new alternative risk charge based on the recommendation from the Academy that the multiple of maximum individual risk be eliminated.
• Adopted 2025-14-L MOD, which implements technical changes to C-3 Phase I and C-3 Phase II to reflect the adoption of the new generator of economic scenarios (GOES).
• Adopted 2026-07-L, which makes structural changes to the Longevity Risk Page to incorporate longevity reinsurance products. For 2026 reporting, companies will be directed to report “zero” for the capital amounts while the Academy further refines its methodology.
• Exposed Item 2026-03-CA, which contains the annual update of the underwriting factors for Comprehensive Medical, Medicare Supplement, and Dental & Vision for the investment income adjustment. This item also implements a stand-alone investment income factor. These changes are being proposed to all three formulas and have already been adopted by the Health RBC Working Group.
• Exposed Item 2026-10-CA, which updates the P&C and health formulas to incorporate the more granular reporting of collateral loans and residuals.
• Exposed revised charges for 2027.
• Received a referral from the SVO related to security identifiers. The task force will prepare a proposal to implement any changes resulting from the combining of security identifiers.

On May 14, the Life Actuarial Task Force paused its work on APF 2026-01, where regulators were considering whether to modify the VM-22 reinvestment guardrail for pension risk transfer (PRT) business and potentially for similar products. The decision was driven primarily by a straw poll about the APF’s scope and proposed modifications, which showed diverse opinions among regulators. Ultimately, the task force decided to table this work until the Academy completes its upcoming review of the VM default and spread methodology (requested by LATF during its April 30 call), the results of which may better inform a path forward on the APF.

Rachel Hemphill (Chair, TX) will clarify the study’s timeline with the Academy; ideally, LATF would like to revisit this APF in time for the 2028 Valuation Manual. Here are the specifics:

• The straw poll gauged regulators’ preference for whether the APF should apply to PRT annuities only (Option A) or to payout annuities without liability optionality (Option B), and whether the additional illiquidity premium should be applied to the max net spread adjustment factor (Option 1) or all assets (Option 2). While the straw poll is not binding, it revealed (1) a noticeable preference for Option B and working toward the 2028 Valuation Manual timeline (including from New Jersey, the APF drafter and original proponent of PRT-only); (2) split views on Options 1 and 2; and (3) support for more work from the Academy regarding its illiquidity principles and default and spread methodology study. Maryland, Oregon, and Tennessee abstained from voting, and New York was opposed to all options.
• Notably, Hemphill acknowledged prior discussions indicating the APF may be motivated by the growth of asset-intensive reinsurance and the desire to keep PRT business onshore, which resulted in a discussion among the leaders of LATF, the Life Insurance and Annuities (A) Committee, and the Financial Condition (E) Committee. The task force was instructed to consider the APF through the actuarial nature of its charges; any policy-related considerations will be handled by A and/or E Committee.

On May 12, the Interstate Insurance Compact’s Product Standards Committee (PSC) proposed an amendment to the Rate Filing Standards for Individual Long-Term Care Insurance (for Issue Age Rate Schedules and Modified Rate Schedules) to address Colorado’s statutory prohibition on using gender as a rating factor for individual LTC insurance rate schedules. This issue was raised by Colorado last year, and at the 2026 Spring National Meeting the Management Committee directed the PSC to develop proposed amendments for consideration. The draft language would allow the use of gender for premium schedules unless prohibited by applicable state statute where the policy is delivered or issued for delivery.

The ACLI reiterated its concerns that this approach could undermine the Compact’s uniformity and utility by allowing deviations based on state statutes, potentially eroding the consistency intended by the Compact. The ACLI recommended that the language be revised to prohibit gender-based rating only in cases where there is a binding court ruling or opinion grounded in the state’s constitution, rather than any applicable statute. This, the organization argued, would ensure that exceptions to Compact standards are narrowly defined and only permitted under clear constitutional constraints, preserving the Compact’s broader goal of uniformity across member states.

Oregon characterized the ACLI’s perspective as “sensationalist” and suggested the Compact would cause greater damage by not respecting the Supreme Court decisions of its member states. Brendan Bridgeland (Center for Insurance Research) also supported Colorado’s position, emphasizing the importance of consumer protections, while Chris Kite (consumer advocate) questioned its benefit for consumers, noting that (in his experience) life insurers charge higher rates without gender distinctions and recommended studying whether that is the case for LTC products. The PSC planned to discuss the feedback during its May 19 regulator-only call and refer their resulting recommendation to the Management Committee for further discussion.

International Developments

On May 5, 2026, the European Insurance and Occupational Pensions Authority (EIOPA) published draft advice for consultation on harmonizing Insurance Guarantee Schemes (IGSs) across the European Union, aiming to address persistent policyholder protection gaps, especially in cross-border insurance failures. This move comes as the EU prepares to implement the Insurance Recovery and Resolution Directive (IRRD) in January 2027, with the consultation open for public input until June 26. The advice calls for targeted minimum standards for IGSs while allowing member states the flexibility to tailor broader coverage based on national needs.

For U.S. stakeholders, the report is notable for its clear alignment with many principles long championed by NOLHGA and the NCIGF in global forums. EIOPA emphasizes the critical need for formal collaboration between national resolution authorities and IGSs, a point consistently raised by the U.S. guaranty system. The consultation also recognizes the operational value of IGS expertise in resolution planning and execution, echoing U.S. calls for IGSs to be fully engaged in crisis management. Importantly, EIOPA explicitly recognizes ex-post funding as a legitimate and viable safeguard, with the preferred approach being a blend of ex-ante and ex-post funding, subject to market conditions, reflecting a core message of prior NOLHGA/NCIGF submissions

While there is broad convergence, the consultation diverges from the U.S. position on one key point: EIOPA leaves discretion to member states regarding insolvency ranking, including the option to prioritize non-covered policyholders above those covered by the IGS. This is not the U.S. approach, which favors equal treatment for all policyholders, but the recommendation is not prescriptive and remains a national choice.

EIOPA’s summary table of preferred policy options (see Section 4 on page 25) provides an at-a-glance reference for how the EU envisions IGS design and operation.

In sum, the consultation reflects—and to some extent validates—some of the main international advocacy themes of NOLHGA/NCIGF. While it does not require U.S. engagement, it provides an important benchmark for global trends and demonstrates the growing international influence of U.S. perspectives on IGS design.

EIOPA will host a public workshop on the draft advice on June 17; registration is available here.

In other international news, on May 12, the International Association of Insurance Supervisors (IAIS) held a background session on its draft Issues Paper on customers receiving value from insurance products. The Issues Paper identifies challenges consumers face in assessing insurance value due to factors such as cognitive biases, information asymmetries, and the intangibility of insurance products. Supervisory approaches discussed include explicit value requirements, fit-for-purpose standards, and behavioral interventions.

The IAIS highlighted some of the paper’s findings regarding product value diminishers (misaligned product distribution, unfair or non-risk-based pricing, and broken pricing promises) and enhancers (product features that reward risk reduction and customer-centric claims handling). The draft Issues Paper is exposed for comment through July 28; the final paper is expected in the fourth quarter. Here are the relevant takeaways from the Q&A session:

• Stakeholders were encouraged to provide examples of other value-enhancing measures and input on preventing low-value products.
• Behavioral insurance products, such as telematics, were recognized for promoting safer behavior but also flagged for potential consumer challenges if premiums are dynamically adjusted. The paper clarifies that higher-risk consumers paying higher premiums is appropriate if justified by risk.
• Dave Snyder of the American Property Casualty Insurance Association (APCIA), on behalf of the Global Federation of Insurance Associations (GFIA), addressed the topic of product bundling, highlighting that while bundling is often viewed negatively, it can benefit consumers by resulting in lower prices if properly supervised. He advocated for a nuanced perspective, noting that bundling should not be automatically categorized as detrimental, but rather assessed based on its impact.
• Snyder also discussed the feasibility and costs of designing highly individualized insurance products. He pointed out that while tailoring products to each consumer’s specific needs might seem ideal, it could be prohibitively expensive, raising a trade-off between customization and affordability.