NAIC Updates
On September 4, 2026, the Mutual Recognition of Jurisdictions Working Group issued a memo confirming that it has agreed to begin the evaluation process for three jurisdictions seeking Qualified Jurisdiction (QJ) status: (1) the Cayman Islands Monetary Authority, (2) the Republic of Korea’s Financial Services Commission and Financial Supervisory Service, and (3) the Guernsey Financial Services Commission. The notice formally launches the review consistent with the Process for Evaluating Qualified and Reciprocal Jurisdictions.
The review will follow an outcomes-based approach, comparing each jurisdiction’s reinsurance supervisory framework against the NAIC Accreditation Program, international supervisory standards, and applicable international guidance on the recognition of reinsurance supervision. Under the QJ standard, the NAIC must be able to reasonably determine that a jurisdiction’s supervisory system is sufficiently effective for purposes of reinsurance collateral reduction, that its supervisory practices align with its regulatory framework, and that its laws satisfy the requirements outlined in the Credit for Reinsurance Models.
Feedback is due November 3 on each jurisdiction’s ability to meet the QJ standard. Commenters should provide separate letters for each jurisdiction and indicate whether their submissions are confidential.
During its meeting on September 17, the Receivership and Insolvency Task Force (RITF) (i) approved the exposure of its 2027 proposed charges, which reflect the proposed disbandment of the Receivership Law (E) Working Group as of December 31, 2026; and (ii) exposed for comment a draft memorandum to the Macroprudential Working Group on Funding Agreement Backed Notes (FABN). The draft memorandum agrees with NOLHGA’s conclusion that funding agreements issued in FABN programs appear to be a type of unallocated annuity contract that would not be eligible for guaranty association coverage under the NAIC Life and Health Insurance Guaranty Association Model Act. Concerning treatment of such funding agreements for claims priority purposes in receivership, the draft concludes that “in most states, funding agreements (not FABNs) would be treated pari passu with other life and annuity policyholder claimants.”
On August 31, the Big Data and Artificial Intelligence Working Group exposed a revised AI Risk Evaluation Supplement until September 29, accompanied by a summary of changes from the prior version. Coral Manning (WI) introduced version 5.0 of the supplement, which reflects feedback from the 12 states participating in the pilot program. Among other things, version 5.0 expands the scope of the supplement to include generalized linear models (GLMs); clarifies the document’s intent as a supplement to existing handbooks rather than a standalone tool; aligns the definition of materiality with the Financial Condition Examiners Handbook; and refocuses risk assessment on inherent risk before mitigating controls. Updated definitions were also added or revised for agentic AI, AI model, direct consumer impact, materiality, and third parties. The working group will meet on October 8 to discuss comments. Following the comment period, NAIC staff will incorporate feedback into version 6.0, which will be exposed for an additional 14-day comment period, with the goal of adopting a final version 7.0 at the Fall National Meeting.
On September 10, the Life Actuarial Task Force (LATF) did the following:
Exposed the YE 2026 AG 55 Guidance Document and Templates Until October 9: Based on common questions from the first year of Actuarial Guideline (AG) 55 reviews, the draft guidance document asks companies to assemble supplemental information alongside their year-end 2026 filing to reduce follow-up requests from regulators. Fred Andersen (MN) acknowledged the additional work for companies but noted the issues are evolving too quickly to wait another year. Specifically, companies would need to provide:
- A detailed table of pre- and post-reinsurance reserve values and starting asset amounts, including excess capital, reserve credit, and VM-22 reserve if applicable. This is driven by findings that many filings reported pre- and post-reinsurance reserve values inconsistent with AG 55’s defined terms.
- An RBC impact analysis showing the ceding company’s RBC ratio with and without the transaction (i.e., assuming recapture of the ceded block).
- Documentation of policyholder behavior assumptions, including low-rate lapse suppression, multi-year guaranteed annuity (MYGA) renewal behavior, and fixed indexed annuity guaranteed living withdrawal benefit election patterns.
- A new MYGA self-support demonstration disclosing average asset earned rate, guaranteed credited rate, guarantee period, and annual expenses.
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Narrative on drivers of reserve reduction, alternative run documentation (including dedicated excess capital), and commentary on negative IMR handling.
Notable discussion points included:
Dedicated Excess Capital: Rachel Hemphill (Chair, TX) referred to Andersen’s previously stated concern that in some cases, post-reinsurance reserves were reported as equal to pre-reinsurance reserves with no indication of additional capital. Hemphill asked whether the alternative run framework or a mandatory run adjustment could address that scenario. Andersen said this was not contemplated when the guideline was developed but he would be open to considering the issue in the guidance document or a future revision to the AG.
Industry Concerns: Carrie Haughawout (ACLI) questioned how requests around RBC, excess capital, and recapture scenarios fit within AG 55’s reserve adequacy focus. She also raised concerns that the proposal seemingly gathers data related to the counterparty credit and recapture risk referral to the Life RBC Working Group before that effort has been discussed as a broader policy matter. Andersen responded that the U.S. system has two layers of protection—reserves ensure companies can meet obligations under moderately adverse conditions, and RBC provides an additional cushion beyond that. When business moves offshore, regulators need to ensure both layers remain intact. He views this as separate from the Life RBC Working Group’s efforts but acknowledged the point about drawing the line between AG 55 and E Committee capital considerations.
Exposed the YE 2026 AG 53 Guidance Document and Templates Until September 30: Jennifer Frasier (NAIC) walked through proposed changes to the AG 53 templates and guidance document, which are largely technical. The revised template:
- Adds several new asset types to the Asset Summary tab: cash and cash equivalents, direct fund financing, collateralized loan obligations (CLOs) split by broadly syndicated loans (BSLs) and middle market (MM), and itemized asset-backed securities categories (consumer, commercial, rated note feeders, and collateralized fund obligations). These carry forward into all other tabs.
- Updates the Non-Traditional Assets tab to align column headers with the new asset types; rows for CLO BSL/MM percentage splits were removed because they can now be calculated from the Asset Summary tab.
- Adds an item to the Instructions tab for companies to explain how AG 53 asset type descriptions map to asset groupings in the main VM-30 cash flow testing report.
The guidance document is substantively the same as the prior year, with targeted wording changes in Sections 2b, 5c, and 5e referencing the templates.
Discussed Canadian Mortality Tables: The Canadian Institute of Actuaries presented on Canadian mortality tables as regulators work to understand non-U.S. table methodology and conservatism as part of ongoing work on non-U.S. mortality tables. Unlike U.S. tables, Canadian tables reflect observed experience without embedded margins—the valuation actuary applies professional judgment to add margins for adverse deviation.
The Capital Markets Bureau (CMB) issued a special report on the continued increase in U.S. insurers’ outsourcing of investment management to unaffiliated firms. Approximately 54% of all U.S. insurers reported outsourcing investment management at year-end 2025, up from about 50% from 2021, with the pace of increase accelerating over the last two years. The CMB attributes the trend in part to insurers’ growing exposure to “nontraditional, higher-yielding alternative investments,” including private credit and structured finance assets, which require specialized expertise and infrastructure that many companies do not maintain in-house. Notably, life insurers’ outsourcing to nonaffiliates has declined in recent years, a shift the CMB ties to the rise in “acquisitions or joint venture activity with private equity (PE)-owned firms,” which bring in-house capabilities for managing private credit and alternative assets. The CMB indicated it will continue monitoring these trends.
On September 1 and September 8, the Life Insurance and Annuities Illustrations Working Group (LIAIWG) continued its review of proposals for revising the Annuity Disclosure Model Regulation (#245), addressing the treatment of non-guaranteed elements (NGEs) applied to historical returns, additional scenarios and supplemental information, and a potential stopgap solution. Commissioner Ommen (IA) opened the September 1 call by flagging the illustration of hypothetical index performance history as a key concern, noting that FINRA prohibits the practice in registered index–linked annuity (RILA) marketing.
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NGE Treatment (Issue 4B): In a preliminary vote, no regulator supported continuing the current Model #245 approach (Option 1) or applying historical option-budget NGEs (Option 3) in isolation. A substantial number favored applying adjustments or haircuts to current NGE levels (Option 2), and many also favored receiving alternative ideas. Mike Yanacheak (IA) proposed showing actual historical index returns but departing from historical data where an index did not exist or NGE levels differed, an approach that garnered significant support.
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Additional Scenarios & Supplemental Information (Issue 4C): The working group favored not relying solely on historical data. Four options were discussed: (1) extending history beyond 20 years; (2) replacing the low scenario with guaranteed values; (3) supplemental tables or visuals based on NGE haircuts; and (4) prescribed up-and-down percentage index return scenarios (e.g., +/-20%). New York, Oregon, Maryland, and Rhode Island leaned toward Option 4 for its transparency and simplicity. Rhode Island also raised the broader goal of shortening illustrations to one or two pages, cautioning against lengthening an already complex document. This issue will be further discussed on the next call.
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Stopgap Solution (Issue 5): In a preliminary straw poll, four regulators favored development of a model bulletin, two favored an AG, and two voted for no stopgap. Texas and Maryland observed that the changes under discussion would be substantive modifications rather than clarifications, making an AG less appropriate. Several others expressed support for tying a model bulletin to the Annuity Suitability Model Regulation—adopted by virtually every state—to give the stopgap broader reach than one anchored solely to Model #245. The ACLI and the Indexed Annuity Leadership Council questioned the need for a stopgap altogether but stated that if one is pursued, it should complement rather than compete with the revised model.
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Next Steps: At the conclusion of the next call (scheduled for September 15), Ben Slutsker (Chair, MN) intends to issue a chair exposure soliciting specific ideas and potential Model #245 redlines within the parameters of the decisions made to date.
On September 9, the Financial Examiners Handbook Technical Group (FEHTG) discussed several revisions to the Financial Condition Examiners Handbook, adopting four sets of changes and exposing three others until October 9.
Adopted Guidance
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CUSIP Terminology (Attachment 2): Replaces the use of “CUSIP” (Committee on Uniform Securities Identification Procedures) with more inclusive security identifier terminology in the investments repository. For consistency, the change aligns with referrals the Investment Designation Analysis Working Group sent to several other groups.
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Exhibit O – Assessment of Aggregated Controls (Attachment 3): Clarifies existing guidance on how examiners evaluate controls in Exhibit O, Part 1 – Combined Tests of Controls Worksheet. The current worksheet implies that each control should be assessed individually; however, the revised guidance recognizes that multiple controls addressing a single risk should be evaluated in aggregate. Examiners are now directed to document one overall assessment of how those controls collectively address the identified risk.
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Evergreen Letters of Credit (Attachment 4): Updates evergreen provisions in letters of credit within Exhibit N – Reinsurance Review and Section 1-5 – Reinsurance Review. The revisions were driven by recent court decisions on the language of evergreen clauses regarding letter of credit expiration. The revisions ensure that letters of credit automatically renew on a rolling basis, consistent with the Credit for Reinsurance Model Law (#785) and Regulation (#786).
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AG Narrative Guidance, VM-22 & GOES Implementation (Attachment 5): Adds narrative guidance to the reserves/claims handling (life) repository related to AG 53 and AG 55; provides context for examiners on how VM-22 and the Generator of Economic Scenarios (GOES) may affect reserve calculations and how those impacts should be evaluated during the examination process; and builds out new sections covering annuity principle-based reserving (PBR) consistent with existing life PBR guidance. The revisions were previously exposed through the LATF, which recommended adoption without an additional FEHTG exposure period.
Exposed Revisions (comments due October 9)
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Assessing Private Asset Exposures (Attachment 6): Proposes revisions to the Handbook’s investments repository focused on strengthening examination guidance in four areas: investment governance and monitoring procedures for private credit portfolios; risks associated with private credit originated or managed by affiliates or related parties; valuation procedures where market-observable pricing is limited; and expanded impairment guidance for private credit and other less transparent holdings. This stems from a Financial Analysis Working Group (FAWG) referral, which noted the continued growth in private assets held by U.S. domestic insurers, including securities supported by private letter ratings and securities valued using Level 3 inputs. The revisions also would expand the existing risk indicators for high-risk mortgage loans to strengthen ongoing monitoring.
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Unauthorized Offshore Reinsurers (Attachment 7): Proposes revisions to the reinsurance (ceding insurer) repository that would strengthen examination guidance for significant reinsurance agreements, particularly those involving unauthorized or non-U.S. reinsurers. The revisions would introduce new procedures covering ongoing assessment of reinsurer financial condition; management review of collateral investment guidelines; monitoring the quality, liquidity, and concentration of collateral assets; periodic post-agreement assessments of how the reinsurance arrangement is performing and whether reserve support remains adequate; and evaluation of the ceding insurer’s dependence on significant reinsurers. These revisions stem from a referral received from FAWG in coordination with the Valuation Analysis Working Group and the Investment Analysis Working Group regarding the increasing use of unauthorized offshore reinsurers by U.S. life and annuity insurers.
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Exhibit N – Reinsurance Clauses (Attachment 8): Proposes adding a procedure to the ceded reinsurance contract review procedures in Exhibit N, Part Three for examiners to identify how the reinsurance contract defines a loss occurrence and the applicable time parameters, along with incorporating co-participation and reinstatement considerations into the procedures. The exhibit currently applies to property and casualty insurers, but the technical group plans to enhance the guidance for life insurers in 2027.
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