Executive Life Insurance Company (California)
Aurora Defeasance Agreement Closes
On October 1, 2025, the defeasance agreement with Aurora for the resolution of the affected guaranty associations’ remaining obligations in the Executive Life Insurance Company (ELIC) matter successfully closed. This resolution marks the culmination of the guaranty system’s provision of coverage for ELIC policyholders, a funding process that has been ongoing for decades, dating back to the December 6, 1991, liquidation date.
We extend our thanks to the task force, participating guaranty associations, and our consultants for their sustained efforts in achieving this constructive outcome.
Task Force Chair – Bart Boles; Staff Contact - Bill O'SullivanNAIC Updates
On September 23, 2025, a revised version of the RBC principles was exposed for comment by the RBC Model Governance Task Force. The task force is seeking feedback on the Proposed Preliminary Principles for Maintaining and Prioritizing Updates to RBC Requirements (on page 3 of the document linked above) and has made clear that there will be no formal adoption of the principles until they have been demonstrated to provide an appropriate level of guidance later in the process. The proposed principles are followed by a summary of regulator discussions surrounding each principle. Notably, the “materiality” principle now suggests that RBC requirements should be updated when the decision “could meaningfully impact the regulator’s assessment of the solvency risk for all or an identifiable segment of companies.” The revisions also add a “Prioritization” principle, which directs regulators to use judgment to prioritize changes, considering their necessity, materiality, time and resource intensity, and other considerations. Comments are due October 23.
Additionally, the Capital Adequacy Task Force has moved its October 15 call to October 23 and included the RBC Model Governance Task Force. The purpose of the call is to discuss the proposed changes to the RBC preamble to limit its use to identifying weakly capitalized companies. It became clear at the NAIC’s Summer National Meeting that whether RBC should be used for any reason other than identifying weakly capitalized companies is intricately linked to the RBC principles. As such, the two groups are coordinating to discuss edits to the preamble.
The Financial Analysis Solvency Tools Working Group (FASTWG) recently exposed a number of changes to the Financial Analysis Handbook. Noteworthy elements of the exposure include:
- Model 385 Financial Hazardous Condition Standards Guideline: These changes, which came from the Financial Regulatory Forum, are meant to give regulators guidance on determining when certain hazardous financial condition standards are triggered. Regulators noted difficulty in performing the calculations outlined in Model 385; the guidance is designed to remedy those concerns, including highlighting the portions of a company’s annual statement a regulator should use to perform the calculations. Ohio noted that some states have adopted language and standards that deviate slightly from the model.
- Blank Changes Guidance for Principle-Based Bond Definition (PBBD): These changes provide a high-level overview of the new PBBD and explain to regulators that amounts on certain investment schedules may vary following the effective date of the new definition.
- New Guidance for Assets Held for Modco or Funds Withheld: While not separately identified by the working group as a change, new language is being proposed related to the credit quality, adequacy, and appropriateness of assets held in modco and fund withheld arrangements (see pages 13 and 14 of the changes linked above).
- New Language Incorporating AG 55: Another set of changes not separately identified by the working group, this new language reflects Actuarial Guideline (AG) 55 requirements for asset adequacy testing of reinsured business.
- Notes to the Financial Statement: These changes direct analysts to review new Separate Account disclosures.
- Risk Assessment IPS & GPS Examples
- Proposed Changes to the P&C IRIS Adjusted Liabilities to Liquid Assets Ratio
The working group also adopted revisions related to insurance department oversight of financial analysis work performed by contactors. Because these changes had already been exposed and adopted by the Risk-Focused Surveillance Working Group, the working group adopted them without a comment period.
The Life Actuarial Task Force re-exposed the following items on its September 25 call:
- AG 55 Templates: The proposed templates are referenced in the Actuarial Guideline and provide detailed information about counterparties for reinsurance agreements scoped into the guideline. The templates request extensive information about counterparty assets from cedants. Fred Andersen (MN) recognized that there will be information outlined in the templates that is not available to certain cedants or is irrelevant for specific deals—a point that Brian Bayerle (ACLI) encouraged regulators to make very clear in the template’s instructions.
- Proposed Revisions to AG 49-A for IUL Illustrations: These changes clarify the requirements in Section 7.B and 7.C to address the inclusion of historical averages exceeding the maximum illustrated rate and backcasted performance (new changes are highlighted). Regulators have incorporated most of the interested parties’ comments to simplify the new language. The task force has retained the bracketed timeframes (5 or 10 years) that an index must be in existence before it can be illustrated; the American Academy of Actuaries plans to weigh in on this topic during the exposure period (comments are due October 15).
The Privacy Protections Working Group exposed Article VI of the draft revisions to the Privacy of Consumer Financial and Health Information Regulation (#672). Article VI focuses on exceptions to limits on disclosures of nonpublic personal information. Comments are due October 10.
The Cybersecurity Working Group adopted a guidance document regarding the implementation of the Insurance Data Security Model (IDSM). The working group emphasized that the guide should be used only by those states that have adopted the IDSM; the hope is that this document ultimately will reduce the risk of duplicative and redundant work for insurers and regulators.
Similar to other regulatory requirements (e.g., ORSA filings, group capital calculation, etc.), the guidance instructs regulators to rely on domestic regulators (particularly when the domestic state has adopted the IDSM). The guidance instructs domestic regulators to use existing market conduct and financial examination functions to complete an IDSM review and does not provide prescriptive instructions on how regulators should conduct such reviews. Generally, the guide highlights existing tools regulators can use to enforce compliance and encourages collaboration among departments. The guide will be sent to the Innovation, Cybersecurity, and Technology Committee for consideration at the Fall National Meeting.
The International Insurance Relations (G) Committee met briefly to approve its comments on the International Association of Insurance Supervisors’ (IAIS) draft application paper on operational resilience objectives and toolkit. Most of the NAIC’s comments were editorial in nature and received no further feedback from regulators or interested parties.
Comments on the Annuity Suitability Working Group’s draft Safe Harbor Guidance Document have been posted to the working group’s webpage. Only two letters were received—one from the joint trades (ACLI, CAI, Finseca, FSI, IALC, IRI, NAFA, and NAIFA) and another from the Federation of Americans for Consumer Choice. The feedback will be discussed on the working group’s October 7 call.
Staff Contact - Sean McKennaInternational Developments
The United States and the UK have formed a new Transatlantic Taskforce for Markets of the Future, chaired by officials from the U.S. Treasury Department and HM Treasury (UK). According to the press release, the task force is intended to explore:
- Options for short- to medium-term collaboration on digital assets while legislation and regulatory regimes are still developing, as well as options for long-term collaboration and additional opportunities for wholesale digital markets innovation
- Options to improve links between the capital markets to enhance the growth and competitiveness of both UK and U.S. markets, focusing on reducing burdens for UK and U.S. firms raising cross-border capital. Recommendations are to be developed in collaboration with industry partners and reported through the UK-U.S. Financial Regulatory Working Group within 180 days.
Privacy Updates
The California Office of Administrative Law approved the California Consumer Privacy Agency’s (CCPA) regulations covering cybersecurity audits, risk assessments, automated decision-making technology, and insurance companies. The rules (1) require “businesses” (as defined by the CCPA) whose data processing activities pose a “significant risk” to consumers to undergo an annual cybersecurity audit that covers every applicable component of its cybersecurity program; (2) require businesses to conduct a detailed risk assessment before initiating activities that present “significant risk” to consumers’ privacy and submit information and attestations to the CCPA regarding such activities; and (3) clarify that insurance companies (defined as persons subject to the California Insurance Code and its regulations) that meet the definition of a “business” under the CCPA must comply with the CCPA with respect to personal information that is not subject to the California Insurance Code and its regulations. The regulations go into effect on January 1, 2026, with additional time for companies to comply with certain requirements.
The New York Department of Financial Services’ final cybersecurity regulations (23 NYCRR Part 500) take effect on November 1, 2025. As of November 1, Covered Entities (as defined in Part 500) must:
- Comply with enhanced multi-factor authentication requirements, as applicable (23 NYCRR Section 500.12)
- Implement written policies and procedures to maintain a complete, accurate, and documented asset inventory of their information systems that includes, among other things, tracking ownership and location (23 NYCRR Section 500.13(a))