NAIC Updates

The Statutory Accounting Principles Working Group (SAPWG) has exposed a revised version of Ref #2025-19 that proposes new reporting requirements for private placement securities. The proposal contains two parts: (1) new columns on the investment schedules to identify whether an investment is a private placement security; and (2) a new Note disclosure to provide aggregate reporting information on certain aspects of private placements. The working group incorporated most of industry’s comments and proposed changes into the original proposal.

Notably, the codes have been consolidated so that each security must include one of the following codes:

• Public
  
• 144A (includes all permitted exclusions for resales that do not involve the issuer, underwriter, or dealer)
  
• Private Placement Securities (includes Reg D and Section 4(a), as well as any other exclusion from SEC registration for investments captured under the Securities Act of 1933, excluding Rule 144A)
  
• Not Applicable (i.e., investments not included in the other categories)

The changes are set to become effective for year-end 2026 financials. Comments are due October 31. Once adopted by SAPWG, the changes will go through the normal Blanks proposal process.

At the Summer National Meeting, both SAPWG and its parent task force adopted changes to regulatory guidance related to risk transfer issues involving combination reinsurance arrangements (those that contain both a coinsurance and yearly renewable term (YRT) component). Those groups voted to make the changes applicable to all new or newly amended agreements immediately and to all existing agreements starting on December 31, 2026 (in other words, there would be no grandfathering of existing agreements).

When the item made its way to the Financial Condition Committee, regulators requested additional time to get up to speed on the issues, and a vote was anticipated last week. However, shortly before the call, an alternative discussion document was added to the agenda. Director French (OH) introduced the revised proposal, which was met with skepticism from both Texas and Wisconsin. The revised approach would put additional authority in the hands of the domestic regulator. The domestic regulator would have the opportunity to approve or non-disapprove existing arrangements, thus exempting them from the revised guidance in SSAP 61. Comments are due November 7.

The Longevity Risk Subgroup discussed four potential methods to develop C-2 factors for longevity reinsurance business, submitted by the American Academy of Actuaries, the ACLI, Minnesota, and New Jersey. The proposals vary in their approach and complexity, with both the Academy and ACLI proposing the application of the C-2 factor to the present value of benefits, rather than the reserve (the ACLI also proposes an offset credit for future surplus not included in statutory reserves). The Minnesota approach involves shocking the longevity assumption, an approach that Minnesota believes will fit within the VM-22 calculations. Three of the four proposals would require a structural change to the Life RBC formula, which would need to be adopted by March to be ready for year-end 2026 implementation. The Academy and ACLI are evaluating the proposals and plan to report back to the subgroup. Seong-min Eom (NJ – Chair) plans to discuss progress made on this issue at the Fall National Meeting.

The Annuity Suitability Working Group briefly discussed comments and reviewed proposed edits to the draft Safe Harbor Guidance that incorporates interested party feedback. The revised draft was not shared in advance, but many of the changes were in response to suggestions from the Joint Trades. Following its call, the working group made additional revisions and exposed an updated draft until October 24, which will be considered for adoption on the working group’s November 5 call.

  Staff Contact - Sean McKenna

FSB Releases AI Vulnerabilities Report

On October 10, 2025, the Financial Stability Board (FSB) published a report on Monitoring Adoption of Artificial Intelligence and Related Vulnerabilities in the Financial Sector, which follows the FSB’s 2024 paper on AI’s financial stability implications. The new report discusses how member jurisdictions are monitoring AI adoption, including related vulnerabilities, and features a case study on the monitoring of third-party dependencies and service provider concentrations.

  Staff Contact - Sean McKenna

Privacy Updates

Minnesota and New Hampshire joined the Consortium of Privacy Regulators, a bipartisan effort to implement and enforce state privacy laws across the country. The Consortium now has 10 total members, including the California Privacy Protection Agency and state Attorneys General from California, Colorado, Connecticut, Delaware, Indiana, Minnesota, New Hampshire, New Jersey, and Oregon.

The Pennsylvania House voted to approve HB 78, which aims to establish the Pennsylvania Consumer Data Privacy Act. The bill now moves to the Senate for consideration. If passed, the Act would apply to for-profit entities that (1) alone or jointly with others, determine the purposes and means of the processing of consumers’ personal information; (2) do business in Pennsylvania; and (3) satisfy any of the following thresholds: (A) have annual gross revenues in excess of $10 million; (B) alone or in combination, annually buy or receive, sell, or share for commercial purposes, alone or in combination, the personal information of at least 50,000 consumers, households, or devices; or (C) derive at least 50% of annual revenues from selling consumers’ personal information. The Act would not apply to financial institutions, affiliates, and data subject to Title V of the Gramm-Leach-Bliley Act (GLBA) or to covered entities, business associates, and protected health information under HIPAA.

Businesses should anticipate a rise in universal opt-out preference signals (OOPS) following California Governor Gavin Newsom’s signing of a bill on October 8, 2025, that mandates all web browsers to support this feature, according to Tom Kemp, executive director of the California Privacy Protection Agency (CPPA). Kemp noted in an interview that the CPPA, along with regulators from other states, is actively monitoring whether companies are complying with these opt-out requests.

  Staff Contact - Sean McKenna