NAIC 2019 Fall National Meeting

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The National Association of Insurance Commissioners held its Fall National Meeting in Austin, Texas. This newsletter contains information on activities that occurred in some of the committees, task forces and working groups that met there and includes subsequent conference calls through January 8, 2020.

Highlights include

  • The Statutory Accounting Principles Working Group adopted new guidance on goodwill limitations, life and health reinsurance and “other derivatives.” The working group re-exposed for comment proposed guidance on rolling short-term investments and commission financing, and also directed staff to begin an issue paper addressing topics related to its controversial proposal on investments in collateralized fund obligations.
  • The Life RBC Working Group exposed for comment a proposal to correct an issue related to C-3 smoothing and VA voluntary reserves. The Health RBC Working Group exposed for comment a revised “health test” for determining which entities should file the health annual statement and RBC. The Investment RBC Working Group has not met publicly since November 2018, as they are deliberating next steps on the Life RBC bond factor project. However, the Capital Adequacy Task Force exposed for comment proposed changes to the three RBC formulas to implement 20 NAIC bond rating classes for year-end 2020 (but without any factors assigned to the 20 designations).
  • The VOS Task Force continued its discussion of removing the filing exempt status for rated “principle protected notes,” in 2020 (with no grandfathering permitted) and expects to have a revised proposed PPN definition for comment by February. The task force also proposed that the SVO’s SSG would assign NAIC designations to RMBS and CMBS securities starting year-end 2020 versus being done by third party vendors.
  • The Reinsurance Task Force approved Bermuda, Japan, and Switzerland as reciprocal jurisdictions.
  • The Life Actuarial Task Force discussed the upcoming YRT reinsurance reserve credit field test; the task force hopes to have revised guidance in place for the 2021 Valuation Manual. For the first time the task force also discussed a timeline to complete VM-22, PBR for non-variable annuities, with a proposed effective date of January 1, 2023. The task force also had extensive discussions of proposed revisions to AG 49 on indexed universal life illustrations to increase consistency and transparency.
  • The Annuity Suitability Group revised the Suitability of Annuity Transaction Model Regulation (#275) to reflect adoption of the SECs new “best interest” standard of conduct regulation.
  • The Financial Stability Task Force exposed the NAIC Liquidity Stress Test Framework for comment with the hope of final adoption by the end of 2020.
  • The International Insurance Committee discussed the IAIS adoption of its ComFrame and Holistic Framework, noting that “Team USA” had a significant victory this fall in connection with compromises reached on the Insurance Capital Standard.

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