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  • 3 Min Read
  • April 29, 2022

NAIC April Update: Exposed Items

Written by:
Sabrina Wilson, CPA, FLMI

NAIC Life Risk-Based Capital Working Group

The Life Risk-Based Capital Working Group of the NAIC held a meeting on April 22, 2022. The following item pertains to investment accounting.

Exposed Item with Comment Deadline of May 25, 2022

Residual Tranches and Interests LR008 Instructional Change

As NAIC staff received queries about which line residual tranches and interests should be reported on LR008 – Other Long-Term Assets, they proposed adding the new instruction to clarify this asset type should be reported in line 49.2 on LR008.

NAIC Property & Casualty Risk-Based Capital Working Group

The Property & Casualty Risk-Based Capital Working Group of the NAIC held a meeting on April 26, 2022. The following item pertains to investment accounting.

Exposed Item with Comment Deadline of June 25, 2022

Affiliated Investments Instructions and Structures PR003-PR005, PR007, PR029-PR032

The working group’s Chair said the affiliated ad hoc group worked on this project six years ago. They reviewed the RBC instructions and formulas to ensure they are consistent and easy for the regulators to explain the discrepancies. The project was quite extensive, and the working group members had to start over with a different approach after it was halfway done.

The major proposed change is to update the categories on PR003 – Details for Affiliated Stocks, e.g.,

  • The directly and indirectly owned alien insurance affiliates/subsidiaries are broken into three insurer types respectively.
  • Other affiliates are re-categorized as non-insurance affiliates/subsidiaries not subject to RBC with three sub-categories – entities with a capital requirement imposed by a regulatory body, other financial entities without regulatory capital requirements, and other non-financial entities.

This item proposes combining the percentage of ownership for common stock and preferred stock on PR003.

It also proposes changing the affiliate types on PR004 – Subsidiary, Controlled and Affiliated Investments, to be consistent with PR003 and eliminating individual columns of RBC required for affiliated common stock and preferred stock.

The Chair said he hopes other RBC working groups are ready to expose this change, too. It is important to be consistent across all insurance types.

This item is exposed for 60 days.

 

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