Sabrina Wilson, CPA, FLMI
Global Regulatory Policy Expert
Sabrina serves as a subject matter expert for regulatory filings at Clearwater. In this role, she works with internal teams for the ongoing enhancement of NAIC reports. Sabrina has over 20 years’ of statutory accounting and reporting experience and uses her background to communicate industry best practices and comment on regulatory guidance and procedures. She also handles complex statutory accounting and analytics questions posed by our user community.
Sabrina is a certified public accountant, has earned the designation of Fellow, Life Management Institute (FLMI), and has a master’s degree in accounting and taxation from Boise State University.
The Property and Casualty Risk-Based Capital Working Group, Life Risk-Based Capital Working Group, and Capital Adequacy Task Force of the NAIC held meetings on June 9, June 11, and June 30, 2021, respectively. The following items pertain to investment accounting.
Property and Casualty Risk-Based Capital Working Group
ADOPTED ITEM EFFECTIVE DECEMBER 31, 2021
Consider adoption of Proposal 2021-08-P (PC Bond Factors and Instructions)
This item updates new bond factors for 20 NAIC Designation Categories and reclassifies hybrid securities from equities into bonds in PR006, PR011 and PR015.For details of the new bond factors, please see this document.
Life Risk-Based Capital Working Group
ADOPTED ITEMS EFFECTIVE DECEMBER 31
Consider adoption of new bond factors (proposed by ACLI REF#2021-11-L or Academy REF#2021-10-L), bond size adjustment factors and tax factor adjustments
This item updates bond factors for 20 NAIC Designation Categories, bond size adjustment factors, and tax factor adjustments. The majority of working group members voted for the bond factors proposed by the American Council of Life Insurers (ACLI), bond size adjustment factors proposed by the American Academy of Actuaries (Academy) with minor modifications (see below), and tax factor adjustments for LR030 Calculation of Tax Effect for Life and Fraternal Risk-Based Capital.
To ease the burden on insurers that have less than 50 issuers in their bond portfolio holdings, the regulators propose modifying:
• The first two thresholds from first 10/next 90 to first 50/next 50; and
• The first bond size adjustment factor from 7.80 to 2.90, which is the breakpoint of the first 50 issuers, i.e. (7.80 x 10 issuers + 1.75 x 40 issuers) / 50 issuers = 2.90
Capital Adequacy Task Force
ADOPTED ITEM EFFECTIVE DECEMBER 31, 2021
Consider adoption of Proposal 2021-07-CA (Update the RBC factors for Receivables for Securities)
This item updates the receivable for securities factors based on a weighted average calculation of bonds, common, preferred and hybrid stock investments. The factor is increased from 0.014 to 0.015 for life insurers but decreased from 0.025 to 0.024 for health insurers and 0.025 to 0.020 for property and casualty insurers.