NAIC Life Risk-Based Capital Working Group June 12 Meeting Materials

Jun 10, 2009

The National Association of Insurance Commissioners (“NAIC”) Life Risk-Based Capital Working Group, a subgroup of the Financial Condition Committee’s Capital Adequacy Task Force, will meet on Friday, June 12, during the NAIC’s 2009 Summer National Meeting in Minneapolis.  To view the complete meeting agenda and materials packet, click here.  Items scheduled to be discussed include:

  • Comments from the following interested parties regarding the March 2009 American Academy of Actuaries’ risk-based capital requirements for C-3 risk on life insurance (“C-3 Phase III”) proposal:
    • Motorists Life Insurance Company
    • Prudential Insurance Company of America
    • Industrial Alliance Pacific Insurance and Financial Services, Inc.
    • The American Council of Life Insurers (“ACLI”)
    • Baltimore Life Insurance Company
    • Unum Group
    • Northwestern Mutual
    • The National Alliance of Life Companies
    • Government Personnel Mutual Life Insurance Company
    • AA Dicke Company
  • Proposals from the ACLI regarding the treatment of derivatives collateral
  • Adoption of interim Working Group conference call minutes
  • Update on the ACLI derivatives risk mitigation proposal
  • Update on the ACLI long-term 2009 Mortgage Experience Adjustment Factor proposal

The Capital Adequacy Task Force mission is to evaluate and recommend appropriate refinements to capital requirements for all types of insurers.  As a subgroup along with its health and property counterparts, the Life Risk-Based Capital Working Group evaluates emerging risk issues relating to the life risk-based capital formula and instructions.  Upon notice that a particular security has been placed under regulatory review, the Working Group Chair (or his or her representative) is then deemed a member of the NAIC Invested Asset Working Group of the Valuation of Securities Task Force and charged with contributing the perspective and expertise of the regulatory group to the development of NAIC regulatory guidance for the security under review.

The NAIC Risk-Based Capital system has two main components:  1) the risk-based capital formula that establishes a hypothetical minimum capital level that is compared to a company’s actual capital level, and 2) a risk-based capital model law that grants automatic authority to the state insurance regulator to take specific actions based on the level of impairment.  Based on reviews performed as part of the NAIC Accreditation Program, 47 of the U.S. insurance jurisdictions have adopted laws, regulations or bulletins that are considered to be substantially similar to the NAIC’s risk-based capital for Insurers Model Act. 


Should you have any questions or comments, please contact Colodny Fass.


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