Rector Modified Recommendations to NAIC Task Force on Financing of XXX and AXXX Reserves

16 June 2014
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  • On June 4, 2014, Rector & Associates, Inc. presented modified recommendations to the NAIC Principle-Based Reserving Implementation (EX) Task Force to its February 17, 2014 report on the use of transactions designed to finance reserves associated with level premium term life insurance policies and universal life insurance policies with secondary guarantees, which are commonly referred to as XXX reserves and AXXX reserves, respectively. The February 17th report set forth recommendations for the criteria to be satisfied by ceding insurers when financing XXX or AXXX reserves, including the types of assets permitted to support such reserves.
  • While the framework application and security requirements have not materially changed in the modified recommendations, the manner in which they are proposed to be implemented by the NAIC has changed.
  • This client update describes the framework application and security requirements, the proposed NAIC implementation steps and the key changes from the February 17th report.