NAIC 2022 Fall National Meeting Highlights

21 December 2022
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Key Takeaways:
  • The NAIC is continuing its focus on private equity investments in insurance companies, with notable recent developments around Form A disclosure requirements, the definition of “control” for purposes of the Holding Company Act and disclosure requirements for related party investments.
  • The NAIC is continuing to evaluate potential changes to accounting treatment of structured securities, including collateralized loan obligations and differential treatment of their residual tranches. While the proposed principles-based bond definition to be reflected in amendments to SSAP 23R and 43R are getting closer to being finalized, recent proposals concerning the risk-based capital charges applicable to CLOs, including their residual tranches, and the SVO “filing-exempt” status for fund and equity investments, could create uncertainty around the capital treatment of such structured securities.
  • Given the changing interest rate environment, the NAIC is evaluating whether negative IMR amounts should properly be admitted as assets on insurers’ balance sheets. For now, insurers with particular concerns are encouraged to discuss with their domestic regulators regarding permitted practices to admit negative IMR, potentially subject to restrictions or guardrails.