Insurance: NAIC 2021 Fall meeting

Applicability

• All insurance companies

Key impacts

The National Association of Insurance Commissioners (NAIC) adopted the following guidance: 

• SSAP No. 43R to clarify that residual tranches or interests are recorded at the lower of amortized cost and fair value and reported on Schedule BA.
• SSAP No. 61R to clarify life and health reinsurance disclosures. Revisions are effective for 2021 year-end reporting. 
• The principles for data collection developed by Workstream Five of the Special Committee on Race and Insurance that focuses on identifying practices or barriers that potentially disadvantage people of color and/or historically underrepresented groups in the health insurance line of business.

The NAIC exposed revisions to the following guidance:

• SSAP Nos. 25 and 43R to clarify the identification and reporting of affiliated transactions and add annual statement disclosure to identify investments held that involve related parties.
• A discussion draft to revise Schedule D reporting and revisions to the proposed principle concept when determining whether an asset-backed security satisfies the credit enhancement criteria to be reported as a bond.
• SSAP No. 86 to expand effective hedge relationships consistent with ASU 2017-12.
• A proposal to add a new general interrogatory to the Annual Statement to require disclosure when cryptocurrencies are directly held or accepted for the remittance of premiums.
• A request for comments on the concept of an actuarial guideline focused on the modelling of complex or high-yielding assets in asset adequacy testing.
• A redesigned climate risk disclosure survey.

The NAIC also discussed a report from the Securities Valuation Office about the results of an ongoing analysis on the NAIC’s reliance on rating agency ratings to assess investment risk for regulatory purposes.

Report contents

• Meeting highlights
• Accounting highlights
• Actuarial highlights 
• Group capital calculation
• Risk-based capital
• Valuation of securities task force
• Financial stability task force
• Long-term care insurance
• Race and insurance 
• Climate risk