October ends with the fun of Halloween: ghosts and goblins and trick-or-treating. Earlier in October, however, the NAIC conducted some of its business as usual. Let’s look at some of those activities.
Statutory Accounting Principles Working Group (SAPWG) – September 10, 2025
The sole purpose of this meeting was the discussion of reference #2025-19, which had been previously exposed with a comment deadline of September 19. 2025.
During the meeting, the following action was taken:
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-19 | Private Placement Investments | Re-exposed for comment through October 31, 2025. |
This proposal is not an accounting change, but rather a revision to disclosures and statement reporting. Several Statements of Statutory Accounting Principles (SSAPs) would be revised to reflect additional disclosure requirements. The statement reporting changes would incorporate a new electronic reporting column in Schedule D, Schedule BA, and Schedule E – Part 2 identifying private placement investments by the type of private placement. The new column will identify specific investments. In addition, an aggregate exposure will be added to the Notes to Financial Statements detailing key public and private investment information by type of investment. At the same time, to help eliminate redundancy in reporting, revisions to Schedule D – Part 1A would remove the division of reporting for publicly and privately placed bonds. Changes also would be made to the Supplemental Schedule of Selected Statutory Basis Financial Data in the audited financial statements. Since several revisions suggested by interested parties were incorporated into the revised proposal, it was re-exposed for comment through October 31, 2025. It will then be further discussed at the upcoming NAIC Fall National Meeting in December with the goal of adoption. At that point, the group will prepare and submit a proposal to the Blanks Working Group for consideration. The goal is to have the new reporting in place for year-end 2026.
Financial Conditions (E) Committee – October 7, 2025
The original agenda indicated the meeting was being held to consider adoption of SAPWG agenda item 2024-06, but the meeting took a quick turn of events. As a reminder, in August SAPWG adopted revisions to SSAP No. 61, Life, Deposit-Type and Accident and Health Reinsurance, and Appendix A-791, Life and Health Reinsurance Agreements, regarding reinsurance contracts with interdependent features that possibly offset risk transfer. After the SAPWG adoption, the Accounting Practices and Procedures Task Force also voted for adoption. However, when progressing up the NAIC’s ladder of groups and arriving on the E Committee’s agenda, the E Committee decided to defer activity pending further review. This effectively stopped implementation, at least temporarily. Between August and this meeting, regulators had met twice for discussion and a better understanding of both the proposal and some of industry’s concern. As a result, a discussion draft was sent to all meeting attendees just prior to the beginning of this meeting. Although entitled a discussion draft, it was actually an alternative proposal. The new proposal suggests different and staggered implementation dates would exempt contracts that have already received regulatory approval (or non-disapproval), and a change to the A-791 Q&A. The new proposal was exposed for a 30-day comment period ending November 7, 2025, with any action on the original proposal being on hold for now. After receiving comments from all interested stakeholders, the group will decide how to move forward.
Property Risk-Based Capital (RBC) Working Group & Catastrophe (CAT) Risk Subgroup – October 8, 2025
The Subgroup announced it is close to finalizing the work on the review and impact analysis of proposed CAT modeling for wildfire. Research has been ongoing since 2022, with the current review and analysis involving four different modeling vendors. The Subgroup now feels comfortable enough with its analysis to formally draw up a proposal and supporting documentation for a wildfire CAT charge.
The discussion then turned to the possibility of modifying the Rcat formula section to include a covariance calculation. Until recently, the Rcat only included earthquake and hurricane, which have no correlation; that is, the odds of both happening at the same time were extremely low. However, with the soon-to-be additions of wildfire and convective storms, several correlations are possible, for example, convective storms and wildfire. The Subgroup feels now is the time to research a covariance calculation for the Rcat.
The Working Group discussed the benefits of separating the hurricane and earthquake loss experience in the formula’s PR100s worksheets. It will be working with NAIC staff to draw up a proposal for the separation.
The conversation then concentrated on a referral from the RBC Investment Risk and Evaluation Working Group. The referral addresses a recent change initiated for the Life/Fraternal RBC formula regarding the handling of Securities Valuation Office (SVO)-approved bond funds, suggesting the change also may be appropriate for the Property/Casualty RBC. The referral was exposed for a 30-day comment period, ending November 7, 2025.
Attention then turned to a brief update from the Academy regarding work it had been doing on the RBC premium and loss concentration factors. This part of the formula provides a credit for writing multiple lines of business. The analysis is nearing completion, with the Academy expecting to have a report ready later in 2025. At this point, it appears the maximum credit could increase for both premiums and reserves.
The chair then gave a “heads-up” to the fact that the Health RBC Working Group will shortly be exposing changes to its H2 and managed care credit sections of the Health RBC formula for 2026. Along with the exposure, the Health RBC Working Group will be sending referrals to both the Life/Fraternal and Property/Casualty RBC Working Groups. Since both of those formulas contain an accident and health section based on the Health’s version, they will need to incorporate those changes.
Own Risk & Solvency Assessment (ORSA) Implementation Subgroup & Group Solvency Issues Working Group – October 8, 2025, via email
Previously, these groups had jointly released a 2025 NAIC ORSA Guidance Manual Survey (Survey) asking for feedback on the ORSA Guidance Manual (Manual). The groups are looking for instructional and clarification improvements to the Manual. The original Survey deadline was October 24, 2025. However, that completion deadline has now been reset to November 21, 2025. The survey is open to regulators, industry-interested parties, and any interested third parties.
Restructuring Mechanisms Working Group, via email October 21, 2025
The Working Group released for a 30-day comment period a white paper entitled “Restructuring Mechanisms” and Best Practices Procedures for IBT (Insurance Business Transfer) Transactions/Corporate Division Transactions. Both documents have been revised since the last comment period. The current comment period ends on November 18, 2025.
Joint Meeting of the Capital Adequacy Task Force & the RBC Model Governance Task Force – October 22, 2025
The focus of this meeting was the continuing effort to revise the RBC Preamble. Capital Adequacy has been working on this project since April 2024, but this is the first time the Task Force has met jointly with the RBC Model Governance Task Force in relationship to this project.
The current Preamble covers the background, purpose, objectives, and critical concepts of the RBC.
Proposed revisions emphasize that the goal of the RBC formulas is to identify potentially weakly capitalized companies to facilitate regulatory action and oversight. To help accomplish that goal, a new section is proposed covering the limited use of the RBC results. This section stresses that any other use of the RBC formulas and/or results except for regulatory purposes is inappropriate. RBC results are not to be used to rank insurers or even to conduct a comparison between insurers. Industry voiced objections to some of the language because of other requests for RBC information; for example, when requested by the SEC, some foreign jurisdictions require solvency disclosures, and Insurance Core Principle 20.10 of the International Association of Insurance Supervisors requires that companies disclose capital available to cover regulatory capital requirements.
Although the NAIC’s model RBC law, which has been adopted by all U.S. jurisdictions, covers the limited use of RBC, the Preamble lacked strong language emphasizing this point. Some feel, however, that the proposed Preamble language goes beyond what is outlined in the NAIC’s model. No final action was taken during this meeting. After carefully reviewing and discussing the comments received during the comment period, another meeting is being planned. This meeting will most likely occur prior to the upcoming NAIC Fall National Meeting scheduled in December.
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