As industry scurries to complete its year-end 2025 annual filings, the NAIC is getting ready for its upcoming Spring National Meeting in March. That means groups that will not be meeting during the National Meeting started holding sessions this month and groups that plan on meeting during the National Meeting are getting organized.
Life Risk-Based Capital (RBC) Working Group – February 10 & February 25, 2026
During the February 10 meeting, the Working Group adopted its meeting minutes from November 14, 2025 and the minutes of the Generator of Economic Scenarios (GOES) Subgroup from October 29, 2025. The Working Group then moved on to the discussion of three different Life/Fraternal RBC proposals.
All three of the proposals address the handling of Schedule BA assets within the Life/Fraternal RBC formula. Recent and continuing reporting changes to Schedule BA within the annual statement have necessitated a further look at the RBC treatment of some of those assets. Although all of these proposals have originated for the Life/Fraternal RBC, it is possible that the same types of changes will be considered for the other RBC formulas at a future date. All exposures can be found on the Working Group’s webpage.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-16-L | Conceptual collateral loan proposal utilizing a look-through approach to the underlying collateral for RBC purposes. | Exposed for comment through March 6, 2026. |
Most of the discussion centered around proposal 2025-16-L. The proposal had been previously exposed as a conceptual idea incorporating more granular reporting of collateral loan investments into the RBC formula. The comments received covered a wide variety of topics from a suggested delay in the target implementation date to the handling of overcollateralization. Ultimately, the proposal was exposed for comment through March 6, 2026. The expectation is to receive additional feedback on various issues, but adoption is not expected at the group’s next meeting.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-01-L | RBC reporting of collateralized bond obligations (CBOs), collateralized debt obligations (CDOs), and collateralized loan obligations (CLOs). | Exposed for comment through March 12, 2026. |
The Blanks Working Group has exposed for comment changes to the Asset Valuation Reserve (AVR). If adopted, those revisions require updating the annual statement references provided in the Life/Fraternal RBC for the above assets.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-02-L | Addresses unaffiliated Schedule BA assets backed by all other residential mortgages in good standing. | Exposed for comment through March 12, 2026. |
This proposal might be tagged as “left over” from a 2024 proposal handling “Affiliated BA Mortgage – Residential – All Other – In Good Standing.” During that discussion, interested parties requested that the category of “Unaffiliated BA Mortgage – Residential – All Other – In Good Standing” be revisited. Adoption would not only revise the Life/Fraternal RBC but would also be contingent upon revisions to the AVR in the annual statement. There is a Blanks Working Group concurrent proposal revising the AVR on this same issue.
The group received an update on the C-3 alignment survey results. The survey was conducted to help ascertain the level of industry participation that can be expected in the upcoming field test for the C-3 Phase 1 and Phase 2, tentatively scheduled for summer/fall 2026. The chair announced the Working Group will be meeting in person at the upcoming NAIC Spring National Meeting.
The February 25 meeting discussion concentrated on the C-3 Phase I and Phase II modernization projects. One of the goals of the current proposal is to provide more of a sense of what the regulators are expecting. The Academy emphasized the need for critical feedback to prepare for a summer field test. The field test aims to measure impacts of asset-based versus surplus-based metrics in C-3 and is designed with possible implementation by the end of the year. Specific questions for which the Academy is seeking feedback include:
- The use of guardrails for the net asset earned rate (NAER) discounting
- What scalars and metrics should be reviewed as part of the field test
- The treatment of voluntary reserves
- The level of granularity to be used
- Additional supplemental information that might be needed for clarity
- The retroactive application of VM–22 (Valuation Manual, chapter 22)
| Reference # | Subject | Disposition |
|---|---|---|
| C-2 alignment field test specifications and cover questions. | Exposed for comment through April 11, 2026. | |
| 2026-06-L | Editorial revisions to the Interest Rate Risk and Market Risk page in the LRBC formula, as well as a cover question. | Exposed for comment through March 27, 2026. |
For the most part, this proposal updates source references (mostly referrals to annual statement reporting) within the Interest Rate Risk and Market Risk section of the formula. However, NAIC staff has posed a cover question that should be addressed in any comment letters. The question asks if more specific source references should be provided in the Life/Fraternal RBC formula. For example, currently the source column on page LR027 refers to annual statement sources but does not refer to a specific reporting column.
Before concluding the meeting, the chair reminded attendees that the Working Group has several RBC proposals exposed for comment, with varying comment deadlines. All are posted on the Working Group’s webpage.
RBC Model Governance Task Force – via February 10, 2026 email
The Task Force is conducting a comprehensive gap analysis and consistency assessment of RBC formulas. As part of this process, the group is asking for submission of comments from parties to help focus its efforts. Suggestions should address material risks and can be on the macro (across RBC formulas) and/or micro (specific to an RBC formula) level. Comments are to be submitted by March 12, 2026. The full document with submission instructions can be viewed on the Task Force’s webpage under the Documents tab.
Joint Call Life RBC Working Group & the Variable Annuities Capital & Reserve Subgroup – February 11, 2026
For some time, these two groups have been jointly meeting to discuss proposed changes to the C-3 Phase I and II cash flow testing in the Life RBC formula. Revisions are needed to align with the implementation of GOES. Now that GOES has been formally adopted for principle-based reserving beginning in 2026, the push is on to implement updates to C-3.
Accordingly, the following activity occurred during this meeting.
| Subject | Disposition |
|---|---|
| C-3 Phase I instructions for cash flow testing. | Re-exposed for comment through March 6, 2026. |
Changes to this iteration include a drafting note explaining that discounting of the NAER was contemplated but ultimately removed and a brief discussion on the use of non-prescribed scenario generators.
| Subject | Disposition |
|---|---|
| C-3 Phase II updates for cash flow testing. | Re-exposed for comment through March 6, 2026. |
| Clarification for variable annuities in payout phase. | Exposed for comment through March 6, 2026. |
Updates to this document include discount rates to use for variable annuities in payout phase that are reserved for as payout annuities, the addition of a reference to the 2026 VM-V, Section 1.B, and language indicating payout contracts can be reserved for under VM-21 with domiciliary commissioner approval.
Health RBC Working Group – February 13, 2026
Comments on a referral from the RBC Investment Risk and Evaluation Working Group regarding bond-like treatment for Securities Valuation Office designated funds were positive, pointing out that this treatment would be beneficial to the industry, in particular to smaller companies. However, after sending the referral to this Working Group, the RBC Investment Risk and Evaluation Working Group tabled the issue. Accordingly, this Working Group also tabled the issue for now but likely will reopen the discussion at a future date.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-15-CA | H-2 Underwriting Risk structure revisions and changes to Exhibit 7 in the Health annual statement. | Re-exposed for comment through March 11, 2026. |
This proposal would significantly expand the reporting of lines of business in the Health RBC H-2 Underwriting Risk Component and Managed Care Credit Calculation. Since this part of the Health RBC feeds off of Exhibit 7 in the Health Annual Statement, revisions to that exhibit are also suggested. Comments received from the previous exposure period resulted in several technical changes to the formula revisions. The exposure addresses format and instructional changes only; possible factor changes will be addressed later. The Task Force submitted several questions to the Academy regarding factor changes, including the possibility of a phase-in period. The revisions to Exhibit 7 are not part of the re-exposure, as further modifications are needed before sending it to the Blanks Working Group for further action. This Working Group will be meeting at the upcoming NAIC Spring National Meeting.
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