As the industry dove into closing out and preparing filings for the first quarter of 2026, the NAIC conducted a little business. For the groups usually followed in these monthly summaries, the only activity occurred in the risk-based capital (RBC) groups, and even that was limited.
Risk-Based Capital (RBC) Investment Risk & Evaluation Working Group – April 10, 2026
The purpose of this meeting was to allow the American Academy of Actuaries (the Academy) to provide an update on its continuing work on the development of factors for the addition of collateralized loan obligations (CLOs) to the Life RBC formula. No decisions were made. At the time of this meeting, the Working Group had two items still exposed for comment; proposal 2025-22-IRE (CLO RBC structure with tranche thickness) and a CLO update presentation from the Academy. The Working Group had another meeting scheduled for May 6, 2026 to discuss comments received on these two exposures.
Life RBC Working Group – April 23 & 30, 2026
The agenda for this meeting was quite aggressive, considering it was scheduled for only an hour. Some items were adopted. Keep in mind that anything that was adopted at this meeting is not final until adopted by the Capital Adequacy Task Force.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-14-L | Generator of economic scenarios (GOES) for C-3 Phase I and Phase II implementation. | Adopted effective 2026. |
GOES implementation has been an ongoing project for some time. The proposal was first exposed for comment in July 2025 and has undergone several revisions since that time. The adopted version included revisions that increased the discount rate from the use of the one-year U.S. Treasury rate to the 10-year U.S. Treasury rate. The entire document should be reviewed carefully for an understanding of all the revisions.
| Reference # | Subject | Disposition |
|---|---|---|
| 2026-06-L | Annual statement source revisions for the Interest Rate Risk and Market Risk (LR027). | Re-exposed for comment through May 7, 2026. |
The one comment letter received noted what it perceived as an oversight, which was the exclusion of Exhibit 7 reserves from the calculation. The Working Group agreed, making the edits needed to indicate that Exhibit 7 reserves, as reported in Note 32 Section C, are to be included.
| Reference # | Subject | Disposition |
|---|---|---|
| 2026-07-L | Format and instructional changes to page LR025-A for longevity reinsurance. | Adopted effective 2026. |
Originating from the Longevity Risk Subgroup, which adopted the proposal on April 9, 2026, the proposal includes structural and instructional changes to the Life RBC formula for the appropriate handling of longevity reinsurance on page LR025-A, Longevity Risk. The new reporting excludes longevity reinsurance from Lines 1 through 4 of page LR025-A, providing separate reporting for the reinsurance through the addition of two new lines to that page. From there, the longevity risk will be pulled through to the other appropriate RBC pages. Although this change was adopted, further work is anticipated by the Subgroup.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-16-L | Revisions to the handling of collateral loans. | Re-exposed for comment (but not really). |
A great deal of discussion occurred regarding this proposal. The original purpose of the proposal was to provide more granular reporting of collateral loans based on the newly adopted annual statement reporting and then potentially to use a “look-through” approach for the RBC factors. From the previous exposure, two comment letters were received with each of the commenting parties providing a different alternative proposal. However, both suggested alternatives recommended adjusting the original RBC factor according to the underlying loan-to-value (LTV) percentage; the more overcollateralization, the lower the RBC factor.
During this meeting, the Working Group decided to re-expose the proposal for a 21-day comment period; however, the exposure was never posted to the Working Group’s webpage. That meant, in essence, it was not re-exposed.
At that point, the allotted meeting time had expired with the Working Group not covering all of the agenda items. It was announced that another meeting would be scheduled to cover the remaining agenda.
The April 30 meeting opened with a discussion on why the re-exposure of 2025-16-L did not happen as had been planned. It seems that there was a lot of confusion among the Working Group members as to what was being exposed, so it was never posted.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-16-L Version 3 | Revisions to the handling of collateral loans. | Re-exposed through May 21, 2026. |
The original re-exposure was rescinded and a new exposure, version 3, occurred. This version, also known as the American Council of Life Insurers’ (ACLI) proposal, adjusts the RBC factor according to over-collateralization but explicitly states that independent verification of the fair value is required. It also presents two different options for determining the RBC factor “hair cut” for the amount of over-collateralization. Those submitting comments need to indicate their preferred option. If adopted, the revisions would not be effective until 2027.
| Reference # | Subject | Disposition |
|---|---|---|
| 2026-09-L | Clarifies that if loan level details are not available for collateral loans collateralized by mortgage loans, the reporting should be in the “Other” collateral loan category in the RBC. | Exposed for comment through June 1, 2026. |
| 2025-02-L | Provides for a look-through treatment for unaffiliated BA residential mortgages in good standing classified as “all other” in the Asset Valuation Reserve (AVR). An associated AVR statement proposal was referred to the Blanks Working Group. | Adopted effective 2026. |
The discussion then turned to the C-3 field test specifications and the comments received on its previous exposure. The specification document included a field study overview, scenarios, and assumptions, as well as a section on supplemental information. The field test, currently scheduled to occur between July and September, is the result of work being done by the Academy to consider changes to the C-3 framework because of implementation of Principle-Based Reserving for Valuation Manual 22 and the new GOES. The test will be based on a December 31, 2025 valuation date and will include all products that are currently subject to C-3 Phase 1. One of the goals of the test is to assess the impacts of using an asset-based metric versus a surplus-based metric. The test is expected to result in RBC framework revisions for year-end 2027 implementation.
The last item on the agenda was a brief presentation on fixed deferred annuity default cost analysis. Previous discussions had brought up the question of double counting within RBC (which was acknowledged as happening). This analysis was an effort to try to determine if the double counting resulted in material differences in the calculation. According to this study, there does not seem to be a significant impact, but materiality will vary from company to company. Discussion on double counting will continue, particularly in the analysis of the upcoming C-3 field test.
May Preview
Activity should really ramp up in May. The RBC groups will be finalizing 2026 format changes to the formulas, the Statutory Accounting Principles Working Group will meet to finalize some accounting issues needed prior to finalizing annual statement reporting, and the Blanks Working Group will, hopefully, finalize the 2026 Annual Statement. Stay tuned!
If you have any questions or need more information, please reach out to a professional at Forvis Mazars.