All about risk
Link: https://www.thinkadvisor.com/2022/01/24/new-york-may-develop-life-policy-disclosure-rules/
Excerpt:
An NAIC committee formed the Life Insurance Illustrations Working Group in 2016.
The working group chair report said states should become the laboratories for disclosure standards.
The committee disbanded the working group and put the disclosure standards effort back in the hands of the states.
Author(s): Allison Bell
Publication Date: 24 Jan 2022
Publication Site: Think Advisor
Graphic:
Excerpt:
The number of privately rated securities reported by U.S. insurance companies totaled 5,580 at
year-end 2021, an increase from 4,231 in 2020 and 2,850 in 2019.
• Small credit rating providers (CRPs) to the NAIC, such as Egan-Jones, DBRS Morningstar, and the
Kroll Bond Rating Agency LLC (KBRA), produced a dominant share of the private letter ratings
(PLRs), accounting for almost 83% of U.S. insurers’ privately rated securities as of Dec. 31, 2021.
• Designations based on PLRs averaged 2.375 notches higher than designations assigned by the
NAIC Securities Valuation Office (SVO) according to data from 2019 through Q3 2021.
• Based on the credit rating analysis conducted by the SVO, the use of PLRs can result in lower
risk-based capital (RBC) charges and potentially lead to the undercapitalization of insurance
companies.
• Regulatory oversight of nationally recognized statistical rating organizations (NRSROs) does not
result in uniform ratings across the NAIC’s CRPs.
• Ten U.S. insurer groups accounted for 55% of the industry’s exposure to privately rated
securities at year-end 2020.
• No significant issuer concentrations of privately rated securities were noted.
Author(s): Jennifer Johnson, Michele Wong, and Linda Phelps
Publication Date:21 Jan 2022
Publication Site: NAIC Capital Markets Special Bureau
Graphic:
Excerpt:
The percentage of U.S. insurers that reported outsourcing investment management to an
unaffiliated firm has remained relatively unchanged at year-end 2020, compared to the last
several years; it was about half of all U.S. insurers, dating back to at least 2016.
Consistent with prior years, small insurers, or those with less than $250 million in assets under
management (AUM), accounted for the largest percentage, or 63% of the total number of U.S.
insurers, that outsourced investment management.
Property/casualty (P/C) companies continue to account for almost 60% of the total number of
U.S. insurers that outsource to unaffiliated investment managers.
For U.S. insurers that named the unaffiliated investment management firms that they utilize,
BlackRock, Conning, and New England Asset Management Inc. (NEAM) have been the top three
most-named investment managers over the last few years.
Author(s): Jennifer Johnson and Jean-Baptiste Carelus
Publication Date: 18 Jan 2022
Publication Site: NAIC Capital Markets Special Bureau
Excerpt:
On December 7, the National Association of Insurance Commissioners (NAIC) Financial Stability Task Force voted in a virtual meeting to expose, for a 30-day comment period, a list of “Regulatory Considerations Applicable (But Not Exclusive) to Private Equity (PE) Owned Insurers.” The Task Force assigned to its Macroprudential Working Group the role of coordinator of the ongoing evaluation of these considerations.
The decision is the latest public expression of increasing concern among regulators about the recent growth in number and complexity of private equity-owned insurers.
The current exposure has some antecedents in NAIC-directed efforts that began two years ago. In November 2019, the Statutory Accounting Working Group began an effort to change the Statement of Statutory Accounting Principles (SSAP) No. 25, which provides accounting rules on insurer transactions with related parties and affiliates.
Author(s): Scott Fischer
Publication Date: 9 Dec 2021
Publication Site: DLA Piper
Graphic:
Excerpt:
The U.S. economy has made a solid recovery as COVID-19 vaccinations were made increasingly
available, social distancing began to ease, and businesses gradually reopened.
The International Monetary Fund (IMF), among other forecasters, expects the U.S. economy to
grow by about 6% in 2021, after contracting about 3.4% in 2020.
• Inflation reached a 39-year high of 6.8% in November following a strong rebound from the COVID19-induced recession.
• The ‘stronger for longer’ inflation rates prompted the Federal Reserve to accelerate the tapering
of its asset purchases and to suggest the likelihood of three rate hikes in 2022.
• The 10-year U.S. government bond yield has generally ranged between 1.3% and 1.7% in 2021,
increasing from less than 1% in 2020, due in part to fiscal stimulus aiding in economic recovery.
• Credit spreads have been muted in 2021 given robust global economic growth, favorable funding
conditions, and overall solid corporate performance despite higher costs and supply disruptions.
• Global stocks have achieved relatively high returns; in the U.S., the Standard & Poor’s (S&P) 500
posted seven record closing highs in November alone.
• The price of oil reached a seven-year high of $85 per barrel in 2021 as demand for oil normalized
while the global supply market tightened.
Author(s): : Jennifer Johnson and Michele Wong
Publication Date: 22 Dec 2021
Publication Site: NAIC Capital Markets Bureau Special Reports
Graphic:
Excerpt:
At year-end 2020, the U.S. insurance industry reported $286 billion in high-yield bond exposure,
an increase of just over 25% compared to year-end 2019 due in part to the broad-based credit
impact of the COVID-19 pandemic.High-yield bonds accounted for 6.1% of the industry’s total bond exposure, the highest level in
more than 10 years and an increase from 5.1% at year-end 2019.High-yield corporate bonds, asset-backed securities (ABS) and other structured securities, and
private-label commercial mortgage-backed securities (CMBS) were the primary contributors to
the increase in high-yield exposure.
Author(s): Michele Wong and Jean-Baptiste Carelus
Publication Date: 6 August 2021
Publication Site: NAIC, Capital Markets Special Report
Excerpt:
A National Association of Insurance Commissioners’ task force today created a subgroup to focus solely on the index-linked annuity products.
“These products are exclusively filed in the states as variable annuities and are funded through non-unitized separate accounts,” read a notice to the task force from Pete Weber, chief life actuary at the Ohio Department of Insurance. “The task force has discussed developing a draft standard for minimum interim values for these products and providing direction for implementing the standard.”
Regulators gave the Index-Linked Variable Annuity Subgroup a 2021 charge to: Provide recommendations and changes, as appropriate, to nonforfeiture, or interim value requirements related to Index-Linked Variable Annuities.
Author(s): John Hilton
Publication Date: June 2021
Publication Site: insurancesnewsnet
Link: https://insurance-forums.com/health/long-term-care/naic-reveals-5-regulatory-priorities-for-2021/
Excerpt:
Race & Insurance — The insurance regulatory system, and insurance in general, reflects the society it protects. Through our special committee on race and insurance we will continue to ensure the availability and affordability of insurance products for persons of color and historically underrepresented groups and promote diversity and inclusion within our sector.
Climate Risk & Resiliency — The NAIC is committed to working with state, federal and international stakeholders to coordinate climate-related risk and resiliency assessments, disclosures, and evaluation initiatives so that each state has the information, policies, and tools that promote resiliency and ensure stable insurance markets for its citizens.
Author(s): Insurance Forums Staff
Publication Date: 17 February 2021
Publication Site: Insurance Forums
Link: https://www.carriermanagement.com/news/2021/02/10/216927.htm
Excerpt:
The NAIC 2021 priorities and the charges to its key committees are (in no specific order):
COVID-19 — In 2021, the NAIC will continue its “Priority One” initiative designed to support state insurance departments in their response to the ongoing pandemic and its impact on consumers and insurance markets. NAIC has a COVID resource page that includes information on actions taken by individual states in response to the COVID 19 pandemic that impact various lines of insurance. NAIC said insurance regulators will continue to analyze data and develop the tools so that consumer protection keeps pace with changes brought on by the virus.
Big Data/Artificial Intelligence — The Big Data and Artificial Intelligence Working Group is chaired by Doug Ommen, Iowa, joined by Elizabeth Kelleher Dwyer, co-vice chair, Rhode Island and Mark Afable, co-vice chair, Wisconsin.
…..
Race & Insurance — The Special Committee on Race and Insurance is co-chaired by Maine Superintendent Eric Cioppa and New York Executive Deputy Superintendent of Insurance My Chi To.
The 2021 agenda for this panel calls for research into the level of diversity and inclusion within the insurance sector; engagement with a broad group of stakeholders on issues related to race, diversity and inclusion in, and access to, the insurance sector and insurance products; and an examination of current practices or barriers in the insurance sector that potentially disadvantage people of color and historically underrepresented groups.
Publication Date: 10 February 2021
Publication Site: Carrier Management