NAIC Spring 2020: Capital Adequacy Task Force Updates

NAIC working groups held a series of conference calls after the cancellation of the 2020 Spring National Meeting. The is a summary of recent updates from the Capital Adequacy Task Force pertinent to investment accounting and reporting.

Download Clearwater’s full NAIC Spring 2020 market insight paper here.

Ref#2019-16-CA

The CADTF on April 30, 2020 adopted changes to the 2020 Annual Statement Blanks. The BWG and the SVO have adopted the 20 bond designations for 2020 reporting. The reported designation categories will flow into the RBC. The current factor for designations 1-6 will remain until an impact analysis can be done to confirm the new factors for the 20 designation categories. There are also other changes not related to the new 20 designation categories:

• Hybrid securities were removed from LR005 – Unaffiliated Preferred and Common Stock, LR010 – Asset Concentration Factor, LR030 – Calculation of Tax Effect for Life RBC, Calculation of Authorized Control Level RBC
• Hybrid securities were added to XR011 – Asset Concentration and XR023 – Calculation of Total RBC after Covariance
• “Unaffiliated” was added to line 35 Common Stock on XR006 – Off-Balance Sheet Security Lending Collateral and Schedule DL, Part 1 Assets

RBC Reports are modified for 2020 annual reporting due to 20 new designation categories:

• XR006 – Off-Balance Sheet Security Lending Collateral and Schedule DL, Part 1 Assets
• XR007.1 – Fixed Income Assets
• XR011 – Asset Concentration
• PR006 – Bonds
• PR011 – Asset Concentration
• PR015 – Off-Balance Sheet Collateral and Schedule DL, Part 1 Assets
• LR002 – Bonds
• LR010 – Asset Concentration Factor
• LR014 – Hedged Asset Bond Schedule
• LR018 – Off-Balance Sheet Collateral