NAIC Committee Proposes Reinsurance RBC and Reporting Changes

At a meeting on August 14, 2026, the Financial Condition (E) Committee (the “(E) Committee”) of the National Association of Insurance Commissioners (the “NAIC”) released two proposals demonstrating state insurance regulators’ continued focus on life reinsurance transactions. First, (E) Committee members indicated that following review of insurer reporting pursuant to the recently adopted Actuarial Guideline LV (AG 55) (described here), insurance regulators hold a “general belief” that “immediate action is needed” to respond to a significant increase in U.S. reinsurance activity and the identification of certain transactions that may pose risk to U.S. cedants. Accordingly, the (E) Committee approved a referral to the Life Risk-Based Capital (E) Working Group to develop (1) a reinsurance recapture RBC factor for ceded reserves and modified coinsurance balances outside reciprocal jurisdictions, reflecting the additional capital needed if recapture occurs; and (2) alignment of the life risk-based capital reinsurance credit-risk methodology with the property and casualty risk-based capital approach to account for reinsurers with lower financial strength ratings. The changes are to be prioritized for year-end 2027 implementation.

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