NAIC Adopts Group Capital Calculation and Related Amendments to Insurance Holding Company Model Act and Regulation

  • Legal Development 2020年12月22日 2020年12月22日
  • 北美洲

  • 保险和再保险

On December 9, 2020, the Executive (EX) Committee and Plenary of the National Association of Insurance Commissioners (“NAIC”) adopted the Group Capital Calculation (“GCC”) and amendments to the NAIC Insurance Holding Company System Regulatory Act and the NAIC Insurance Holding Company System Model Regulation (collectively, the “NAIC Model Law and Regulation”).

NAIC Adopts Group Capital Calculation and Related Amendments to Insurance Holding Company Model Act and Regulation

The GCC is designed to assist state insurance regulators in identifying risks to insurance companies that they regulate by detecting which risks may emanate from the insurers’ holding company systems by, for example, providing regulators with insight into the financial condition of non-insurance entities within a holding group, how capital is distributed across an entire group, and whether and to what degree insurance companies may be supporting the operations of non-insurance entities within their holding group.  The GCC is to be calculated in accordance with instructions prepared by the NAIC, which can be found here.

Work on developing the GCC began in 2015 and was carried out by the NAIC’s Group Capital Calculation (E) Working Group.  It will be another group supervision tool for state insurance regulators in addition to the Form F Enterprise Risk Report, ORSA (Own Risk and Solvency Assessment) reporting, and the Corporate Governance Annual Disclosure. 

The changes to the NAIC Model Law and Regulation are intended to facilitate the GCC including, inter alia, by requiring the ultimate controlling person of every insurer subject to registration to file an annual GCC concurrently with its holding company registration statement.  However, the amendments to the NAIC Insurance Holding Company System Regulatory Act exempt certain insurance holding groups from the requirements relating to the GCC, including groups:  (1) with only one insurer in the holding company structure; (2) required to perform a group capital calculation specified by the United States Federal Reserve Board; (3) whose non-US group-wide supervisor is located within a Reciprocal Jurisdiction (as defined in the NAIC Credit for Reinsurance Model Act); and (4) that provide information to the US lead state insurance regulator which meets the requirements for accreditation and whose group-wide supervisor is not a Reciprocal Jurisdiction but does accept the GCC as a worldwide group capital assessment for US insurance groups operating in that jurisdiction.  The amendments to the NAIC Model Law and Regulation will, of course, not be binding in any state unless and until they are adopted into the laws and regulations of such state.      

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