CFOs Worry About Principles-Based Reserving

North American life insurance company chief financial officers say they have mixed feelings about a likely shift in regulation of insurers’ reserves and capital levels.

Researchers in the Stamford, Conn., office of Tillinghast, a unit of Towers Perrin Inc., have published that finding in a report based in an informal survey 25 North American life company CFOs.

State regulators have been working to move toward a flexible, “principles-based” approach that will rely heavily on statistical modeling methods, and away from relying on simple formulas for computing minimum reserve and capital levels.