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Life Health > Life Insurance

NAIC Panel Hears About Problems

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Members of the Financial Analysis Working Group at the National Association of Insurance Commissioners have received a confidential presentation on insurers that may have problems.

The working group, part of the Financial Condition Committee at the NAIC, Kansas City, Mo., “met in executive session” Tuesday, officials report in a summary of the working group’s activities posted on the NAIC Web site.

Working group members “heard presentations on nationally significant insurers and groups that are exhibiting characteristics of potentially troubled companies,” officials report.

Another arm of the NAIC, the Financial Regulation Standards and Accreditation Committee, voted to release revisions made in 2008 to the Model Regulation to Define Standards and Commissioner’s Authority for Companies Deemed to be in a Hazardous Financial Condition.

The committee has opened the draft model revisions up for public comment for 30 days.

“The revisions provide additional standards for consideration by the commissioner to determine whether the continued operation of any insurer might be deemed to be hazardous to its policyholders, creditors or the general public,” officials write in a summary describing that committee’s activities. “In addition, the revisions give the commissioner additional authority to issue an order requiring companies deemed to be in a hazardous financial condition to take corrective action.”

NAIC panels also are reviewing the “capital and surplus relief” proposals submitted in November 2008 by the American Council of Life Insurers, Washington.

Regulators decided against adopting the proposals as is on an expedited emergency basis, but the NAIC is continuing to review the proposals.

The NAIC’s Capital and Surplus Relief Working Group referred one proposal – that insurers be able to include more of the income tax refunds they are expecting and other “tax assets” in their capital and surplus totals – to the Statutory Accounting Principles Working Group.

The Statutory Accounting Principles Working Group has made a draft of a deferred tax asset provision available for comment.

The Statutory Accounting Principles Working Group “plans to conduct conference calls to discuss the recoverability of deferred tax assets, and relationship of the proposed language to existing model laws,” officials write in the activity summary for that working group. “[The insurance] industry was specifically requested to demonstrate whether there is an economic need to change the language.”

The Life and Health Actuarial Task Force is making other capital and surplus-related drafts available for public comment.

The task force “exposed” a draft of the Model Regulation Permitting the Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities, along with drafts of Actuarial Guideline 1c and the Valuation of Life Insurance Policies Model Regulation, which deal with the details of how insurers can use the preferred mortality tables in reserve calculations.

In related news, members of the Capital and Surplus Relief Working Group agreed that they should take a look at the current system of “permitted practices,” or insurers’ use of an individual state regulator’s permission to use accounting practices that appear to differ from the standard statutory accounting practices.

The working group will look at the definition of a “permitted practice,” the requirements surrounding requests for permitted practices, the processes used to determine whether to grant the requests, and related matters, officials write.


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