The National Association of Insurance Commissioners published a response to U.S. Sen. Elizabeth Warren detailing how state regulators are adapting solvency oversight to insurers’ increasingly complex investments, ownership structures and risk transfer arrangements. The framework remains risk and activity based rather than imposing separate requirements based solely on private equity ownership or private credit exposure. Its focus is on the economic substance of assets and transactions, including conflicts of interest, concentration, valuation, liquidity, rating opacity, reinsurance risk and capital adequacy. Key measures include a substance based definition of bonds, authority to challenge external ratings used for regulatory purposes and development of a due diligence framework for credit rating providers. Regulators have also imposed a 45% risk based capital charge on residual interests in structured securities and revised capital factors for certain collateralized loan obligation tranches for year-end 2026. From year-end 2026, insurers must provide standardized, securities level reporting on private investments, including distribution type, valuation inputs, deferred payment in kind interest and reliance on private ratings. Expanded related party and investment manager disclosures support scrutiny of affiliated transactions, fees, conflicts and whether insurers retain meaningful control over investment decisions. The letter also updates implementation of actuarial safeguards for life insurers. Asset adequacy testing under Actuarial Guideline 53 is focusing on structured asset cliff risk, illiquidity and Level 3 valuations, while regulators have begun reviewing the first Actuarial Guideline 55 filings covering certain life and annuity reinsurance transactions and are considering additional guidance for year-end 2026. The NAIC said it cannot comment on company specific supervisory matters and is not aware of any material instance in which a private firm made risky investments with policyholder premiums while failing to disclose or properly classify them.
2026-09-24National Association Of Insurance Commissioners
National Association of Insurance Commissioners details tighter state oversight of private investments, ratings and life reinsurance
The National Association of Insurance Commissioners outlined how state regulators are tightening risk based oversight of complex and private investments, external ratings, affiliated relationships and life reinsurance. Measures include a 45% capital charge on residual structured securities, revised year-end 2026 CLO factors and standardized private investment reporting from year-end 2026. Regulators are also reviewing the first Actuarial Guideline 55 reinsurance filings and strengthening asset adequacy analysis for complex holdings.