NAIC backs new XXX/AXXX framework

The executive committee of the National Association of Insurance Commissioners (NAIC) has adopted a newly drafted reinsurance framework which changes the types of assets or securities insurer/captive regulations can invest in to back their reserve liabilities.

The body’s adoption of the XXX/AXXX Reinsurance Framework furthers an action plan to develop proposed changes to the insurer/captive regulations specific to XXX/AXXX transactions.

The XXX/AXXX Reinsurance Framework does not change the statutory reserve requirements; rather, it changes the types of assets or securities are needed to back those reserve liabilities.

The framework also requires the ceding company to disclose the assets and securities used to support the reserves and hold an RBC cushion if the captive does not file RBC.

“The XXX/AXXX Reinsurance Framework is an important regulatory initiative, and this adoption will allow us to move expeditiously to develop a comprehensive framework proposal,” said Adam Hamm, NAIC president and North Dakota Insurance Commissioner.

With this adoption, numerous groups will develop the details to create the framework for subsequent consideration by the entire NAIC membership.