Regulatory Update: National Association of Insurance Commissioners Spring 2026 National Meeting

In connection with developing the resource document, the working group has proposed a draft outline and requested input from interested parties on specific best practices or procedures insurers have implemented to satisfy the supervisory obligations of Model #275 in areas related to training, supervision systems, and required disclosures and conflicts of interest. The working group has emphasized that it is seeking practical input on both effective compliance approaches and recurring implementation challenges, with the goal of producing guidance that reflects a range of insurer business models, distribution structures, and operational sizes. The deadline to submit information to the working group is May 11, 2026.

At its February 24, 2026, meeting, the working group described its newly assigned 2026 charge to evaluate concepts to improve life insurance and annuity illustrations and disclosures, including through revisions to NAIC models or other guidance where appropriate. The chair emphasized that the group’s initial focus is indexed annuity sales materials and disclosures, particularly regulator concerns that some illustrations depict sustained annual returns in the 10% to 25% range and that recently created proprietary indices may be presented using favorable back-casted performance. At the conclusion of that meeting, the working group exposed for a 30-day comment period the following high-level discussion question: “What are both short-term and long-term approaches to ensure consumers receive reasonable expectations for index annuity returns at the point-of-sale?”

At its March 31, 2026, meeting, the working group discussed comments received on the exposure question. Suggested ideas for a starting point for a short-term solution included the Annuity Disclosure Model Regulation (#245) and the NAIC’s recently adopted revisions to Actuarial Guideline XLIX-A — The Application of the Life Illustrations Model Regulation to Policies with Index-Based Interest Sold on or After December 14, 2020 (AG 49-A). The chair expressed a desire to develop a short-term solution over the next year and pursue a long-term solution after that. To that end, the working group exposed for comment until May 18, 2026, the following questions: “What should be the starting point of a short-term solution: Model 245 language or something else (such as AG 49-A, other guidance, or starting anew)? If language similar to Model 245 or other existing guidance, what types of modifications do you believe are necessary to address current regulatory concerns regarding illustrated rates and transparency (i.e., which sections/parts do you believe need to be added or modified)?

If starting anew, then how can the scope be limited to ensure progress towards a short-term solution before a longer-term solution is developed?”

The new working group is expected to explore a variety of areas including, among others, the collection and analysis of market conduct data, interstate collaboration (including with respect to data analysis and examination), the Market Regulation Handbook and examination approaches, NAIC support, systems, and training. The working group is expected to provide its initial recommendations to the full committee for adoption at the NAIC Fall 2026 National Meeting.

After adopting the PBM Guidelines during the Fall 2025 National Meeting, the PBMWG incorporated revisions to address further comments received from PBMs, which were intended to clarify that the PBM Guidelines do not constitute a model law or represent a uniform standard for all state insurance regulators but rather are intended to serve as a guidance document for regulators considering licensure or regulation of PBMs. That further revised draft was ultimately adopted by the (D) Committee at the Spring Meeting.

Meanwhile, the PBMWG intends to continue to revise the PBM Examination Chapter to address comments received from interested parties and interested regulators, including the Alabama Department of Insurance. The PBMWG intends to hold interim meetings to complete its work and refer the draft to the Market Conduct Examination Guidelines (D) Working Group for its consideration prior to the Summer 2026 National Meeting.

Although catastrophe risk has been a consideration in the RBC formula since its inception in the mid-1990s, hurricane and earthquake perils were not formally added to the formula until 2017 following several years of informational-only data collection. In 2021, after an increase in wildfire frequency and severity, the Climate and Resiliency (EX) Task Force sent a referral to the Catastrophe Risk (E) Subgroup to expand the catastrophe perils in the P&C RBC formula that reference wildfire. The Subgroup subsequently entered into discussions with industry and regulators to evaluate the informational-only wildfire data that has been reported in the RBC annual statement pages since 2022.

Recently, NAIC staff evaluated the effect of adding wildfire to the RBC formula using 2024 and 2025 information. Notably, while the 2024 data showed that only two companies exhibited a decline in their RBC action level, the 2025 data showed no shifts in action levels. Accordingly, while the addition of wildfire risk does have a measurable effect on RBC, the observed effects on companies’ action levels were minimal.

Looking ahead, the Catastrophe Risk (E) Subgroup is currently evaluating severe convective storm peril based on data collected since 2024 and expects to move forward with incorporating this additional peril into the P&C RBC formula within the next two to three years.

As exposed, the proposal would align RBC charges for collateral loans with the factors applicable to the underlying asset classes (e.g., 30% for loans backed by mortgage loans or JV/LP/LLC interests and 45% for loans backed by residual tranches) with corresponding asset valuation reserve (AVR) implications. The original proposal applied a uniform 20% haircut to RBC factors for certain higher-risk collateral types (including JV/LP/LLC interests and residual interests) rather than accounting for overcollateralization. The ACLI’s proposal would replace this with a more granular approach under which RBC factors vary based on the level of overcollateralization (or similar metrics, such as loan-to-value ratios), so that loans with higher overcollateralization receive lower effective RBC charges and vice versa. The Life RBC Working Group requested feedback on whether an alternative tiering structure with 80% LTV at the midpoint would be appropriate, based on the observation that 80% LTV is a prevalent investment limit among states.

In connection with this alternative framework, the Life RBC Working Group requested additional industry input on appropriate methodologies for measuring and validating key metrics, including overcollateralization levels and loan-to-value ratios. In its comment letter, the ACLI noted that regulators are expected to have more complete data beginning with the 2026 annual statement filings, which could support calibration of a more risk-sensitive approach. The ACLI also indicated that the proposed framework is intended to align with existing statutory accounting requirements, including SSAP No. 21, Other Admitted Assets, which requires insurers to maintain documentation supporting valuation of JV/LP/LLC interests.

As part of the SVO’s financial analysis of general corporate and municipal bonds, the SVO undertakes a financial analysis of the issuer, using historical audited financial information of the issuer. Where the issuer of a bond is a subsidiary of a parent entity (i.e., an issuing subsidiary), in certain cases the SVO may also analyze the financial condition of the parent entity and the nature of the relationship between the parent and the issuing subsidiary in order to assess the credit quality of the bond.

Paragraph 38 of the P&P Manual (Parent-Subsidiary Situations) currently states that the SVO may rely on the financial statements of the parent holding company as if they were prepared for the issuing subsidiary when the consolidating work papers relating to the issuing subsidiary are provided and when (i) the parent’s operations are limited exclusively to owning the issuing subsidiary and (ii) the subsidiary’s income constitutes at least 97% of the parent’s consolidated pretax income and assets.

In its proposal, the SVO noted that it had become aware that the current guidelines have often been read in isolation and interpreted as the only basis on which the SVO may assess a subsidiary issuer based on its parent’s financial statements, when in fact the SVO has broader latitude in this assessment. The proposed revision adds language to Paragraph 38 stating that the SVO may also rely on a parent holding company’s financial statements when it has determined that there is other satisfactory support to do so, though the proposal does not specify what might constitute satisfactory support in the SVO’s view.

The P&P Manual requires the SVO director to prepare an annual report at each Spring National Meeting of the NAIC on the carry-over filings to be presented to the Investment Designation Analysis (E) Working Group (which report was formerly required to be presented at the Valuation of Securities (E) Task Force). The report sets forth an acceptable annual rate of carry-over filings and identifies whether the acceptable annual carry-over rate has been significantly exceeded and, if so, whether the excess is attributable to resource constraints at the SVO. If a resource constraint is identified, the chairs and members of the Investment Designation Analysis (E) Working Group consult with NAIC senior staff to evaluate the need for additional SVO staff and resources.

In its 2026 report, the SVO noted that it reviewed over 23,319 filings in 2025, a 19.9% year-over-year increase in overall filings from 2024, primarily driven by a 49.1% increase in Private Letter Rating filings. The SVO’s report noted that Private Letter Rating filings have risen from 1,961 in 2022 to 12,269 in 2025, representing a 525.7% increase over that three-year period. The SVO also reported that the carry-over rate of 9.3% in 2025 increased from 7.5% in 2024.

Typically, a carry-over rate of 10% or higher would be an indication of analytical resource constraint in the SVO, but the SVO reported that a carry-over rate that excludes Private Letter Rating filings is a more accurate measure of its analytical workload. Excluding Private Letter Rating filings, the SVO calculated a consistent increase in the carry-over rate from 10.8% in 2023, to 13.3% in 2024 and 19.7% in 2025 — nearly double the 10% threshold that would typically indicate a resource constraint.

The SVO also reported that it has been deferring an increasing amount of its work on traditional filings further into the following year to ensure that insurers that own securities with a Private Letter Rating obtain an NAIC Designation to report at year-end because without timely completion of these filings, insurers could potentially incur a punitive NAIC Designation. The SVO predicts that as the volume of Private Letter Rating filings continues to increase, carry-over filings for traditional SVO filings will also continue to increase. Importantly, the SVO noted an increasing likelihood that it will soon be unable to complete all Private Letter Rating filings before year-end.

NAIC staff expressed concerns with these trends and the ongoing strain on SVO analytical resources and indicated a willingness to work with the SVO to obtain additional resources to alleviate this strain.

The Credit Rating Provider (E) Working Group met in a regulator-only session on March 10, 2026, in which it received a presentation from PricewaterhouseCoopers on its current draft of the Credit Rating Provider Due Diligence Framework proposal and the status of the Credit Rating Provider data call. The working group anticipates holding its first open meeting in late April, at which time it expects the framework to be exposed for public comment.

The Investment Analysis (E) Working Group reported that it held a regulator-to-regulator meeting on March 3 to establish the group and develop its plan for the coming months. The working group plans to prioritize educational and analytical discussions to enhance regulatory understanding of new investment trends and insurer investment portfolio risk characteristics in order to support consistent oversight across jurisdictions. Planned areas of focus include mortgage loan investments, Level 3 assets (assets whose fair value cannot be determined using observable market prices or inputs and instead rely on internal models and assumptions), effects of the newer bond reporting definitions, and capital markets research initiatives.

With respect to mortgage loans, the working group plans to discuss recent industry trends in mortgage loan investments, including allocations across loan categories based on factors such as loan-to-value and debt service coverage metrics, with a focus on developing additional context regarding evolving insurer exposure profiles and these investments’ sensitivity to economic conditions. The working group also plans to analyze insurer participation in residential mortgage lending, including loan structures, and underwriting and performance monitoring practices. The working group anticipates that this initiative will include review of individual insurer holdings and input from insurers and other market participants regarding insurers’ assessment of credit quality, collateral, liquidity risk, and how these exposures are monitored over time. The working group reported that these discussions may result in recommendations or referrals for public discussion of whether existing reporting and capital frameworks align with any emerging risk characteristics that are observed.

As part of its plans to discuss trends related to Level 3 assets, the working group plans to review longer-term growth patterns, concentration considerations, and impairment activity, which may include a review of approaches used to identify other-than-temporary impairments. Discussions may focus on how qualitative and quantitative factors are incorporated into impairment assessments and the role of governance and documentation in these approaches. The working group noted that these discussions are intended to be educational, and it plans to provide an update to the Invested Assets (E) Task Force on any key observations.

With respect to effects of the newer bond reporting definitions, the working group anticipates that it will review aggregated industry data related to newer bond reporting definitions and structured security classifications and plans to discuss reporting attributes, such as payment-in-kind features, leverage characteristics, and other structural elements relevant to risk assessment.

Finally, the working group noted that it anticipates receiving an overview of capital markets research initiatives and analytical products intended to support regulatory analysis and public transparency. The working group anticipates that these initiatives will include opportunities for regulator feedback to help inform future research priorities.

a. SAP Working Group Adopts Clarifications to Guidance on Sale-Leasebacks

The SAP Working Group adopted revisions to SSAP No. 22 to address the treatment of sale-leaseback transactions involving restricted proceeds. Under the clarified guidance, transactions in which cash or other assets received by the seller are effectively restricted, such that they are unavailable to satisfy policyholder obligations or may be forfeited upon breach or early termination, do not qualify for sale-leaseback accounting and must be accounted for as financing arrangements.

The proposed revisions were drafted in response to a question that NAIC staff received on a sale-leaseback transaction that included a significant restriction on the cash received as part of the sale of the assets and whether such a transaction would meet the definition of a sale-leaseback in accordance with SSAP No. 22. 

In the fact pattern considered, an insurer sold a nonadmitted asset to an unaffiliated party but was required to hold the sale proceeds in a restricted account until the leaseback obligation was fully satisfied. This restriction raised questions as to whether the transaction constitutes a bona fide sale for statutory accounting purposes.

Regulators emphasized that in an insolvency scenario, such restricted cash or assets would not be available to satisfy policyholder obligations. The adopted revisions are intended to address concerns that certain sale-leaseback structures could otherwise result in recognition of assets that are not truly available, contrary to statutory accounting principles regarding admissibility and policyholder protection. The final guidance also clarifies that cash or assets subject to such restrictions are considered nonadmitted. A sale-leaseback transaction that does not qualify for sale-leaseback accounting must be accounted for by the financing method. Under the financing method, the underlying asset is not derecognized, the cash received is recognized as an asset, and a corresponding liability is recorded for the obligation to repay the proceeds.

The adopted revisions are effective for all contracts in effect on or after March 23, 2026.

b. SAP Working Group Adopts Clarifications to Guidance on Repurchase Agreements

The SAP Working Group adopted revisions to SSAP No. 103 to clarify the guidance requiring nonadmittance of long-term repurchase and reverse repurchase transactions. Under prior guidance, both repurchase and reverse repurchase transactions with maturity dates in excess of 365 days were required to be nonadmitted. The revisions eliminate automatic nonadmittance for long-term repurchase agreements while retaining nonadmittance for reverse repurchase agreements with maturities exceeding one year.

The revisions reflect the SAP Working Group’s conclusion that the maturity of a repurchase agreement, in isolation, should not determine admittance where the transaction meets SSAP No. 103 collateral requirements, while maintaining a more conservative treatment for reverse repurchase agreements. The adopted revisions also clarify reporting for reverse repurchase agreements, specifying that long-term reverse repurchase agreements should be reported as “Any Other Asset” on Schedule BA and remain nonadmitted, with limited ability to become admitted in the final year to maturity if specified conditions are met.

NAIC staff and regulators emphasized that repurchase and reverse repurchase agreements represent distinct economic transactions and should be evaluated separately. In a repurchase agreement, the insurer transfers a security and receives cash, with the counterparty bearing the primary asset valuation risk. In contrast, in a reverse repurchase agreement, the insurer provides cash and assumes the asset valuation risk associated with the acquired collateral.

In developing the revisions, NAIC staff noted potential risks associated with “put” provisions in repurchase agreements and indicated that if warranted, broader guidance addressing the puttable nature of borrowing arrangements could be considered, rather than imposing restrictions specific to repurchase agreements.

c. SAP Working Group Considers Updates on Asset-Liability Matching Derivatives

The SAP Working Group exposed a draft issue paper and proposed statutory accounting guidance for interest-rate hedging derivatives used for asset-liability management (ALM). The exposure reflects the SAP Working Group’s prior direction to develop guidance based on an amortized cost approach and includes both a clean draft and a version showing revisions from the ACLI’s proposal. The exposure specifically requests comment on key elements of the proposed guidance, including transition, reporting, and admitted asset classification.

On September 10, 2025, the SAP Working Group had received a presentation from the ACLI regarding proposed new statutory accounting guidance for ALM derivatives along with two drafts of potential statutory accounting guidance: one using an amortized cost approach, and one using a fair value and spread method. The presentations and both potential options for statutory accounting guidance were exposed for public comment. Comments from industry members generally supported further development of guidance based on the ACLI’s amortized cost approach.

Consistent with prior direction, NAIC staff used the ACLI’s amortized cost framework as a starting point in developing the exposure draft, with revisions to align with statutory accounting concepts and NAIC drafting conventions. The amortized cost approach is intended to reduce income statement volatility by deferring and amortizing gains and losses, in contrast to a fair value approach that would recognize unrealized gains and losses in current period results.

The proposed guidance is intended to address derivatives used in macro-hedging strategies for interest-rate risk that do not qualify for hedge accounting under SSAP No. 86, Derivatives but are considered economically effective for ALM purposes.

The SAP Working Group is continuing to solicit industry input on reporting considerations, including whether these derivatives should be reported within existing Schedule DB-Derivatives or through new or modified reporting structures.

d. SAP Working Group Exposes Issue Paper Regarding Qualifying Statutory Trusts

The SAP Working Group exposed a draft issue paper addressing the statutory accounting treatment of residential mortgage loans held in qualifying statutory trusts. The issue paper documents the conceptual basis for the SAP Working Group’s previously adopted revisions to SSAP No. 37, Mortgage Loans (SSAP No. 37) as well as related changes to SSAP No. 2, Cash and Cash Equivalents and SSAP No. 40, Real Estate Investments.

The exposed issue paper formalizes the concept of a “qualifying statutory trust,” which permits insurers to report residential mortgage loans held through such trusts as if directly held and within the scope of SSAP No. 37. To qualify, a statutory trust must meet a series of structural and operational requirements, including

• 100% undivided beneficial ownership by the insurer in the trust (or a qualifying series)
• limitation of assets to residential mortgage loans eligible under SSAP No. 37, related cash and cash equivalents, and certain foreclosed real estate
• restrictions limiting activities to those incidental to the ownership and management of mortgage loans
• requirements that all cash flows and economic risks pass through directly to the insurer

The framework is intended to ensure that qualifying statutory trusts operate as pass-through vehicles rather than as investment subsidiaries or vehicles for regulatory arbitrage. Consistent with the adopted SSAP revisions, the issue paper confirms that assets and liabilities of a qualifying statutory trust are reported on a look-through basis as if directly held by the insurer.

The guidance also clarifies that nonqualifying statutory trusts must be accounted for under other applicable SSAPs, reinforcing that the look-through approach is limited to structures meeting the qualifying criteria.
The SAP Working Group declined to extend the framework to common law trusts, citing concerns regarding legal certainty, enforceability, and regulatory oversight. Instead, the guidance is limited to statutory trusts formed under state law, which regulators view as providing more consistent governance and liability protections.

In addition, while the scope of permissible mortgage assets was broadened during the drafting process to align with SSAP No. 37 (including second-lien loans and participations), the SAP Working Group maintained a narrow focus on residential mortgage loan activities and related assets.

The issue paper reflects that the underlying SSAP revisions are effective January 1, 2027, with early adoption permitted. Transition guidance requires insurers to transfer qualifying statutory trust assets and liabilities at book/adjusted carrying value, avoiding recognition of gains or losses upon adoption.

 

e. SAP Working Group Exposes Proposal to Add Restricted Asset Reporting Code for Assets Held Under Modified Coinsurance and Funds Withheld Arrangements

The SAP Working Group re-exposed revisions to SSAP No. 1, Accounting Policies, Risks & Uncertainties, and Other Disclosures (SSAP No. 1) on the use of the restricted asset code in the investment schedules, including assets held under ModCo and FWH reinsurance arrangements. The proposal builds on recent changes adopted by the Blanks (E) Working Group and is intended to align SSAP No. 1 disclosures with updated Note 5L restricted asset reporting and to improve transparency regarding assets supporting reinsurance structures. 

The proposal would revise SSAP No. 1 to require separate identification of additional categories of restricted assets, including assets held under ModCo and FWH reinsurance agreements and collateral assets received and recognized on the balance sheet (excluding collateral related to securities lending and repurchase agreements). These categories have already been incorporated into the statutory financial statement Note 5L disclosures, and the proposal would conform SSAP No. 1 to those reporting requirements. The revisions also contemplate corresponding additions to investment schedule reporting codes to provide more granular visibility into restricted assets across reporting schedules. 

The SAP Working Group is considering whether restricted asset codes should be retained in the investment schedules. Regulators noted potential limitations, including applying the restricted asset code at the entire investment level, even where only a portion of the asset is restricted, and the substitutability of assets may result in different assets being restricted over time, reducing the usefulness of static schedule-level coding.

Given these concerns, the SAP Working Group is considering whether to eliminate restricted asset codes from the investment schedules altogether and has requested feedback from regulators on the utility of restricted asset codes in investment schedules and whether existing note disclosures provide sufficient information without schedule-level coding.

The SAP Working Group also received an update that NAIC staff will collaborate with interested parties in identifying clarifications to respond to the referral from the Life RBC Working Group that was received at the Summer 2025 National Meeting. The referral raised questions regarding AVR equity reporting lines for common stock in subsidiary, controlled, and affiliated (SCA) entities and other affiliates and requested clarifications to the AVR instructions. Specifically, the ACLI identified potential ambiguity in how AVR equity components should be reported for common stock investments in SCA entities and other affiliated investments, particularly in the context of the AVR instructions applicable to Schedule BA and related reporting lines. 

NAIC staff indicated that they will collaborate with interested parties to identify and develop clarifications to the AVR instructions. The SAP Working Group did not expose specific revisions at the Spring Meeting but signaled that further guidance or clarifying revisions may be developed following stakeholder engagement. 

f. SAP Working Group Updates on IMR Topics

The IMR Ad Hoc Subgroup (IMR Ad Hoc Group) continues to make progress toward developing a long-term framework for the treatment and admittance of negative IMR. The subgroup has been meeting regularly and is expected to present a draft of its proposed long-term framework for the treatment of the IMR at an interim meeting of the SAP Working Group in April 2026.

The SAP Working Group adopted revisions to SSAP No. 7, Asset Valuation and Interest Maintenance Reserve (SSAP No. 7) that set forth concepts for an IMR proof of reinvestment developed by the IMR Ad Hoc Group. A fundamental concept of a negative IMR, supporting the deferral of realized loss recognition with amortization over time, is that the proceeds from the sale of fixed-income instruments have been reinvested into new fixed income instruments with a higher yield. To facilitate verification without specific investment tracking, a calculation template has been developed to determine whether (i) insurers are sufficiently acquiring fixed-income instruments in comparison to their investable premium and sold fixed income investments and (ii) whether the weighted average yield on the investments acquired is greater than the weighted average yield of the investments sold. 

With these revisions, a company will be required to complete and pass both tests within the proof of reinvestment to move to a net negative IMR balance (from a prior positive IMR position) and/or increase a prior year net negative IMR balance. The proof of reinvestment is intended to be captured as a disclosure within SSAP No. 7 for annual completion as required by affected reporting entities.

NAIC staff will continue to work with industry to refine the templates as part of the IMR work. The concept and revised disclosure templates will be subsequently exposed and considered for final adoption in the issue paper and revised SSAP developed as part of the long-term IMR project.

g. NAIC Working Group Proposes Disclosures for Funding Agreement-Backed Financing Programs

At the Spring Meeting, the SAP Working Group exposed revisions to SSAP No. 52, Deposit-Type Contracts (SSAP No. 52) that would require insurers to disclose, on a pre-reinsurance basis, the balance of all funding agreements supporting special purpose vehicle (SPV) issued structures, with disaggregation by transaction type, including funding agreement-backed notes, funding agreement-backed repurchase agreements (FABRs), funding agreement-backed commercial paper, funding agreement-backed loans (FABLs), and direct funding agreements. 

The proposal also includes additional required disclosures regarding whether the associated SPV-issued debt contains put features or embedded options, instances where the terms of the funding agreement differ from the associated SPV issuance, the maturity distribution of funding agreements (including fixed versus floating rate), currency denomination and hedging of non-U.S. exposures, and the book adjusted carrying value of collateral pledged in connection with FABR and FABL structures.

In addition, the SAP Working Group proposal contemplates corresponding footnote disclosures in Exhibit 7, Deposit-Type Contracts and coordination with a blanks proposal sponsored by the Macroprudential (E) Working Group to operationalize the reporting framework. If ultimately adopted, the disclosures would be incorporated into SSAP No. 52 and the Annual Statement reporting framework, with the NAIC indicating an expected effective date of year-end 2026 financial statements.

The Academy presentation, exposed in March 2026, outlines a proposed modeling framework developed in coordination with the NAIC Structured Securities Group (SSG) to recalibrate CLO asset risk charges using a “comparable attributes” approach. Under this framework, C-1 factors would be determined based on tranche-level characteristics, with ratings serving as the primary driver of tail risk and additional adjustments applied for structural features.

The modeled results set forth in the presentation indicate a differentiated risk profile across the CLO capital structure, with relatively low risk for senior tranches and significantly higher risk for junior tranches. Consistent with these results, the comparable attributes approach would generally reduce RBC charges for higher-rated tranches and increase charges for lower-rated tranches, reflecting greater sensitivity to default and loss severity.

Although the analysis to date has focused on CLOs backed by broadly syndicated loans (BSL CLOs), the framework may be extended to middle-market and private credit CLOs, either as currently structured or with modification.

In addition to ratings, the Academy identified tranche thickness, defined as the difference between a tranche’s attachment and detachment points (expressed as a percentage of the capital structure), as a key determinant of tail risk, particularly for tranches rated Baa3 (BBB-) and below. The modeling indicates that thinner tranches exhibit higher loss volatility within a given rating category. Accordingly, the Academy presented an approach under which CLO tranches would be segmented based on a 4% thickness threshold, with additional capital charges applied to thinner tranches below that threshold, primarily for below-investment-grade exposures.

In parallel, the RBCIRE Working Group has advanced a proposal to modify RBC reporting to separately identify CLO exposures within long-term bonds. The proposal would require distinct reporting of CLOs (and similar structured securities) from other bonds and establish a framework to support differentiated RBC treatment across NAIC designation categories. The working group indicated that these reporting changes are intended to support implementation of revised CLO RBC factors.

The Academy presentation anticipates that final modeled factors could be available for exposure by April 30, 2026. Any adopted changes are expected to be effective for RBC reporting as of December 31, 2026.

At the Spring Meeting, the AM Working Group discussed its implementation timeline and ongoing workstreams for the AM. The AM was developed by the U.S. as an alternative to the ICS to serve as a prescribed capital requirement for Internationally Active Insurance Groups (IAIGs) under ComFrame to avoid the application of multiple capital standards to groups domiciled in the U.S. Following the IAIS determination on December 5, 2024, that the AM may be used in lieu of the ICS for U.S.-based IAIGs, the NAIC has been advancing implementation of the AM through the Group Capital Calculation (GCC) and related supervisory processes.

The draft Solvency Regulation Review concludes that implementation of the AM can be achieved primarily through targeted refinements to existing U.S. regulatory tools rather than the creation of a new framework. The review identifies recommendations to

• finalize key elements of the AM (including scalar methodologies and entity categories)
• enhance the GCC to improve transparency and comparability (including reporting on interest rate sensitivity and reserve composition)
• clarify the role of existing supervisory tools, such as Own Risk and Solvency Assessment and GCC, in group capital intervention
• address forthcoming ComFrame reporting and disclosure requirements in a manner consistent with the aggregation-based approach

The review contemplates that these recommendations will be incorporated into documentation supporting the final AM and, where necessary, referred to relevant NAIC committees for implementation.

The AM Working Group expects to consider adoption of the final Solvency Regulation Review in June 2026, after which any recommendations would be referred to the International Insurance Relations (G) Committee and the Financial Condition (E) Committee. The Working Group also indicated it intends to move toward finalization of the AM in mid-2026, including establishing reporting of AM results through existing U.S. supervisory processes.

a. AI Systems Evaluation Tool

Following the NAIC Fall 2025 National Meeting and in advance of the Spring Meeting, the Big Data and Artificial Intelligence (H) Working Group (BDAI Working Group) met twice, on February 9 and 17, 2026, to discuss updates to and comments on the AI Systems Evaluation Tool (Evaluation Tool) and preparations for the pilot phase. During these meetings, the BDAI Working Group continued to refine the Evaluation Tool in response to comments and provided updates to the planned pilot, including the participation of 11 states (Colorado, Connecticut, Florida, Iowa, Louisiana, Maryland, Pennsylvania, Rhode Island, Vermont, Virginia, and Wisconsin).

During the Spring Meeting, the BDAI Working Group provided an update on the pilot, which began earlier in March 2026. Participating states are now sending inquiries to companies and holding weekly calls to share insights. Each participating domestic regulator makes independent decisions on which companies to include in the pilot and has made efforts to engage with the companies ahead of sending any Evaluation Tool inquiries. The companies selected include insurers across product lines and of various sizes and types. Consistent with expectations, the participating states are focusing their initial efforts on Exhibit A of the Evaluation Tool and are deploying the Evaluation Tool in the context of market conduct exams, financial exams, financial analyses, and general regulatory inquiries.

Additional background on the Evaluation Tool can be found in our prior reporting from the NAIC Fall 2025 National Meeting available here.

b. Third-Party Data and Model Regulatory Framework

During the NAIC Fall 2025 National Meeting, the Third-Party Data and Models (H) Working Group (TPDM Working Group) exposed a draft Third-Party Data and Model Regulatory Framework (Framework), the purpose of which is to provide regulators with direct access through registration to third-party vendors of data and models used in insurance functions with direct consumer impact, including access to such vendors’ governance programs.

The TPDM Working Group then met on February 26, 2026, in advance of the Spring Meeting, to discuss the 23 comment letters it received from interested parties during the exposure period. Comments from industry interested parties requested, among other things, that the TPDM Working Group consider narrowing the scope of the insurance functions relevant to the Framework and to make the registration process voluntary for third-party data and model vendors.

At the Spring Meeting, the TPDM Working Group decided to revise the draft Framework to be initially applicable only to third-party vendors of data and models used in pricing and underwriting functions. It also clarified that the Framework does not contemplate that the registration process will include the direct filing of data and models by vendors but that states retain discretion to request such data and models. The TPDM Working Group continued to discuss the mechanics of the registration process and whether registration should be compulsory or voluntary. Following the Spring Meeting, the TPDM Working Group intends to make decisions on these and other open points, which will be reflected alongside the aforementioned changes in a revised draft of the Framework.

c. Cybersecurity Event Notification Portal Project

Ahead of the Spring Meeting, the Cybersecurity (H) Working Group adopted the Cybersecurity Event Notification Portal Project intake form. The proposed portal is designed to serve as a single, centralized platform through which insurers could satisfy cybersecurity event notification obligations under the Insurance Data Security Model Law (#668), as enacted in applicable states.

The Innovation, Cybersecurity and Technology (H) Committee is expected to consider the portal project for adoption at an interim meeting anticipated to be scheduled in April 2026. If the committee approves the project, adoption of the intake form would authorize the NAIC to begin development of the portal. Key aspects of the portal’s structure, content, and functionality would be addressed in subsequent phases of the project.

The Natural Catastrophe Risk & Resilience (EX) Task Force, which will be responsible for drafting the new model, noted that it would provide consistent guidance for states developing mitigation programs by standardizing processes and metrics, premium discount calculations, certification, and data-gathering strategies and documentation requirements. The model would build on established frameworks, enable the NAIC to provide supporting tools and resources, and ensure uniform program administration. The ultimate goal of the new model is to provide consistency that will help insurers and stakeholders better plan, budget, and support long-term risk-reduction efforts.

Consumer and industry representatives expressed support for greater transparency in NAIC work. Industry representatives suggested that the NAIC has increasingly relied on regulator-to-regulator sessions in recent years and requested that NAIC policy be updated to, among other things, (a) require that meeting notices and agendas clearly identify the basis for closure, (b) clarify the appropriate scope of closed sessions to ensure it is not overly broad, and (c) require notice of regulator-to-regulator meetings on the NAIC calendar. Consumer representatives also noted the increasing cost of virtual attendance at NAIC national meetings and suggested that all NAIC meetings open to the public should be livestreamed at no cost.

The committee noted that interested parties will continue to have opportunities to provide input on proposed changes as the amendment process continues.

The White Paper discusses the statutory processes that certain states have recently adopted to govern insurance business transfer (IBT) and corporate division (CD) transactions. The White Paper includes a survey of U.S. restructuring statutes and regulations (including a summary of transactions completed to date) and a summary of the significant legal issues related to IBT and CD laws (including guaranty association issues). Among other things, the White Paper recommends that regulators develop financial best practices to be used in considering the approval of proposed restructuring transactions.

Consistent with this recommendation, the RMWG also adopted the Best Practices document, which establishes best practice procedures for state insurance regulators to use in reviewing IBT and CD transactions. Among other things, the Best Practices document outlines a framework for the application for approval of an IBT or CD transaction, recommends that an independent expert review the transaction, and establishes procedures to protect the due process rights of policyholders, claimants, and other stakeholders. It is anticipated that the Financial Analysis Solvency Tools (E) Working Group will consider incorporating the Best Practices into the NAIC’s Financial Analysis Handbook at an interim meeting later this spring.

The RBC Model Governance Task Force has been conducting a “comprehensive gap analysis and consistency assessment” of the RBC framework and, in parallel, developing a formal process for evaluating prospective and retrospective adjustments to RBC. The gap analysis is intended to be a high-level, diagnostic exercise to identify areas that may warrant further review. In connection with this review, in February 2026, the RBC Model Governance Task Force exposed a memorandum seeking input on (i) whether material risks are not adequately captured in the RBC framework and (ii) whether inconsistencies across life, property/casualty, and health RBC formulas or components impair regulators’ ability to assess solvency risk.

At the Spring Meeting, the RBC Model Governance Task Force discussed comments received on the exposure, which identified a range of potential gaps and inconsistencies across RBC formulas, including differences in investment risk treatment, modeling approaches, and calibration across components. While the comments generally supported the focus on governance and materiality, they also emphasized that differences across formulas are often intentional and tied to underlying business models. Several commenters cautioned against efforts to harmonize RBC outcomes across sectors where risks differ and instead recommended that any changes be prioritized based on material effect on solvency assessment.

Following review of comments, the task force expects to determine whether identified issues are material and, if so, whether to refer them to the appropriate technical groups within the NAIC structure for further evaluation.

The task force also discussed a draft flowchart describing the current RBC adjustment process and potential refinements. The discussion focused on how issues enter the RBC process and whether the current sequencing appropriately distinguishes between policy questions (e.g., whether a gap exists and whether RBC is the appropriate tool) and technical questions (e.g., calibration and implementation).

Regulators noted that in some cases, technical work may proceed before there is agreement on the underlying policy objective, which can lead to inefficiencies or require later reconsideration. In response, the task force is considering whether to introduce a more structured process to address policy questions earlier, before technical work is undertaken.

The task force did not reach conclusions on specific process changes but indicated that further work will focus on refining the governance framework, including how issues are identified, prioritized, and referred within the NAIC committee structure.