CIPR Fall Event: Regulation of Captives · Web-based technology, gaining efficiencies with online complaint filings, regulated entity data reporting and licensure applications and

CIPR Fall Event:

Regulation of Captives

November 18, 2015Washington, D.C.

The CenTer for InsuranCe PolICy & researCh© 2015 National Association of Insurance Commissioners

Program Booklet Contents Welcome Letter ...................................................................................................... 4 Agenda .................................................................................................................... 5Biographies ............................................................................................................. 7Regulator Professional Designation Program Learning Objectives ........................ 17Continuing Education Credit Information ............................................................. 18 Meet the CIPR Team ............................................................................................. 19 CIPR Support Services ........................................................................................... 21 October 13 CIPR Newsletter Article: Work on Life Insurer-Owned Captives Continues Following Adoption of White Paper ........................................... 23 July 15 CIPR Newsletter Article: Expected Changes to Insurance Regulation for Captives and Special Purpose Vehicles ........................................................ 26 May 2015 CIPR Newsletter Article: Recently Adopted AG 48 to Bring Uniformity to Captive Reinsurance Transactions........................................................... 29 Participant List ...................................................................................................... 32

© 2015 National Association of Insurance Commissioners 3

WELCOME MESSAGE

Welcome to the NAIC Center for Insurance Policy and Research (CIPR) fall event: Regula on of Cap ves. The mission for the CIPR is to serve federal and state lawmakers, federal and state regulatory agencies, interna-

onal regulatory agencies, and insurance consumers, by enhancing intergovernmental coopera on and awareness, improving consumer protec on and promo ng legi mate marketplace compe on. To help achieve this mission, the CIPR hosts four annual events that bring together a number of dynamic and in-forma ve speakers and panelists. These events offer a forum for opinion and discussion on major insurance regulatory issues. This event will cover a variety of topics related to cap ves; including the evolu on of cap ves; the impact of insurer-owned cap ves on the insurance market; recent changes in the use of cap ves; differing views on insurer-owned cap ves, including their use of capital, confiden ality, and disclosure and transparency; and poten al regulatory solu ons for cap ves. The CIPR is collabora ng with The Griffith Insurance Educa on Founda on, an affiliate of The Ins tutes, on this event to provide policymakers with a nonadvocacy, nonpar san educa onal forum on the regula on of cap ve insurance companies. While you are here, I encourage you to take some me to explore the Washington, D.C. area and its many a rac ons. I hope you enjoy the event and your stay ! Sincerely, Eric Nordman Director of CIPR and Regulatory Services


THE CENTER FOR INSURANCE POLICY & RESEARCH © 2015 National Association of Insurance Commissioners

CIPR Event: Regulation of Captives As of 11/10/15 November 18, 2015 Gaylord Convention Center—Potomac A—Level 2 1:00 Registration Check-in 2:00 Opening Remarks

Introduction: Overview of the Program John M. Huff, Missouri Insurance Director

2:10 Session 1: Evolution of Captives Presentation: Tracing the growth of captives from early 1800s through the birth of the first modern captive in the 1950s, drivers and challenges in the growth of offshore captives, and their transition and use domestically beginning in the 1970s. Discussion will cover all captive types, including single parent, group, association, risk retention, reciprocal, rent-a-captive, segregated/protected cells, agency, branch, and long-term care.

Presenter: Robert E. Hoyt, Ph.D., University of Georgia

2:45 Session 2: Regulatory and Market Development in Captives Panel Discussion: The panel will discuss the impact of insurer-owned captives on the insurance market and the use of those captives.

Moderator: Ted Nickel, Wisconsin Insurance Commissioner Panelists: David F. Provost, Vermont Deputy Commissioner, Captive Insurance Division William Pargeans, Assistant Vice President, A.M. Best Alan Routhenstein, Principal, Consulting Actuary, Milliman Neil Rector, Rector & Assoc.

4:00 Break (Refreshments Served)


THE CENTER FOR INSURANCE POLICY & RESEARCH © 2015 National Association of Insurance Commissioners

4:15 Session 3: Remaining Challenges and Concerns

Panel Discussion: Remaining market, uniformity, transparency and regulatory challenges. Regulatory solutions. Opening Remarks: Joseph Torti, III, Rhode Island Division of Insurance Superintendent

Moderator: Superintendent Torti Panelists: Nick Gerhart, Iowa Insurance Commissioner Paul Graham, American Council of Life Insurers (ACLI) Actuary

5:45 Closing Remarks Director Huff


John M. Huff, Director—Missouri Department of Insurance, Financial Institutions and Professional Registration In February 2009, Governor Jay Nixon appointed and the Missouri Senate confirmed John M. Huff as director of the Missouri Department of Insurance, Financial Institutions and Professional Registration. The Potosi, Missouri, native serves as the state's 47th director of the Department of Insurance, which was established in 1869.

An attorney, Director Huff leads the largest consumer protection agency in the state, which regulates the $34 billion insurance industry, the $112 billion state-chartered financial institutions and half a million professionals who impact Missourians' lives daily. He leads a team of 585 regulators. Besides protecting consumers, Director Huff has overseen the transformation of department to Web-based technology, gaining efficiencies with online complaint filings, regulated entity data reporting and licensure applications and renewals. Director Huff was elected by his peers to serve as President–Elect of the National Association of Insurance Commissioners for 2015. He assumes the role of NAIC president in 2016. The last time a Missouri insurance director headed the NAIC was in 1955. Director Huff also has served in several other leadership roles with the NAIC, including his 2010 appointment to the U.S. Financial Stability Oversight Council. He served two terms on the council and was the first state insurance regulator to be appointed by the NAIC. The council was created by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Director Huff chairs the NAIC Reinsurance (E) Task Force, the Financial Regulation Standards and Accreditation (F) Committee and the Governance Review (EX) Task Force. He is vice chair of the NAIC/Industry Liaison Committee. The NAIC is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. Before entering public service, Director Huff spent 11 years as an executive with leading insurers and reinsurers, including Swiss Re and GE Insurance Solutions. At these companies, he led global teams and was stationed in two European markets: London and Zurich.


Nick Gerhart, Commissioner—Iowa Insurance Division

Iowa Governor Terry Branstad appointed Nick Gerhart to serve as Insurance Commissioner of the State of Iowa beginning February 1, 2013. Commissioner Gerhart serves on the NAIC Executive Committee, Life and Annuity (A) Committee, Financial Condition (E) Committee and International (G) Committee.

In addition, Commissioner Gerhart is a board member of the National Insurance Producer Registry (NIPR). He was named by the U.S. Treasury in 2014 to serve on the Federal Advisory Committee on Insurance (FACI) that advises the Federal Insurance Office on domestic and international policy. He has represented the NAIC at the International Association of Insurance Supervisors and at the EU-US Dialogue project.

Commissioner Gerhart is a recognized thought leader on health care matters and has been at the forefront during the implementation of the Affordable Care Act. He also led the team that created and hosted the Global Insurance Symposium in Des Moines, Iowa, an event that attracted over 350 people from all over the world to discuss emerging issues in insurance. He is passionate about educating Iowans on insurance and investment matters and created Iowa Fraud Fighters, a statewide initiative that aims to educate seniors on how to protect themselves and not fall prey to fraudulent investment scams.

Prior to being appointed Insurance Commissioner, he worked at Sammons Financial Group and American Equity Investment Life Insurance Company. He is active in the Des Moines Community and currently serves as Vice Chair of the Iowa Homeless Youth Centers.

Commissioner Gerhart earned his law degree and health law certificate from St. Louis University School of Law and a Masters of Health Administration from St. Louis University School of Public Health. He earned a BA from the University of Northern Iowa. He and his wife Jessica reside in Des Moines, Iowa with their three children.


tfosgate

Typewritten Text

.

Paul Graham, Senior Vice President, Insurance Regulation—American Council of Life Insurers. Paul Graham is Senior Vice President, Insurance Regulation, and Chief Actuary for the American Council of Life Insurers in Washington, D.C. He is responsible for many legislative and regulatory issues, including all matters accounting and actuarial related.

Currently, Mr. Graham is spending a majority of his time as the ACLI project manager for the Principles-based Reserves and Captives projects. He is also responsible for policy issues relating to annuities, disability insurance and long term care insurance. Prior to joining the ACLI in 2001, Mr. Graham served as Vice President and Group Actuary for Phoenix American Life, the group life and health subsidiary of the Phoenix Companies, where he also served as Phoenix American’s Chief Financial Officer and Appointed Actuary. He played an instrumental role in the sale of Phoenix American to GE Financial Assurance in 2000, and subsequently assumed the role of Vice President and Chief Actuary of GEFA’s Employer Services Group. Mr. Graham earned his Fellowship in the Society of Actuaries in 1989, and is a member of the American Academy of Actuaries. He is a summa cum laude graduate of the University of Connecticut, with a B.S. degree in Mathematics and Actuarial Science.


Robert E. Hoyt, Ph.D., Chair and Professor of Risk Management and Insurance—Terry College of Business at the University of Georgia Robert E. Hoyt is the Dudley L. Moore, Jr. Chair and Professor of Risk Management and Insurance in the Terry College of Business at the University of Georgia. He teaches corporate risk management and enterprise risk management and serves as the Department Head for Insurance, Legal Studies, and Real Estate. He was Interim Dean of the Terry College in 2007 and has

been on the UGA faculty since 1988. He is a recipient of the Richard B. Russell Outstanding Undergraduate Teaching Award from UGA, the Terry College’s Outstanding Service Award, the Outstanding Teaching Award, and the Outstanding Research Award. Dr. Hoyt holds a degree in actuarial science from the University of Nebraska and M.A. and Ph.D. degrees in risk and insurance from the Wharton School of the University of Pennsylvania where he was an S.S. Huebner Fellow. He was a Fulbright Visiting Professor of Risk Management at the Vienna University of Economics and Business Administration, a Swiss Re Visiting Research Scholar at the University of Munich, and a Gen Re Visiting Scholar at the University of Cologne, Germany. His research interests are focused in the areas of corporate hedging, enterprise risk management, catastrophe risk management, insurer operations, economics of insurance fraud, liability system costs and insurer insolvency. His research has appeared in various scholarly and trade journals including the Journal of Risk and Insurance, the Journal of Risk and Uncertainty, the Journal of Law and Economics, the Journal of Banking and Finance, the North American Actuarial Journal, the Journal of Business Finance and Accounting, Risk Management and Insurance Review, the Journal of Insurance Regulation, the Journal of Insurance Issues, the CPCU Journal and the Journal of Actuarial Practice. Dr. Hoyt has offered expert testimony in litigation relating to pension valuation and insurance contract interpretation and has served as a risk management consultant to various public and private sector organizations including the U.S. Department of Homeland Security. He is an advisory board member of the Griffith Insurance Education Foundation, a past director of the Spencer Educational Foundation, Chair of the Board of Athens Regional Medical Center, and serves on the board of the Georgia Underwriting Association (FAIR Plan). He also serves as a director of Grange Mutual Insurance Company in Columbus, Ohio, is a director of Global Energy Resource Insurance Corporation and was Chair of the Board of Athens Area Health Plan Select. Dr. Hoyt is Past President of the American Risk and Insurance Association, Past President of the Risk Theory Society, Past President of the Southern Risk and Insurance Association, a Vice President of the International Insurance Society, and a member of the Risk and Insurance Management Society, the Western Risk and Insurance Association, and the American Finance Association. He serves on the Board of Directors of the Journal of Insurance Regulation and on the editorial board of Risk Management and Insurance Review. He holds the professional designations of CLU and ChFC.


Ted Nickel, Commissioner—Wisconsin Office of the Commissioner of Insurance

Governor Scott Walker appointed Ted Nickel of Merrill, Wisconsin, as Commissioner of Insurance for the state of Wisconsin January 3, 2011. The Office of the Commissioner of Insurance regulates the business of insurance in Wisconsin. The office has a staff of 153 and is responsible for examining industry financial solvency and market conduct, licensing agents, reviewing policy forms for compliance with state legislation,

investigating consumer complaints and providing consumer information. In addition to its regulatory duties, the office administers the State Life Insurance Fund, Local Government Property Insurance Fund, and Injured Patients and Families Compensation Fund.

Prior to his appointment, Commissioner Nickel worked for almost 18 years as director of Governmental and Regulatory Affairs for Church Mutual Insurance Company in Merrill, Wisconsin. Commissioner Nickel has been actively engaged in insurance industry affairs in Wisconsin. He has served on the board of directors of the Wisconsin Insurance Alliance, including having served as chair. He served on the board of directors of the Wisconsin Insurance Security Fund and the Oklahoma Property Casualty Insurance Guaranty Association, as well as having served as a member of the Legal and Government Affairs Committee of the Property Casualty Insurers Association of America. Commissioner Nickel also worked in the administration of former Governor Tommy Thompson.

Commissioner Nickel served on the Northcentral Technical College District Board of Trustees for six years. While there, he served as secretary/treasurer and participated on a CEO recruiting committee. He chaired the Merrill Parks and Recreation Committee and was vice chair of the City Plan Commission.

The Commissioner was elected secretary-treasurer of the National Association of Insurance Commissioners (NAIC) in December 2014. He currently serves on the Executive (EX) Committee, Cybersecurity (EX) Task Force, Governance Review (EX) Task Force, Government Relations (EX) Leadership Council, International Insurance Relations (EX) Leadership Group and the Internal Administration (EX1) Subcommittee. He chairs the Audit Committee and the NAIC/Industry Liaison Committee and is vice chair of the Consumer Participation Board of Trustees. He is a member of the Life Insurance and Annuities (A) Committee, Health Insurance and Managed Care (B) Committee, NAIC American Indian and Alaska Native Liaison Committee and serves on several other NAIC task forces and committees. In addition, he chairs the Contingent Deferred Annuity (A) Working Group, Mortgage Guaranty Insurance (E) Working Group, and the Health Care Reform Regulatory Alternatives (B) Working Group. In August 2014, the Commissioner was appointed to the Federal Advisory Committee on Insurance which serves as an advisory committee to the Federal Insurance Office.

Commissioner Nickel earned his Bachelor of Science Degree in Business Administration with a concentration in finance from Valparaiso University.


William Pargeans, Assistant Vice President—A.M. Best Life/Health Ratings Division William (Bill) Pargeans is an Assistant Vice President in A.M. Best's Life/Health Ratings Division. A.M. Best is an independent global full-service credit rating organization dedicated to serving the financial and health care service industries.

Mr. Pargeans manages a team of analysts and has responsibility for the ratings and analysis of a portfolio of domestic life insurance companies followed by A.M. Best. The rating analysis includes a comprehensive review of a company’s operations and financial condition and concludes with the assignment of financial strength, issuer credit and debt ratings. In addition, Mr. Pargeans researches emerging trends in the life insurance industry has authored a number of articles and speaks on insurance topics at conferences.

Prior to joining A.M. Best, Mr. Pargeans was a manager in the large group pension division of the Equitable Life Assurance Society (AXA). Mr. Pargeans has been with A.M. Best for twenty years and has an M.B.A. from Pace University, NYC.


David F. Provost, CFE, Deputy Commissioner, Captive Insurance Division, Vermont Department of Financial Regulation

David F. Provost is Deputy Commissioner of Vermont’s Captive Insurance Division; responsible for the regulation of captive insurance companies and risk retention groups. He has been with the Division since 2001, and was appointed Deputy effective June 1, 2008.

Mr. Provost has over 25 years of experience in captive insurance in both the private and government sectors. His prior experience includes work in the captive insurance arms of Johnson & Higgins, Sedgwick, and AIG, and he served as Treasurer of the Vermont Captive Insurance Association.

A lifelong Vermonter, Mr. Provost is a Certified Financial Examiner, and a member of the Society of Financial Examiners.


Neil Rector, Founder and Senior Consultant—Rector & Associates, Inc. Neil Rector is the Founder of and Senior Consultant with Rector & Associates, Inc., a consulting firm headquartered in Columbus, Ohio. The firm provides a wide variety of services nationally to insurance industry clients and to regulators. Most specifically on topic for this panel, Mr. Rector and his firm were engaged by the NAIC to develop a

regulatory framework relative to XXX/AXXX reinsurance transactions, which resulted in Actuarial Guideline 48 (AG 48). This is the second project the NAIC has engaged Mr. Rector to work on pertaining to XXX/AXXX insurance. Several years ago, he also was engaged to oversee the development of reserving rules pertaining to those products, as now embodied in AG 38. Mr. Rector is also a team leader under the NAIC Accreditation Program, and, in that capacity, he has conducted performance reviews of the financial examination and analysis areas of the vast majority of state insurance departments. He has testified twice before the U.S. Congress about the Accreditation Program. In addition to his duties in the United States, Neil has been engaged to help either establish insurance regulatory agencies or to train insurance regulatory staff in China, Brazil, Hungary, Slovenia and Poland. Prior to forming Rector & Associates, Mr. Rector practiced law with a large regional law firm and was the Deputy Director of the Ohio Department of Insurance.


Alan Routhenstein, Principal and Consulting Actuary—Milliman

Alan is a principal and consulting actuary with the New York office of Milliman. He joined the firm in 2008.

Since joining Milliman, Alan has consulted extensively to insurance companies on XXX/AXXX reserve financing, embedded value securitization transactions, and other life insurer captive transactions. He also has advised on M&A transactions, reinsurance strategies and other projects involving capital management, hedging strategy design or principles based approaches to reserves

and capital.

Before joining Milliman, Alan worked in investment banking and structured reinsurance for 16 years, in consulting for 4 years and for a mutual life insurer for 5 years.

Alan has been an active volunteer for the AAA Life Reserve Working Group on asset-related issues in VM-20 since 2006, and had been helping insurers evaluate, structure or negotiate, and implement XXX/AXXX transactions since 2003.


Joseph Torti, III, Superintendent—Rhode Island Department of Business Regulation Division of Insurance

Joseph Torti III was appointed Associate Director and Superintendent of Insurance December 16, 2002. In 2008, He was appointed Deputy Director and Superintendent of Insurance and Banking.

Superintendent Torti has enjoyed tenure of more than 25 years with the Insurance Division, beginning his career as a senior examiner. He previously served as chief insurance examiner, managing the largest section of the Insurance Division. Prior to joining the Insurance Division, Superintendent Torti was a bank examiner and worked as an auditor for the Department of Transportation.

Superintendent Torti graduated cum laude from Providence College with a bachelor’s degree in business administration with a specialization in accounting. He is a certified public accountant and certified financial examiner. He is a member of the American Institute of Certified Public Accountants, the Institute of Internal Auditors and a former member and officer of the Society of Governmental Accountants and Auditors.

Superintendent Torti currently serves as chair of the NAIC Financial Condition (E) Committee and chair of the Audit Committee of the Interstate Insurance Product Regulation Compact (IIPRC). He also co-chairs the Principle-Based Reserving Implementation (EX) Task Force and is a member of the NAIC Audit Committee, and serves as a member of several other committees and working groups.


Insurance Regulator Professional Designation Program Learning Objectives At the completion of this program, attendees will be able to:

Explain what prompted life companies to enter the captive market.

Identify drivers and challenges in the growth of offshore captives.

Explain the use of captives domestically.

Identify issues surrounding transparency with respect to life insurer-owned captives.

Explain how a rating agency evaluates the financial risks of life insurer owned captives.

Identify solvency issues of life insurer-owned captives.

Explain the impact of Actuarial Guideline 48 and Principle Based Reserving on the formation, use, pricing and availability of captives.

Identify trends in how captives are structured.

Explain the drivers behind the increase in captive domiciles.

Explain how regulators assess and address risk from a captive reinsurer at the entity and group level.

Explain issues and solutions related to transparency and disclosure of captive financials.

Explain the impact of new regulatory solutions on the use of offshore captives.


NAIC Insurance Regulator Professional Designation Program - comprehensive, customizable, content-rich curriculum…directly from the NAIC

Over 800 enrollments and growing…our designations have been designed to assure that regulators have a basic understanding of market, solvency, and rates and forms regulation at the APIR level, specialized training in regulatory concepts at the PIR level, leadership training at the SPIR level and a focused understanding of investments at the IPIR level. We continue to add new course opportunities at the PIR level and the new IPIR courses are rolling out at a rapid pace! If you are a state insurance department employee, we invite you to sign up and learn how this program can help you achieve your personal goals.

Visit us at http://www.naic.org/education_designation.htm

What Regulators Have to Say:

"The APIR program was a well- rounded program that gave me a clear picture of how I fit into the overall regulatory setting. The background obtained through these classes has improved my ability and confidence to perform as a regulator immensely, and I believe there is something here for everyone.”…David

"The APIR has provided me with a wonderful opportunity to learn from and interact with regulators across the country (and our U.S. territories). I think the NAIC will be of growing importance to all of us in the future and we should not miss the opportunity to learn from the wealth of knowledge and experience it offers to us."…Richie

“I have really enjoyed the PIR program. It has enhanced my skills as a regulator by increasing my knowledge of both the industry and the regulatory tools that I have at my disposal. One of my favorite things about the program is the opportunity to attend instructor-led NAIC courses and associate with other regulators. There is no substitute for learning from other regulators personal experiences…Dan

“Through the NAIC Designation Program I have been able to work, learn, accomplish and excel in insurance regulatory areas outside of my duties. The program gave me the opportunity to broaden my knowledge beyond the basic insurance scope and think outside the box.”...Vanessa


M CIPR T

Eric Nordman, CPCU, CIE, is the director of the NAIC Regulatory Services Division and the CIPR. He directs the Regulatory Services Division staff in a wide range of insurance research, financial and market regulatory ac vi-

es, suppor ng NAIC commi ees, task forces and working groups. He has been with the NAIC for 24 years. Prior to his appointment as director of the Regulatory Services Division, Nordman was director of the Research Division and, before that, the NAIC’s senior regulatory specialist. Before joining the NAIC, he was with the Michigan Insurance Bureau for 13 years. Nordman earned a bachelor’s degree in mathema cs from Michigan State University. He is a member of the CPCU Society and the Insurance Regulatory Examiners Society.

Dimitris Karapiperis joined the NAIC in 2001 and he is a researcher with the NAIC Center for Insurance Policy and Research. He has worked for more than 15 years as an economist and analyst in the financial services industry, focusing on economic, financial market and insurance industry trends and developments. Karapiperis studied economics and finance at Rutgers University and the New School for Social Research, and he developed an ex-tensive research background while working in the public and private sector.

Shanique (Nikki) Hall is the manager of the NAIC Center for Insurance Policy and Research. She joined the NAIC in 2000 and currently oversees the research, produc on and editorial aspects of the CIPR’s four primary work streams; the CIPR Newsle er, studies, events and website. Ms. Hall has extensive capital markets and insurance exper se and has authored copious ar cles on major insurance regulatory and public policy ma ers. She began her career at J.P. Morgan Securi es as a research analyst in the Global Economic Research Division. At J.P. Mor-gan, Ms. Hall analyzed regional economic condi ons and worked closely with the chief economist to publish research on the principal forces shaping the economy and financial markets. Ms. Hall has a bachelor’s degree in economics and an MBA in financial services. She also studied abroad at the London School of Economics.

Anne Obersteadt is a researcher with the NAIC Center for Insurance Policy and Research (CIPR). She has 15 years of experience with the NAIC performing financial, sta s cal and research analysis on all insurance sectors. In her current role, she has authored several ar cles for the CIPR Newsle er, a CIPR Study on the State of the Life In-surance Industry, organized forums on insurance related issues, and provided support for NAIC working groups. Before joining CIPR, she worked in other NAIC Departments where she published sta s cal reports, provided insurance guidance and sta s cal data for external par es, analyzed insurer financial filings for solvency issues, and authored commentaries on the financial performance of the life and property/casualty insurance sectors. Prior to the NAIC, she worked as a commercial loan officer at U.S. Bank. Ms. Obersteadt has a bachelor’s degree in business administra on and an MBA in finance.

Kris DeFrain is the NAIC Director of the Research and Actuarial Department. She is currently charged as primary NAIC staff for the Principle-Based Reserving and the Casualty Actuarial and Sta s cal Task Forces. She manages a staff of actuaries, sta s cal analysts, insurance contract experts, economists, and research analysts working on regulatory solvency- and market-related issues, providing regulatory services, and conduc ng research for the Center for Insurance Policy and Research. She received her bachelor’s degree in finance/actuarial science from the University of Nebraska in 1989. Ms. DeFrain received her FCAS designa on from the Casualty Actuarial Society (CAS), where she previously served as Vice President—Interna onal. She is a member of the American Academy of Actuaries and a Chartered Property & Casualty Underwriter.


CIPR E

The CIPR holds four events each year—three events during each of the NAIC Na onal Mee ngs and one off-site event. For more informa on on our past events, including presenta ons and audio, please visit our web-site at: www.naic.org/cipr_events.htm.

2015 Events

• All About Earthquakes (Aug. 14)

• Boom or Bust? A Look into Re rement Issues Facing Baby Boomers Symposium (June 15-16)

• Risk of Pandemics to the Insurance Industry (Mar. 27)

2014 Events

• Naviga ng Interest Rate Risk in the Life Insurance Industry (Nov. 19)

• Implica ons for Increasing Catastrophe Vola lity on Insurers and Consumers Symposium (Oct. 7-8)

• Commercial Ride-Sharing and Car-Sharing Issues (Aug. 16)

• Insuring Cyber Liability Risk (Mar. 28)

2013 Events

• The Future of Automobile Insurance: Telema cs in the U.S. (Dec. 16)

• Exploring Insurers’ Liabili es Summit (Aug. 27)

• Health Care Reform - Tools for Oversight and Assistance in the Marketplace Symposium (Apr. 30-May 1)

• Insurance for Acts of Terrorism (Apr. 9)

2012 Events

• Financing Home Ownership Luncheon (Nov. 30)

• State of the Life Insurance Industry: Implica ons of Industry Trends Symposium (Oct. 25-26)

• Flood Insurance Summit (Aug. 14)

2011 Events

• Conference on Transatlan c Insurance Group Supervision (Sep. 7-8) © 2015 National Association of Insurance Commissioners 20

April 2013 | CIPR Newsle er

CIPR W E R S S

By Shanique (Nikki) Hall, CIPR Manager In a concerted effort to become the go-to site for regulatory and public policy informa on, the NAIC’s Center for Insur-ance Policy and Research (CIPR) is diligently working to im-prove its public offerings. The CIPR was established in 2009 to leverage the resources of several NAIC departments in order to support the collec on and dissemina on of informa on and analysis for use by state and federal officials, agencies, policymakers and insurance consumers. The forma on of the CIPR expands regulatory support services by distribu ng the research and analysis that takes place within NAIC. To achieve this mission, the CIPR publishes a quarterly CIPR Newsle er, as well as special reports and studies to provide the public with informa on on developing trends in the insur-ance industry and to enhance the awareness and under-standing of key insurance issues. In addi on, the CIPR hosts four annual events that offer a forum for opinion and discus-sion on major insurance regulatory issues. This ar cle will discuss some of the recent improvements made that we hope will help meet that goal. CIPR W Central to the communica on of NAIC research and public policy ac vi es is the CIPR website, which is a recent en-hancement to the NAIC home page. Within the CIPR site is a host of informa on on current insurance regulatory develop-ments, ongoing CIPR projects and coverage of a wide range of insurance topics and issues. Moreover, content from the Government Rela ons division of the NAIC—such as issue briefs and Congressional tes mony—has been added to the CIPR site to serve as a central point of informa on-gathering. The CIPR site is divided into four principle areas: (1) Home; (2) Key Issues; (3) Special Reports and Studies; and (4) Sta s-

cs. The CIPR home page is where you can find what’s new on the site, including the most recent CIPR Newsle er. Also available on the home page is informa on on upcoming and past CIPR events; including, presenta ons, audio and handout material from the events. Our goal is to make it easy for the user to locate topical informa on on insurance and insurance regulatory topics. K I A recent enhancement to the CIPR site is its A–Z Topic lis ng of key insurance issues. The A–Z Topic lis ng contains a wealth of informa on on a wide range of regulatory and in-surance industry-specific topics. It is a great research tool for regulators, consumers, industry and academia. Each topic page includes a detailed summary of the topic and issues,

and is supported by reference documents, including links to presenta ons, speeches, NAIC news releases and ac ons, ar cles and special reports. References to the current NAIC commi ee task force or working group ac ve on the topic is also included, as well as an NAIC contact for any ques ons. Currently, there are more than 80 topics included in the A–Z Topic lis ng, such as: accredita on, flood insurance, the EU-U.S. Dialogue Project, insurance-linked securi es, natural catastrophes and workers’ compensa on. The A–Z Topic lis ng is steadily growing; more than 40 topics were added in 2012 and another 40 (or more) are expected to be added to the lis ng this year. S R S The CIPR site also provides access to special reports and stud-ies on major regulatory and public policy issues in insurance. Here you will find studies wri en by CIPR dis nguished schol-ars and researchers; former NAIC CEO Therese M. Vaughan, Ph.D.; insurance industry experts; academics; and other NAIC staff. Selected ar cles from the Journal of Insurance are also available. Moreover, NAIC Industry Snapshots and Analysis Reports were recently made available on the CIPR site. Produced by the Financial Regulatory Services Department, these reports provide an overview of insurer statutory filings and assist consumers in be er understanding developing trends in the insurance industry. They cover the property/casualty, tle, life, fraternal and health insurance industries. S The NAIC Sta s cs page is another pivotal element of the CIPR site. This page provides a collec on of key facts and market trends for a par cular state, such as: the number of insurance companies in each state; the number of cap ve insurance companies in the states; total direct premium; se-lect insurance department data for the states; cost of regula-

on in the states; insurance industry employment in each state; and gross domes c product for the states. For compar-ison, na onal key facts and trends are also available. In addi-

on, premium volumes for the 50 largest markets worldwide, as well as sample reports from the NAIC Research and Actu-arial Department, are also provided. S We hope you will make use of these tools. The CIPR is always open to sugges ons. If you have an issue you believe we should cover, please let us know. Send your sugges ons, compliments (we like those) and cri cisms to [email protected].


The

CIPR

ser

ves:

fede

ral a

nd s

tate

law

mak

ers;

fede

ral a

nd s

tate

regu

lato

ry a

genc

ies;

inte

rnat

iona

l reg

ulat

ory

agen

cies

; and

insu

ranc

e co

nsum

ers.

It e

nhan

ces

inte

rgov

ernm

enta

l coo

pera

tion

and

awar

enes

s, im

prov

ing

con-

sum

er p

rote

ctio

n w

hile

pro

mot

ing

legi

timat

e m

arke

tpla

ce c

ompe

titio

n. T

he s

ite p

rovi

des

info

rmat

ion

on c

urre

nt

insu

ranc

e re

gula

tory

dev

elop

men

ts, o

ngoi

ng C

IPR

proj

ects

, and

cov

erag

e of

a w

ide-

rang

e of

insu

ranc

e in

dust

ry

topi

cs.

The

CIPR

’s o

rgan

izat

ion

and

navi

gatio

n sh

ares

man

y of

the

sam

e el

emen

ts

the

NA

IC h

ome

page

as d

escr

ibed

on

Page

1.

Her

e ar

e th

e hi

ghlig

hts u

niqu

e to

CIP

R pa

ges:

1. T

he N

AIC’

s Cen

tral

Offi

ce/C

IPR

staff

can

pr

ovid

e a

grea

t dea

l of i

nfor

mati

on to

regu

-la

tors

and

law

mak

ers.

Con

tact

info

rmati

on

prov

idin

g di

rect

acc

ess t

o th

em is

vita

l to

the

CIPR

site

’s fu

nctio

n.

2. C

lick

to se

e th

e m

ost c

urre

nt a

s wel

l as

arch

ived

issu

es o

f the

CIP

R N

ewsle

tter.

3. T

he A

-Z In

dex

of In

sura

nce

topi

cs a

nd

issue

s. C

lick

to se

e de

taile

d an

alys

is an

d do

cum

enta

tion

on a

wid

e ra

nge

of in

sur-

ance

topi

cs a

nd is

sues

. 4.

The

Key

Issu

es se

ction

incl

udes

a to

pica

l lis

ting

of k

ey in

sura

nce

regu

lato

ry is

sues

.

NA

IC W

eb S

ite S

uppo

rt Co

ntac

t Inf

orm

atio

n:

1. N

AIC

Help

Des

k:

Ph

one

816.

783.

8500

E-m

ail h

elp@

naic

.org

fax

816.

460.

7456

2.

NAI

C W

eb T

eam

: web

post

@na

ic.o

rg

3. N

AIC

Com

mun

icati

ons:

new

s@na

ic.o

rg

5. T

he S

peci

al R

epor

ts/W

hite

Pap

ers

secti

on p

rovi

des a

sses

s to

NAI

C sp

ecia

l re

port

s, w

hite

pap

ers a

nd a

rticl

es o

n a

wid

e ra

nge

of in

sura

nce

regu

lato

ry to

p-ic

s and

con

cern

s.

6. S

tatis

tics M

ap: t

his p

age

prov

ides

ac

cess

to st

ate

scor

e ca

rds w

hich

det

ail

stati

stics

abo

ut e

ach

juris

dicti

on’s

in-

sura

nce

mar

ket a

long

with

that

of t

he

entir

e U

S. In

add

ition

, lin

ks to

sam

ples

of

NAI

C re

sear

ch re

port

s and

dat

a ar

e pr

ovid

ed.

1 23

4

5

6


October 2013 | CIPR Newsle er 7

W L I -O C C F A W P

ons to exis ng NAIC model laws or developing new ones as necessary. To ini ate this study, the Subgroup requested state insur-ance departments respond to a confiden al regulator-only request for comment on the use of cap ves and SPVs by insurance companies. The request for comment was sent to all 50 states and the District of Columbia. Thirty-five re-sponses were received. Results from the survey suggested, while insurers cede business to cap ves for a variety of rea-sons, the majority use of cap ve/SPVs by insurers was relat-ed to the financing of XXX and AXXX reserve redundancies. Thus, the Subgroup concluded it appears the use of cap ves may be more prevalent among life insurers than other lines of business. The Subgroup developed the White Paper to address the broadened use of cap ves by life insurers. The White Paper was exposed for comment, and, a er receiving industry feedback, it was subsequently adopted by the Subgroup on June 6, 2013. The Financial Condi on (E) Commi ee and the Execu ve (EX) Commi ee and Plenary formally adopted the White Paper on July 17 and July 26, 2013, respec vely. The White Paper outlines the findings of the Subgroup’s request for comment and offers seven recommenda ons to the Financial Condi on (E) Commi ee for considera on and/or possible further study. The recommenda ons address: 1) accoun ng considera ons; 2) confiden ality; 3) access to alterna ve markets; 4) Interna onal Associa on of Insur-ance Supervisors (IAIS) principles, standards and guidance; 5) enhancements to the credit for reinsurance models; 6) disclosure and transparency; and 7) Financial Analysis Handbook guidance. The Subgroup recommends (inter alia): cap ves not be used by insurers to avoid statutory accoun ng rules; en-hanced transparency and disclosure on cap ves so regula-tors can assess and monitor the risks cap ves and SPVs might pose to the holding company system; the further study of issues rela ng to confiden ality; support be given to IAIS guidance paper on the regula on and supervision of cap ves; and considera on be given to modifying the Cred-it for Reinsurance Model Law (#785). The Subgroup also

(Continued on page 8)

By Shanique (Nikki) Hall, CIPR Manager In recent years, life insurers have increasingly turned to cap ves to “finance” purported “reserve redundancies” associated with requirements under Regula on XXX1 and AXXX.2 State insurance regulators and the NAIC con nue to monitor and assess this emerging prac ce, which has drawn considerable a en on in the industry and the mainstream press. The implementa on of principle-based reserving (PBR) is expected to reduce the need for life insurers to create new cap ves and special purpose vehicles (SPVs) to address the perceived reserving redundancies. However, it could take a few years un l the exis ng blocks of business are run off. The NAIC has been studying the issues surrounding the use of cap ves and SPVs by life insurers and there are a number of working groups focused on examining the complex issues, including transparency and disclosure, accoun ng treatment and confiden ality. The Cap ves and Special Purpose Vehi-cles: An NAIC White Paper (White Paper) was recently adopt-ed by the NAIC membership and outlines a number of rec-ommenda ons of specific ac on items to various com-mi ees. This ar cle marks the third installment in our series covering the NAIC’s review of cap ves in an effort to keep you abreast of the latest developments and regulatory efforts on this important policy ini a ve. The previous ar -cles appeared in the January 2012 and April 2013 edi ons of the CIPR Newsle er.3 T W P I R The use of cap ve reinsurance subsidiaries and insurance securi za ons by life insurers to address perceived reserve redundancies associated with requirements under Regula-

on XXX and AXXX has accelerated in recent years. Tradi-onally, a cap ve is an insurance company created and

wholly owned by one or more non-insurance companies to insure the risks of its owner (or owners). Cap ves and SPVs owned by life insurers are fundamentally different from cap ves used by non-insurance companies as a form of self-insurance. Regulatory concerns over the use of cap ves by life insurers led to the establishment of the NAIC Cap ve and Special Purpose Vehicle (SPV) Use (E) Subgroup in early 2012. The Subgroup is charged to study insurers’ use of cap ves and SPVs to transfer insurance risk, other than self-insured risk, in rela on to exis ng state laws and regula ons, and estab-lish appropriate regulatory requirements to address con-cerns iden fied in this study. Based on its findings, the Sub-group would make recommenda ons on possible modifica-

1 Used to describe the actuarial reserves required to be held under the Valua on of Life Insurance Policies Model Regula on (#830), which is commonly referred to as Regula on XXX (or, more simply, XXX). 2 Used to describe the actuarial reserves required to be held under the Actuarial Guideline XXXVIII—The Applica on of the Valua on of Life Insurance Policies Model Regula on (AG 38), which is commonly referred to as AXXX. 3 For past edi ons of the CIPR Newsle er, please visit www.naic.org/cipr_newsle er_archive.htm.


8 October 2013 | CIPR Newsle er

W L I -O C C (C )

recommended the current regulatory process be enhanced to provide standardized tools and processes to be used by all regulators when reviewing such transac ons. Moreover, the Subgroup recommended the development of guidance in the Financial Analysis Handbook for the states’ review and ongoing analysis in regard to insurers’ use of cap ves and SPVs. The Financial Condi on (E) Commi ee assigned the task of determining how to implement many of the recommenda-

ons to the Principle-Based Reserving Implementa on (EX) Task Force and the Reinsurance (E) Task Force. Although PBR is s ll being calibrated, the Principle-Based Reserving Implementa on (EX) Task Force was recently charged to further assess the solvency implica ons of life insurer-owned cap ve insurers and alterna ve mechanism. The Principle-Based Reserving Implementa on (EX) Task Force has formed the PBR Review (EX) Working Group to analyze the issue and propose possible solu ons and further recom-menda ons for any remaining XXX and AXXX issues not ade-quately addressed through PBR. R A , I . – I R In an effort to further assess the solvency implica ons of life insurer-owned cap ve insurers’ and other alterna ve mechanisms in the context of PBR, the Principle-Based Re-serving Implementa on (EX) Task Force was given the fol-lowing charge by the Execu ve (EX) Commi ee: “Upon comple on of the Cap ve and Special Purpose Vehicle (SPV) Use (E) Subgroup’s report and subsequent referral by the Financial Condi on (E) Commi ee, consider the report’s recommenda ons in the context of the proposed PBR sys-tem and make further recommenda ons, if any, to the Ex-ecu ve (EX) Commi ee.” To assist with this charge, the NAIC engaged the consultant Rector & Associates, Inc., to make recommenda ons for improving uniformity and transparency and to provide rec-ommenda ons regarding the poten al regulatory treat-ment of these transac ons in light of PBR. To ini ate the study, Rector & Associates interviewed insurers, as well as regulators represen ng approximately 15 jurisdic ons, many of which have approved these types of transac ons in some form or another. An ini al report from Rector & Associates was released Sept. 13, 2013. The report found some insurers have en-tered into various reinsurance transac ons to finance differ-ent por ons of the statutory reserve differently (i.e., to fund different por ons of the reserve using different kinds of assets) based on what insurers believe is a be er correla-

on between the kind of asset used and the probability it will be needed. The report notes those interviewed believe these transac-

ons to be safe, legal and conserva ve, and they more closely match assets held to the likely need for those as-sets. In addi on, some of those interviewed believe insur-ers should be allowed to use lower quality nonadmi ed assets, at least to some extent, if the insurer can conserva-

vely demonstrate there is a low probability such assets will be needed to pay claims. However, the report further notes, even though most of those interviewed appear to accept this general logic, there appears to be significant unease regarding how the logic is currently being imple-mented, and especially the lack of consistency from insurer to insurer and regulator to regulator regarding key aspects of transac ons. The report concludes the Principle-Based Reserving Imple-menta on (EX) Task Force will need to decide: 1) whether to accept insurers’ general logic allowing lower quality nonad-mi ed assets to back por ons of the reserve that have a low probability of being needed to pay claims; or 2) whether, instead, to seek to prohibit transac ons that result in an economic effect different than the current statutory ac-coun ng requirement that admi ed assets be used to back 100% of statutory reserves. The report sets out a regulatory framework for considera-

on rela ve to these types of transac ons if the Principle-Based Reserving Implementa on (EX) Task Force decides in favor of con nuing to permit these types of financing ar-rangements in some form, but also concludes changes to the exis ng regulatory framework are needed to promote consistency and to ensure the exis ng transac ons are ap-propriately conserva ve. The report also includes a corre-sponding list of “Issues to be Addressed.” The full report can be found on the NAIC website.4 F A (E) W G C In addi on to the White Paper, the Financial Condi on (E) Commi ee charged the Financial Analysis (E) Working Group with conduc ng a peer review analysis on the prac-

ces of cap ve and SPV transac ons within the life insur-ance industry to understand their nature and how exten-sively they are used. The Working Group is charged with analyzing troubled na onally significant insurers and to sup-


4 www.naic.org/documents/commi ees_ex_pbr_implementa on_ _related_rectors_associates_dra .pdf.


October 2013 | CIPR Newsle er 9

W L I -O C C (C )

port mul -state efforts in addressing solvency problems, including iden fying adverse industry trends. The peer review by the Working Group would be voluntary on the part of the domes c state insurance regulators of the life insurers engaging in such transac ons. For transac-

ons completed prior to a certain date and s ll in place, the Working Group would collect specified data in order to pro-vide informa on into the prevalence and significance of these transac ons throughout the industry. The Working Group also would inform the domiciliary state regulator and the Principle-Based Reserving Implementa on (EX) Task Force of any issues and concerns arising from its review. The Working Group would not have the power to approve or reject cap ve transac ons, as this decision remains with the domiciliary state of the insurer establishing the cap ve. The Working Group’s specific charges rela ng to the use of cap ves and SPVs are: 1. Perform analy cal reviews of transac ons (occurring on

or a er a date as determined by the NAIC membership) by na onally significant U.S. life insurers to reinsure XXX and/or AXXX reserves with affiliated cap ves, SPVs or any other U.S. en es subject to different solvency regulatory requirements than the ceding life insurers, to preserve the effec veness and uniformity of the solvency regulatory system.

2. For such transac ons entered into and approved prior to this date, and s ll in place, collect specified data in order to provide regulatory insight into the prevalence and significance of those transac ons throughout the industry.

3. Provide recommenda ons to the domiciliary state reg-ulator to address company specific concerns and to the Principle-Based Reserving Implementa on (EX) Task Force to address issues and concerns regarding the solvency regulatory system.

C State insurance regulators and the NAIC will con nue to assess and monitor the use of cap ves by life insurers in an effort to understand and improve prac ces employed by many life insurers to address perceived reserve redundan-cies. The issue is a top priority for state insurance regulators and the NAIC. The CIPR will con nue to report on these de-velopments and provide updates as appropriate.

A A

Shanique (Nikki) Hall is the manager of the NAIC’s Center for Insurance Policy and Research. She joined the NAIC in 2000 a er working at J.P. Morgan Securi es in the Global Economic Research Division. At J.P. Morgan, she worked closely with the chief economist to publish research on the principal forces shaping the economy

and financial markets. Hall has more than 20 years of capital markets and insurance exper se. She has a bachelor’s degree in economics and an MBA in financial services. She also studied abroad at the London School of Economics.


July 2014 | CIPR Newsle er 3

E C I R C S P V

By Kris DeFrain, Director, Research & Actuarial Department I State insurance regulators are given powers by state and federal law to regulate insurance companies and insurance cap ves1 and special purpose vehicles2 (herea er referred to as “cap ves”) domiciled in their state. While insurers and cap ves are subject to solvency regula on, the financial regulatory systems for insurers and cap ves can s ll be sig-nificantly different, largely because cap ves are unique. As regulators have said, “If you’ve seen one cap ve, you’ve seen one cap ve.” Regulators use a na onal state-based financial regulatory system for insurers (as developed by regulators through NA-IC commi ees and the NAIC Financial Regula on Standards and Accredita on Program) and use their own state financial regulatory system for cap ves. Insurers are required to file a uniform financial statement that is shared with all regula-tors; cap ves must share specified informa on with their state regulator. For insurers, there is online shared infor-ma on between regulators, including financial data and state ac on informa on; for cap ves, there is an op on to share informa on upon regulatory request. For insurers, the domiciliary state takes responsibility with support of cross-checks and balances in the system; for cap ves, the individu-al state takes full responsibility. In 2013, regulators conducted an NAIC study of these insur-er-owned cap ves, analyzing poten al ways to enhance the regulatory framework and provide insurance departments standardized tools and processes for reviewing certain types of cap ve transac ons. Two of the important bodies of work that resulted from the study were 1) regulators sought to clarify when they should use the na onal state-based financial regulatory system for the regula on of cap-

ves; and 2) regulators sought to iden fy adjustments to the regulatory system (e.g., elimina on of the perceived redundancy in specific required reserves) to no longer in-cent insurers to use cap ves for XXX/AXXX3 reserves. N S M -S R States and U.S. territories have collec vely established cer-tain standards for regula ng the solvency of U.S. insurers. Adherence to those standards by the states is monitored through the NAIC accredita on process. If a state demon-strates its system achieves the objec ves of these standards and the state regulators con nue to operate their system reliably, the state becomes accredited. Accredita on can be a signal to other states (and even to interna onal regula-

tors) that the state’s system has been evaluated, meets the agreed-upon standards and has been implemented to en-sure adequate solvency regula on. The standards apply to a state’s mul -state domes c insur-ers and reinsurers, generally defined as insurers and rein-surers: 1) domiciled in the state; and 2) either licensed, ac-credited, or opera ng in at least one other state or oper-a ng or accep ng business as an excess and surplus lines insurer or non-cap ve risk reten on group (RRG) from an-other state. Confusion arises from an exclusion that the defini on “does not include those insurers that are li-censed, accredited or opera ng in only their state of domi-cile but assuming business from insurers wri ng that busi-ness that is directly wri en in a different state.” Some find it unclear whether reinsurers—including those organized under cap ve laws and reinsuring business wri en in other states—are considered mul -state insurers subject to the accredita on standards. At the 2014 Spring Na onal Mee ng, the Financial Regula-

on Standards and Accredita on (F) Commi ee exposed a defini on of “mul -state reinsurers” along with an accom-panying clarifica on of when such a reinsurer would need to be regulated under the agreed-upon accredita on stand-ards. The intent of the new defini on was to: 1) recognize that a mul -state reinsurer that assumes business wri en in any state other than its state of domicile would cons tute mul -state business, and would therefore be regulated un-der the accredita on standards; and 2) generally exempt cap ve insurers owned by non-insurance en es for the management of their own risks. Of the more than 30 comment le ers submi ed, most ex-pressed some opposi on to the revised defini on and opined the scope was too broad. A few le ers were sent in support of the change, expressing the issue needing to be addressed is broader than just the XXX/AXXX cap ves and


1 “A cap ve is an insurance company created and wholly owned by one or more non-insurance companies to insure the risks of its owner (or owners). Cap ves are essen ally a form of self-insurance whereby the insurer is owned wholly by the insured.” NAIC website: CIPR: CIPR Key Issues: Cap ve Insurance Companies. 2 According to the Special Purpose Reinsurance Vehicle Model Act (# 789), special purpose reinsurance vehicles (SPRVs) are designed to facilitate the securi za on of one or more ceding insurers’ risk as a means of accessing alterna ve sources of capital and achieving the benefits of securi za on. Investors in fully funded insur-ance securi za on transac ons provide funds that are available to the SPRV to secure the aggregate limit under an SPRV contract that provides coverage against the occurrence of a triggering event. 3 The Valua on of Life Insurance Policies Model Regula on (#830) is commonly referred to as “XXX” and Actuarial Guideline XXXVIII—The Applica on of the Valua-

on of Life Insurance Policies Model Regula on (AG 38) is commonly referred to as “AXXX”.


4 July 2014 | CIPR Newsle er

E C I R C S P V (C )

that the state-based system of regula on would be strengthened as a result of the change. The Commi ee is expected to discuss the comments received at the Summer Na onal Mee ng. P XXX/AXXX D , R F A , R F The U.S. financial regulatory framework includes regulatory controls or needed approvals on typical affiliated transac-

ons and reinsurance, largely because of the poten al to use these tools to misrepresent economic reality, such as a emp ng to reduce or bypass high capital requirements. In a Feb. 11, 2014 le er, the Financial Analysis (E) Working Group explained the regulatory concern with cap ve rein-surance agreements. The Working Group explained that the “risk for XXX and AXXX cap ve reinsurance agreements is generally considered to be different, in part because they are structured different than a pure cession. This is because many state insurance regulators consider XXX and AXXX to create overly conserva ve statutory reserves. As such, the transac ons are generally structured in a manner to shi the “redundant” por on of the reserve to the cap ve insur-er in order to more accurately reflect the expected cash ou lows that could occur on the underlying policies... FAWG believes the primary risk associated with these XXX and AXXX cap ve reinsurance agreements is if the experi-ence on the underlying business develops unfavorably to where the statutory reserves on such business may be in-sufficient to absorb such development.”4 In June 2014, Rector & Associates, Inc. issued a report with a proposal for an XXX/AXXX Reinsurance Framework, a new repor ng requirement in the 2014 financial statement blank for insurers ceding XXX/AXXX reserves, and the idea of a new sec on in the Financial Analysis Handbook regard-ing XXX/AXXX transac ons. On June 30, the Principle-Based Reserving Implementa on (EX) Task Force put in mo on the development of 1) a new financial statement supplement to be required with 2014 annual repor ng; 2) the need for regulatory financial analysis procedures for the states’ re-view of XXX/AXXX reinsurance transac ons with cap ves/SPVs; and 3) details to support the XXX/AXXX Reinsurance Framework that was adopted in concept. A new financial statement supplement to be required with 2014 annual repor ng will be considered by the Blanks (E) Working Group. The Working Group is using Rector’s pro-posed dra supplement as a star ng point. Rector’s pro-posal includes three tables detailing informa on about re-

serves, securi es and collateral regarding each assuming insurer. Among other required repor ng, the first table would include the name of the assuming insurer, the re-serve amounts ceded and the type of reinsurer; the second table would include the name of the assuming insurer, the reserve credit taken by the ceding insurer, and the securi es held in the current and prior year; and for each transac on included in the second table, a separate table would include the name of the assuming insurer, categories of assets and the amounts of assets and affiliate or parental guarantees. The Financial Analysis Handbook (E) Working Group will be developing a new sec on in the Financial Analysis Handbook to specify procedures or best prac ces for reviewing XXX/AXXX reinsurance transac ons with cap ves/SPVs. This Working Group is instructed to consider the changes recom-mended in the Feb. 11, 2014, le er from the Financial Anal-ysis (E) Working Group. These changes include having a life actuary determine the reasonableness of the “economic reserve calcula ons” such that sufficient margins are includ-ed, the company can handle stresses (e.g. significant chang-es to mortality) and the assets suppor ng the economic reserves are of sufficiently high quality. The third part of the project is to develop the details around the proposed XXX/AXXX Reinsurance Framework. Similar to how the Principle-Based Reserving Implementa on (EX) Task Force adopted the framework in concept, the Execu ve (EX) Commi ee will consider adop ng the proposed XXX/AXXX Reinsurance Framework in concept at the Summer Na onal Mee ng. If adopted, numerous groups will develop the details to create the framework for subsequent consid-era on by the en re NAIC membership. The proposed framework, as currently adopted by the Task Force, would apply only to the XXX term life insurance busi-ness and AXXX universal life with secondary guarantees (ULSG) business. The Framework seeks to address regulato-ry concerns regarding reserve financing transac ons and to do so without encouraging them to move off-shore. The primary goal of the Framework is to ensure enough assets are available to the ceding company to pay policyholder claims. In general, reinsurance transac ons with large pro-fessional reinsurers, and other transac ons that are not of


4 Feb. 11, 2014 le er, “Recommenda ons Regarding the Solvency Regulatory System Related to XXX and AXXX Cap ve Transac ons” from Steve Johnson, chair, Financial Analysis (E) Working Group to Superintendent Joseph Tor III, chair, Financial Condi on (E) Commi ee and co-chair, Principle-Based Implementa on (EX) Task Force and Commissioner Julie Mix McPeak, co-chair, Principle-Based Implementa on (EX) Task Force.


July 2014 | CIPR Newsle er 5

E C I R C S P V (C )

the types that regulators have been concerned about, are not affected by the proposed Framework. It is important to note the proposed framework does not change the statutory reserve requirements applicable to a ceding insurer. Rather, the framework addresses the types of security that can back those reserves in connec on with reserve financing transac ons. By way of either new re-quirements or what are effec vely safe harbors (depending on the specifics of the transac on), the direct ceding com-pany for reinsurance financing transac ons, in most in-stances, would: 1. Collateralize a por on of the total statutory reserve

approximately equal to the principle-based reserving (PBR)-level with hard assets such as cash and securi es listed by the Securi es Valua on Office (SVO).

2. Collateralize the remainder of the statutory reserve with other assets and forms of security iden fied as acceptable by regulators.

3. Disclose the assets and securi es used to support the reserves.

4. Hold a risk-based capital (RBC) cushion as required for other business.

The proposed framework would be codified through the Credit for Reinsurance Model Law (#785) with the crea on of a new model regula on to establish requirements re-garding the reinsurance of XXX/AXXX policies. A modifica-

on to the Actuarial Opinion and Memorandum Regula on (#822) or other regula on will require the opining actuary for the ceding insurer to issue a qualified opinion if the framework is not followed. Prior to the regula on being modified and adopted by the states, an actuarial guideline would be adopted. As another enforcement tool, a note to the annual audited financial statement would require the ceding insurer, and its independent auditor, to indicate whether the framework is being followed.

It is expected once PBR is implemented, the perceived re-serving redundancies precipita ng the use of cap ves for reserving purposes will be addressed and, therefore, the incen ve to create these types of cap ves will be almost, if not fully, eliminated. Industry representa ves have agreed if regulators can remove the excessively conserva ve reserves to get to the “right” reserve level, then financing transac-

ons would no longer exist. C Regulators are now in the final stages of implemen ng some regulatory changes for 2014, including revised financial analysis procedures for evalua ng XXX/AXXX transac ons for approval and new disclosures through a supplement to the financial annual statement. Based on what gets ap-proved at the Summer Na onal Mee ng, changes to RBC could be implemented in 2015 with other changes to follow.

A A Kris DeFrain is the NAIC Director of the Research and Actuarial Department. She is currently charged as primary NAIC staff for the Principle-Based Reserving and the Casu-alty Actuarial and Sta s cal Task Forces. She manages a staff of actuaries, sta s cal ana-lysts, insurance contract experts, economists, and research analysts working on regulatory

solvency- and market-related issues, providing regulatory ser-vices, and conduc ng research for the Center for Insurance Policy and Research. She received her bachelor’s degree in finance/actuarial science from the University of Nebraska in 1989. Ms. DeFrain received her FCAS designa on from the Casualty Actuari-al Society (CAS), where she previously served as Vice President—Interna onal. She is a member of the American Academy of Actu-aries and a Chartered Property & Casualty Underwriter.


May 2015 | CIPR Newsle er 15

R A AG 48 B U C R T

By Shanique (Nikki) Hall, CIPR Manager* Over the past several years, the NAIC and state insurance regulators have been keenly focused on the life insurance industry’s use of cap ve insurance companies to finance reserves required under current regula ons. These reserves are commonly referred to as “XXX reserves” for certain term life insurance policies and “AXXX reserves” for certain universal life insurance policies. In cases where reserves are viewed as excessive or redundant, life insurers have in-creasingly turned to cap ve reinsurers to finance the redun-dant statutory reserves on these products. A er several years of work, the NAIC and state insurance regulators made significant strides last year towards bring-ing more uniformity to cap ve reinsurance transac ons. In December 2014, Actuarial Guideline XLVIII (AG 48) was adopted by the NAIC Execu ve (EX) Commi ee and Plenary. AG 48 defines the rules for new life XXX and AXXX reserve financing transac ons executed a er Jan. 1, 2015 and is a key item needed to implement the XXX/AXXX Reinsurance Framework (Framework) as adopted in 2014. The Frame-work sets forth an ac on plan specific to life insurance re-serve financing transac ons un l principle-based reserving (PBR) requirements become fully effec ve. Once adopted and implemented, PBR is expected to eliminate the reserv-ing incen ve for these transac ons. L - O C The XXX/AXXX excess reserve financing market started in the early 2000s. It has since grown in popularity to become a common part of many life insurers’ capital management programs.1 In 2011, the NAIC first undertook its inves ga-

on into certain types of life insurer-owned cap ves. Regu-latory concerns led to the establishment of the NAIC Cap-

ve and Special Purpose Vehicle Use (E) Subgroup in 2012. The Subgroup, which has since been disbanded, was charged to study insurers’ use of cap ves and special pur-pose vehicles (SPVs) to transfer insurance risk, other than self-insured risk, in rela on to exis ng state laws and regu-la ons, and to establish appropriate regulatory require-ments to address concerns iden fied in this study. At the end of this study, the Subgroup adopted a white paper, Cap ve and Special Purpose Vehicles: An NAIC White Pa-per2, on the use and regula on of cap ves. The white paper revealed insurers were crea ng these cap-

ves because the XXX/AXXX reserves established were too high—some mes three to four mes the actual value of the reserves. Because of this, insurers looked for be er, more economical ways to handle these reserves and thus, they

created cap ves and SPVs. The result to the companies was an economic gain because they were able to back the excess reserves with non-tradi onal assets and other instruments not typically allowed as assets in our statutory financial reg-ulatory system. This created an unlevel playing field amongst insurers. Another core concern iden fied in the white paper was a lack of transparency and consistency in the regula on of cap ves. While both insurers and cap ves are subject to solvency regula on, the financial regulatory systems for cap-

ves is significantly different than for insurers. This is largely because cap ve laws were originally intended to only ad-dress the risks of self-insurance. Also worth no ng is insur-ance company-owned cap ves have since become more unique. As regulators have said, “If you’ve seen one cap ve, you’ve seen one cap ve.” One of the differences is insurers are required to file a uniform financial statement that is shared with all regulators. There is shared informa on be-tween regulators, including financial data and state ac on informa on. Conversely, cap ves share specified infor-ma on only with their state regulator—there is an op on to share informa on, but only upon regulatory request. Two important bodies of work resulted from the NAIC study: 1) regulators sought to clarify when they should use the na onal state-based financial regulatory system for the regula on of cap ves; and 2) regulators sought to iden fy adjustments to the regulatory system to no longer provide incen ves to insurers to use cap ves for XXX/AXXX reserves. As it pertains to the la er, regulators decided they wanted to adjust the system but also did not want to forbid these cap ves, since they did not want to encourage movement of these cap ve reinsurance transac ons off-shore. XXX/AXXX R F The NAIC retained Rector & Associates, Inc. (Rector) to de-velop regulatory responses for the use of cap ves to fi-nance XXX/AXXX reserves. Rector worked with mul ple par es to devise a XXX/AXXX Reinsurance Framework which was based on significant input from state insurance regulators and the insurance industry. The Framework was adopted in August 2014 by the NAIC Execu ve (EX) Com-mi ee in concept. Subsequent to the Execu ve Commi ee ac on, a number of NAIC groups have been working to de-


* The author would like to thank Dan Daveline, Kris DeFrain and Todd Sells for their valuable comments and sugges ons to this ar cle. 1 “Life ILS: 2014 year in review and looking ahead to 2015.” Milliman. February 2015. 2 The Cap ve and Special Purpose Vehicles: An NAIC White Paper was formally adopted in 2013 and can be accessed at: www.naic.org/store/free/SPV-OP-13-ELS.23pdf.


16 May 2015 | CIPR Newsle er

R A AG 48 B U C R T (C )

velop the technical aspects of the new Framework, and several of the conceptual components have been con-structed and implemented. The Framework itself is based on regula on of the direct ceding company rather than regula on on the cap ve. The Framework would require the direct ceding company for reinsurance financing transac ons, in most instances, to: 1. Book the full statutory reserve. 2. Back the core reserve value (which is equal to the ex-

pected PBR reserve level) with hard assets such as cash and NAIC Securi es Valua on Office (SVO)-listed securi es).3

3. Disclose the assets and securi es used to support the reserves in a new Blanks Supplement.

4. Hold an appropriate risk-based capital (RBC) charge for this business.

The Framework is prospec ve and only applies to financing arrangements involving term life insurance business subject to Regula on XXX and universal life insurance business sub-ject to Actuarial Guideline 38 (more commonly known as Regula on AXXX or AG 38). These are the business lines that have been iden fied by the life insurance industry as having the most self-evident reserve redundancies and are the most commonly financed lines. The Framework does not change the statutory reserve requirements applicable to a ceding insurer. Rather, the Framework addresses the types of security that can back those reserves in connec on with reserve financing transac ons. The purpose of the Framework is to “further an ac on plan to develop proposed changes to the insurer/cap ve regula-

ons specific to XXX/AXXX transac ons.” As part of the ac-on plan, Rector introduced a dra “Actuarial Guideline

XLVIII—Actuarial Opinion and Memorandum Requirements for the Reinsurance of Policies required to be Valued under Sec ons 6 and 7 of the NAIC Valua on of Life Insurance Polices Model Regula on (Model #830).” Regulators refer to this actuarial guideline as AG 48. AG 48 There are two means to implement the Framework—a long-term solu on and a short-term solu on. AG 48 is a short-term solu on to regulate the use of cap ves for XXX/AXXX reserve financings un l PBR requirements be-come generally effec ve. AG 48 was developed to serve as an interim step—it establishes a reserving methodology that will be in place un l the XXX/AXXX Reinsurance Mod-el Regula on is adopted and implemented. Regulators opted for a short-term solu on of AG 48 which requires

issuance of a “qualified” actuarial opinion if the Frame-work is not being followed. AG 48 does not prohibit XXX/AXXX cap ve reserve transac-

ons. Its intent is to “provide uniform, na onal standards governing XXX/AXXX reserve financing arrangements”4 so all companies and regulators will use the same approach, thereby providing a more level playing field than that which exists today. To meet the standards, a por on of a ceding insurer’s statutory reserve approximately equal to the PBR reserve must be secured by high quality types of assets. The por on of the statutory reserve exceeding the PBR-level may be backed by other forms of security, but only as ap-proved by the ceding insurer’s domiciliary regulator. AG 48 does introduce new terms, such as Primary Security, which will be explained below. The main components of AG 48 include the following: • AG 48 applies to “covered policies” (those required to

be valued under Sec ons 6 or 7 of the NAIC Valua on of Life Insurance Policies Model Regula on) ceded Jan. 1, 2015 and later. It will not apply to policies that were both issued prior to Jan. 1, 2015 and ceded as part of a reinsurance arrangement in existence as of Dec. 31, 2014. Policies already subject to a cap ve arrangement as of the end of 2014 would be grandfathered. Guid-ance has been included to allow the ceding company’s domiciliary regulator, a er consul ng with the NAIC Financial Analysis Working Group (FAWG), to exempt a transac on if such risks are “clearly outside the intent and purpose” of AG 48 or for other reasons specified in the guideline.

• AG 48 iden fies specific assets, “Primary Securi es” which must be used to support the “Actuarial Method5” reserves, which are calculated using NAIC Valua on Model, chapter 20 (VM-20) with specified modifica-

ons. Primary Security includes numerous forms of se-curity including cash, SVO-listed securi es excluding any synthe c le er of credit, con ngent note, credit-linked note or other similar security that operates in a manner

(Continued on page 17) 3 Back the remainder of the statutory reserve with other assets and forms of security iden fied as acceptable by regulators. 4 In general, reserve financing arrangements are those where the security/assets backing part or all of the reserves have one or more of the following characteris cs: such security/assets (1) are issued by the ceding insurer or its affiliates; and/or (2) are not uncondi on-ally available to sa sfy the general account obliga ons of the ceding insurer; and/or (3) create a reimbursement, indemnifica on or other similar obliga on on the part of the ceding insurer or any if its affiliates (other than a payment obliga on under a deriva ve contract acquired in the normal course and used to support and hedge liabili es pertain-ing to the actual risks in the policies ceded pursuant to the reinsurance arrangement). 5 Actuarial Method is the methodology used to determine the Required Level of Primary Security (the dollar amount determined by applying the Actuarial Method to the risks ceded with respect to Covered Policies.


May 2015 | CIPR Newsle er 17

R A AG 48 B U C R T (C )

similar to a le er of credit; as well as, funds-withheld and modified coinsurance transac ons, commercial loans in good standing (CM3 quality and higher), policy loans and deriva ves used to hedge risk.

• AG 48 allows “other security6” approved by the regula-tors to back the excess of statutory reserves over the Actuarial Method reserves which can include any asset acceptable to the ceding company’s domiciliary state and even security not typically considered an asset, such as le ers of credit

• Each reinsurance arrangement subject to AG 48 re-quires analysis by the appointed actuary on a treaty by treaty basis, and requires the appointed actuary to is-sue a qualified opinion if one or more of the require-ments are not met.

• AG48 was adopted with an effec ve date of 1/1/2015 and is included in the NAIC Accoun ng Prac ces and Procedures Manual.

S The adop on of AG 48 is viewed as an interim step in devel-oping a more comprehensive approach to the use of cap ve reinsurers for XXX/ AXXX reserves. As a second stage solu-

on, the NAIC Reinsurance Task Force will create a new model regula on incorpora ng AG 48 principles, and amend the exis ng Credit for Reinsurance Model Act (Model #785) to allow for the new regula on. Although some in the

life insurance industry believe a level of redundancy will con nue to exist under PBR, under the new regula on, com-panies will be required to fund the full statutory (PBR) re-serve with assets that meet the requirements of AG 48, which would appear to eliminate the reserving incen ve to use cap ves to finance reserves.

A A

Shanique (Nikki) Hall is the manager of the NAIC Center for Insurance Policy and Research. She joined the NAIC in 2000 and currently oversees the re-search, development, produc on and editorial aspects of the CIPR’s four pri-mary work streams; the CIPR News-le er, studies, events and website. Ms. Hall has more than 20 years of capital

markets and insurance exper se and has authored copious ar cles on insurance regulatory ma ers affec ng state regulat-ed insurance companies. She began her career at J.P. Morgan Securi es in the Global Economic Research Division where she worked closely with the chief economist to publish research on the principal forces shaping the economy and financial mar-kets. Ms. Hall has a bachelor’s degree in economics and an MBA in financial services. She also studied abroad at the Lon-don School of Economics.

6 Other Security is any asset, including asset mee ng the defini on of Primary Security, acceptable to the Commissioner of the ceding insurer’s domiciliary state.


First Name Last Name Title CompanyKenneth Abitz Director, Financial Surveillance Kansas Dept of InsJean Adams-Harris Principal Johnson Lambert LLPMaureen Adolf Senior Policy Adviser/Insurance Sutherland LawChristine Afolabi Financial Examiner DC Dept of Ins Securities & BankingSelma Ajanovic Insurance Risk Specialist Federal Reserve Bank of ChicagoRosemarie Albrizio Vice President AXA Equitable Life Ins CoLois Alexander Market Regulation Manager NAICGordon Amini General Counsel Oklahoma Ins DeptJoshua Andersen Director of Regulatory Affairs & In-House Counsel ReliaMax Surety CoErik Anderson Vice President & Actuary New York Life Insurance CoGary Anderson First Deputy Commissioner Massachusetts Div of InsMel Anderson Deputy Commissioner for Financial Regulation/Audit Arkansas Ins DeptCharles Angell Deputy Commissioner & Actuary Alabama Dept of InsWilliam Arfanis Supervising Examiner Connecticut Ins DeptJosh Arpin Accounting and Reinsurance Policy Advisor NAICJon Arsenault General Counsel Connecticut Ins DeptJennifer Austin Partner KPMG LLPKathy Bachman Actuary Ohio National Financial ServicesErin Bagley General Counsel CoverysJ. Kevin Baldwin General Counsel Illinois Ofc of the Special DeputyCynthia Barnard AVP Annuities Valuation Pacific Life Insurance CompanyRichard Barnhart VP - Accounting Policy MassMutualBrett Barratt Deputy Commissioner Utah Ins DeptDavid Barton General Counsel New Mexico Ofc of the SuperintendentJohn Bauer Chief Counsel, Regulatory Affairs NAICGreg Bealuk Captive Regulatory Division Supervisor The INS CompaniesCarmen Belen Compliance Manager ACORDKathy Belfi Director Connecticut Ins DeptLouis Belo Chief Deputy Commissioner North Carolina Dept of InsChristine Benefield Associate General Counsel & Vice President AIGNancy Bennett Senior Life Fellow American Academy of ActuariesAlan Berliner Attorney Thompson Hine LLPSusan Bernard Chief Examiner California Dept of InsSandy Bigglestone Director of Captive Insurance Vermont Dept of Financial RegTim Biler Chief Financial Analyst Ohio Dept of InsBirny Birnbaum Director Center for Economic JusticePatricia Booker Consultant MassMutual Life Ins CoPatricia Borowski Senior Vice President PIA NationalAl Bottalico Insurance Specialist Locke Lord LLPRich Bradley Director of Market Conduct Massachusetts Div of InsAaron Brandenburg Economist & Statistical Information Manager NAICW. Jay Branum Director of Captives South Carolina Dept of InsCharles Breitstadt Sr. Gov. Rel. Director Nationwide Mutual InsuranceBrendan Bridgeland Director Center for Ins ResearchDenise Brignac Chief of Staff Louisiana Dept of InsSteve Broadie Vice President, Financial Policy Property Casualty Insurers Association of America (PCIAA)Jack Broccoli Associate Director - Financial Regulation Rhode Island Div of InsLorrie Brouse General Counsel Tennessee Dept of Commerce & InsPeg Brown Deputy Commissioner Colorado Div of InsDale Bruggeman Chief, Policy and Development, Foreign Analysis and Administration Ohio Dept of InsJohn Bruins VP and Senior Actuary American Council of Life InsurersNatalie Brunson-Wheeler Counsel State Farm InsuranceSurayuth Bunyasrie Financial Analyst DC Dept of Ins Securities & BankingWarren Byrd Deputy Commissioner Louisiana Dept of InsuranceElizabeth Byrne Vice President-State Government Affairs VoyaAdam Cancryn Senior Reporter SNL FinancialAndrew Carlson Legislative Liaison and PIO Arizona Dept of InsMary Caswell Data Quality Manager NAICMike Chaney Commissioner Mississippi Ins DeptVirginia Christy Chief Assistant General Counsel Florida Office of Insurance RegEric Cioppa Superintendent Maine Bureau of InsSharon Clark Commissioner Kentucky Dept of InsNorris Clark Financial & Regulatory Specialist Locke Lord LLPRandolph Clerihue SVP, Corporate Communications MetLifeCarolyn Cobb Vice President & Chief Counsel, Reinsurance & Int'l Policy American Council of Life InsurersBuddy Combs Director of Public Policy Oklahoma Ins DeptRay Conover Director, Examinations and Regulatory Services Global Insurance EnterprisesChris Conrad Senior Actuary TransamericaJames Cornman Director, Media Relations American Council of Life InsurersTodd Coslow Assistant Vice President Federal Reserve Bank of ChicagoTony Cotto Financial Policy and Legislative Counsel NAICLindsay Crawford Deputy Chief Examiner Nebraska Dept of InsLeeAnne Creevy Partner Risk and Regulatory Consulting, LLCKim Cross Assistant Chief Examiner Iowa Ins DivAlice Cruz Regulatory Examiner II Guam Regulatory DivisionGreg Dahl Deputy Insurance Commissioner Montana Ofc of the Ins Cmsr

CIPR Fall Event: Attendee List (11/6/15)


Richard Daillak Vice President Swiss ReAndy Daleo P/C Financial Analysis Manager NAICLauren Dantche Director Tennessee Dept of Commerce & InsDan Daveline Director-Financial Regulatory Services NAICBrian Davis Director- Technical Accounting Genworth Financial, Inc.Rebecca Davis Financial Examiner DC Dept of Ins Securities & BankingKris DeFrain Director, Research & Actuarial NAICAngele Delevoye Financial Counselor French Embassy in the USJoe Detrick Senior IT Specialist Jennan Enterprises, LLCLynn Dickerson Associate Commissioner, Property & Casualty Maryland Ins AdminMichael Dinius President Noble Consulting Services, Inc.Edward Dinkel Senior Financial Consultant Rector & Associates, Inc.Cindy Donovan Chief Financial Examiner Indiana Dept of InsThomas Doran President Medical Risk ManagersTynesia Dorsey Chief Administrative Officer Ohio Dept of InsHardy Drane Deputy Commissioner Delaware Dept of InsMatthew Duffy VP Voya FinancialHarry Dunn VP & Managing Actuary Genworth FinancialStephanie Dunn SVP, Chief Legal Officer SCOR Global Life AmericaEric Dupont Vice President & Government Relations Counsel MetLifeSteve Durish President OH & WV Insurance Guaranty Assns.Justin Durrance Chief Deputy Commissioner Georgia Ofc of Ins & Fire SafetyLinda Duzick Manager, Insurance Policy Section Federal Reserve BoardBrandon Dwyer Corporate Vice President & Actuary New York LifeElizabeth Dwyer Associate Director Rhode Island Div of InsJohn Eads Special Assistant Attorney General Mississippi Ins DeptRebecca Easland Director, Financial Analysis Bureau Wisconsin Ofc of the Ins CmsrAmy Eby AVP, Assitant APpointed Actuary Lincoln Financial GroupDarren Ellingson Deputy Director Arizona Dept of InsCharles Evers Vice President, Corporate Accounting Protective Life CorporationRichard Fabian General Counsel RiverStoneRaymond Farmer Director South Carolina Dept of InsFarrah Fielder General Counsel NAPEOJohn Fielding Counsel Steptoe & JohnsonTom Finnell Deputy Director, Regulatory Policy Federal Insurance OfficeJohn Finston General Counsel California Dept of InsArthur Fliegelman Senior Financial Analyst Office of Financial ResearchRichard Ford Chief Examiner Alabama Dept of InsWhitney Fore Associate Carlton Fields Jorden BurtSara Franson Accreditation Program Manager NAICDiane Fraser Senior Policy Advisor Financial Stability Oversight CouncilAnn Frohman Principal Attorney Frohman Law OfficeJillian Froment Deputy Director Ohio Dept of InsBryan Fuller Director Examination Resources, LLCRoman Gabriel Vice President PrudentialAlan Gamse Principal Semmes, Bowen & Semmes, PCJulie Gann Senior Manager - Accounting & Reporting NAICJulie Garber Senior Manager--Solvency Regulation NAICJennifer Gardner Manager I NAICRuben Gely Deputy Commissioner, Supervision and Compliance Puerto RIco Ofc of the Ins CmsrNick Gerhart Commissioner Iowa Ins DivBonnie Gerst Vice President, Corp. Finance TransamericaScott Gilliam VP & Government Relations Officer The Cincinnati Insurance CompanyWalter Givler Vice President - Solvency Policy Northwestern MutualThomas Glassic VP Policy and Government Relations PCIWilliam Goddard Attorney Day Pitney LLPChristina Goe general counsel Montana Ofc of the Ins CmsrSusan Gozzo Andrews Chief Property Casualty Actuary Connecticut Ins DeptPaul Graham SVP & Chief Actuary American Council of Life InsurersCatherine Grason Director of Regulatory Affairs Maryland Ins AdminRalf Gütersloh Head of Foreign Affairs German Insurance AssociationBrenda Haggard Manager of Financial Analysis Arkansas Ins DeptNikki Hall CIPR Manager NAICLawrence Hamilton Partner Mayer Brown LLPLaura Hanson Senior Corporate Actuary Allianz LifeThomas Harman DC Bureau Manager A.M. Bestwilliam harrington Director Examination Resources, LLPDoug Hartz Deputy Insurance Commissioner Washington Ofc of the Ins CmsrJim Hattaway Managing Director Noble Consulting Services, Inc.Mel Heaps Chief Financial Examiner Arkansas Ins DeptTom Helsdingen Senior Accounting Manager Allstate Insurance GroupJoseph Hennelly Counsel Van Cott & Talamante, PLLCCIndy Hermes Director of Public Outreach Kansas Dept of InsRobert Herrell Deputy Commissioner California Dept of InsLee Hill Deputy Director / Financial Regulation and Solvenc South Carolina Dept of InsEmma Hirschhorn Division Chief California Dept of InsJoe Holahan Attorney Morris Manning & Martin LLP



Tom Houston Financial Examiner Adv Wisconsin Ofc of the Ins CmsrMary Jo Hudson Member Bailey Cavalieri LLCKim Hudson Deputy Insurance Commissioner California Department of InsuranceJohn Huff Director Missouri Dept of InsGORDON ITO Insurance Commissioner Hawaii Insurance DivisionRosa Iturbides Senior Director AXA Equitable Life Insurance CompanyJohn Iwanicki Vice President MetLifeGregory Jackson Sr Financial Reporting Consultant Ohio NationalConnie Jasper Woodroof NAIC Liaison StoneRiver, Inc.Jenny Jeffers Managing Member Jennan Enterprises, LLCEric Johnson Chief Actuary & Director L&H Product Review Florida Office of Insurance RegJeff Johnson AVP & Actuary John HancockStewart Johnson General Counsel North Carolina Dept of InsStephen Johnson Deputy Insurance Commissioner Pennsylvania Ins DeptJeffrey Johnson AVP & Actuary John HancockJeff Johnston Senior Director, Financial Regulatory Affairs – Do NAIColivier jonglez Financial Counselor French TreasuryThomas Kalmbach SVP, Chief Financial Officer Liberty MutualAlice Kane Partner Duane Morris LLPDimitris Karapiperis Research Analyst NAICGeorge Keiser Representative North DakotaDavid Keleher Senior P&C Specialist NAICSteve Kerner Assistant Commissioner New Jersey Dept of Banking & InsBrian Kilbane Senior Manager Dixon Hughes Goodman LLPEleanor Kitzman Principal Eleanor Kitzman, LLCArlene Knighten Executive Counsel Louisiana Dept of InsMichael Knowles Counsel, Products Empower RetirementTamara Kopp Receivership Counsel Missouri Dept of InsTina Korty General Counsel Indiana Dept of InsMatthew Kozak Investment Specialist Maryland Ins AdminLeslie Krier Market Conduct Oversight Manager Washington Ofc of the Ins CmsrCarolyn Krisko AVP, Financial Reporting Ohio National Financial ServicesLinda Lankowski VP & Actuary Prudential FinancialAlma Laris Senior Analyst GAOSonja Larkin-Thorne NAIC Funded Consumer Rep Consumer AdvocateTyler Laughlin Chief of Operations Oklahoma Ins DeptC. Christopher Ledoux Senior Advisor Financial Stability Oversight CouncilChanho Lee Life Actuary NAICReba Leonard Sr. VP Risk Mgmt & Health Policy Goldwater Taplin GroupRuth Leung Senior Financial Analyst, Policy Studies Office of Financial Research - Department of TreasuryJessie Li Examiner/Analyst DC Dept of Ins Securities & BankingBeth Lindsay Assistant Vice President Voya FinancialAlyssa Long Executive Director USAAJohn Loughran Insurance Holding Company Examiner Connecticut Ins DeptRobert Lynch Vice President MetLifeMonica Macaluso Attorney California Dept of InsJohn MacBain Consulting Actuary Actuarial Resources CorpRobert Macullar Acting Director of Financial Surveillance Massachusetts Div of InsAndrew Mais Subject Matter Expert DeloitteDiana Marchesi Director of State Government Affairs, VP and Assoc Transamerica Life Insurance CompanyNicole Marshall Resident EYRaymond Martinez Senior Deputy Commissioner North Carolina Dept of InsElizabeth Martini Vice President and Counsel Ohio National Financial ServicesJohn Mathews Corporate Counsel Allstate Insurance CompanyDaniel Mathis Assistant Chief Examiner Iowa Ins DivSteve Matthews Chief Financial Regulator Montana Ofc of the Ins CmsrKristine Maurer Assistant Director New Jersey Dept of Banking & InsHugh McCormick Partner Duane Morris LLPJames McIntyre Partner McIntyre & Lemon, PLLCPatrick McNaughton Chief Examiner Washington Ofc of the Ins CmsrScott McNulty Senior Auditor US Government Accountability OfficePatrick McPharlin Director Michigan Dept of Ins & Financial SvcsMichael Mead President M.R. Mead & Company, Inc.Kevin Meehan Policy Advisor Federal Insurance OfficeAndrew Melnyk Vice President American Council of Life InsurersBecky Meyer Financial Examination Manager NAICEmily Micale Moe Senior Counsel American Council of Life InsurersAmy Mignogna Vice President, Strategic Initiatives Insured Retirement InstituteJames Mills Chief of Staff Oklahoma Ins Deptrandy milquet Insurance Financial Examiner WI Ins DeptDiane Minear General Counsel Kansas Dept of InsLawrence Mirel Principal Lawrence Mirel, Attorney at LawMichael Molony Partner Young Clement Rivers LLPGlory Montalvo Executive Aid Puerto Rico Ofc of the Ins CmsrEdward Moody Director of Insurance Company Licensing North Dakota Ins DeptRandy Moreau Senior Accounting Director Allstate Insurance GroupJudy Mottar Casualty Actuary Illinois Dept of Ins



Tim Mullen Market Regulation Director NAICSusanne Murphy Special Deputy Commissioner Florida Office of Insurance RegJoseph Murphy Chief Operating Officer CoverysStephen Murphy SVP, Capital Management Ohio NationalJay Muska Insurance Supervisory Analyst Board of Governors of The Federal Reserve SystemKathleen Nakasone Chief Deputy Insurance Commissioner Hawaii Insurance Divisionforozan nasery Vice President and Controller Resolution LifeLeslie Nehring Chief Financial Examiner Missouri Dept of InsChristine Neighbors Deputy Director/General Counsel Nebraska Dept of InsE Benjamin Nelson Chief Executive Officer NAICDavid Neve VP/Chief Actuary Global AtlanticRebecca Nichols Assistant Deputy Commissioner Virginia Bureau of InsuranceJohanna Nickelson Assistant Director Solvency and Licensing South Dakota Div of InsMolly Nollette Deputy Commissioner, Rates and Forms Division Washington Ofc of the Ins CmsrKay Noonan General Counsel NAICEric Nordman Director, Regulatory Services Division & the CIPR NAICTanji Northrup Assistant Insurance Commissioner Utah Ins DeptTodd Oberholtzer General Counsel Ohio Dept of InsAnne Obersteadt Senior Researcher NAICJames Odiorne Chief Deputy Insurance Commissioner Washington Ofc of the Ins CmsrSean O'Donnell Director of Financial Examination, RFB DC Dept of Ins Securities & BankingDoug Ommen Deputy Commissioner Iowa Ins DivGeorge Ortiz Director of Federal Affairs ISO, Inc.Mark Ossi Deputy Division Director Georgia Ofc of Ins & Fire SafetyHolly Osumi Insurance Examiner Hawaii Ins DivLauren Pachman Policy Analyst, Property & Casualty American Academy of ActuariesSuyash Paliwal Senior Insurance Policy Analyst Board of Governors of the Federal Reserve SystemPaula Pallozzi Associate Director Rhode Island Div of InsRobert Panah President Assurity Resources, Inc.Arthur Panighetti AVP Pacific LifeAndrew Pauley General Counsel West Virginia Ofc of the Ins CmsrMatti Peltonen Supervisory Insurance Analyst Federal Reserve BoardCharles Perin Assistant General Counsel Nationwide InsuranceScott Persten Chief Financial Analyst Arizona Dept of InsRichard Piazza Chief Actuary Louisiana Dept of InsYvette Pierre Assistant Director Bermuda Monetary AuthorityPriya Pooran Attorney at law NAAndrew Posewitz Chief of Staff Montana Ofc of the Ins CmsrDonna Powers Assistant Director NAICJoseph Prakash Managing Member JP ConsultingJennifer Pressley CFO Mainstreet Asset ManagemetAnn Pruett Administrative Supervisor - Examinations Regulatory Insurance ServicesEdwin Pugsley Chief Market Conduct Examiner New Hampshire Ins DeptDwight Radel Assistant Director-Risk Assessment Ohio Dept of InsAlfred Redmer Jr Commissioner Maryland Ins AdminGreg Redmond Vice-President & Head, State Government Relations MetLifeKurt Regner Assistant Director Arizona Dept of InsJohn Rehagen Division Director Missouri Dept of InsPeter Rice Senior Counsel DLA Piper LLPBarbara Richardson Director New Hampshire Ins Deptmichael ricker Property & Casualty Actuary Alaska Division of InsSara Robben Statistical Advisor NAICOlga Roberts Senior Manager KPMG LLPRich Robleto Deputy Comm - Life & Health Florida Office of Insurance RegAshley Rogers Senior Manager KPMG LLPJeremy Rosenbaum Director Guggenheim PartnersAlan Routhenstein Principal & Consulting Actuary Milliman IncJoel Sander Deputy Commissioner of Finance Oklahoma Ins DeptMarcy Savage Acting Assistant Deputy Director Illinois Dept of InsDaniel Schelp Managing Counsel NAICDavid Schleit Financial Analyst DC Dept of Ins Securities & BankingDavid Schonbrun Head of Legal HiscoxLes Schott Partner Baker TillyBruce Schowengerdt owner Schowengerdt Consulting LLCMartin Schwartzman Consultant Sky Bridge BenefitsBill Schwegler Vice President - Actuary TransamericaLeslie Scism Staff Reporter and News Editor The Wall Street JournalAnne Seggerman Senior Regulatory Counsel CoverysFrancine Semaya Legal & Insurance Regulatory Consultant Francine L. Semaya, Legal and Insurance Regulatory ConsultantGregory Serio Partner Park Strategies.comSanders Shaffer Senior Insurance Specialist Federal ReserveBob Shapiro Attorney Carlton Fields Jorden BurtMichael Sheiowitz Senior Director AXA Equitable Life Insurance CompanyJan Shemanske Asst. Secretary W. R. Berkley Corporationdana sheppard Acting Deputy Commissioner DC Dept of Ins Securities & BankingClark Shultz Director, Government Affairs Kansas Dept of InsDavid Sloane President Genworth Life Ins. Co. of NY



Marc Smith Director Baker TillyAndrew Smith Associate Actuary Ohio National Financial ServicesTracy Snow Chief, Captive Insurance Ohio Dept of InsDavid Snowball Captive Director/Regulator Utah Ins DeptEli Snowbarger Chief Financial Examiner Oklahoma Ins DeptEthan Sonnichsen Director, Government Relations NAICCarl Sornson Managing Actuary New Jersey Dept of Banking & InsSteven Sparks Director - Regulatory Reporting and Analysis Pacific Life Insurance CompanyMargaret Spencer Partner Risk & Regulatory Consulting, LLCAnthony Spina Of Counsel Vorys Sater Seymour PeaseJames Stephens Chief Deputy Director Illinois Dept of InsMike Stinziano, PhD Senior Vice President, Government and Corporate Re DemotechTomoko Stock Bureau Chief California Dept of InsDoug Stolte Deputy Commissioner Virginia Bureau of InsWayne Stuenkel Sr. VP and Actuary Protective Life CorpWilliam T. Sullivan Attorney Internal Revenue ServiceRobert Sullivan Attorney Polsinelli PCKelly Sullivan Attorney Polsinelli PCSheldon Summers Actuary Claire Thinking, Inc.Scott Taber VP & Senior Assistant General Counsel Zurich North AmericaSatoshi Takemoto Chief Representative of DC Office DLI North America (Dai-ichi Life Group)stephen taylor Acting Commissioner DC Dept of Ins Securities & BankingMary Taylor Director Ohio Department of InsurancePaul Tetrault State & Policy Affairs Counsel NAMICCharles Therriault Director, Securities Valuation Office NAICJeffrey Thomas ATTORNEY Mitchell WilliamsTerry Tiede Vice President, Regulatory and Government Affairs Global Atlantic Financial GroupJohn Tittle Senior Manager Deloitte & Touche LLPFrank Tomasello Program Director The Griffith Insurance Education FoundationEdward Toy Director, Capital Markets Bureau NAICThomas Travis NAIC Coordinator Louisiana Dept of InsJeffrey Trendel Deputy Commissioner North Carolina Dept of InsTimothy Tucker Washington Affairs Executive NCCIJohn Turchi Deputy Commissioner Massachusetts Div of InsDavid Vacca Principal Vacca Regulatory Consulting, LLCAndrew Vedder Director, Enterprise Risk Management Northwestern MutualMaxine Verne Senior Vice President and General Counsel SCOR Reinsurance CompanyKatharine Wade Commissioner Connecticut Ins DeptJamie Walker Associate Commissioner Texas Dept of InsMatt Walker Sr Analyst & Ins. Team Proj. Manager Federal Reserve BoardBarry Ward Deputy Commissioner Office of Licensing Louisiana Dept of InsPaige Waters Partner Locke Lord LLPBaird Webel Specialist in Financial Economics Congressional Research ServiceAnn Weber Director of Regulatory Affairs Society of ActuariesPeter Weber Chief Life Actuary Ohio Dept of InsBarry Leigh Weissman Shareholder Carlton Fields Jordan BurtKaren Weldin Stewart Commissioner Delaware Dept of InsKimberly Welsh VP, Assistant General Counsel RGADouglas Wheeler Senior Vice President New York Life Ins CoWilliam White Managing Principal Acuity Strategic ConsultingRobert Whitney Deputy Commissioner and General Counsel Massachusetts Div of InsDonna Wilson Estate Manager Oklahoma Receivership OfficeMargaret Witten General Counsel Georgia Ofc of Ins & Fire SafetyRoy Woodall Independent Member, FSOC Financial Stability Oversight CouncilGayle Woods Senior Policy Advisor Oregon Ins DivRyan Workman Senior International Relations Policy Counsel NAICJames Wrynn Managing Director - Vice Chairman Strategic Adviso Guy Carpenter & Co.Glenn Yamashita Insurance Examiner Hawaii Ins DivMike Yanacheak Actuarial Administrator Iowa Ins DivPamela Young Vice President & Associate General Counsel American Insurance AssociationPaul Yuen Supervising Attorney Hawaii Ins DivStephen Zimmerman Member Dykema



Documents

CIPR Fall Event: Regulation of Captives · Web-based technology, gaining efficiencies with online complaint filings, regulated entity data reporting and licensure applications and