Normal Between NAIC Meetings

Date Setpember 2, 2009 Author Connie Jasper Woodroof Email connie.woodroof@stoneriver.com

First, I want to apologize for not posting a new NAIC Focus in some time. So let’s get things back to normal, whatever that is, and catch up with a new Focus.

As has been normal for the last few years following the reduction of the length of NAIC National Meetings, several conference calls have been held since the last meeting. Below is a listing of the conference calls scheduled since the June meeting, along with the number of calls each group held. Now in all fairness, it is normal for some groups to meet only by conference call. I think you will be able to spot those.

Annuity Disclosure Working Group of the Life and Annuities Committee (1) Annuity Subgroup of the Interstate Compact National tandards Working Group (7) Capital Adequacy Task Force (1)Casualty Actuarial Task Force (1) Catastrophe Subgroup of Casualty Actuarial and Statistical Task Force (CASTF) (1) Consumers Connections Working Group (1) Consumer Guides Working Group (1) Disability Subgroup of the Interstate Compact National Standards Working Group (6) Financial Analysis Handbook Working Group (2) Financial Examiners Handbook Technical Group (1) Group Solvency Issues Working Group of the Solvency Modernization Initiative Task Force (2) Guaranty Fund Subgroup of SAPWG (1) Health Actuarial Opinion Subgroup of A&H Working Group (1) Health Coordination Subgroup of the Financial Examiners Coordination Working Group (2) Health RBC Working Group (1) Information Systems Task Force (2) Invested Assets Working Group (1) Issues Subgroup of the National Treatment and Coordination Working Group (2) Joint Call of the Capital Adequacy Task Force, and LHATF (1) Joint Call of the Life Insurance and Annuities Committee, Principles-Based Reserving Working Group, and Solvency Modernization Initiative Task Force (1) Life Coordination Subgroup of the Financial Examiners Coordination Working Group (2) Life Insurance and Annuities Committee (1) Life and Health Actuarial Task Force (LHATF) (2) Life RBC Working Group (4) Life Subgroup of the Interstate Compact National Standards Working Group (4) Long Term Care Appendix E Subgroup of the Senior Issues Task Force (1) Long Term Care Subgroup of the Interstate Compact National Standards Working Group (7) Market Analysis Procedures Working Group (3) Market Conduct Examination Standards Working Group (2) Medicare Supplement Refund Formula Subgroup of A&H Working Group (2) Multi-State Surplus Lines Premium Tax Working Group (1) NARAB Working Group of the Producer Licensing Task Force (1) National Treatment and Coordination Working Group (2) Operational Efficiencies Working Group (1) Pension Protection Act Subgroup of A&H Working Group (1) Principles-Based Reserving (PRB) Working Group (1) Producer Licensing Roundtable (1) Producer Licensing Working Group (2) Product Filing Review Handbook Subgroup (2) P&C Coordination Subgroup of the Financial Examiners Coordination Working Group (2) Property and Casualty RBC Working Group (1) Rate Filing Guideline Subgroup of A&H Working Group (1) Receivership and Insolvency Task Force (1) RRG (Risk Retention Groups) Subgroup of the Financial Examiners Handbook Technical Group (1) SERFF Board of Directors (2) Special Accreditation Standards Working Group (1) Speed to Market Task Force (1) Statistical Issues Subgroup of CASTF (3) Statutory Accounting Principles Working Group (2) VM PBR Experience Reporting and Review Subgroup of LHATF (1) VM (Valuation Manual) PBR Life Subgroup of Life and Health Actuarial Task Force (LHATF) (4) VM PBR Process and Coordination Subgroup of LHATF (2) VM PBR Reinsurance Subgroup of LHATF (1) VM PBR Scenarios Subgroup of LHATF (1) Valuation of Securities (VOS) Task Force (3) Workers’ Compensation Large Deductible Subgroup of CASTF (1)

Obviously, not all of these meetings are of interest to everyone, but it does give you an idea of normal conference call activity. This list is as of September 1. There are still some other calls scheduled between now and the September meeting. The schedule for NAIC conference calls and the occasional interim meeting can be found at http://www.naic.org/meetings_calendar.htm. The calls are open to anyone wanting to listen and/or participate. Additionally, by “clicking” on the group name, you will be taken to that group’s website where materials may be posted that will be discussed during the call. Also keep in mind, that as extensive as this list appears, it is not all of the NAIC groups and does not include any of the industry’s Interested Parties’ calls.

Now let’s find out what some of these calls have been about for the groups that are normally discussed in the Focus.

Statutory Accounting Principles Working Group (SAPWG)

This group has been quite busy since the June meeting. With the impending September 30 implementation date for SSAP No. 98 looming in the near future, regulators have decided to try to replace it before the effective date. That decision was made after the June meeting and to meet their established target date, things will have to happen at the September meeting. (No, this is not normal procedure even for the NAIC.) To replace SSAP No. 98, SAPWG has crafted SSAP No. 43R. In addition to superseding SSAP No. 98, the new SSAP will revise SSAP No. 43 and supersede paragraph 13 of SSAP No. 99. That is, all that will happen if adopted in its current format. The exposure draft for 43R, as well as other exposed SAPWG items, can be found on the SAPWG website, http://www.naic.org/committees_e_app_sapwg.htm.

Emerging Issues Accounting Working Group

EIAWG has not held conference calls, but because of the activity on SSAP No. 43R, industry feels revisions will also be needed to INT 09-07: Accounting for Re-Securitizations of Loan-Backed and Structure Securities (e.g. ReREMICs) which was exposed for comment at the June meeting. The exposure draft of INT 09-07 can be found on the Emerging Accounting Issues Working Group website at http://www.naic.org/committees_e_app_eaiwg.htm.

Valuation of Securities (VOS) Task Force

VOS conference calls covered normal discussion and exposure of documents on several topics. The group received the “Plan for Enhancing Regulatory Structure for Other Than Credit Investment Risks” from the Invested Assets Working Group and voted to immediately expose it for comment. Also exposed for comment was a recommendation to approve RealPoint as an ARO for CMBS (commercial mortgage-backed securities) ratings. Additionally, a revised proposal from the ACLI (American Council of Life Insurers) regarding RMBSs (residential mortgage-backed securities) was also released for comment. The last VOS call held was to vote to expose a new SVO Purpose’s and Procedures Manual for comment. The exposed version is a reformatting of the manual and does not contain any changes in procedures. All exposure documents can be found at http://www.naic.org/committees_e_vos.htm. All of these items and more are scheduled to be discussed at the upcoming NAIC meeting in September. (VOS has already posted their agenda and materials for the meeting at the above website.)

Capital Adequacy Task Force and Various RBC Working Groups
Joint Call of the Capital Adequacy Task Force, and LHATF

The Capital Adequacy call centered around the Term Asset-Backed Securities Loan Facility (TALF) proposal which has been posted at http://www.naic.org/committees_e_capad.htm, and the LRBC Derivatives Collateral proposal.

The Property/Casualty RBC call included the normal procedure of adopting the 2009 formula and a discussion of expanding Schedule P to 10 years of development in the annual statement for all lines of business.

The Life RBC conference calls included further discussion of the C-3 Phase III proposal, approval of the 2009 LRBC formula, and discussion of the ACLI Derivatives Risk Mitigation Proposal. Minutes to those calls and some call material can be found at http://www.naic.org/committees_e_capad_lrbc.htm.

The Health RBC call adopted the 2009 formula.

The joint Capital Adequacy and LHATF conference call dealt with several issues to be addressed as a result of the pending adoption of Principles-Based Reserving (PRB) for the Life companies.

In Conclusion
The NAIC September meeting is quickly approaching and holds the promise of being a very busy meeting, but then again that is normal for most September meetings. The Focus will let you know what occurs.

I hope to see many of you at the upcoming StoneRiver Summit, September 21 – 24 in Orlando, Florida! Check it out at http://www.stoneriversummit.com.

And yes, it’s already time to begin thinking about your annual filing. Take time to review the schedule for our Regional Update Seminars and Webinars at http://www.stoneriver.com/update. Our full-day seminars cover new NAIC filing requirements and blank changes—plus software updates, FAQs, and time-saving tips. Seminars are presented in seven cities across the US.

Although StoneRiver, Inc. takes all reasonable steps to ensure that the information in this document is current and correct, it neither warrants nor guarantees its accuracy. StoneRiver, Inc. does not render legal services or advice. This newsletter is not intended to substitute for legal advice, which can be rendered only by an attorney.