NAIC Working Group Considers ACLI Package

- A recommendation that addresses allowable collateral for reinsurance was adopted.

- A recommendation to advance work on Actuarial Guideline VACARVM, which deals with variable annuities, was adopted. Maine and Wisconsin voted against the proposal and New York abstained.

- A recommendation to reject a retroactive use of Section 8C of Actuarial Guideline 38 was unanimously adopted.

- An ACLI request to waive the standard scenario requirement for capital calculations associated with the C3-Phase II project for variable annuities with guarantees was rejected unanimously.

- An ACLI request to temporarily change the mortgage experience adjustment factor was rejected unanimously.

- A recommendation to relax restrictions on deferred tax assets was adopted, with a dissent from Maine. The original proposal, which allows deferred tax assets to be recognized over a 3-year period, was amended with a proposal from Wisconsin Insurance Commissioner Sean Dilweg.

The DTA amendment restricts the ability of companies to use any additional surplus to pay out dividends. Additionally, companies with risk-based capital ratios that are below acceptable trend test safe harbors will not be able to use the DTA proposal to move to an acceptable level, and those that use the deferred tax assets and have unacceptable levels at a future point will be subject to review by the domiciliary commissioner. The compromise also increases the DTA calculation from 10% of surplus and 1 year to 15% of surplus and 3 years.

Links to more information about the ACLI capital and surplus proposal are available here.