NAIC implements further XXX/AXXX changes

The executive committee of the National Association of Insurance Commissioners has adopted the XXX/AXXX Reinsurance Framework, furthering an action plan to develop proposed changes to the insurer/captive regulations specific to XXX/AXXX transactions.

The NAIC says that the XXX/AXXX Reinsurance Framework would not change the statutory reserve requirements; rather, it would change what types of assets or securities are needed to back those reserve liabilities. The framework would also require the ceding company to disclose the assets and securities used to support the reserves and hold an RBC cushion if the captive does not file RBC.

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

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