PROPERTY AND CASUALTY RISK-BASED CAPITAL (E) WORKING GROUP Saturday, April 8, :00 1:00 p.m. Hyatt Regency Denver Capitol 4 7 Fourth Floor

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1 Date: 3/27/ Spring National Meeting Denver, Colorado PROPERTY AND CASUALTY RISK-BASED CAPITAL (E) WORKING GROUP Saturday, April 8, :00 1:00 p.m. Hyatt Regency Denver Capitol 4 7 Fourth Floor ROLL CALL Tom Botsko, Chair Richard Ford Ron Dahlquist/Giovanni Muzzarelli Mitchell Bronson Susan Gozzo Andrews/George Bradner/Wanchin Chou Robert Ridenour Judy Mottar Alan Seeley Gloria Huberman/Sak-man Luk Nicole Elliott/Jennifer Wu Randy Milquet Ohio Alabama California Colorado Connecticut Florida Illinois New Mexico New York Texas Wisconsin AGENDA 1. Consider Adoption of its Dec. 22, 2016, and 2016 Fall National Meeting Minutes Tom Botsko (OH) Attachment A 2. Consider Adoption of the Catastrophe Risk (E) Subgroup Report Ron Dahlquist (CA) Attachment B 3. Consider Exposure of Agenda Item P Underwriting Risk Line 4 Factors Tom Botsko (OH) Attachment C 4. Consider Exposure of Agenda Item P Underwriting Risk Line 1 Factors Tom Botsko (OH) Attachment D 5. Discuss 2015 Overall Impact Analysis Tom Botsko (OH) Attachment E 6. Discuss Any Other Matters Brought Before the Working Group Tom Botsko(OH) 7. Adjournment w:\national Meeting\2017\Spring\Agenda\ pc rbc agenda.docx 2017 National Association of Insurance Commissioners 1

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3 Attachment A Attachment Capital Adequacy (E) Task Force 4/9/17 Draft: 1/12/17 Property and Casualty Risk-Based Capital (E) Working Group E-Vote December 22, 2016 The Property and Casualty Risk-Based Capital (E) Working Group of the Capital Adequacy (E) Task Force conducted an e-vote that concluded Dec. 22, The following Subgroup members participated: Tom Botsko, Chair (OH); Richard Ford (AL); George Bradner (CT); David Altmaier (FL); Alan Seeley (NM); Sak-man Luk (NY); Nicole Elliott (TX); and Randy Milquet (WI). 1. Adopted the 2016 and 2017 Annual Statement Guidance for the R3 Charge on Schedule F, Part 3 Aggregate Lines Commissioner Altmaier made a motion, seconded by Mr. Milquet, to adopt the 2016 and 2017 Annual Statement Guidance for the R3 Charge on Schedule F, Part 3 Aggregate Lines. The motion passed. Having no further business, the Property and Casualty Risk-Based Capital (E) Working Group adjourned. W:\National Meetings\2017\Spring\TF\CapAdequacy\PCRBC\Att01_12-22propertyrbcwg.doc 2017 National Association of Insurance Commissioners 1 3

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5 Draft Pending Adoption Attachment A Attachment Six-B Capital Adequacy (E) Task Force 12/11/16 Draft: 12/15/16 Property and Casualty Risk-Based Capital (E) Working Group Miami, Florida December 10, 2016 The Property and Casualty Risk-Based Capital (E) Working Group of the Capital Adequacy (E) Task Force met in Miami, FL, Dec. 10, The following Subgroup members participated: Tom Botsko, Chair (CA); Richard Ford (AL); Ron Dahlquist (CA); Wanchin Chou (CT); Brian Sewell (FL); Bruce Sartain (IL); Alan Seeley (NM); Marc Allen (NY); Mike Boerner (TX); and Randy Milquet (WI). 1. Adopted its Nov. 10 and Sept. 27 Minutes Mr. Seeley made a motion, seconded by Mr. Dahlquist, to adopt the Working Group s Nov. 10 (Attachment Six-A) and Sept. 27 (Attachment Six-B) minutes. The motion passed unanimously. 2. Adopted the Report of the Catastrophe Risk (E) Subgroup Mr. Dahlquist said the Subgroup met Dec. 9 (Attachment Six-C) and took the following action: 1) adopted its Nov. 18, Oct. 20 and Oct. 5 minutes; 2) adopted agenda item CR (2016 U.S. and Non-U.S. Catastrophe Event Lists); 3) exposed agenda item CR (Rcat Implementation) for a 30-day public comment period ending Jan. 8, 2017; and 4) re-exposed agenda item CR (Using Models Other than the Five Approved Commercially Available Model Losses) for a 45-day public comment period ending Jan. 23, He also stated that the Subgroup plans to focus its future discussions on the following items: 1) agenda item CR; and 2) other catastrophe risks for possible inclusion to the property/casualty risk-based capital (RBC) formula. Mr. Dahlquist made a motion, seconded by Mr. Milquet, to adopt the report of the Catastrophe Risk (E) Subgroup. The motion passed unanimously. 3. Agreed to Refer the Schedule F Proposal to the Blanks (E) Working Group Scott Williamson (Reinsurance Association of America RAA) said that, over the past few months, the RAA has been providing different informational sessions to individual companies and software vendors regarding the Schedule F proposal. He stated that a few minor editorial changes have been made based on the industry inputs collected during the exposure period. He stated that this proposal has accomplished the Working Group s goals of: 1) implementing the reinsurance credit risk methodology to the annual financial statement Schedule F; and 2) consolidating the current annual financial statement Schedule F, Part 3 through Part 8 into a single Part 3, which eliminates duplication, promotes consistency of the reported ceded transactions, provides for greater automation and reduces filing errors. Mr. Dahlquist made a motion, seconded by Mr. Milquet, to refer the Schedule F proposal to the Blanks (E) Working Group, subject to approval from the Reinsurance (E) Task Force. The motion passed unanimously. 4. Adopted Agenda Item P (Simplify the RBC Charge for the Type 7 Affiliated Investments) Mr. Botsko said the purpose of this proposal is to simplify RBC charge for the ownership of investment affiliates to be a fixed factor times the book/adjusted carrying value (BACV) of the investments, as this type of affiliate is not required to submit the RBC filings; therefore, the RBC charge for the ownership of the investment affiliate cannot be verified. John Mathews (Allstate Insurance Company) said he believes that this is a positive improvement to the current process, as it simplifies the calculation and the charge is consistent with P&C other affiliate. Michelle Werner (American International Group AIG) reiterated that replacing the current see-through approach to a fixed factor approach will likely be inconsistent with: 1) the way the state insurance laws are set up; and 2) the investment limits calculations. Mr. Botsko said adopting this proposal will be a temporary solution at this point, as the issue of the affiliated investments for all formulas has been assigned to an informal ad hoc group for further review National Association of Insurance Commissioners 1 5

6 Draft Pending Adoption Attachment A Attachment Six-B Capital Adequacy (E) Task Force 12/11/16 Mr. Seeley made a motion, seconded by Mr. Ford, to adopt agenda item P. The motion passed unanimously. 5. Exposed the Academy Underwriting Risk Line 4 Factors Report Lauren Cavanaugh (American Academy of Actuaries Academy) said the purposes of this report are to propose: 1) a new methodology for calculating the underwriting risk Line 4 factors; and 2) a new set of the Underwriting Risk Line 4 Factors. She stated that the proposed methodology uses data from the annual statements between 1997 and 2014, and calculates the 87.5 th percentile using the following filtering: 1) survivorship; 2) line of business size; 3) pooling; 4) minor lines; 5) years of line of business greater than five years of experience; 6) maturity; and 7) anomalous values. She said the new sets of factors are computed on a gross of catastrophe basis. The Working Group might consider updating the catastrophe adjustment factors in the near future. Ms. Cavanaugh also stated that the indicated factors are, at times, a significant change from the factors currently in use. She said the Academy recommends the Working Group allow the caps to increase from year to year, eventually reaching the indicated values. Mr. Williamson recommended the Academy consider applying expert judgements to the lines where historical data may not be indicative of current or expected market conditions. Mr. Botsko said the Working Group will perform impact studies during the exposure period and provide findings on the next conference call. Mr. Boerner made a motion, seconded by Mr. Milquet, to expose the Academy Underwriting Risk Line 4 Factors Report for a 60-day public comment period ending Feb. 8, The motion passed unanimously. 6. Received an Update from the Operational Risk (E) Subgroup Mr. Seeley said the Subgroup would like to go live with the basic operational risk charge with the 2017 RBC filing. Also, it has decided to set the basic operational risk charge as a percentage of an insurer s total RBC after covariance. The structure has been exposed recently, and it is expected to be finalized by June He said the other type of charge that the Subgroup is looking at is for growth risk. NAIC staff have performed studies comparing the effects of the existing and the informational growth risk methods. Mr. Seeley stated that these studies reveal that there is not much difference in the effect of these growth risk methods in triggering regulatory interventions. However, based on discussions with some of the P/C staff expertise, the Subgroup may recommend that the factors be applied to the net premium and the net reserve proxies be reviewed by the Working Group. Mr. Williamson recommended the Subgroup consider applying a lower operational risk charge, as some of the operational risks have been implicitly embedded in different risk components. Having no further business, the Property and Casualty Risk-Based Capital (E) Working Group adjourned. W:\National Meetings\2016\Fall\TF\CapAdequacy\PCRBC\Att01_12_10propertyrbcwg.doc 2016 National Association of Insurance Commissioners 2 6

7 Attachment B - Pending 7

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9 Capital Adequacy (E) Task Force RBC Proposal Form Attachment C [ ] Capital Adequacy (E) Task Force [ ] Health RBC (E) Working Group [ ] Life RBC (E) Working Group [ ] Catastrophe Risk (E) Subgroup [ ] Investment RBC (E) Working Group [ ] Operational Risk (E) Subgroup [ ] C3 Phase II/ AG43 (E/A) Subgroup [ x ] P/C RBC (E) Working Group [ ] Stress Testing (E) Subgroup DATE: 11/22/16 CONTACT PERSON: Eva Yeung TELEPHONE: ADDRESS: eyeung@naic.org ON BEHALF OF: P/C RBC WG NAME: Tom Botsko TITLE: Chair AFFILIATION: Ohio Department of Insurance ADDRESS: 50 W. Town Street, Third Floor Suite 300 Columbus, OH FOR NAIC USE ONLY Agenda Item # P Year 2017 DISPOSITION [ ] ADOPTED [ ] REJECTED [ ] DEFERRED TO [ ] REFERRED TO OTHER NAIC GROUP [ x ] EXPOSED 12/10/16 [ ] OTHER (SPECIFY) IDENTIFICATION OF SOURCE AND FORM(S)/INSTRUCTIONS TO BE CHANGED [ ] Health RBC Blanks [ x ] Property/Casualty RBC Blanks [ ] Life RBC Instructions [ ] Fraternal RBC Blanks [ ] Health RBC Instructions [ ] Property/Casualty RBC Instructions [ ] Life RBC Blanks [ ] Fraternal RBC Instructions [ ] OTHER DESCRIPTION OF CHANGE(S) American Academy of Actuaries (Academy) Report for 2017 Property and Casualty Risk-Based Capital Underwriting Line 4 Factors. The factors are based on the scenario #1 (10% capped) Underwriting Factors proposed by the Academy. The PCRBC WG developed the Line 4 Ex-cat Factors based on the Academy proposed factors. REASON OR JUSTIFICATION FOR CHANGE ** At the request of the PCRBC WG, the Academy examined the underwriting risk charges used the NAIC RBC formula. The Academy recommended that the Working Group consider adopting factors resulting from the revised methodology outlined in the report. Additional Staff Comments: 12/10/16 The PCRBC WG exposed the Academy Underwriting Risk Line 4 Factors report for a 60-day public comment period ending Feb. 8, ** This section must be completed on all forms. Revised National Association of Insurance Commissioners 9

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11 Attachment C Option 1: Proposed for adoption if Cat Risk is for information purposes only in 2017 RBC Formula Reserves Premiums Proposed for adoption PR017 Line 4 Proposed for adoption PR018 Line 4 Proposed for adoption PR018A Line 4 Schedule P Line of Business LOB Short tailed 2016 PR017 Line PR018 Line PR018A Line 4 H/F A PPA B CA C WC D CMP E MM Occurrence F MM Clms Made F SL G OL H Fidelity / Surety K X Special Property I X Auto Physical Damage J X Other (Credit, A&H) L X Financial / Mortgage Guaranty S X Intl M Rein. Property & Financial Lines NP Rein. Liability O PL R Warranty T X Option 2: Proposed for adoption if Cat Risk is officially adopted in 2017 RBC Formula Proposed for adoption PR017 Line 4 Reserves Premiums Proposed for adoption PR018 Line 4 Schedule P Line of Business LOB Short tailed 2016 PR017 Line PR018 Line 4 H/F A PPA B CA C WC D CMP E MM Occurrence F MM Clms Made F SL G OL H Fidelity / Surety K X Special Property I X Auto Physical Damage J X Other (Credit, A&H) L X Financial / Mortgage Guaranty S X Intl M Rein. Property & Financial Lines NP Rein. Liability O PL R Warranty T X

12 Distributions of 2015 R4, R5 and RBC After Covariance by Total Adjusted Capital Size (Companies with TAC Greater Than $0) TAC Size 0 $5M $5M $25M $25M $75M $75M $250M $250M $1B Over $1B Total Total Adjusted Capital 913,314,207 10,269,457,346 26,620,159,736 60,947,746, ,350,134, ,389,125, ,489,937,952 R4 Current 130,324,748 1,086,701,536 2,518,789,795 7,298,059,214 18,524,818,881 77,293,224, ,851,918,449 R4 at 10% cap 131,132,525 1,115,846,165 2,608,534,732 7,606,666,262 19,186,495,769 79,324,904, ,973,580,277 R4 Change 807,777 29,144,629 89,744, ,607, ,676,888 2,031,680,549 3,121,661,828 R4 % Change 0.6% 2.7% 3.6% 4.2% 3.6% 2.6% 2.9% R4 at 20% cap 131,201,384 1,125,697,448 2,637,265,739 7,714,177,745 19,390,125,322 79,631,427, ,629,895,098 R4 Change 876,636 38,995, ,475, ,118, ,306,441 2,338,203,184 3,777,976,649 R4 % Change 0.7% 3.6% 4.7% 5.7% 4.7% 3.0% 3.5% R5 Current 185,534,357 1,168,086,738 2,541,006,822 6,191,397,929 12,279,144,645 45,666,745,518 68,031,916,009 R5 at 10% cap 187,389,444 1,176,255,672 2,550,909,853 6,197,381,430 12,254,874,848 45,414,405,240 67,781,216,489 R5 Change 1,855,087 8,168,934 9,903,031 5,983,501 (24,269,797) (252,340,278) (250,699,520) R5 % Change 1.0% 0.7% 0.4% 0.1% 0.2% 0.6% 0.4% R5 at 20% cap 187,505,579 1,172,967,601 2,532,125,874 6,137,615,394 12,091,102,459 44,837,789,660 66,959,106,567 R5 Change 1,971,222 4,880,863 (8,880,948) (53,782,535) (188,042,186) (828,955,858) (1,072,809,442) R5 % Change 1.1% 0.4% 0.3% 0.9% 1.5% 1.8% 1.6% Attachment C RBC after Cov Current 346,055,858 2,208,207,921 4,945,141,297 14,042,249,265 32,619,573, ,527,927, ,689,155,689 Implied RBC Ratio 528% 930% 1077% 868% 726% 643% 678% RBC after Cov at 10% Cap 347,936,807 2,238,647,801 5,025,535,361 14,299,650,923 33,163,721, ,827,873, ,903,366,036 RBC After Cov change 1,880,949 30,439,881 80,394, ,401, ,147,623 2,299,946,173 3,214,210,347 RBC After Cov % change 0.5% 1.4% 1.6% 1.8% 1.7% 1.2% 1.3% Implied RBC Ratio 525% 917% 1059% 852% 714% 636% 669% RBC after Cov at 20% Cap 347,890,709 2,244,499,899 5,035,705,520 14,356,424,561 33,258,415, ,282,522, ,525,458,278 RBC After Cov change 1,834,851 36,291,978 90,564, ,175, ,841,642 2,754,594,599 3,836,302,589 RBC After Cov % change 0.5% 1.6% 1.8% 2.2% 2.0% 1.4% 1.6% Implied RBC Ratio 525% 915% 1057% 849% 712% 634% 668% # of Companies ,495 12

13 Attachment C Comparisons of 2015 P&C RBC Action Levels between current underwriting factors and AAA proposed underwriting factors (Companies with TAC Greater Than $0) 2015 RBC Action Level with AAA Proposed 10% Capped Factors MCL ACL 6 6 RAL CAL Trend Test No Action 1 2,423 2,424 Total ,427 2, RBC Action Level with AAA Proposed 20% Capped Factors MCL ACL RAL CAL Trend Test No Action 1 2,423 2,424 Total ,427 2,495 13

14 Comparisons of 2015 P&C RBC Action Levels between current underwriting factors and AAA proposed underwriting factors (Companies with TAC between $0 and $5 Million) 2015 RBC Action Level with AAA Proposed 10% Capped Factors Attachment C MCL ACL 5 5 RAL 5 5 CAL Trend Test 7 7 No Action Total RBC Action Level with AAA Proposed 20% Capped Factors MCL ACL 5 5 RAL 4 4 CAL Trend Test 7 7 No Action Total

15 Attachment C Comparisons of 2015 P&C RBC Action Levels between current underwriting factors and AAA proposed underwriting factors (Companies with TAC between $5 Million and $25 Million) 2015 RBC Action Level with AAA Proposed 10% Capped Factors MCL 3 3 ACL 1 1 RAL CAL Trend Test 6 6 No Action Total RBC Action Level with AAA Proposed 20% Capped Factors MCL 3 3 ACL 1 1 RAL CAL Trend Test 5 5 No Action Total

16 Attachment C Comparisons of 2015 P&C RBC Action Levels between current underwriting factors and AAA proposed underwriting factors (Companies with TAC between $25 Million and $75 Million) 2015 RBC Action Level with AAA Proposed 10% Capped Factors MCL 1 1 ACL 0 RAL 0 CAL Trend Test 0 No Action Total RBC Action Level with AAA Proposed 20% Capped Factors MCL 1 1 ACL 0 RAL 0 CAL Trend Test 0 No Action Total

17 Attachment C Comparisons of 2015 P&C RBC Action Levels between current underwriting factors and AAA proposed underwriting factors (Companies with TAC between $75 Million and $250 Million) 2015 RBC Action Level with AAA Proposed 10% Capped Factors MCL 0 ACL 0 RAL 0 CAL 0 Trend Test 3 3 No Action Total RBC Action Level with AAA Proposed 20% Capped Factors MCL 0 ACL 0 RAL 0 CAL 0 Trend Test 3 3 No Action Total

18 Attachment C Comparisons of 2015 P&C RBC Action Levels between current underwriting factors and AAA proposed underwriting factors (Companies with TAC between $250 Million and $1 Billion) 2015 RBC Action Level with AAA Proposed 10% Capped Factors MCL 0 ACL 0 RAL 1 1 CAL 0 Trend Test 2 2 No Action Total RBC Action Level with AAA Proposed 20% Capped Factors MCL 0 ACL 0 RAL 1 1 CAL 0 Trend Test 2 2 No Action Total

19 Attachment C Comparisons of 2015 P&C RBC Action Levels between current underwriting factors and AAA proposed underwriting factors (Companies with TAC Greater Than $1 Billion) 2015 RBC Action Level with AAA Proposed 10% Capped Factors MCL 0 ACL 0 RAL 0 CAL 0 Trend Test No Action Total RBC Action Level with AAA Proposed 20% Capped Factors MCL 0 ACL 0 RAL 0 CAL 0 Trend Test No Action Total

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21 Attachment D Capital Adequacy (E) Task Force RBC Proposal Form [ ] Capital Adequacy (E) Task Force [ ] Health RBC (E) Working Group [ ] Life RBC (E) Working Group [ ] Catastrophe Risk (E) Subgroup [ ] Investment RBC (E) Working Group [ ] Op Risk RBC (E) Subgroup [ ] C3 Phase II/ AG43 (E/A) Subgroup [ x ] P/C RBC (E) Working Group [ ] Stress Testing (E) Subgroup DATE: 4/9/2017 CONTACT PERSON: Eva Yeung TELEPHONE: ADDRESS: eyeung@naic.org ON BEHALF OF: P/C RBC (E) Working Group NAME: Tom Botsko TITLE: Chair AFFILIATION: Ohio Department of Insurance ADDRESS: 50 West Town Street, Suite 300 Columbus, OH FOR NAIC USE ONLY Agenda Item # P Year 2017 DISPOSITION [ ] ADOPTED [ ] REJECTED [ ] DEFERRED TO [ ] REFERRED TO OTHER NAIC GROUP [ ] EXPOSED [ ] OTHER (SPECIFY) IDENTIFICATION OF SOURCE AND FORM(S)/INSTRUCTIONS TO BE CHANGED [ ] Health RBC Blanks [ x ] Property/Casualty RBC Blanks [ ] Life RBC Instructions [ ] Fraternal RBC Blanks [ ] Health RBC Instructions [ ] Property/Casualty RBC Instructions [ ] Life RBC Blanks [ ] Fraternal RBC Instructions [ ] OTHER DESCRIPTION OF CHANGE(S) The proposed change would update the Line 1 Factors for PR017 and PR018. REASON OR JUSTIFICATION FOR CHANGE ** The proposed change would provide routine annual update of the industry underwriting factors (premium and reserve) in the PCRBC formula. Additional Staff Comments: ** This section must be completed on all forms. Revised National Association of Insurance Commissioners 21

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23 PR017 Line 1 Reserves Attachment D Schedule P Line of Business LOB Short tailed Proposed for adoption Industry Average Development Ratio 2016 Industry Average Development 2015 Industry Average Development 2014 Industry Average Development 2013 Industry Average Development 2012 Industry Average Development 2011 Industry Average Development 2010 Industry Average Development 2009 Industry Average Development 2008 Industry Average Development H/F A PPA B CA C WC D CMP E MM Occurrence F MM Clms Made F SL G OL H Fidelity / Surety K X Special Property I X Auto Physical Damage J X Other (Credit, A&H) L X Financial / Mortgage Guaranty S X Intl M Rein. Property & Financial Lines NP Rein. Liability O PL R Warranty T X n/a n/a 2007 Industry Average Development 23

24 Attachment D Option 1: Proposed for adoption if Cat Risk is for information purposes only in 2017 RBC Formula Schedule P Line of Business LOB Short tailed Proposed for adoption PR018 Line PR018 Line 1 Proposed for adoption PR018A Line PR018A Line 1 H/F A PPA B CA C WC D CMP E MM Occurrence F MM Clms Made F SL G OL H Fidelity / Surety K X Special Property I X Auto Physical Damage J X Other (Credit, A&H) L X Financial / Mortgage Gu S X Intl M Rein. Property & Financ NP Rein. Liability O PL R Warranty T X Option 2: Proposed for adoption if Cat Risk is officially adopted in 2017 RBC Formula Schedule P Line of Business LOB Short tailed Proposed for adoption PR018 Line PR018 Line 1 H/F A PPA B CA C WC D \ CMP E MM Occurrence F MM Clms Made F SL G OL H Fidelity / Surety K X Special Property I X Auto Physical Damage J X Other (Credit, A&H) L X Financial / Mortgage Gu S X Intl M Rein. Property & Financ NP Rein. Liability O PL R Warranty T X

25 PR018 Line 1 Premiums Attachment D Schedule P Line of Business LOB Short tailed Proposed for adoption PR018 Line 1 Proposed for adoption PR018A Line PR018 Line PR018A Line PR018 Line PR018A Line PR018 Line PR018A Line PR018 Line PR018A Line PR018 Line PR018 Line PR018 Line PR018 Line PR018 Line PR018 Line 1 H/F A PPA B CA C WC D CMP E MM Occurrence F MM Clms Made F SL G OL H Fidelity / Surety K X Special Property I X Auto Physical Damage J X Other (Credit, A&H) L X Financial / Mortgage Guaranty S X Intl M Rein. Property & Financial Lines NP Rein. Liability O PL R Warranty T X n/a n/a 25

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27 Attachment E Comparisons of 2015 Currently RBC Charges and Scenario #1 RBC Charges by Total Adjusted Capital Range (Dollars) TAC Range 0 $5M $5M $25M $25M $75M $75M $250M $250M $1B Over $1B Total Total Adjusted Capital 908,337,268 10,269,457,346 26,620,159,736 60,947,746, ,350,134, ,389,125, ,484,961,013 R0 Current 8,254,790 38,615, ,413, ,911,089 4,457,675,867 44,178,622,549 49,854,492,576 R0 Recalc 8,254,792 39,700, ,099,049 1,019,399,148 4,610,495,925 48,079,624,067 53,977,573,626 R0 Change 2 1,085,620 13,685,793 54,488, ,820,058 3,901,001,518 4,123,081,050 R0 % Change 0.0% 2.8% 6.6% 5.6% 3.4% 8.8% 8.3% R1 Current 11,782, ,863, ,143, ,855,099 1,468,252,638 6,134,010,991 8,731,909,090 R1 Recalc 19,000, ,201, ,838,105 1,211,057,690 2,300,784,170 8,363,150,498 12,626,032,474 R1 Change 7,218,078 83,337, ,694, ,202, ,531,532 2,229,139,507 3,894,123,384 R1 % Change 61.3% 74.5% 78.9% 71.6% 56.7% 36.3% 44.6% R2 Current 42,500, ,284, ,462,907 2,971,352,537 8,772,987,518 84,125,582,954 97,007,170,616 R2 Recalc 49,076, ,860, ,917,796 3,383,753,369 9,840,707,777 94,762,160, ,304,476,511 R2 Change 6,576,695 51,575, ,454, ,400,832 1,067,720,259 10,636,577,590 12,297,305,895 R2 % Change 15.5% 14.8% 16.4% 13.9% 12.2% 12.6% 12.7% R3 Current 97,097, ,560, ,658,711 2,370,572,764 3,468,902,278 6,564,034,385 13,766,826,198 R3 Recalc 24,867, ,135, ,895,071 1,040,957,823 1,375,729,260 3,710,359,775 6,604,944,449 R3 Change (72,230,454) (254,425,086) (558,763,640) (1,329,614,941) (2,093,173,018) (2,853,674,610) (7,161,881,749) R3 % Change 74.4% 66.3% 63.3% 56.1% 60.3% 43.5% 52.0% R4 Current 126,094,089 1,086,701,536 2,518,789,795 7,298,059,214 18,524,818,881 77,293,224, ,847,687,790 R4 Recalc 117,239,167 1,048,250,894 2,472,099,731 7,223,144,236 18,303,879,949 76,485,854, ,650,468,890 R4 Change (8,854,922) (38,450,642) (46,690,064) (74,914,978) (220,938,932) (807,369,363) (1,197,218,900) R4 % Change 7.0% 3.5% 1.9% 1.0% 1.2% 1.0% 1.1% R5 Current 167,918,249 1,168,086,738 2,541,006,822 6,191,397,929 12,279,144,645 45,666,745,518 68,014,299,901 R5 Recalc 164,749,315 1,107,103,154 2,304,721,995 5,609,560,920 10,923,346,880 38,948,795,410 59,058,277,674 R5 Change (3,168,934) (60,983,584) (236,284,827) (581,837,009) (1,355,797,765) (6,717,950,108) (8,956,022,227) R5 % Change 1.9% 5.2% 9.3% 9.4% 11.0% 14.7% 13.2% R6 984,699 35,134, ,138, ,161,535 2,435,630,556 25,277,630,204 28,719,680,448 R7 7,048, ,610, ,697,376 2,262,281,826 5,480,592,006 40,144,326,006 49,083,556,754 RBC after Cov Current (Sum individual) 327,904,846 2,208,207,921 4,945,141,297 14,042,249,265 32,619,573, ,527,927, ,671,004,678 Implied Current RBC Ratio 554% 930% 1077% 868% 726% 643% 678% RBC after Cov (Scenario #1) (Sum Individual) 282,909,351 2,216,422,742 5,273,987,111 14,542,729,220 34,506,269, ,246,736, ,069,053,762 Implied (Scenario #1) RBC Ratio 642% 927% 1009% 838% 686% 560% 602% Number of Companies ,494 Note: Exclude companies with negative TAC and one company subject to extraodrinary large Cat Risk RBC Charge Scenario #1 Criteria Type 7 =22.5%; Unaffiliated Bond charges (Class 1 = 0.79%, Class 2 = 1.23%, Class 3 = 1.85%, Class 4 = 3.30%, Class 5 = 7.82% and Class 6 = 19.5%); Unaffiliated Common Stock = 19.5%; RAA proposed Reinsurance Recoverable Charges; AAA proposed Reserve Charges at 10% cap; AAA proposed Premium Charges at 10% cap on: a) non cat lines and b) Factor Team adjusted Cat lines; R6; R7 and add on 3% Operational Risk charge Companies reporting positive values in PR004 but $0 in PR004A will be replaced with PR004 values 27

28 Attachment E Comparisons of 2015 Currently RBC Charges and Scenario #2 RBC Charges by Total Adjusted Capital Range (Dollars) TAC Range 0 $5M $5M $25M $25M $75M $75M $250M $250M $1B Over $1B Total Total Adjusted Capital 908,337,268 10,269,457,346 26,620,159,736 60,947,746, ,350,134, ,389,125, ,484,961,013 R0 Current 8,254,790 38,615, ,413, ,911,089 4,457,675,867 44,178,622,549 49,854,492,576 R0 Recalc 8,254,792 39,700, ,099,049 1,019,399,148 4,610,495,925 48,079,624,067 53,977,573,626 R0 Change 2 1,085,620 13,685,793 54,488, ,820,058 3,901,001,518 4,123,081,050 R0 % Change 0.0% 2.8% 6.6% 5.6% 3.4% 8.8% 8.3% R1 Current 11,782, ,863, ,143, ,855,099 1,468,252,638 6,134,010,991 8,731,909,090 R1 Recalc 19,000, ,201, ,838,105 1,211,057,690 2,300,784,170 8,363,150,498 12,626,032,474 R1 Change 7,218,078 83,337, ,694, ,202, ,531,532 2,229,139,507 3,894,123,384 R1 % Change 61.3% 74.5% 78.9% 71.6% 56.7% 36.3% 44.6% R2 Current 42,500, ,284, ,462,907 2,971,352,537 8,772,987,518 84,125,582,954 97,007,170,616 R2 Recalc 49,076, ,860, ,917,796 3,383,753,369 9,840,707,777 94,762,160, ,304,476,511 R2 Change 6,576,695 51,575, ,454, ,400,832 1,067,720,259 10,636,577,590 12,297,305,895 R2 % Change 15.5% 14.8% 16.4% 13.9% 12.2% 12.6% 12.7% R3 Current 97,097, ,560, ,658,711 2,370,572,764 3,468,902,278 6,564,034,385 13,766,826,198 R3 Recalc 24,867, ,135, ,895,071 1,040,957,823 1,375,729,260 3,710,359,775 6,604,944,449 R3 Change (72,230,454) (254,425,086) (558,763,640) (1,329,614,941) (2,093,173,018) (2,853,674,610) (7,161,881,749) R3 % Change 74.4% 66.3% 63.3% 56.1% 60.3% 43.5% 52.0% R4 Current 126,094,089 1,086,701,536 2,518,789,795 7,298,059,214 18,524,818,881 77,293,224, ,847,687,790 R4 Recalc 117,239,167 1,048,250,894 2,472,099,731 7,223,144,236 18,303,879,949 76,485,854, ,650,468,890 R4 Change (8,854,922) (38,450,642) (46,690,064) (74,914,978) (220,938,932) (807,369,363) (1,197,218,900) R4 % Change 7.0% 3.5% 1.9% 1.0% 1.2% 1.0% 1.1% R5 Current 167,918,249 1,168,086,738 2,541,006,822 6,191,397,929 12,279,144,645 45,666,745,518 68,014,299,901 R5 Recalc 164,749,315 1,107,103,154 2,304,721,995 5,609,560,920 10,923,346,880 38,948,795,410 59,058,277,674 R5 Change (3,168,934) (60,983,584) (236,284,827) (581,837,009) (1,355,797,765) (6,717,950,108) (8,956,022,227) R5 % Change 1.9% 5.2% 9.3% 9.4% 11.0% 14.7% 13.2% R6 984,699 35,134, ,138, ,161,535 2,435,630,556 25,277,630,204 28,719,680,448 R7 7,048, ,610, ,697,376 2,262,281,826 5,480,592,006 40,144,326,006 49,083,556,754 RBC after Cov Current (Sum individual) 327,904,846 2,208,207,921 4,945,141,297 14,042,249,265 32,619,573, ,527,927, ,671,004,678 Implied Current RBC Ratio 554% 930% 1077% 868% 726% 643% 678% RBC after Cov (Scenario #2) (Sum Individual) 283,064,851 2,217,587,776 5,275,978,704 14,549,422,294 34,518,845, ,297,711, ,142,609,677 Implied (Scenario #2) RBC Ratio 642% 926% 1009% 838% 686% 560% 601% Number of Companies ,494 Note: Exclude companies with negative TAC and one company subject to extraodrinary large Cat Risk RBC Charge Scenario #2 Criteria: Type 7 =22.5%; Unaffiliated Bond charges (Class 1 = 0.79%, Class 2 = 1.23%, Class 3 = 3.13%, Class 4 = 5.43%, Class 5 = 13.29% and Class 6 = 19.5%); Unaffiliated Common Stock = 19.5%; RAA proposed Reinsurance Recoverable Charges; AAA proposed Reserve Charges at 10% cap; AAA proposed Premium Charges at 10% cap on: a) non cat lines and b) Factor Team adjusted Cat lines; R6; R7 and add on 3% Operational Risk charge Companies reporting positive values in PR004 but $0 in PR004A will be replaced with PR004 values 28

29 Attachment E Comparisons of 2015 P&C Current RBC Action Level and Scenario #1 RBC Action Level (All Companies with TAC Greater Than $0) 2015 RBC Action Level under Scenario #1 adjustments MCL ACL RAL CAL Trend Test No Action ,423 2,434 Total ,427 2,494 (Companies with TAC between $0 Million and $5 Million) 2015 RBC Action Level under Scenario #1 adjustments MCL 8 8 ACL 3 3 RAL CAL Trend Test 3 3 No Action Total (Companies with TAC between $5 Million and $25 Million) 2015 RBC Action Level under Scenario #1 adjustments MCL 2 2 ACL RAL CAL Trend Test No Action Total (Companies with TAC between $25 Million and $75 Million) 2015 RBC Action Level under Scenario #1 adjustments MCL 0 ACL 1 1 RAL 0 CAL Trend Test 0 No Action Total Scenario #1 Criteria: Type 7 =22.5%; Unaffiliated Bond charges (Class 1 = 0.79%, Class 2 = 1.23%, Class 3 = 1.85%, Class 4 = 3.30%, Class 5 = 7.82% and Class 6 = 19.5%); Unaffiliated Common Stock = 19.5%; RAA proposed Reinsurance Recoverable Charges; AAA proposed Reserve Charges at 10% cap; AAA proposed Premium Charges at 10% cap on: a) non cat lines and b) Factor Team adjusted Cat lines; R6; R7 and add on 3% Operational Risk charge 29

30 Attachment E Comparisons of 2015 P&C Current RBC Action Level and Scenario #1 RBC Action Level (Companies with TAC between $75 Million and $250 Million) 2015 RBC Action Level under Scenario #1 adjustments MCL 0 ACL 0 RAL 0 CAL 0 Trend Test 2 2 No Action Total (Companies with TAC between $250 Million and $1 Billion) 2015 RBC Action Level under Scenario #1 adjustments MCL 0 ACL 0 RAL 1 1 CAL 0 Trend Test 2 2 No Action Total (Companies with TAC Greater Than $1 Billion) 2015 RBC Action Level under Scenario #1 adjustments MCL 0 ACL 0 RAL 0 CAL 0 Trend Test No Action Total Scenario #1 Criteria: Type 7 =22.5%; Unaffiliated Bond charges (Class 1 = 0.79%, Class 2 = 1.23%, Class 3 = 1.85%, Class 4 = 3.30%, Class 5 = 7.82% and Class 6 = 19.5%); Unaffiliated Common Stock = 19.5%; RAA proposed Reinsurance Recoverable Charges; AAA proposed Reserve Charges at 10% cap; AAA proposed Premium Charges at 10% cap on: a) non cat lines and b) Factor Team adjusted Cat lines; R6; R7 and add on 3% Operational Risk charge 30

31 Attachment E Comparisons of 2015 P&C Current RBC Action Level and Scenario #2 RBC Action Level (All Companies with TAC Greater Than $0) Scenario #2 RBC Action Level Current RBC Action Level MCL ACL RAL CAL Trend Test No Action ,423 2,434 Total ,427 2,494 (Companies with TAC between $0 Million and $5 Million) Scenario #2 RBC Action Level Current RBC Action Level MCL 8 8 ACL 3 3 RAL CAL Trend Test 3 3 No Action Total (Companies with TAC between $5 Million and $25 Million) Scenario #2 RBC Action Level Current RBC Action Level MCL 2 2 ACL RAL CAL Trend Test No Action Total (Companies with TAC between $25 Million and $75 Million) Scenario #2 RBC Action Level MCL 0 ACL 1 1 RAL 0 CAL Trend Test 0 No Action Total Scenario #2 Criteria: Type 7 =22.5%; Unaffiliated Bond charges (Class 1 = 0.79%, Class 2 = 1.23%, Class 3 = 3.13%, Class 4 = 5.43%, Class 5 = 13.29% and Class 6 = 19.5%); Unaffiliated Common Stock = 19.5%; RAA proposed Reinsurance Recoverable Charges; AAA proposed Reserve Charges at 10% cap; AAA proposed Premium Charges at 10% cap on: a) non cat lines and b) Factor Team adjusted Cat lines; R6; R7 and add on 3% Operational Risk charge Current RBC Action Level 31

32 Attachment E Comparisons of 2015 P&C Current RBC Action Level and Scenario #2 RBC Action Level (Companies with TAC between $75 Million and $250 Million) Scenario #2 RBC Action Level Current RBC Action Level MCL 0 ACL 0 RAL 0 CAL 0 Trend Test 2 2 No Action Total (Companies with TAC between $250 Million and $1 Billion) Scenario #2 RBC Action Level Current RBC Action Level MCL 0 ACL 0 RAL 1 1 CAL 0 Trend Test 2 2 No Action Total (Companies with TAC Greater Than $1 Billion) 2015 RBC Action Level under Scenario #2 adjustments MCL 0 ACL 0 RAL 0 CAL 0 Trend Test No Action Total Scenario #2 Criteria: Type 7 =22.5%; Unaffiliated Bond charges (Class 1 = 0.79%, Class 2 = 1.23%, Class 3 = 3.13%, Class 4 = 5.43%, Class 5 = 13.29% and Class 6 = 19.5%); Unaffiliated Common Stock = 19.5%; RAA proposed Reinsurance Recoverable Charges; AAA proposed Reserve Charges at 10% cap; AAA proposed Premium Charges at 10% cap on: a) non cat lines and b) Factor Team adjusted Cat lines; R6; R7 and add on 3% Operational Risk charge Current RBC Action Level 32