NAIC Summer 2017 National Meeting Update

Transcription

1 NAIC Summer 2017 National Meeting Update Market Insight Paper PG. 2 PG. 4 PG. 4 PG. 5 PG. 6 STATUTORY ACCOUNTING PRINCIPLES WORKING GROUP (SAPWG) Dedicated to maintaining accounting principles and providing periodic updates to guidance as it develops. The SAPWG focuses on discussions that result in changes to the Accounting Practices and Procedures (AP&P) Manual and related SSAPs. BLANKS WORKING GROUP (BWG) Addresses changes made to the annual statement blanks and instructions, including technical changes and clarifications. Primarily dedicated to the development of new corporate bond factors for life insurance companies. INVESTMENT RISK-BASED CAPITAL WORKING GROUP (IRBCWG) Primarily dedicated to the development of new corporate bond factors for life insurance companies. FINANCIAL CONDITIONS (E) COMMITTEE Coordinates solvency-related considerations of the NAIC relating to accounting practices and procedures; blanks; valuation of securities; the Insurance Regulatory Information System; financial analytics and solvency; multi-state examinations and examiner training; and issues concerning insures insolvencies and insolvency guarantees. VALUATION OF SECURITIES TASK FORCE (VOSTF) Dedicated to designations, valuations, and the Securities Valuations Office (SVO) filing process as outlined in the Purposes and Procedures (P&P) Manual of the NAIC Investment Analysis Office.

2 The NAIC held its Summer 2017 National Meeting from August 7-8 in Philadelphia, Pennsylvania. Clearwater Analytics is dedicated to keeping insurers updated on the latest regulatory guidance changes as they pertain to investment accounting and reporting. Our insurance experts attend each NAIC national meeting to monitor regulatory updates and provide proactive education on adopted and proposed items. Statutory Accounting Principles Working Group At the NAIC Summer 2017 National Meeting, the SAPWG met to review and discuss numerous items that were adopted and exposed including revisions to SSAP No. 26R, minor changes to the Statement of Cash Flows for restricted cash, changes to SSAP No. 100, and more. ADOPTED ITEMS Ref # : AVR/IMR in SSAP No. 26 This item addresses an inconsistency in guidance between SSAP No. 26 and the AVR/IMR statement instructions. The SAPWG adopted revisions to SSAP 26R to bring it into alignment with the annual statement instructions for allocating gains and losses to the AVR and IMR. A proposal will also be sent to the BWG to clarify instructions for bifurcating between AVR and IMR. Ref # : ASU , Statement of Cash Flows: Restricted Cash This item adds minor changes to the Statement of Cash Flows for restricted cash. It also clarifies in SSAP 1 that restricted asset disclosures should include restrictions on cash, cash-equivalents, and short-term investments. EXPOSED ITEMS Ref # : Use of Net Asset Value instead of Fair Value The Financial Accounting Standards Board (FASB) has passed several standards updates recently that allow the use of Net Asset Value (NAV) as a substitute for fair value as a practical expedient in certain situations (primarily for investment companies without a readily determinable fair value). NAIC staff is proposing SSAP No. 100 be amended to dictate when NAV is allowed as an expedient for fair value, and to add a new level to the fair value hierarchy to specify when investments are reported at NAV. Feedback is requested from Industry and regulators on this exposure, as it may result in substantive changes to SSAP No Ref # : Impact of Future Settled Premiums on Option Valuations This item concerns the appropriate accounting and reporting treatment of deferred premiums on derivatives. With many derivative contracts, the reporting entity pays a small fee or premium upon origination to enter into the contract. How that premium is accounted for when it is deferred over the term of the derivative or paid upon expiration/settlement is not clear. Industry has provided feedback and the SAPWG exposed revisions that request a narrative disclosure in 2017 and the possibility of a data capture disclosure in The nature of the data capture disclosure would include the aggregate amount of financing premiums, and could also request contract-level detail on premiums. Industry maintains this approach could prove burdensome for some companies, and questions the value of providing contractlevel detail. How these amounts should be accounted for is still undetermined. Ref # : Settlement of Variation Margin Recent changes by the Chicago Mercantile Exchange and London Clearing House allow entities to have daily margin movements considered legal settlement, rather than margin amounts. In response, the SAPWG requested feedback from Industry considering the treatment of variation margin and whether it should be recognized as a realized gain or loss before the derivative contract expires. Industry commented that they believe the current treatment as an unrealized gain/loss is appropriate, and the SAPWG exposed revisions to clarify this in SSAP No. 86. Ref # : Bank Loans Discussion continues around developing additional guidance for bank loans. When the SAPWG members met, they were still waiting for a response from the VOSTF on whether reporting entity-issued bank loans carries additional risk concerns as opposed to bank loans acquired through another method, such as syndication. The VOSTF responded that insurer-issued bank loans should not pose different risks than other bank loans. Therefore, they will likely be included in the same guidance that is proposed for other bank loans. The SAPWG exposed a proposed definition from interested parties for comment and questioned whether a separate line in Schedule D to identify entity-originated bank loans is necessary. The exposed definition would not cause substantive changes to the current industry practices of accounting and reporting on bank loans. NAIC Summer 2017 Market Insight Paper clearwateranalytics.com 2 >

3 Ref # : Wholly-Owned Ultra-Short Bond Portfolio in an LLC Series Payden Active Cash Management submitted a request to the SAPWG for the Securities Valuation Office (SVO) to create a new list of investments similar to fixed-income funds that are currently reporting on Schedule BA because they are structured as partnerships or LLCs. The list would function similar to the current list of SVO-identified funds, where they are approved to be reported on Schedule D Part 1 in a separate category. Payden Active Cash Management proposed a list of six requirements to receive Schedule D Part 1 classification, which are available on the SAPWG s website. NAIC staff expressed concern with creating a new list and sent a referral to the VOSTF with the proposal. NAIC staff sent three options for the VOSTF to consider. Two of the options move the proposal forward and one rejects it entirely. NAIC staff also proposed an idea to allow P&C companies to report a designation on Schedule BA and receive more favorable capital treatment than an asset without a designation. Life companies currently are allowed to do so, and the NAIC believes this would address the problem of an unfavorable capital charge on an investment that has similar risks and characteristics as a bond. SSAP No. 26 already contains enough exceptions to the general definition for assets within its scope, and while entities may have to update their systems to allow for designations on Schedule BA for non-avr companies, this proposal solves the problem of capital charges not reflecting the risk of the asset, rather than tacking on an additional exception to address one scenario and structure that an investment could take. Update from Industry on ASU : Credit Losses The SAPWG continues to request feedback regarding the recent US GAAP update to move to the Current Expected Credit Loss framework for impairment of loans and securities. ASU requires companies to move from a recognized credit loss where losses are recognized when incurred, to an expected credit loss model, where valuation allowances need to be established for available-for-sale and held-to-maturity securities. The GAAP guidance is not required until Although this guidance was passed last year, it has not been at the top of the NAIC s agenda. Industry has not provided much comment, and whether the framework is also adopted for Statutory Accounting (STAT) is still unclear. The new guidance is more conservative than the current impairment guidance; since the statutory basis is intended to be more conservative than US GAAP, it appears that at least part of the framework will be adopted. Rejecting the standard would result in situations where impairment losses should be recognized for GAAP but not STAT, which contradicts the principles of STAT. However, STAT already has a provision for unrealized credit losses (e.g., AVR) as well as capital requirements based on the default risk of assets. For this reason, it s possible that some modifications will be made to those mechanisms in place of, or in addition to, modifying impairment guidance within the SSAPs. Ref # : Extension of SCA Filing Deadlines NAIC staff has noted current SCA filing deadlines are likely causing some of the noncompliance issues around SCAs. It was noted that many companies, in order to meet the 30-day deadline for Sub-1 or the June 30 deadline for Sub-2, do not submit a complete filing. This causes issues with the VISION system and obstructs the NAIC s SCA automation process. This exposure proposes the Sub- 1 deadline be extended to 90 days after purchase, and the Sub-2 deadline to be extended to August 31 every year afterward, or 30 days after the receipt of audited financials if the financials are received later. Ref # : Wash Sales Involving Money Market Mutual Funds This exposure clarifies that money market mutual funds (MMFs) are not subject to the wash sale disclosure; this mirrors the Tax treatment which generally excludes MMFs from wash sale rules. REJECTED ITEMS Ref # : ASU : Purchased Amortization on Purchased Callable Debt Securities This item would set GAAP guidance for premium callable securities to be amortized to the call date. Since STAT accounting already has more detailed guidance concerning the amortization of callable bonds, this item was rejected. Ref # : Definition of Loan-Backed and Structured Securities The SAPWG and the VOSTF had a joint project to consider revising the definition of loan-backed and structured securities that would narrow the scope of SSAP No. 43R. Feedback from Industry was that the current scope of SSAP No. 43R does not need revision, so the revised definition was rejected. The SAPWG adopted revisions to SSAP No. 26R to bring it into alignment with the annual statement instructions for allocating gains and losses to the AVR and IMR. NAIC Summer 2017 Market Insight Paper clearwateranalytics.com 3 >

4 Blanks Working Group The BWG discussed a number of items, including several adopted items which will become effective for year-end 2017 reporting. NEW LINE ADDED TO THE STATEMENT OF CASH FLOWS A recently adopted proposal will add prepayment penalties and callable bonds to the Schedule D verification report. As a result, a recommendation was made to add a new line to the Statement of Cash Flows, which will similarly reflect this information, and the change was adopted. The effective date of this change aligns with the effective date of the verification change in the first quarter of CHANGE TO CAPITAL STRUCTURE CODE Previously, if a Capital Structure Code was not available on a security (e.g., a bond mutual fund or an ETF) the statement instructions advised reporting Other for this field. An update was recommended to change the wording to Not Applicable, since Other inaccurately implies the security may have another position in the Capital Structure that is not identified by the current selections. This change was adopted at the June 14 conference call and is effective for year-end IDENTIFIER CHANGES ON THE BA AND DL Item BWG, previously discussed at the NAIC Spring 2017 National Meeting, recommended instruction on Schedules BA and DL be deleted, which indicates the CUSIP must conform to those published by the SVO, since an insurer can now designate the International Securities Identifier Number (ISIN) when a CUSIP is unavailable. This recommendation would allow for more consistency with similar changes made to the Schedule D. Additionally, clarification was recommended on the Schedule DL to indicate when securities identified were reported in aggregate on the assets page or when they were reported on the other investment schedules. This change was adopted during the June 14 conference call and is effective for year-end DEFINITION OF NOTIONAL ON THE SCHEDULE DB Notional was recently clarified by the SAPWG and the description changed to Notional Amount in SSAP No. 86. A recommendation was made that would similarly change the wording within the Annual Statement Instructions and was unanimously adopted during the June 14 conference call with an effective date of year-end INSTRUCTIONS AND ILLUSTRATIONS FOR NOTES 5A(4) AND 5A(5) MODIFIED The SAPWG recently clarified that an entity can either be a participant or co-lender in a mortgage loan and recommended the Annual Statement Instructions be similarly modified. This proposal was adopted during the June 14 conference call and is effective year-end CODE CODE UPDATE FOR SECURITIES HELD AT SYSTEMATIC VALUE A newly adopted change will allow insurers to optionally carry their bond ETFs and bond mutual funds at systematic value. The BWG recommended an additional change that would allow regulators to easily identify this treatment on the Schedule D through use of the already existing column Code Code. This proposal also recommended further accommodating the systematic value update by changing the language for Book Adjusted Carrying Value and Unrealized Valuation Increase (Decrease) on the Schedule D. This proposal was adopted during the June 14 conference call and is effective year-end REPURCHASE AND REVERSE REPURCHASE AGREEMENTS Disclosures were changed for repurchase and reverse repurchase agreements accounted for under SSAP No. 103: Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. A referral was sent to the BWG to remove the disclosure for these assets from Note 5(e) and add them to Notes 5(f) through 5(i). This change was adopted during the June 14 conference call, and the disclosure requirements are effective the fourth quarter of However, since there is no retroactive treatment, the disclosures are not required for prior quarters in Insurers can now report Not Applicable if a capital structure code is not available on a security. Investment Risk-Based Capital Working Group The IRBCWG met to hear updates on the American Academy of Actuaries (AAA) work on corporate bond factors for life insurance companies and consider similar changes to the corporate bond factors for P&C companies. NAIC Summer 2017 Market Insight Paper clearwateranalytics.com 4 >

5 REVISED CORPORATE BOND BASE FACTORS FOR LIFE INSURERS The IRBCWG continued work on a project to implement the revised corporate bond base factors for life insurers (C-1 factors). The overall structure of the update was agreed upon by both regulators and Industry. However, there is still debate regarding specific inputs and assumptions that will affect what the actual factors will be, as well as the portfolio adjustments that will be applied by each life insurance company. In order to expedite the project and get the entire proposal passed for year-end 2018, the IRBCWG will work with the other RBC working groups the Financial Condition (E) Committee and the Capital Adequacy Task Force to adopt the overall structure of 20 designation classes instead of six before the actual factors are finalized. The AAA proposed a new set of factors and portfolio adjustments. Industry provided several comment letters on the new factors and models. In the coming months, the AAA will be making additional adjustments, as well as discussing key assumptions in its model that interested parties have concerns with. Interested parties think the new factors may be higher than necessary and outlined their reasoning in their comment letters (available on the IRBCWG website). The currently proposed factors are available on the NAIC s website, and are subject to change. CHANGES TO CORPORATE BOND FACTORS FOR P&C COMPANIES It is likely that additional granularity will be added to 20 factors for P&C and health companies, just as there will be in the life RBC calculation. However, the AAA and Industry would like a thorough review of the appropriate factors for non-avr companies, rather than simply use the life factors, or the life factors with one or two high-level adjustments. Documentation of the reasoning behind the current differences is lacking, so it s difficult to project what the end-factors for non-avr filers will be. Expected adjustments for consideration are: The differences in carrying value for NAIC 3-5 bonds The tax adjustment that is only in the life RBC formula The fact that a typical P&C company will have a shorter portfolio duration, which should mean less risk UPCOMING ADJUSTMENTS TO RBC CHARGE FOR REAL ESTATE The American Council on Life Insurance (ACLI) requested several adjustments to the current charge. These include three primary changes: Reducing the base charge Applying a market value adjustment to the charge Allowing real estate held on Schedule BA to have the same charge as real estate held on Schedule A. The AAA reviewed the ACLI s proposal and posed several of its questions and concerns. The ACLI representatives stated they will respond to questions in the coming weeks. Kevin Frye, chair of the IRBCWG, noted that it will consider the proposal, but that the C-1 factor project is its priority. For that reason, this item may be pushed out until the C-1 Factor proposals are finalized. Financial (E) Condition Committee The Financial Condition (E) Committee discussed a proposal which would require insurance companies to produce mid-year reporting of certain holdings information including CUSIP, par value, book adjusted carrying value, and fair value. This issue was originally addressed by the SAPWG and then passed to the Accounting Practices and Procedures (E) Task Force. It was then sent to the Financial Condition (E) Committee because the proposal reflects a policy issue and would change the filing process for all insurance entities. The report has been heavily debated by interested parties and the NAIC, with interested parties indicating that the cost of the proposed data collection is disproportionate to the amount of benefit the proposal would provide. Interested parties also asserted that the benefits have not been clearly outlined. They requested the NAIC update its systems to aggregate the information since insurance entities are already providing the detail necessary to obtain this data in the quarterly activity filings. The IRBCWG will work with the other RBC working groups to expedite the C-1 factors project and get it passed for year-end NAIC Summer 2017 Market Insight Paper clearwateranalytics.com 5 >

6 The NAIC originally recommended the proposal stating that it would allow them to better monitor changing risks in capital markets and respond more quickly to state insurance regulators concerns on interim-period solvency issues. It also asserted that investment managers are more actively trading securities on insurance portfolios, which increases the need to monitor insurers changing portfolios. As this is a policy issue, the Financial Condition (E) Committee will work with interested parties and the working groups to resolve this issue. Ed Toy, Director of the Capital Markets Bureau, spoke during the session about working with A. M. Best. A. M. Best sent in a comment letter stating it is able to provide the information requested on behalf of Industry. A. M. Best has the data for those that file for a credit rating; remaining data for insurers that do not file for an A. M. Best rating can be aggregated based on activity reports from the NAIC. Though interested parties strongly supported this approach, the NAIC noted the following three concerns: 1. Cost Ed Toy said the cost of the A. M. Best project is estimated at $250,000 $300,000 annually. The NAIC does not currently have a budget allocated for this project, and it is unclear whether these costs would be passed along to insurers. 2. Timeliness It would take approximately six to eight weeks after the mid-year filing date of August 15 for A. M. Best to aggregate the data, review it, and return it to the NAIC. The information would then be provided in the third or fourth quarter, at which point it may not be as beneficial. 3. Data Coverage A. M. Best would run into some of the same issues that the NAIC would when collecting data. A. M. Best has the same pricing vendors as the NAIC, so they would be unable to obtain a fair value for some securities, including structured products and private placements. The NAIC pointed out that these securities are most important when obtaining fair value. In addition, BACV could be estimated but would exclude the effects of OTTI, which insurers do not report on quarterly. Ed Toy mentioned that they may also be able to infer this information from existing reports, but this proposed process has not been vetted. The committee discussed testing the process in 2018 at a decreased cost, but reiterated that they still need more information on the benefits of the proposal prior to moving forward. Ed Toy said he would work with the committee and A. M. Best to obtain some of the requested information, such as an estimated percentage of securities that contain values that cannot be obtained. The estimated percentage of small insurers that may be required to otherwise provide this schedule will also be provided, as the costs may disproportionately affect these insurers. No decisions were made at this meeting, and more discussion is necessary before adopting a proposal of this nature. Valuation of Securities Task Force In addition to the summer national meeting, the VOSTF held several interim conference calls May 18, June 15, June 22, July 14, and August 1, to discuss potential updates to the Investment Analysis Office s (IAO) role and responsibility in the designation process. These updates were proposed to reduce the number of reporting exceptions present in the filing process that occur when the NAIC determines a designation different from the insurance entity. REFERRAL ON BANK LOANS SENT TO THE SAPWG The SAPWG recently updated language in SSAP No. 26-R, which identifies that bank loan syndications, participations, and assignments are covered under SSAP No. 26-R. Industry provided feedback on this change, stating the language proposed does not cover direct originations, and they should be included with the other types of acquisition transactions. Industry also commented the language specifying that bank loans must be issued by a financial institution is not appropriate because bank loans issued by insurance companies are, in substance, the same type of asset. The SAPWG sent a referral to the VOSTF to provide more information on bank loans and whether the types of transactions referenced pose different risks than those previously mentioned. The VOSTF adopted a motion to send a referral back to the SAPWG, which confirms that bank loans issued by an insurer or in a direct origination do not pose significantly different risks to insurers. This referral will allow the SAPWG to move forward with additional proposed changes on future conference calls. DISPOSED REFERRAL RELATED TO LOAN-BACKED AND STRUCTURED SECURITIES The VOSTF previously recommended revisions to SSAP No. 43-R which would change the definition of loan-backed and structured securities (LBSS). This item was referred to the SAPWG. In response, Industry voiced significant concerns, saying the recommended change would enable some assets to become non-admitted. The SAPWG noted the concerns and disposed of the item without recommending changes. The VOSTF does not plan on pursuing this agenda item further at this time. NAIC Summer 2017 Market Insight Paper clearwateranalytics.com 6 >

7 ENHANCEMENTS TO THE ADMINISTRATION OF THE DESIGNATION PROCESS Three proposals regarding enhancements to the administrative process for the SVO are currently in consideration. While these proposals were not discussed at the NAIC 2017 Summer National Meeting, they are notable and will be discussed in future meetings. 1. Producing Designations for Private Letter Ratings Insurers anticipate that effective January 1, 2018, all privately held securities will either be received from rating agencies through feeds or filed directly with the the SVO and Structured Securities Group (collectively the IAO), and manually added to the FE database. NAIC staff discussed several amendments, but there is confusion regarding the process flow, the meaning of the word private, the situations in which the PL suffix should be appended to a designation, grandfathering previous private placements, and the overall timing for the change. 2. Resolving Discrepancies between Official NAIC Designations and Insurer-Computed Designations In the event that the designation the IAO produces conflicts with a designation reported by an insurer, it has been recommended that the RE suffix be appended to a security for further investigation. Industry and the VOSTF continue to discuss the merits of this proposal, potential processes for resolving reporting exceptions, and the timing of the change. 3. Reviewing the Policy of Requiring Rated Securities to be Filed with the IAO The VOSTF is discussing a proposal that would allow the IAO to require an insurer to file a security that has already been rated so the IAO could identify new types of risks pertaining to the security. During an interim conference call August 1, some members of the VOSTF indicated they developed a proposed flowchart that outlines the process for these securities and indicates when either the PL or the RE suffix would be reported. Many interested parties agreed the flowchart would be helpful for understanding the impacts of these changes. The VOSTF agreed to make the flowchart available on the NAIC s website and discuss it once Industry has a chance to review it. Each of the above amendments has been discussed in great detail on the interim conference calls, but Industry and the VOSTF have yet to agree on how each of these securities subsets would be reported and communicated to the IAO. A proposed amendment to the P&P Manual could clear up confusion among insurers about Schedule BA. AMENDMENT TO THE 5*/6* DESIGNATION PROCESS The VOSTF received a cumulative staff report on an adopted change that removes the 5*/6* process from the guidance of the SVO and moves it to an interrogatory. The VOSTF did not need to take any action at this time. POLICY STATEMENT ON NAIC STAFF INTERACTIONS The VOSTF reviewed another referral from the SAPWG that recommended language in a policy statement transferring the administrative function on Filing Exempt (FE) and Private Letter (PL) ratings to the IAO and require that the IAO study the result of the exceptions and recommend improvements. The VOSTF members reviewed the referral and agreed with the intent of the statement, but they were concerned the SAPWG s proposed text did not identify the areas of staff interactions. The VOSTF revised language to address these concerns and re-exposed the language. There has been concern expressed that this language conflicts with language in the P&P Manual in many different parts. The VOSTF will discuss how to revise this language on future calls. SVO METHODOLOGY FOR POWER GENERATION NAIC designations have been assigned by the SVO for many decades. However, it was recently noted in a joint IAO/ACLI proposal that the methods for assigning a designation to these securities is not transparent and possibly not appropriate. The regulatory treatment for these types of securities is unclear and should be addressed. During a June 15 conference call, the VOSTF passed a motion to expose amendments to the P&P Manual, which provided a methodology and instructions for assigning a designation to renewable energy and power generation securities. NAIC staff heard a report on the benefits and rationales for insurers investing in renewable energy and power generation and adopted the proposed amendments to the P&P Manual. ERRORS IN THE US GOVERNMENT LIST AND PROPOSAL TO EXPAND During the June 22 conference call, NAIC staff heard a report regarding administrative errors found on the US government list. Ineligible MMFs were inappropriately added despite their investment in agencies of government-sponsored enterprises and other ineligible organizations. The staff made a recommendation to expose the report for a 45-day comment period, which ended August 7. Industry comments will be discussed on a future conference call. NAIC Summer 2017 Market Insight Paper clearwateranalytics.com 7 >

8 SVO REPORT ON FUND INVESTMENTS There were two separate proposals related to fund investments that were addressed by the VOSTF: 1. Clarification on Fund Designations: Addition of Language to the P&P Manual The VOSTF proposed to add language to the P&P Manual clarifying that the SVO does not have procedures to add designations to funds, stating the SVO only applies designations to funds in specific and limited circumstances, which are clearly outlined in the P&P Manual. This includes applying a designation to bond mutual and exchange traded funds after it is identified that those funds are invested in certain types of investments. The VOSTF commented that Industry has been confused by the instructions related to the Schedule BA. This is because they indicate that if the security has fixed-income characteristics, it is eligible to be filed with the SVO for a designation. The VOSTF clarifies in the proposal that this instruction does not apply to fund investments. 2. Recommendation: SAPWG Review SSAP No. 30 The VOSTF recommended the SAPWG review SSAP No. 30 for the purposes of differentiating between funds that predominantly hold bonds and those that do not. Both memorandums were exposed for a 45-day comment period. SVO-AFFILIATED TRANSACTIONS MEMORANDUM The SVO heard a report from the SAPWG that requested the SAPWG assist in developing the regulatory criteria for assigning a designation to a Subsidiary, Controlled and Affiliated (SCA) entity. The SAPWG responded outlining the following key points: An inter-affiliated transaction is outside the scope of an NAIC designation The SVO should only assign a designation in the circumstance that the affiliated transaction is identical to an unaffiliated transaction The P&P Manual should be clear that only credit risk is communicated, not statutory accounting guidance The SVO should contact the state insurance regulator prior to undertaking an assignment to ensure the asset can be admitted under SSAP No. 25 A motion passed to expose the memorandum for a 45-day comment period. IAO REPORT ON THE IRBCWG PROPOSAL As part of the IRBCWG s pending proposal to add further granularity in Risk-Based Capital (RBC), a referral was sent to the IAO requesting information on the impact of the change in the P&P Manual and IAO processes. The IAO adopted a response to the IRBCWG which outlined that the IAO would provide a mapping from the 20 designations that are intended to be captured for RBC purposes to the six designations that will remain as part of the reporting schedules. Clearwater Analytics is the leading provider of web-based investment portfolio accounting, reporting, and reconciliation services for corporate treasuries, insurance companies, and investment managers. Clearwater aggregates, reconciles, and reports on more than $2 trillion in assets across thousands of accounts daily. For more than a decade, Clearwater has helped firms such as Knights of Columbus, CopperPoint Mutual Insurance Company, The Main Street America Group, SBLI, C.V. Starr & Co., Sagicor, Wilton Re., and WellCare streamline their investment and accounting operations. Clearwater remains committed to continuous improvement and encourages insurers to rethink how they approach their investment accounting and reporting challenges. clearwateranalytics.com