The National Association of Insurance Commissioners (NAIC) cited five main regulatory priorities for the life insurance sector at its meeting last month...
Moody’s attended the meeting and has published a new report delving into the credit implications during what will be an active year on the regulatory front.
- Insurers' investment standards on CLOs. Potential changes for asset-backed securities (ABS) highlight the importance of diversification by asset class within insurers' investment portfolios.
- Offshore reinsurance takes center stage. We view the overall movement of business offshore as a credit negative for the life insurance sector and believe the Life Actuarial (A) Task Force (LATF) highlights an important issue relating to the transparency and governance surrounding offshore transactions.
- Clarity on whether non-SEC registered funds and feeder funds can be considered as backed by the creditworthiness of the issuer of the bond. As newer asset classes form and concentration builds, diversification will remain a key for risk management.
- Development of risk-based global insurance capital standard. We view group capital models as a positive supplement to entity-focused models such as RBC.
- AI, privacy and cybersecurity. We believe that AI can increase operational efficiency , but integrating AI into insurance will be challenging. While recent cyber breaches (e.g. UnitedHealth, Prudential) have not materially impacted the companies' operations, they require incremental expenses to respond, remediate and investigate the incidents.
