The National Association of Insurance Commissioners (NAIC), the U.S. insurance standard-setting organization of which all state insurance regulators are members, held its 2025 Fall National Meeting in Hollywood, Florida on December 8-11, 2025. The following is a summary of some of the developments that may be of interest.

I. The Valuation of Securities Task Force (VOSTF) held its final meeting on December 10, 2025, closing a chapter that stretches back to 1907. The Task Force provided updates on several ongoing projects and announced a major organizational restructuring in the NAIC's supervision of insurer investments.

1. Deferral of CLO Modeling Implementation

The NAIC's CLO modeling project, which has been developing an NAIC-specific loss model for CLOs that will be used to assign risk-based capital charges to insurers' CLO holdings, has been extended one year to year-end 2026, but this is expected to be the last extension because the model (at least for CLOs) is largely complete. However, since separate NAIC work streams are evaluating whether the CLO model may be used for other structured securities, as well as new capital charges based on the new CLO model (which are expected to be exposed for comment no later than April 30, 2026), the effective date for removing CLOs from the Filing Exempt process has been extended to allow all the work streams to finish.

2. Reorganization of VOSTF

The Valuation of Securities Task Force will be disbanded and replaced by the Invested Assets Task Force (IATF), with three working groups reporting to it:

a. The Invested Assets Working Group will focus primarily on portfolio level analysis.

b. The Investment Designation Analysis Working Group (or "I-DAWG") will focus primarily on analysis of individual investments for assignment of NAIC designations by the SVO.

c. The Credit Rating Provider Working Group (CRPWG) will focus primarily on the administration of the credit rating provider due diligence framework, after the CRPWG develops this framework (described below)].

3. CRP Due Diligence Framework Project

The NAIC has launched a Credit Rating Provider (CRP) Due Diligence Framework project to better understand and have more visibility into the process of CRPs developing ratings opinions and has retained PricewaterhouseCoopers (PWC) as a consultant to work on the project. According to PWC, the main objective is to establish a structured, scalable and pragmatic process to support the NAIC’s reliance on the translation of the CRP ratings into NAIC designations. According to PWC, the proposed framework is expected to provide practical oversight, focused on areas where commercial ratings have the greatest potential to impact the insurance industry.

The project intends to collect and standardize historical ratings data from all eight CRPs, with most providers actively participating. The data, which comes from multiple sources and is inconsistently structured data, is being converted into a standardized format for analysis, and a draft framework will be presented to the NAIC for feedback and possible public exposure at a future meeting. There have been a number of calls and emails between NAIC staff and the CRPs, including one with a rating agency trade group to discuss the data call, answer any questions, and coordinate transmission processes.

After the data analysis is complete, a draft CRP due diligence framework will be presented to the NAIC, after which the NAIC will determine whether the draft is ready to be exposed for public comment or whether further refinements will be required prior to such exposure.

4. CRP Ratings Discretion Project

Under the CRP Ratings Discretion project, the SVO will have the power to challenge CRP ratings assigned to securities that are Filing Exempt if it finds that a particular CRP rating may not reasonably represent the security's investment risk as determined by the SVO, and the security's CRP rating has at least a three-notch difference from the SVO's calculated rating. The challenge process contemplates discussions with the insurer(s) holding the challenged security, the CRP and any interested regulators, with the ultimate decision on whether to maintain or remove a security from Filing Exempt eligibility made by the domestic regulator.

Although the authority granted to the SVO as part of this project becomes effective January 1, 2026, the systems needed to make the process operational and the agreements necessary to ensure the security of information and data are still being developed. Therefore, the implementation of this project is not expected to occur until this and other related work streams finish their work.

5. Grace Period for Private Letter Rating Updates

The VOSTF adopted a revised amendment to the Purposes & Procedures (P&P) manual to permit insurers a 30-day grace period to file the annual update of private letter ratings (PLR) after such ratings are renewed by a CRP. This proposal came in response to previous issues with deactivating PLRs that received updates near the end of the year. The amendment, which had undergone a 30-day public comment period ending September 12, 2025, was supported by the industry through a joint letter from the ACLI, PPIA, and NASVA, with a request for clarifying language. NAIC staff incorporated this feedback, and the amendment was unanimously adopted.

II. The Statutory Accounting Principles Working Group met on December 9, 2025 and considered the following topics and issues.

1. Interest Maintenance Reserve

Impact on Reinsurance Collateral

The Interest Maintenance Reserve (IMR) is used to defer and amortize realized gains and losses on the sale of fixed-income securities before maturity, where the gain or loss is the result of a change in interest rates. When a sale occurs with a realized gain, it is considered a positive IMR (liability). When a sale occurs with a realized loss, it is considered a negative IMR. Insurers collectively report the IMR based on the net negative or positive position.

Prior to the issuance of the Statutory Accounting Principles Working Group's Interpretation "INT 23-01: Net Negative (Disallowed) Interest Maintenance Reserve," net negative IMR was a non-admitted asset. INT 23-01 temporarily authorizes insurers to admit net negative IMR up to 10% of adjusted capital and surplus, but because this authority expires at the end of 2026, the NAIC has been considering a long-term approach for net negative IMR, to be included in a future revision of SSAP No. 7 (Asset Valuation Reserve and Interest Maintenance Reserve).

Although existing guidance on the impact of derecognized net positive IMR in SSAP No. 61 (Life, Deposit-Type and Accident and Health Reinsurance) requires that it be captured as an increase in the collateral required for an unauthorized reinsurer (excluding certified or reciprocal jurisdiction reinsurers) to provide full statutory credit to a U.S. ceding company, industry has advised that this requirement has not been consistently followed. Instead, insurers advised that the inclusion of derecognized net positive IMR in the collateral requirement has been driven by the terms of their reinsurance treaties. 

In any event, since there is no current mention of derecognized net negative IMR in the existing SSAP No. 61, regulators have been discussing whether/how derecognized net negative IMR should factor into the collateral requirement for reinsurance credit. If net negative IMR were to be included in the collateral requirement, it would reduce required collateral. Accordingly, the Working Group exposed for public comment two options for revising SSAP No. 61: (i) symmetrical treatment where both positive and negative IMR impact collateral (i.e., derecognized net positive IMR increases the collateral requirement and derecognized net negative IMR would decrease the collateral requirement), and (ii) asymmetrical treatment where derecognized positive IMR increases collateral, but derecognized negative IMR does not reduce it. Comments are due no later than February 13, 2026.

Proof of Reinvestment

The Working Group also exposed a new proposal that would require insurers that recognize a net negative IMR to show that proceeds from the sale of fixed-income assets are reinvested in higher-yielding instruments, which regulators require to ensure that the deferral of realized losses is justified by actual reinvestment. The proposal contains requirements and templates for proof of reinvestment, including reinvestment and yield tests for both general and separate accounts. Comments are due no later than February 13, 2026.

2. Separate Account Non-admitted Assets Reporting

The Working Group explained that non-admitted assets in separate accounts held on a general account basis (known as "book value" separate accounts) were not explicitly reported, which created gaps in regulatory oversight. Noting that book value separate accounts are held on a general account basis because such separate account assets pertain to general account products that have been segregated within a separate account, accounting guidance requires that the assets backing these products be admitted (as though they were held in the general account). Under current separate account reporting rules, however, there is no mechanism to identify whether the assets in such separate accounts qualify as admitted assets. The Working Group exposed guidance (effective January 1, 2027) to require explicit reporting of such non-admitted assets in book value separate accounts (both insulated and non-insulated) in order to enable regulators to identify and assess such assets. (Separate Accounts held at "fair value" are not affected by this proposal since the contract holder bears the investment risk of such products.) Comments are due no later than February 13, 2026.

3. Other Reporting Clarifications

The Working Group adopted revisions to SSAP No. 21 (Other Admitted Assets), SSAP No. 26 (Bonds), and SSAP No. 43 (Asset-Backed Securities), effective for year-end 2026 reporting, to improve existing disclosures, clarify guidance, and incorporate consistent locations and frequency for specific debt security disclosures. These include:

• New disclosure to include proceeds and realized gain/loss information for maturities of bonds and non-bond debt securities in accordance with the new principles-based bond definition.
• The disclosure of impaired securities (when fair value is less than amortized cost) has been revised to be included consistently in the statutory financial statements for all debt securities and clarified that it captures all impaired securities regardless of measurement method.
• New disclosure (only in the electronic version of the statutory financial statements) to identify whether a reported security is public, private, or rule 144A, and a new aggregate disclosure that will capture key investment information based on which investment schedule such security is reported.
• The disclosure for bifurcated other-than-temporary impairment (OTTI) in the annual statement instructions and template has been expanded to include non-bond debt securities as well as residual interests that follow the allowable earned yield method.
• New disclosures for residual interests (typically unrated or equity tranches of a securitization) have been added to identify the company’s measurement method, whether the company is transitioning from the practical expedient method to the allowable earned yield (AEY) method, and for those following the AEY method, information comparable to SSAP No. 43 (Asset-Backed Securities) for impaired securities.
• Aligning disclosures for residual interests in scope of SSAP No. 21 (Other Admitted Assets) with those of other invested asset disclosures.

III. The Life Actuarial Task Force provided an update on the implementation of Actuarial Guideline 55, which imposes asset adequacy testing for certain offshore life reinsurance transactions. The Task Force announced that it has created standardized templates to streamline the reporting process and present essential AG 55 information, such as details about the assuming company, key risks, supporting assets, assumed net yields, cash flow testing results, and attribution analyses explaining any changes in reserves for review by regulators. The templates also provide for documenting mortality and policyholder behavior assumptions, both before and after the reinsurance transactions.

Companies are expected to submit their first AG 55 reports by April 1, 2026, with filing instructions expected to be distributed in early February 2026. Reports will be submitted to the Minnesota Insurance Division as representative of the NAIC Valuation Analysis Working Group, and they may be provided to a company's domestic regulator upon request.

IV. The NAIC International Insurance Relations Committee heard a presentation from Jonathan Dixon, Secretary General of the International Association of Insurance Supervisors (IAIS) on the IAIS Roadmap for 2026–2027. The plan emphasizes continuity, building on ongoing initiatives to address structural shifts in the insurance sector, enhancing supervisory standards, and strengthening global financial stability. 

The IAIS Roadmap for 2026–2027 is structured around four core objectives:

1. Monitoring and Responding to Sector Trends

• Global Monitoring Exercise (GME): Continues to assess systemic risks by analyzing data from major international insurance groups and supervisors, covering over 90% of global gross written premiums
  
  a. Solvency and profitability remained stable in 2024
  b. Liquidity and return on assets improved
  c. Aggregate systemic risk scores decreased, with the insurance sector’s risk footprint remaining below that of the banking sector
• Structural shifts in the life insurance sector, particularly private credit investments and asset-intensive reinsurance
  a. Life insurers are allocating more capital to alternative assets, especially private credit, though exposures remain modest globally
  b. Associated credit risk, illiquidity, valuation uncertainty, and complexity require robust governance and risk management

2. Standard-Setting

• ICS-Related Standards: Finalizing standards for supervisory reporting and disclosure related to the Insurance Capital Standard (ICS).
• Enhancement Reviews: Updating standards to address new risks arising from structural changes in the sector.

3. Sharing Good Supervisory Practices and Building Capacity

• Guidance Development: Supporting supervisors on emerging issues such as climate risk, digital innovation, operational resilience, protection gaps, risk-based solvency, and alternative investments.
  a. Ensuring governance, transparency, and accountability; IAIS is developing tools and guidance to support supervisors.
• Application Papers: Practical documents on topics like artificial intelligence (AI) supervision and operational resilience.
  a. AI can transform insurance operations but introduces risks like algorithmic bias, cybersecurity issues, model risk, and operational challenges.

4. Implementation Assessment

• ICS and ComFrame Assessments: Launching baseline self-assessments and developing a comprehensive methodology for evaluating ICS implementation.
• Peer Reviews: Focusing on reinsurance (ICP 13) and reporting on the outcomes of the Holistic Framework’s 2025 assessment.