US NAIC Spring 2026 National Meeting Highlights: Investment-Related Highlights

This Legal Update reports on selected investment-related topics from the NAIC’s Spring National Meeting, March 22-25, 2026.

Life Risk-Based Capital (E) Working Group

The Life Risk-Based Capital (E) Working Group (the “Life RBC WG”) met on Sunday, March 22, and was chaired by Ben Slutsker of the Minnesota Department of Commerce. The summary below covers the agenda items relating to the C-1 (investment risk) component of the risk-based capital (“RBC”) calculation for life insurers.

Discussion of Changes to Life RBC Factors for Collateral Loans

At the March 22 meeting, the Life RBC WG discussed written and oral comments on the revised version of Proposal 2025-16-L MOD that had been exposed for comment on February 10. The NAIC staff’s recommendation embodied in that revised proposal was to assign an RBC factor of 24% to collateral loans backed by equity interests and an RBC factor of 36% to collateral loans backed by residual interests, calculated in each case as 80% of the RBC factor that would have applied if a life insurer had owned the underlying interests directly.

Written comments on the proposal were submitted by the American Council of Life Insurers (“ACLI”), the American Investment Council (“AIC”), the Utah Insurance Department (“UID”) and the Alternative Credit Council (“ACC”). The comment letters are available in Attachment E to the meeting materials. In addition, representatives of the ACLI, UID and ACC were present at the meeting to give oral summaries of their written comments.

The ACLI offered the following recommendations:

• To continue using the Schedule BA mortgage loan RBC factors for collateral loans backed by mortgage loans, as has been done since 2024.
• To set December 31, 2027, rather than December 31, 2026, as the effective date for any new RBC factors, in order to allow sufficient time to operationalize the new framework, as well as a transition period for insurers to assess impacts and make portfolio adjustments.
• To calculate the new RBC factors as the product of a “base factor” for each collateral type equal to the RBC factor for holding the underlying asset directly (30% for interests in joint ventures, partnerships and limited liability companies and 45% for residual interests) multiplied by an “adjustment factor” tied to the level of overcollateralization of the collateral loan. The ACLI proposed five adjustment factors, each based on the midpoint of one of five overcollateralization “bands”:
  • If the loan-to-value ratio (“LTV”) is greater than 80%, the adjustment factor would be 90%.
  • If the LTV is greater than 60% and less than or equal to 80%, the adjustment factor would be 70%.
  • If the LTV is greater than 40% and less than or equal to 60%, the adjustment factor would be 50%.
  • If the LTV is greater than 20% and less than or equal to 40%, the adjustment factor would be 30%.
  • If the LTV is less than or equal to 20%, the adjustment factor would be 10%.

The AIC’s written comments also advocated for an effective date of December 31, 2027, in order to allow for the development of a methodology that incorporates empirical data relating to the specific features and attributes of collateral loans, and in order to allow a reasonable implementation runway for insurers to assess impacts and make portfolio adjustments.

The UID’s comments recommended the use of a “sliding scale” to reflect the level of overcollateralization of the collateral loan. 

The ACC offered the following recommendations:

• To continue using the Schedule BA mortgage loan RBC factors for collateral loans backed by mortgage loans, as has been done since 2024.
• To reflect the level of overcollateralization in the new RBC factors for loans collateralized by interests in joint ventures, partnerships and limited liability companies or by residual interests—but also to consider doing additional empirical analysis to determine the appropriate calibration of the new RBC factors to the LTV.

After the oral summaries, Chair Slutsker invited working group members to comment briefly on whether the RBC changes under discussion should become effective at year-end 2026 versus year-end 2027. He noted that in order to be effective on December 31, 2026, any RBC changes would need to be approved by the Life RBC WG and the Capital Adequacy (E) Task Force by May 15, 2026.

After discussion of the effective date question, the Chair called for a straw poll, in which 11 members supported a 2027 effective date, three members supported a 2026 effective date, and one member abstained. On that basis, the Chair stated that the working group would target an effective date of 2027. It is noteworthy, however, that even among members who favored a 2027 effective date, there was still a sense of urgency to maintain the momentum to work out the details of the new RBC factors sooner rather than later.

The Chair then asked working group members to comment specifically on the ACLI proposal.

The first comment came from the UID, which expressed a preference for a sliding scale adjustment based on LTV, rather than a series of discrete bands or tiers. The concern was that a small adjustment in the LTV that moves a collateral loan one tier lower would have a disproportionate impact on the RBC factor, and that this could potentially be manipulated relatively easily. A discussion of this point ensued.

The Chair then raised a question about the reliability of the valuation of the collateral that would be used to calculate the LTV, and whether that valuation would be an audited figure. It was pointed out that even though the LTV of collateral loans will be disclosed starting with the 2026 annual statements, there is still a concern about the reliability of the “V,” especially when Level 3 unobservable inputs are used to value the underlying investments. A discussion of this point ensued.

The Chair then raised a question about the tiering proposed by the ACLI. He pointed out that many state insurance codes impose an 80% LTV limit in order for a collateral loan to be a permissible investment. In light of that fact, he suggested limiting the first tier to collateral loans with LTV’s greater than 90%, and making 80% the midpoint, rather than the ceiling, of the second tier. The ACLI representative responded that the ACLI would be open to considering this suggestion.

Following the discussion, the Chair directed that the ACLI’s proposed revisions to Proposal 2025-16-L MOD be exposed for a comment period ending on April 13, 2026, together with the two questions he had just articulated.

No Further Developments Yet on the Proposal to Extend Favorable RBC Treatment for Residential Mortgage Loans to Include Unaffiliated Schedule BA Mortgage Funds

As discussed in our February 24 Legal Update, on February 10, 2026, the Life RBC WG exposed for comment Proposal 2026-02-L, which would extend the favored 0.68% RBC treatment established in 2024 for Schedule BA mortgage structures that are affiliated with the insurer to also include Schedule BA mortgage structures that are unaffiliated with the insurer. Although the comment period for that proposal ended on March 12, the proposal was not discussed at the March 22 meeting of the Life RBC WG.

Presentation from the American Academy of Actuaries on RBC Ratios and Impairment Risk

Steve Jackson, Director of Research (Public Policy) at the American Academy of Actuaries, presented a report (Attachment G to the meeting materials) summarizing the results to date of a study of the correlation between an insurer’s RBC ratio and the probability of the insurer becoming impaired.

The high-level conclusions from the study to date were as follows:

• RBC ratios, on their own and across all lines of insurance (P&C, Life and Health) show little meaningful relationship with impairment experience.
• Once we remove very small insurers and companies with extremely high capital levels, a much clearer and more stable predictive pattern emerges.
• In these filtered samples, RBC levels become materially less informative of impairment risk when Authorized Control Level RBC ratios exceed 1,000% to 1,500%.

Mr. Jackson concluded by describing the next steps for the study: sensitivity testing of the above results and examining the relationship between the RBC ratios and impairment risk when accounting for other factors, which are very likely also related.