b'INSURANCE REGULATORY US/NAICMajor NAIC Investment-Related InitiativesA fundamental element of US insurance regulation is monitoring the safety and soundness of insurers, and a big part of that task involves regulating the types of investments made by insurers. Like most aspects of US insurance regulation, the regulation of insurers investments is a function of state law, although the National Association of Insurance Commissioners (NAIC) has developed a framework for how insurer investments are treated for statutory accounting, financing reporting and risk-based capital (RBC) purposes that the states generally follow.The NAIC committee that addresses financial regulation is the Financial Condition (E) Committee, often referred to as the E Committee. Like all NAIC committees, it is composed of state insurance commissioners or their designated staff members. The E committee currently has 39 subgroups that focus on different aspects of the financial regulatory landscape. In this article, we will discuss some 2021 initiatives of those subgroups that have the potential to significantly affect the regulatory treatment of certain investments for insurers.Changes to the Rules on What Is a BondAre Still Being Hammered OutDuring 2021, the NAIC Statutory Accounting Principles (E) Working Group (SAP WG) continued working on substantive revisions to Statement of Statutory Accounting Principles (SSAP) No. 43RLoan-Backed and Structured Securities. 1Our readers will recall that this initiative was launched nearly two years ago on March 18, 2020, when SAP WG exposed for comment a preliminary (and partial) draft of an issue paper suggesting that certain types of structured securities that do not meet the SEC definition of asset-backed securities (ABS)with collateralized fund obligations (CFOs) being top of mindshould no longer be classified within the 1For a more detailed discussion of developments through May 2021, see our Legal Update NAICs SAPWG Exposes Proposed Definition of Bond for Purposes of SSAPs 26R and 43R.60|Global Insurance Industry Year in Review 2021'