b'TABLE OF CONTENTSReserve taking actions to reduce interest ratesFinancial Industry Regulatory Authority or purchase debt instruments; the 10% increase(FINRA) instead of the current treatment of would be reversed when the Federal Reserveasset managers in the GCC as non-insurer decided to increase interest rates or reducefinancial entities not subject to regulatory capital purchases of debt instruments.requirements. NAIC staff noted that this NAIC staff also recommended that the GCC notproposal may not be straightforward to be modified to include a stress scenario, butimplement, since FINRAs capital requirements noted that some members of the GCC Workingare more principle-based, and noted that the Group may be interested in adding informationalGCC Working Group may wish to consider this stresses to the GCC in the future, after the GCCrequest further after clarifying materials are is fully implemented. provided for its review concerning FINRAs capital requirements.Finally, NAIC staff recommended that otherPotential Schedule 1 Changes. Schedule 1 of debt (i.e., debt other than certain senior debtthe GCC is a listing of the ultimate controlling and hybrid financial instruments that are currentlyperson of the insurance group and the entities it counted for purposes of the Debt Allowance) notcontrols, and is intended to include all of the be included in the Debt Allowance.entities included in Schedule Y to the statutory Capital Charge for Insurers Domiciled infinancial statements filed by members of the Non-Risk Sensitive Foreign Jurisdictions.insurance group. However, there was Certain non-US jurisdictions have capitalinconsistency in Schedule 1 reporting during the requirements for insurers that are not based onGCC trial implementation, and the GCC Trial the magnitude or nature of the insurers riskImplementation Memorandum includes certain profile. While the GCC trial implementation usedproposals and other considerations that are a conservative approach of requiring a capitalintended to lead to more consistency in Schedule charge equivalent to 100% of the carrying value1 reporting in the future.of such insurer, the GCC Trial ImplementationThe proposed revisions to the GCC were exposed by Memorandum recommends a lower capitalthe GCC Working Group for a comment period that charge of 50% of the carrying value, with anended in December 2021, and are scheduled to be additional option to instead calculate suchfurther discussed by the GCC Working Group shortly.foreign insurers capital requirement using RBC (with reasonable simplifications and estimates).Accreditation Requirements for the Potential Changes to Capital Charges forGCC Exposed for a One-Year Public Asset Managers. The GCC Trial ImplementationComment PeriodMemorandum notes that certain members of the industry have requested that the GCC capitalThe proposal to adopt the GCC as an NAIC charges for asset managers should utilize theaccreditation standard was exposed by the NAIC for regulatory capital standards imposed by thea one-year comment period beginning on January 1, MAYER BROWN |95'