b'Insurance Regulatory | US/NAIC | NAIC Adopts Group Capital Framework Use of the GCC by insurance regulatory authorities The insurance group (i) provides information to its is expected to complement existing methods usedlead state that meets NAIC accreditation require-by such regulators to conduct group-wide supervi- ments and allows the lead state to comply with sion, including the Form F Enterprise Risk Report,the NAIC group supervision approach; and (ii) the the Own Risk and Solvency Assessment and theinsurance groups non-US group-wide supervisor Corporate Governance Annual Disclosure. (assuming it is not in a reciprocal jurisdiction) rec-The amendments adopted by the NAIC to theognizes and accepts the GCC as the worldwide Model Act and Model Regulation are intended togroup capital assessment for US insurance groups facilitate the use of the GCC by insurance regulatorythat operate in that jurisdiction.authorities, including by requiring the ultimateIn addition, the lead state regulatory authority will controlling person of every insurance companyhave the discretion to exempt an ultimate controlling subject to registration to file an annual GCC concur- person from filing the annual GCC, or may otherwise rently with its Form B Registration Statement.accept a limited group capital filing or report (as may However, insurance holding company systems maybe specified by such regulator in regulations).be exempted from the requirements of the GCC if: Further, the amendments to the Model Law alsoThe insurance group only has one insurer within itsprovide that a lead state regulatory authority may holding company system, and such insurer writesrequire a GCC for the US subgroup of any non-US-business only in its domiciliary state and assumesbased insurance holding company system if, after no business from any other insurer; any necessary consultation with other supervisorsThe insurance group is required to perform a groupor officials, requiring a GCC is deemed appropriate capital calculation for the US Federal Reserve Boardby the lead state regulatory authority for prudential (provided that the lead state regulatory authority ofoversight and solvency monitoring purposes or for such group is able to obtain a copy of such calcula- ensuring the competitiveness of the insurance tion from the Federal Reserve Board); marketplace. How this provision will articulate with the US-EU and US-UK Covered Agreements is stillThe insurance group has a non-US group-widebeing discussed. [See States Begin Revising Credit supervisor located within a reciprocal jurisdic- for Reinsurance Laws to Follow the New NAIC tion (as defined in the recent amendments toModels article]. gthe NAICs Model Credit for Reinsurance Law and Model Credit for Reinsurance Regulation [see States Begin Revising Credit for Reinsurance Laws to Follow the New NAIC Models article]) that recognizes the US state regulatory approach to group supervision and group capital; orMAYER BROWN 65'