August 16, 2022

US NAIC Summer 2022 National Meeting Highlights: Private Equity Ownership of Insurers


On August 12, 2022, a joint meeting of the Financial Stability (E) Task Force (“FSTF”) and the Macroprudential (E) Working Group (“MWG”) took place at the Summer 2022 National Meeting of the US National Association of Insurance Commissioners (“NAIC”), a key element of which was a review of the FSTF and MWG’s plan to address concerns about private equity-owned insurers. While no new guidance was exposed for review or comment at this meeting, the fact that many of the previously identified considerations have been referred to other organs of the NAIC for further discussion indicates that formal guidance on many of those topics will be forthcoming.


In December 2021, the FSTF and the MWG exposed for comment a document titled “Regulatory Considerations Applicable (But Not Exclusive) to Private Equity (PE) Owned Insurers” (the “Regulatory Considerations Document”). The document, which identified 13 regulatory considerations, reflected a perception among the FSTF and MWG members that the trend toward insurers being owned (in whole or in part) and managed by private equity firms raises new challenges for insurance regulation since insurance regulators could take the view that existing insurance laws and regulations may not adequately address newer regulatory risks related to such ownership and management. (A fuller discussion of these 2021 developments is available at “Renewed NAIC Scrutiny of Private Equity Investments in Insurers.”)

During 2022, the NAIC has continued to advance this document. At the NAIC’s Spring 2022 National Meeting, held in early April, a markup of the Regulatory Considerations Document, which reflected internal NAIC discussions on six of the 13 considerations outlined in the document, was produced. Subsequently, on April 27, a revised markup of the Regulatory Considerations Document, which included commentary from state insurance regulatory authorities, was exposed for a 45-day comment period, which ended on June 13. 

At a June 27 meeting, the FSTF and MWG adopted a final version of the Regulatory Considerations Document, which responded to and incorporated certain revisions derived from interested parties’ comments. On July 21, the Financial Condition (E) Committee, to whom the FSTF and MWG report, adopted the final list of considerations as a plan (with some cosmetic changes to turn the list into a plan document). 

Next Steps

At the August 12 meeting, the MWG chair reviewed each of the 13 considerations in the Regulatory Considerations Document and discussed the status of each, which in most cases consisted of identifying another organ of the NAIC to which each consideration and related commentary have been referred for further consideration. While no timelines have been provided with respect to the development of specific guidance as a result of these referrals, a tracking document will be posted to the NAIC’s website to monitor the progress of these referrals as specific guidance is produced.

At all stages of development of the Regulatory Considerations Document, the MWG has emphasized that most of the considerations are not limited to private equity-owned insurers but are applicable to any insurers that engage in the respective activities. While the full list of MWG considerations and associated referrals is well worth reading in its entirety, the following are some key elements:

  • The Group Solvency Issues (E) Working Group has been asked to consider enhancements to the Form A acquisition review process to more effectively address affiliation and control structures and conflict of interest considerations that may not be captured in the current process. It was also noted, as recently highlighted in a New York Department of Financial Services Circular Letter, that keeping ownership of voting securities below 10 percent should not be considered a “safe harbor” that automatically negates control.
  • The Risk-Focused Surveillance (E) Working Group has been asked to consider enhancing surveillance of investment management agreements entered into by insurers and the process for requiring capital maintenance agreements from insurers’ parent companies.
  • The MWG noted that, effective with the 2021 annual statements, a new Schedule Y (Part 3) requires disclosure of all persons with more than 10 percent ownership regardless of whether the ownership consists of voting securities and regardless of any disclaimers of affiliation. 
  • The MWG is closely following the work of the Valuation of Securities (E) Task Force and Statutory Accounting Principles (E) Working Group to increase the transparency of the assets underlying structured investments and to identify more precisely the role affiliates of the insurer play in these investments.
  • The Life Actuarial (A) Task Force is working on a new Asset Adequacy Actuarial Guideline that the MWG believes will help address issues relating to complex and non-publicly traded assets, including those that are related to private equity.

Other Related Updates

Rhode Island Superintendent of Financial Services Elizabeth Kelleher Dwyer, who serves as vice chair of the FSTF, reported in her capacity as a non-voting advisory member of the Financial Stability Oversight Council (“FSOC”). She described the areas in which the NAIC is participating in working groups of the FSOC, particularly on the topics of climate change and digital assets. In addition, Tim Nauheimer, a senior financial markets advisor for the NAIC, reported that the International Association of Insurance Supervisors (“IAIS”) has its own Macroprudential Supervision Working Group, which has also established a workstream to address private equity-owned insurers and which itself could, in the course of its deliberations, raise similar considerations to those discussed above at the IAIS level.

To view additional updates from the US NAIC Summer 2022 National Meeting, visit our meeting highlights page.

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