In November 2008, the ACLI asked the NAIC to consider nine proposals for providing life insurers capital and surplus relief on their December 31, 2008 statutory annual statements. The NAIC formed a Capital & Surplus Relief (EX) Working Group to consider the proposals and make recommendations to the NAIC Executive Committee and Plenary. The Working Group recommended adoption of six of the proposals (some with modifications), relating to reserve requirements, reinsurance collateral and accounting requirements. On January 29, 2009, the Executive Committee voted on a blanket basis to reject all the proposals. The general consensus of the Committee was that the industry had not demonstrated a sufficient emergency to warrant adopting the proposals retroactively for the 2008 annual statements. Committee members also indicated that some proposals may merit further consideration for subsequent reporting periods and suggested that these proposals be pursued through the NAIC’s normal processes. Some Committee members also noted that if an insurer had specific issues relating to its 2008 annual statement, it should address those issues directly with its domiciliary regulator.
Subsequently, some of the proposals have been submitted in select states. Although all states have adopted the NAIC’s accounting requirements, the respective states’ laws generally grant their commissioners discretionary power to override the NAIC standards. This override authority can be exercised for all companies in the state, or on a company-specific “permitted practices” basis. As to pursuing proposals nationally through the NAIC in 2009, the most likely candidates would be variants of the proposals relating to mortality assumptions (i.e., determining reserves with preferred mortality tables for all 2001 CSO policies and eliminating deficiency reserves), facilitating commissioners’ discretion on reinsurance collateral, and expanded recognition of deferred tax assets.