The NAIC Life Actuarial Task Force has endorsed disclosure-only asset adequacy testing guidelines for reinsurance, aiming to improve transparency in offshore reinsurance transactions without imposing prescriptive reserve standards.
The task force chose this approach over more detailed regulatory requirements after industry representatives raised concerns about the administrative and operational burdens that would result from prescriptive rules.
With the task force’s approval, the guidelines will move to the NAIC’s full committee of insurance commissioners for final consideration during the organization’s summer meeting in August.
Fred Andersen, chief life actuary at the Minnesota Department of Commerce and task force member, said the plan for 2025 is to implement the requirements, collect submissions by year-end, and begin reviews in April 2026.
For this year, our plan is to adopt these requirements, collect the submissions by year-end 2025 and start reviewing them in April and see what the findings are before considering any other NAIC coordinated action
Fred Andersen, chief life actuary at the Minnesota Department of Commerce and task force member
These reviews will inform any future NAIC actions on the matter.
The decision comes amid growing concern from regulators about reduced transparency in offshore reinsurance deals.
Andersen noted that as offshore activity expands, regulators lose visibility into financial exposures associated with ceded reserves.
Our concern was that when there is this type of reinsurance activity, including offshore activity, we lose that transparency that we have for the domestic business.
Fred Andersen
“These are still U.S. policyholders that we are trying to protect, even if the business is reinsured or shipped offshore.”
AM Best’s found that nearly 47% of life insurance reserves ceded in 2023 went to offshore reinsurers, up from 26% in 2016. About two-thirds of these reserves were transferred to affiliated entities.
Regulators say this shift raises concerns about oversight and solvency protections for U.S. policyholders.
By requiring only disclosure at this stage, the task force seeks to collect consistent data from carriers while evaluating how offshore arrangements affect the broader market.
