Risk-Based Capital Forecasting & Instructions - Life (2011)

[Pages:178]RBC

Risk-Based Capital

2011

FORECASTING

& INSTRUCTIONS

Regulator Use Only

Risk-Based Capital Forecasting & Instructions

Life

2011

The NAIC is the authoritative source for insurance industry information. Our expert solutions support the ef forts of regulators, insurers and researchers by providing det ailed and comprehensive insurance information. The NAIC offers a wide range of publications in the following categories:

Accounting & Reporting Accountants, members of the insurance industry and educators will find relevant information about st atutory accounting practices and procedures.

Consumer Information Consumers, educators and members of the insurance industry will find important answers to common questions in guides about auto, home, health and life insurance.

Financial Regulation Accountants, financial analysts and lawyers will find handbooks, compliance guides and reports on financial analysis, state audit requirements and receiverships.

Legal State laws, regulations and guidelines apply to members of the legal and insurance industries.

NAIC Activities Insurance industry members will find directories, newsletters and reports affecting NAIC members.

Special Studies Accountants, educators, financial analysts, members of the insurance industry, lawyers and statisticians will find relevant products on a variety of special topics.

Statistical Reports Insurance industry data directed at regulators, educators, financial analysts, insurance industry members, lawyers and statisticians.

Supplementary Products Accountants, educators, financial analysts, insurers, lawyers and statisticians will find guidelines, handbooks, surveys and NAIC positions on a wide variety of issues.

Securities Valuation Office Provides insurers with portfolio values and procedures for complying with NAIC reporting requirements.

White Papers Accountants, members of the insurance industry and educators will find relevant information on a variety of insurance topics.

For more information about NAIC publications, view our online catalog at:



? 1993?2011 National Association of Insurance Commissioners. All rights reserved.

ISBN: 978-1-59917-489-1

Printed in the United States of America

No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any storage or retrieval system, without written permission from the NAIC.

NAIC Executive Office 444 North Capitol Street, NW Suite 701 Washington, DC 20001 202.471.3990

NAIC Central Office 2301 McGee Street Suite 800 Kansas City, MO 64108 816.842.3600

NAIC Capital Markets & Investment Analysis Office 48 Wall Street, 6th Floor New York, NY 10005-2906 212.398.9000

Companion Products

The following companion products provide additional information on the same or similar subject matter . Many customers who purchase the Risk-Based Capital Forecasting & Instructions also purchase one or more of the following products:

Individual Compendium Chart: Capital/Surplus Requirements (CF-20) Individual chart from Volume 1 of the Compendium of State Laws on Insurance Topics: "Basing Capital and Surplus Requirements on Risks; Limitation of Amount of Coverage on One Risk as a Percent age of Capital and Surplus." Chart includes: Citation; Risk-Based Capital Provision; Limit of 10% of Capital on One Risk - Provision in Place?

Raising the Safety Net: Risk-Based Capital for Life Insurance Companies This publication explains the concepts of financial risk that led the NAIC to develop a minimum level of capitalization for insurers. It also includes background on the development of the NAIC' s initial risk-based capital formula. Implementing RBC requirements has helped state insurance regulators limit excessive insolvency risk and t ake more timely action against troubled insurers. Copyright 1994.

Risk-Based Capital (RBC) for Health Organizations Model Act (MDL-315) Establishes RBC requirements and outlines reporting requirements for health organizations. Addresses the hearing process and confidentiality concerns. Also includes provisions for exemptions, foreign health organizations and immunity. Includes legislative history, case law annotations and state action pages.

Risk-Based Capital (RBC) for Insurers Model Act (MDL-312) Establishes RBC requirements and outlines the reporting requirements for insurers. Addresses the hearing process and confidentiality concerns. Also includes provisions for exemptions, foreign insurers and immunity . Includes legislative history, case law annotations and state action pages.

International orders must be prepaid, including shipping charges. Please contact an NAIC Customer Service Representative, Monday - Friday, 8:30 am - 5 pm CT.

DATE: November 30, 2011

TO:

Life Risk-Based Capital Subscribers

FROM: Dave Fleming

SUBJECT: 2011 Life Risk-Based Capital Report

Changes made to the 2011 Life RBC overview and instructions are highlighted in a bold font within that document. Here is a summary of the changes made:

1. The following are changes made as a resu lt of the Derivatives Risk Mitigation proposal which was adopted at the

Jan. 6, 2011, conference call of the Life Risk-Based Capital (E) Working Group:

.

a)

New line (18) was added to LR002 Bonds to include credit for hedging.

b)

The line description for line (21) Total Long-Term and Short-Term Bonds was changed.

c)

New line (27) was added to LR005 Unaffiliated Preferred and Common Stock to include credit for hedging.

d)

The line description for line (30) Total Admitted Unaffiliated Common Stock was changed.

e)

New schedules LR014 Hedged Asset Bond Schedule and LR015 Hedged Asset Common Stock Schedule

were added following LR013 Replication Transactions and before the former LR014 Reinsurance and the

schedules following the new schedules were renumbered.

f)

Guidance and examples for the completion of these two schedules were included in the instructions.

g)

New lines (13), (14) and (126) were added to LR030 Calculation of Tax Effect to include the hedging

ite

ms.

h)

A new Factors Table worksheet was added to the forecasting file as the second to last worksheet to

facilitate formulas included on the new hedging schedules.

2. The following are changes made as a resu lt of the New York Total Adjusted Capital proposal adopted at the Jan. 6, 2011, conference call of the Life Risk-Based Capital (E) Working Group: a) New line (5) Hedging Fair Value Adjustment was added to LR033 Calculation of Total Adjusted Capital. b) Guidance for this line was added to the instructions.

3. New lines (18), (21), (22) and (23) were added to LR033 Calculation of Total Adjusted Capital as a result of th e Deferred Tax Asset Sensitivity Test Correction proposal adopted at the Mar. 18, 2011, conference call of the Capital Adequacy (E) Task Force. (Note: The Annual Statement Source for Lines (17) and (18) has been changed from the 5/6 release to reflect changes made to Notes to Financial Statements Number 9.)

4. Guidance was added to the instructions for LR031 Calculation of Authorized Control Level, LR033 Calculation of Total Adjusted Capital and LR039, LR040 and LR041 Affiliated Investments as a resu lt of the Non-U.S. Life Affiliates proposal adopted at the Oct. 18, 2010 meeting of the Life Risk-Based Capital (E) Working Group.

5. In addition to the schedule renumbering due to the inclusion of new schedules LR014 and LR015, all in ternal schedule references were updated. These included changes to schedules LR019, LR024, LR026, LR028, LR029 through LR031, LR033 through LR038 and LR046.

6. Changes made to the annual statement source for page LR016 Reinsurance Lines (1) through (12) due to changes to annual statement Schedule S.

7. Changes made to the annual statement source for page LR017 Off-Balance Sheet and Other Items Lines (1) through (11) due to the renumbering of the annual statement General Interrogatories, Part 1.

8. References in the first footnote on LR008 Other Long-Term Assets and throughout the instructions to the Securities Valuation Office were updated to reflect the office's new name, "Capital Markets and Investment Analysis Office."

9. Changes made to the annual statement source for page LR017 Off-Balance Sheet and Other Items Line (21) and LR036 Additional Information Required Line (3.2) due to changes made to Notes to Financial Statements Numbers 10E and 14A.

10. Changes made to annual statement source line numbers for LR002 Bonds lines (2) through (7), LR005 Unaffiliated Preferred and Common Stock lines (8) through (13) and the RBC instructions for page LR002 line (8) due to the removal of the credit tenant loans category in the Annual Statement, Schedule D, Part 1A, Section 1.

11. Changes made to the descriptions for LR039 Summary for Affiliated Investments lines (9) and (10), and the RBC instructions to make the descriptions consistent with those used in other parts of the RBC as a result of the July 26, 2011 Capital Adequacy (E) Task Force conference call. as a result of the July 26, 2011 Capital Adequacy (E) Task Force conference call.

12. Change made to the line description for LR033 Total Adjusted Capital line (8) and associated RBC instructions as a result of the July 26, 2011 Capital Adequacy (E) Task Force conference call.

2

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download