Capital Adequacy Task Force
Financial Condition (E) Committee

The mission of the Capital Adequacy (E) Task Force is to evaluate and recommend appropriate refinements to capital requirements for all types of insurers.

2008 Charges

1. Evaluate refinements to the existing NAIC risk-based capital formulas implemented in 2007. Forward final version of the structure of the 2008 Life, P&C and Health RBC formulas to Financial Condition (E) Committee by June 2008.
2. Consider proposals for structural changes to the RBC formulas (including proposals related to a principles-based RBC approach) submitted by the working groups/subgroups. Proposed structural changes to the 2009 formulas that are received by the 2008 NAIC Winter National Meeting will be considered for adoption by the Task Force, and adopted changes will be forwarded to Financial Condition (E) Committee by March 2009.
3. Review the effectiveness of the NAIC’s RBC policies and procedures as they affect the accuracy, audit ability, timeliness of reporting access to RBC results, and comparability between the RBC formulas. Report on data quality problems in the 2007 RBC filings at the June and September meetings.
4. Monitor changes in accounting and reporting requirements resulting from the adoption and continuing maintenance of the revised Accounting Practices and Procedures Manual to ensure that model laws, publications, formulas, analysis tools, etc. supported by the Task Force continue to meet regulatory objectives.
5. Evaluate emerging “risk” issues for referral to the risk-based capital working groups/subgroups for certain issues involving more than one RBC formula. Monitor emerging and existing risks relative to their consistent or divergent treatment in the three RBC formulas.
6. Conduct a regulatory review of the 2006 and 2007 RBC filings and associated company records in order to assess the impact resulting from implementation of the principles-based changes to the life RBC formula. Monitor implementation and impact of the adopted changes as well as the proposed expansion to the principles-based approach in all the RBC formulas. As well as develop and review, disclosure, documentation and governance protocols to be used by regulators and companies.

The following Working Groups report to the Capital Adequacy Task Force:

• Life Risk-Based Capital Working Group
• Property Risk- Risk-Based Capital Working Group
• Health Risk-Based Capital Working Group