Invested Assets Working Group
Financial Condition (E) Committee
Valuation of Securities Task Force

The Invested Asset (E) Working Group of the Valuation of Securities (E) Task Force (IAWG) is the NAIC group responsible for providing technical analysis and recommendations on the appropriate regulatory response to risks in investments eligible for purchase by insurers. As such, it serves as the contact point for guidance to the industry, their investment advisors and capital market participants generally on regulatory concerns associated with investments insurers may purchase. The IAWG is also responsible for assessing the adequacy of the regulatory framework (i.e., reporting, accounting, risk-based capital and other similar mechanisms) for investments and making appropriate recommendations to other NAIC groups. The primary objective of the IAWG is to identify and articulate regulatory perception of risks in investment securities to insurance companies and their investment advisors to help ensure that insurance company investment decisions incorporate an understanding of potential regulatory responses to investment risks in investments. This charge is given to the IAWG as one way for the NAIC to mitigate the risk of confusion about regulatory policy for investments that may disrupt capital markets.

The following documents provide guidance about the IAWG its relationship to the Valuation of Securities Task Force and the broader NAIC process and the Securities Valuation Office. The following documents also identify how an interested person seeks guidance from the NAIC on potential regulatory concerns with investment risk in investments.

• Policy Statement
• Risk Assessment Worksheet
• Explanation of the Role and Function of the SVO in the Formulation of Policy for Insurer Investments
• How to Obtain an SVO Assessment of the NAIC Regulatory Treatment for an Investment
  • RTAS Application
• NAIC Procedure for Placing a Security under Regulatory Review
• Explanation of the NAIC Process for Coordinating Regulatory Expertise when a Security is Placed under Regulatory Review

The Invested Asset (E) Working Group will:

• Consider  improvements  to  the  process  by  which  risks  in  new  invested  assets  are  evaluated, communicated and monitored, and how the annual statement investment schedules could be made more transparent to better reflect non-credit risks, such as various structural risks embedded in new and existing securities.—Essential

• As a standing NAIC working group, provide continuity in and manage NAIC processes related to the development   of   regulatory   rules   to   address   new    investment   structures.   This   includes:
  —Essential
  • Serving as the primary NAIC contact point into the regulatory process for insurance companies, their investment advisors and other market participants.
  • Creating and maintaining a framework and the necessary procedures and processes to conduct technical  assessments  of  investment  risks  in  investment  products  eligible  for  purchase  by insurance companies.
  • Developing and maintaining knowledge and expertise about investment risks and issues, as well as SVO operations and capabilities.
  • Guiding the development of the technology platform of the SVO to ensure the development, implementation and evolution of systems and tools that adequately support NAIC financial solvency objectives.
  • Serving as the primary NAIC regulatory resource to alert the NAIC regulatory community of the identification  of  regulatory  issues  and  concerns  in  specific  investments  or  in  investments generally.
  • Ensuring that the process by which risks in invested assets are evaluated, communicated and monitored is updated as necessary to permit a timely and comprehensive response to requests for regulatory guidance.
  • Ensuring that  the  NAIC  framework for  investment risks  in  all  annual statement investment schedules and reporting instructions captures relevant information of investment risks in insurer- owned securities.
  • Performing or conducting such other ancillary or related activities that are consistent with its mission and charge.

• Meet with SVO staff on a regular basis, in sessions that are either open or regulator-to-regulator, in accordance with, and within the parameters of, the NAIC Policy Statement on Open Meetings. During these sessions, the Working Group shall consult on: —Essential
  • SVO operations.
  • Risks in investment or investment trends identified by the SVO.
  • Regulatory practices and regulatory sensitivities that should serve as inputs in the conduct of SVO analytical responsibilities.
  • Market signals and information that warrant scrutiny for possible regulatory relevance.