Financial Condition (E) Committee
Financial Condition (E) Committee Page
Joint Executive (EX) / Plenary Committee Summary Report
Summer 2009 Meeting Summaries Index

The Financial Condition (E) Committee met June 16, 2009. During this meeting, the Committee:  

1. Adopted reports of its task forces and working groups. Many of these groups are very technical in nature and involve ongoing work necessary to maintain and keep current the NAIC solvency framework. The details of those activities have not been provided in this report; rather, the details of items that were of a non-routine and/or significant nature are included in this report.
2. Discussed the comment letters received on an exposed survey from the Premium Survey Subgroup of the Blanks Working Group. The survey was prepared and accumulated by the Subgroup at the request of the Committee following the NAIC’s adoption of a blanks proposal that codified the current methods of allocation of premium between states on the Annual Statement Schedule T. As a result of the discussion, the Committee determined that it would report to the membership that no action was necessary at this time.
3. Discussed a draft letter to the membership regarding a proposed new process for considering technical items from the Committee. The proposed new process is being suggested as a result of the need to have a process to get technical changes to the industry and impacted parties as quickly as possible, so they can begin modifying their systems and processes for such changes. The process would pertain to proposed technical changes to handbooks, formulas and other forms of guidance that are of a routine nature and would not apply to model laws, model regulations, guidelines, or other items that would typically be pulled from the consent agenda and considered separately by the Membership. The new process would require a list of such technical items to be submitted to the Membership within one week of completion of the national meeting and, if no objections are raised, the items would be considered adopted. If an objection is raised on an item, a joint Executive(EX) Committee/Plenary conference call would be scheduled on that particular item(s).
4. Deferred action on a referral from the Statutory Accounting Principles Working Group regarding a proposed new project related to risk charges for individual separate account products. The Committee will consider formation of a new group to address this issue during a future meeting.
5. Adopted revisions to the Health Risk-Based Capital Model Act (#315), which incorporates a new trend test for insurers under this act similar to how a trend test is contemplated for life and property/casualty insurers within the Risk-Based Capital Model Act (#312).
6. Adopted the short-term mortgage experience adjustment factor proposal for year-end 2009 life RBC only, which changed the minimum factor to 75% and the maximum factor to 125% after considerable discussion.
7. Referred an issue to the Capital Adequacy Task Force related to the Federal Reserve’s Term Asset-Backed Securities Loan Facility (TALF) program.

Action Items:

1. Adopted the reports of its task forces and working groups.
2. Adopted a letter to the Membership regarding a proposed new process for considering technical items from the Committee.
3. Adopted revisions to the Health Risk-Based Capital Model Act.
4. Adopted the Life RBC short-term mortgage experience adjustment factor proposal.
5. Referred an issue to the Capital Adequacy Task Force regarding treatment for the Federal Reserve’s TALF