NAIC panel proposes tighter life RBC for offshore reinsurance
The changes are intended to be in place for year-end 2027.
Tighter capital treatment for some offshore life reinsurance structures is moving onto the NAIC agenda after the Financial Condition Committee on August 14 approved a referral for two changes to the life RBC formula. The referral is aimed at US life and annuity insurers with cross-border reinsurance programs and is to be prioritised for year-end 2027.
One proposal is a new reinsurance recapture RBC factor applying to ceded reserves and modified coinsurance balances for business ceded to reinsurers outside reciprocal jurisdictions.
The recapture factor would reflect the additional capital needed if a ceding company had to bring those reserves back on balance sheet, while also taking account of any overcollateralisation in setting the required RBC.
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