CAPITAL ADEQUACY (E) TASK FORCE January 27, 2020 1.27... · background on the RBC as a reference when reviewing the numerous referrals and proposal that pass to the Capital Adequacy

© 2020 National Association of Insurance Commissioners

Date: 01/23/2020

Conference Call

CAPITAL ADEQUACY (E) TASK FORCE January 27, 2020

3:00 p.m. Eastern / 2:00 p.m. Central

ROLL CALL

Jillian Froment, Chair Ohio Steve Kelley Minnesota Todd E. Kiser, Vice Chair Utah Chlora Lindley-Myers Missouri Jim L. Ridling Alabama Bruce R. Ramge Nebraska Lori K. Wing-Heier Alaska Barbara D. Richardson Nevada Allen W. Kerr Arkansas Marlene Caride New Jersey Ricardo Lara California Mike Causey North Carolina Andrew N. Mais Connecticut Glen Mulready Oklahoma Stephen C. Taylor District of Columbia Elizabeth Kelleher Dwyer Rhode Island David Altmaier Florida Raymond G. Farmer South Carolina Dean L. Cameron Idaho Kent Sullivan Texas Robert H. Muriel Illinois Mike Kreidler Washington Doug Ommen Iowa Mark Afable Wisconsin Vicki Schmidt Kansas NAIC Support Staff: Jane Barr/Lou Felice

AGENDA

1. Consider its 2019 Fall National Meeting Minutes—Tom Botsko (OH)

2. Consider 2019 Catastrophe Event List—Tom Botsko (OH)

3. Discuss Blanks General Interrogatory No. 24—Tom Botsko (OH)

4. Discuss Any Other Matters Brought Before the Task Force

5. Adjournment

Attachment One

Attachment Two

Attachment Three

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Draft Pending Adoption

© 2019 National Association of Insurance Commissioners 1

Draft: 12/08/19

Capital Adequacy (E) Task Force Austin, Texas

December 8, 2019

The Capital Adequacy (E) Task Force met in Austin, Texas Dec. 8, 2019. The following Task Force members participated: David Altmaier, Chair (FL); Todd E. Kiser, Vice Chair, represented by Dan Applegarth (UT); Lori K. Wing-Heier represented by Michael Richer (AK); Jim L. Ridling represented by Sheila Travis (AL); Andrew N. Mais represented by Wanchin Chou (CT); Stephen C. Taylor represented by Philip Barlow (DC); Trinidad Navarro represented by Rylynn Brown (DE); Doug Ommen represented by Mike Yanacheak (IA); Robert H. Muriel represented by Kevin Fry and Vincent Tsang (IL); Vicki Schmidt represented by Tish Becker (KS); Steve Kelley represented by Kathleen Orth (MN); Chlora Lindley-Myers represented by Shannon Schmoeger (MO); Mike Causey represented by Jackie Obusek (NC); Marlene Caride (NJ); John G. Franchini represented by Anna Krylova (NM); Barbara D. Richardson represented by Stephanie McGee (NV); Jillian Froment represented by Tom Botsko and Dale Bruggeman (OH); Glen Mulready represent ed by Eli Snowbarger (OK); Elizabeth Kelleher Dwyer represented by John Tudino (RI); Kent Sullivan represented by Mike Boerner (TX); Mike Kreidler represented by Patrick H. McNaughton (WA); and Mark Afable represented by Randy Milquet (WI).

1. Adopted its October 8 Minutes

The Task Force met Oct. 8, 2019 and took the following action: 1) adopted its Sept. 18 minutes which was an e-vote to adopt its 2020 charges; and 2) exposed its referrals:

a. NAIC Designations for Schedule D, Part 2-Section 2.b. Mutual Fundsc. Comprehensive Funds.d. Supplemental Investment Risk Interrogatories (SIRI).

Ms. Orth made a motion, seconded by Mr. Botsko, to adopt the Task Force’s Oct. 8 minutes (Attachment One). The motion passed unanimously.

2. Adopted its Working Group Reports

Mr. Barlow mentioned an addition to the Life Risk-Based Capital (E) Working Groups summary report to include phase-in and spreading of variable annuity reserves capital. Mr. Milquet made a motion, seconded by Ms. Obusek, to adopt the reports of the: Health Risk-Based Capital (E) Working Group July 17 minutes (Attachment Two); Life Risk-Based Capital (E) Working Group (Attachment Three); and Property and Casualty Risk-Based Capital (E) Working Group (Attachment Four). The motion passed.

3. Adopted its Working Agenda

Mr. McNaughton said the completion dates for stop loss insurance, health care receivables and the health test ad hoc group were extended to better reflect the expected completion of each of these projects. The referral letter to the TF on Guaranty Funds, Long-Term Care and HMO’s and the review of Long-term care and long-term disability under the H2 component were removed from the agenda. The Working Group completed the memo on the Long Term Care and Guaranty Funds and referred it to the Task Force and the Working Group determined that due to materiality, the item on long-term care and long-term disability would be removed and if needed can be re-assessed in the future

Mr. Botsko summarized the changes to the to the 2020 Property and Casualty Risk-Based Capital (RBC) working agenda: 1) removed “evaluate the proposed changes from the Investment Risk-Based Capital WG related to Bond changes in the P/C formula” in the new items section; and 2) added “evaluate the possibility of using NAIC as centralized location for reinsurer designations” and “evaluate the possibility of allowing additional third party models to calculate the cat model losses” in the carry-over items and new items sections respectively.

Mr. Botsko said that the Affiliated Investment group has continued their bi-weekly call since the Summer National meeting and met in person on Friday, December 6. The Ad hoc group has finalized the Directly Owned Subsidiary instructions for all three forms. And has also made progress on the Indirect Owned Subsidiary and Alien Subsidiary instructions as well. The Ad Hoc group will continue to move forward with the remaining instructions over the next few months. Mr. Botsko said that he plans to present the Direct and Indirect instructions to the respective Working Groups and the Task Force by the Spring meeting.

Attachment One



Mr. Botsko made a motion, seconded by Mr. Boerner to adopt the Working Agenda (Attachment Five). The motion passed. 4. Received Long-Term Care/Guaranty Fund Memorandum Mr. McNaughton summarized a referral from the Task Force regarding adopted amendments to the Life and Health Insurance Guaranty Association Model Act, Model #520 and determine if changes were warranted to the health RBC formula. The Health RBC formula currently includes a .5% charge on all premiums that are subject to a guaranty fund assessment. He added that through their analysis: 1) that while some states have not yet adopted the model law changes, once adopted a majority of the states will allow for a premium tax or corporate tax offset, or the ability to impose a minimal surcharge to help offset the assessment; 2) at a maximum, HMO’s would incur a charge of 2% (depending upon each state’s guaranty fund law) and if they were unable to pay or meet this obligation, they could request a waiver from the guaranty fund of some or all of the assessment; and 3) given the differences and complexities between states in the regulation and taxation of HMO’s, and that the RBC formula is a generic formula the goal of which is to be applied as uniformly as possible and not at such a granular level, it would be difficult to incorporate such changes into the formula that could address all the different scenarios needed to provide a different charge, offset or credit to such a distinct population in such diverse regulatory environments. Mr. McNaughton said based on these findings, the Working Group does not recommend any changes to the Health RBC (Attachment Six). 6. Adopted the Property and Casualty Risk-Based Capital (E) Working Group Proposals

a. Proposal 2019-11-P (Clarification to Instructions Regarding Lloyd’s of London) and the 2019 Reporting Guideline (Attachment Seven). Mr. Botsko said upon review of 2018 Annual Statement Schedule F, Part 3 filings, it was observed that many filers reported reinsurance recoverable amounts due from Lloyd’s of London syndicates as NAIC 6 – unrated; therefore, they are subject to the highest R3 charge. He stated that the purpose of this proposal is to clarify that the reinsurance recoverable from individual syndicates of Lloyd’s of London that are covered under the Lloyd’s Central Fund may use the lowest financial strength group rating received from an approved rating agency. He said that because the deadline for the change of the 2019 RBC instructions has passed, a guideline for 2019 RBC reporting will be posted to the Working Group’s web page pending the proposal’s adoption by the Working Group. He also stated that the Working Group received no comments during the exposure period.

b. Proposal 2019-12-P (Remove PR038 Adjustment for Reinsurance Penalty) (Attachment Eight). Mr. Botsko said that because the computation of RBC charge for reinsurance recoverable has been moved to the Annual Statement Schedule F, Part 3 in 2018 reporting, the adjustment for reinsurance penalty for affiliates applicable to Schedule F in PR038 is no longer needed. He stated that the purpose of this proposal is to eliminate the adjustment for reinsurance penalty for affiliates applicable to Schedule F section in PR038. Mr. Botsko also said the Working Group received no comments during the exposure period.

c. Proposal 2019-14-CR (2019 Catastrophe Event Lists) (Attachment Nine). Mr. Botsko said, in order to avoid double-counting the catastrophe losses in the RBC formula, the U.S. and non-U.S. catastrophe event lists provide a routine annual update for those catastrophe events that should be excluded from the R5 calculation. He stated that the Subgroup exposed the list during the Nov. 8 conference call; no comments were received during the exposure period. Mr. Botsko also indicated that any additional events that occur between November 1 and December 31 will be exposed during the first week of January. The Subgroup will either schedule a conference call or conduct an email vote to adopt the updated list after the Committee Assignment Meeting.

Mr. Botsko made a motion, seconded by Mr. Chou to adopt the Property and Casualty Risk-Based Capital Working Group proposals. The motion passed

7. Adopted the RBC Preamble Commissioner Altmaier said that the purpose of the RBC preamble (Attachment Ten). is to provide some history and background on the RBC as a reference when reviewing the numerous referrals and proposal that pass to the Capital Adequacy (E) Task Force and its Working Groups. He added that the Preamble was re-exposed for a 30-day comment period ending Sept. 4 and was modified to include comments received from America’s Health Insurance Plans-AHIP (Attachment Eleven). Bill Weller (AHIP) thanked the task force for including the changes suggested in their comment letter.

Attachment One



Commissioner Altmaier said that he received a comment that states there are some state that are allowing insurers permitted practices to adjust their RBC outside the accounting permitted practices to their financial statement. The wording in the preamble states that permitted practices are not allowed and the Task Force was not aware that this was allowed by any state. Ms. Brown said that if permitted practices are allowed there should be some type of disclosure of the permitted practice and why it is allowed. She added that it was not a good idea to allow permitted practices in the RBC, which would be a disadvantage of companies who are following the rules. Mr. Barlow said that he has heard there are permitted practices in RBC, which he believes there should not because of the significant solvency to the insurance company. Mr. Bruggeman said that RBC is a tool used to monitor solvency, and when a company’s RBC falls into various action levels that may require monitoring adjusting those numbers will skew their results. He added that permitted practices are allowed in the financial statement and that is where they belong, not by adjusting the RBC numerator. Mr. Fry said that there may be state laws that allow for a permitted practice in RBC. Mr. McNaughton said that this tool is a cornerstone to solvency regulation and since the RBC Model Law is an accreditation standard if this is allowed there could be some regulatory arbitrage. Commissioner Altmaier said that the paragraph in question would be paragraph 10 of Attachment Eleven which states; “RBC instructions, RBC reports and adjusted report(s) are intended solely for use by the commissioner/state in monitoring the solvency of insurers and the need for possible corrective action with respect to insurers and are considered confidential. All domestic insurers are required to file an RBC report unless exempt by the Commissioner. There are no state permitted practices to modify the RBC formula and all insurers are required to abide by the RBC instructions.” so adoption would eliminate that states authority to allow permitted practices. Mr. Fry suggested that the task force table this adoption. Lou Felice said that RBC should not allow for permitted practices to the dominator, which would change the RBC formula and factors. The nominator could be an accounting permitted practices or a state permitted practice for RBC. Mr. Yanacheak said he was in favor of moving forward with the current wording today. Commissioner Altmaier said that if adopted, the Task Force could look into the states that are allowing a permitted practice and if the numerator or dominator is being adjusted. Mr. Yanacheak made a motion, seconded by Mr. Barlow to adopt the RBC Preamble The motion passed. 8. Heard Comments on Exposed Referrals Commissioner Altmaier said that the Task Force has received numerous referrals regarding investments that could impact the RBC formula. There referrals were exposed for a 30-day comment period ending Nov. 8 and the Task Force requested that the following questions be considered: a) if changes to the RBC formula were appropriate; if so, b) what was the best way for the Task Force to move forward; and c) what resources should the Task Force consider for research and analysis of these investments.

a. Comprehensive Fund Referral (Attachments Twelve and Thirteen)

Nancy Bennett (Academy) said that the risk in a single bond is not the same as the risk associated with comprehensive bonds. She added that using speculative risk analysis (default rate and credit experience) to rate bond funds may reduce the capital requirement for fund investments below regulators’ state statistical level. Ms. Bennet said that the Academy recommends further analysis so that similar treatment does not under mind the RBC calculation. Josh Bean representing American Council of Life Insurers (ACLI) and North American Securities Valuation Association (NASVA) said they encourage the Task Force to continue discussion on the bond and preferred stock focused fund structures risk profile and determine a risk-based factor appropriate for this investment portfolio. Mr. Bean said that these funds office insurance companies access to diversification and solid risk adjusted returns, as well as liquidity and cash flows well suited to our asset/liability matching needs. Chris Anderson – Anderson Insights (AI) said that for regulatory purposes open end funds (which include Exchange Traded Funds) should not be treated like closed end funds (actual bonds) and could encourage insurers to invest in assets with low C-1 factors for various reasons; a) do not have the same predictability and periodicity of cash flows of actual bonds; b) have indeterminate, not fixed lives; c) do not offer promises of cash flows that insurers can use to provide their projected future liability needs and due to time constraints will end with d) are not subject to credit analysis because there is no party to be evaluated making specific promises concerning the amounts of future cash flows. He asked that this Task Force determine whether it is appropriate to assign the same risk factor for these funds as if they were a bond or preferred stock. Commissioner Altmaier said the comment letter form Everest is included in the materials.

Attachment One



Erinn King – Payden&Rygel said that their asset management firm is in support of assigning bond factors for fixed income designation for all bond and preferred stock funds, and ETFs, both private and public, regardless of which schedule they are reported on in the annual statement that are determined/designated by the SVO. She added that funds allow smaller insurers to achieve better pricing economies of scale and diversification of investment risk than many can find purchasing individual securities, but the RBC charges are inconsistent across the formulas. Kelly Sweppenhiser – Vanguard focused on two important points from their research and that there is 1/10 of 1% of bond mutual funds that apply for designations, so there is minimal impact to RBC and secondly if bond funds were afforded bond like treatment in RBC that amount would slowly increase and a small subset of SEC-registered bonds would be submitted for designation.

b. Structured Notes Referral Mr. Bean stressed that the RBC should exclude non-admitted structured notes from receiving an RBC charge. The RBC rules for P&C companies refer to the net book/adjusted carrying values (net of a non-admit amount) when calculating RBC charges which is inconsistent with the treatment in the Life RBC formula, (reducing Statutory Capital and Surplus by 100% of the net book/adjusted carrying value of the asset), the gross asset (before reducing it for non-admitted) has a RBC charge associated with it. Mr. Bean said that should an insurer receive a permitted practice to admit structured notes as “other derivatives” we recommend the RBC rules associated with Derivatives on Schedule DB be modified to treat such instruments like equity securities. Commissioner Altmaier asked the Task Force members to consider the comments heard today so when the Task Force reconvenes a determination can be made on how to move forward. 10. Discussed Any Other Matters Commissioner Altmaier thanked Mr. McNaughton for his years of service as chair of the Health Risk-Based Capital and expertise and diligence in with the health formula. He expressed admiration for Mr. McNaughton receiving the Robert Dineen Award for Outstanding Service and Contribution and looks forward to seeing him participate in a non-regulatory compacity. Having no further business, the Capital Adequacy (E) Task Force adjourned. W:\National Meetings\2019\FallTF\CapAdequacy\12-08_CapitalAdequacyTFmin_final.docx

Attachment One

2019 National Association of Insurance Commissioners

Capital Adequacy (E) Task Force RBC Proposal Form

[ ] Capital Adequacy (E) Task Force [ ] Health RBC (E) Working Group [ ] Life RBC (E) Working Group [ x ] Catastrophe Risk (E) Subgroup [ ] Investment RBC (E) Working Group [ ] Op Risk RBC (E) Subgroup [ ] C3 Phase II/ AG43 (E/A) Subgroup [ ] P/C RBC (E) Working Group [ ] Stress Testing (E) Subgroup

DATE: 11/8/2019

CONTACT PERSON: Eva Yeung

TELEPHONE: 816-783-8407

EMAIL ADDRESS: [email protected]

ON BEHALF OF: Catastrophe Risk (E) Subgroup

NAME: Tom Botsko

TITLE: Chair

AFFILIATION: Ohio Department of Insurance

ADDRESS: 50 West Town Street, Suite 300

Columbus, OH 43215

FOR NAIC USE ONLY

Agenda Item # 2019-14-CR

Year 2019

DISPOSITION

[ x ] ADOPTED 12/8/19

[ ] REJECTED

[ ] DEFERRED TO

[ ] REFERRED TO OTHER NAIC GROUP

[ x ] EXPOSED 11/8/19 / 1/7/20

[ ] OTHER (SPECIFY)

IDENTIFICATION OF SOURCE AND FORM(S)/INSTRUCTIONS TO BE CHANGED

[ ] Health RBC Blanks [ ] Property/Casualty RBC Blanks [ ] Life RBC Instructions

[ ] Fraternal RBC Blanks [ ] Health RBC Instructions [ ] Property/Casualty RBC Instructions

[ ] Life RBC Blanks [ ] Fraternal RBC Instructions [ x ] OTHER __Cat Event Lists___

DESCRIPTION OF CHANGE(S) 2019 U.S. and non-U.S. Catastrophe Event Lists

REASON OR JUSTIFICATION FOR CHANGE ** New events were determined based on the sources from Swiss Re and Aon Benfield.

Additional Staff Comments:

11/8/19 The Catastrophe Risk SG exposed the proposal for 14 days public comment period ending 11/24/19. 12/6/19 The Catastrophe Risk SG adopted the lists. For any additional events that occur between 11/1 and 12/31, the SG will either schedule a call or conduct an email vote to adopt the updated list. 12/8/19 The PCRBC WG adopted the lists. For any additional events that occur between 11/1 and 12/31, the SG will either schedule a call or conduct an email vote to adopt the updated list. 1/7/20 The Catastrophe Risk SG exposed the additional events for 14 days public comment period ending 1/21/20. One earthquake event was added to the non-U.S. Catastrophe Event Lists. ___________________________________________________________________________________________________ ** This section must be completed on all forms. Revised 11-2013

Attachment Two

1

U.S. List of Catastrophes for Use in Reporting catastrophe Data in PR037 and PR100+

Type of Event Name Date Location Overall losses when occurred

Tropical Storm Hermine 2010 120,000,000$ Hurricane Earl 2010 45,000,000$ Hurricane Irene 2011 4,300,000,000$ Tropical Storm Lee 2011 315,000,000$ Hurricane Sandy 2012 50,000,000,000$ Hurricane Isaac 2012 970,000,000$ Tropical Storm Debby 2012 105,000,000$ Earthquake 2014 California 25+ million Hurricane Patricia 2015 25+ millionHurricane Joaquin 2015 25+ million

Hurricane Matthew 2016 Florida, North Carolina, South Carolina, Georgia and Virginia 2,698,400,000$ Hurricane Hermine 2016 Florida, North Carolina, South Carolina, Georgia and Virginia 245,640,000$ Hurricane Harvey 2017 Texas, Lousiana 25+ million

Hurricane Jose 2017 East Coast of the United States 25+ million

Hurricane Irma 2017 Eastern United States 25+ million

Hurricane Maria 2017 Southeastern United States, Mid-Atlantic States 25+ million

Hurricane Nate 2017Louisiana, Mississippi, Alabama, Tennessee and Eastern United States

25+ million

Tropical Storm Alberto 2018 Southeast, Midwest 25+ million

Hurricane Lane 2018 Hawaii 25+ million

Tropical Storm Gordon 2018Southeast, Gulf coast of the United States, Arkansas and Missouri

25+ million

Hurricane Florence 2018 Southeast, Mid-Atlantic 25+ million

Hurricane Michael 2018 Southeastern and East Coasts of United States 25+ million

Hurricane Dorian 2019 Southeast, Mid-Atlantic 500+ millionHurricane Barry 2019 Southeast, Midwest, Northeast 300+ million

Attachment Two

2© 2019 National Association of Insurance Commissioners

Non U.S. List of Catastrophes For Use in Reporting Catastrophe Data in PR037 and PR100+

Year Event Type Begin End Event Country Affected Area (Detail)

Munich ReNatCATService

Insured losses (in original values, US$m)

Criteria: insured losses equal/greater

US$ 25m. Tries to reflect non-US losses

only

Swiss Re Sigma: Insured Loss Est. US$m (mid point

shown if range given) Mostly reflect total

US andnonUS losses

combined.

2010 Earthquake 04/09/2010 04/09/2010 Earthquake NewZealand

Canterbury, Christchurch, Avonside, Omihi, Timaru, Kaiapoi, Lyttelton 5000 4450

2010 Earthquake 04/04/2010 04/04/2010 Earthquake Mexico Baja California, Mexicali, Tijuana, Calexico 300 300

2010 Earthquake 27/02/2010 27/02/2010 Earthquake Chile

Bió Bió, Concepción, Talcahuano, Coronel, Dichato, Chillán; Del Maule, Talca, Curicó, Constitucion, Caleta Duao, Iloca, Pelluhue, Parral; Metropolitana, Santiago; Valparaíso, Putaendo; La Araucanía, Angol, Temuco; Del General Libertador Bernado Ohiggins, Rancagua, Angol; Juan Fernandez Islands

8000 8000

2011 Tropical Cyclone 20/09/2011 22/09/2011 Typhoon Roke (Onyok), floods

1200 1210

2011 Tropical Cyclone 22/08/2011 02/09/2011 Hurricane Irene

CT; Bridgeport; DC; Washington; DE; Lewes; FL; MA; Boston; MD, Ocean City; ME; NC, New Bern; NH; NJ, Atlantic City; NY, New York City; PA, Philadelphia; RI, Bristol, Charlestown, Narragansett, SouthKingstown, Westerly; SC; VA; VT;Montpelier, Wardsboro; Munich re losses are non-US losses

300 5300


South Island, Canterbury, Christchurch, Lyttelton 800 2000

2011 Earthquake 11/03/2011 11/03/2011 Earthquake Japan

Honshu, Aomori, Tohoku; Miyagi, Sendai; Fukushima, Mito; Ibaraki; Tochigi, Utsunomiya; Iwate, Morioka; Yamagata, Chiba; Tokyo

35000 35000

2011 Tropical Cyclone 09/02/2011 09/03/2011 Tropical Storm Talas N/A 470


South Island, Canterbury, Christchurch, Lyttelton 13000 12000

2011 Tropical Cyclone 02/02/2011 07/02/2011 Cyclone Yasi

Queensland, Tully, Townsville, Mission Beach, Cardwell, Giru, Ingham, Innisfail, Cassowary Coast Shire, Cairns, Bedarra and Dunk islands

1430 1360

Attachment Two



2012 Earthquake 29/05/2012 29/05/2012 Earthquake Italy

Emilia-Romagna, San Felice del Panaro, Cavezzo, Rovereto di Novi, Carpi, Concordia, Bologna, Mailand, Aosta Valley, Venice, Mirandola

1600 N/A

2013 Tropical Cyclone 08/11/2013 12/11/2013 Typhoon Haiyan Phillippines, Vietnam, China 700 N/A

Year Event Type Begin End Event Country Affected Area (Detail)

Munich Re NatCATService Insured

losses (in original values, US$m) Criteria:

insured losses equal/greater US$ 25m. Tries to reflect non-US

losses only

Swiss Re Sigma: Insured Loss Est. US$m (mid point

shown if range given) Mostly reflect total US

andnonUS losses

combined.

2014 Earthquake 07/07/2014 Earthquake Mexico, Guatemala N/A N/A 25+milion

2014 Earthquake 04/01/14 Earthquake Chile N/A N/A 100+milion2014 Earthquake 12/02/2014 Earthquake China N/A N/A 350+milion2014 Earthquake 05/04/2014 Earthquake China N/A N/A 80+milion2014 Earthquake 05/05/2014 Earthquake Thailand N/A N/A 62+milion2014 Earthquake 05/24/14 Earthquake China N/A N/A 60+milion2014 Tropical Storm 06/14/14 06/16/14 TS Hagibis China N/A N/A 131+milion2014 Super Typhoon 07/08/14 07/11/14 STY Neoguri Japan N/A N/A 100+milion2014 Super Typhoon 07/15/14 07/20/14 STY Rammasun Philippines, China, Vietnam N/A N/A 570+milion2014 Typhoon 07/22/14 07/24/14 TY Matmo Taiwan, China, Philippines N/A N/A 570+milion2014 Cyclone 01/10/14 01/12/14 CY Ian Tonga N/A N/A 48+milion2014 Cyclone 04/10/14 04/14/14 CY Ita Australia N/A N/A 1+billion2015 Hurricane 08/16/92 08/28/92 Hurrican Andrew Bahamas United States, Bahamas > 25 million

2015 Hurricane 10/20/15 10/24/15 Hurricane Patricia Central America, Mexco and Texas N/A N/A > 25 million

2015 Typhoon 06/26/15 07/13/15 Typhoon Chan-hom (Falcon)

Guam, Northern Mariana Islands, Philippines, Japan, Taiwan, Chian, Korea, Russian Far East

N/A N/A > 25 million

2015 Severe Tropical Storm 07/01/15 07/10/15 Severe Tropical Storm

Linfa (Egay) Philippines, Taiwan, China N/A N/A > 25 million

2015 Typhoon 07/02/15 07/18/15 Typhoon Nangka Marshall Islands, Mariana Islands and Japan N/A N/A > 25 million

2015 Typhoon 07/29/15 08/12/15 Typhoon Soudelor (Hanna)

Mariana Islands, Japan, Philippines, Taiwan, Eastern China and South Korea


2015 Typhoon 08/13/15 08/30/15 Typhoon Goni (Ineng) Mariana Islands, Japan, Philippines, Taiwan, China, Russia and Korea N/A N/A > 25 million

2015 Severe Tropical Storm 09/06/15 09/11/15 Severe Tropical Storm

Etau Japan, Russian Far East N/A N/A > 25 million

2015 Typhoon 09/19/15 09/30/15 Typhoon Dujuan (Jenny) Ryukyu Islands, Taiwan, East China N/A N/A > 25 million

2015 Typhoon 09/30/15 10/05/15 Typhoon Mujigae (Kabayan) Philippines, Vietnam and China N/A N/A > 25 million

2015 Typhoon 10/12/15 10/21/15 Typhoon Koppu (Lando) Northern Mariana Islands, Philippines, Taiwan, Ryukyu Islands N/A N/A > 25 million

Attachment Two



2015 Typhoon 12/03/15 12/08/15 Storm Desmond Ireland, Isle of Man, United Kingdom, Iceland, Norway and Sweden N/A N/A > 25 million

2015 Hurricane 09/28/15 10/15/15 Hurricane Joaquin

Turks and Caicos Islands, the bahamas, Cuba, Haiti, Southeastern United States, Bermuda, Azores, Iberian Peninsula


2015 Earthquake 04/27/15 Earthquake Nepal N/A N/A > 25 million2015 Earthquake 09/22/15 Earthquake Chile N/A N/A > 25 million

2016 Hurricane 09/28/15 10/10/16 Hurricane Matthew

Lesser Antilles, Leeward, Antilles, Venezuela, Columbia, Jamaica, Hispaniola, Cuba, Lucayan, Archipelago, eastern Canada


2016 Hurricane 08/28/16 09/06/16 Hurricane Hermine Dominican Republic, Cuba, The Bahamas N/A N/A > 25 million

2016 Tropical Cyclone 02/16/16 02/22/16 TC Winston South Pacific Islands N/A N/A > 25 million

2016 Earthquake 02/06/16 Earthquake Taiwan Asia N/A N/A > 25 million

2016 Earthquake 01/03/16 Kaohsiung EQ India, Bangladesh, Myanmar Asia N/A N/A > 25 million

2016 Earthquake 02/14/16 Christchurch EQ New Zealand Oceania N/A N/A > 25 million2016 Earthquake 04/14/16 04/16/16 Kumamoto EQs Japan Asia N/A N/A > 25 million2016 Earthquake 04/16/16 Ecuador EQ Ecuador South America N/A N/A > 25 million

2016 Tropical Cyclone 05/14/16 05/23/16 CY Roanu Sri Lanka, india, Bangladesh, China Asia N/A N/A > 25 million

2016 Earthquake 08/24/16 Italy EQ Italy Europe N/A N/A > 25 million

2016 Tropical Cyclone 09/14/16 09/16/16 STY Meranti China, Taiwan, Philippines Asia N/A N/A > 25 million

2016 Tropical Cyclone 07/08/16 07/12/16 STY Nepartak China, Taiwan Asia N/A N/A > 25 million

2016 Tropical Cyclone 09/26/16 09/29/16 TY Megi Taiwan, China Asia N/A N/A > 25 million

2016 Earthquake 09/10/16 Kagera EQ Tanzania, Uganda Africa N/A N/A > 25 million

2016 Tropical Cyclone 08/29/16 09/01/16 TY Lionrock China, Japan, South Korea Asia N/A N/A > 25 million

2016 Tropical Cyclone 09/19/16 09/22/16 TY Malakas Japan, China Asia N/A N/A > 25 million

2016 Tropical Cyclone 08/18/16 08/20/16 TS Dianmu China, Vietnam Asia N/A N/A > 25 million

2016 Tropical Cyclone 07/31/16 08/03/16 TY Nidia China, Phillippines Vietnam Asia N/A N/A > 25 million

2016 Tropical Cyclone 08/02/16 08/10/16 HU Earl Belize, Mexico, Carribbean Islands North America (non-U.S.) N/A N/A > 25 million

2016 Tropical Cyclone 08/22/16 08/23/16 TS Mindulle Japan Asia N/A N/A > 25 million

2016 Tropical Cyclone 09/06/16 09/08/16 HU Newton Mexico North America (non-U.S.) N/A N/A > 25 million

Attachment Two



2016 Tropical Cyclone 10/04/16 10/07/16 STY Chaba Japan, Korea Asia N/A N/A > 25 million

2016 Tropical Cyclone 10/16/16 10/22/16 STY Haima Phillipines, China Asia N/A N/A > 25 million

2016 Tropical Cyclone 10/14/16 10/20/16 TY Sarika Phillipines, China, Vietanm Asia N/A N/A > 25 million

2016 Earthquake 10/26/16 Central Italy EQ Italy Europe N/A N/A > 25 million2016 Earthquake 10/27/16 Central Italy EQ Italy Europe N/A N/A > 25 million2016 Earthquake 10/21/16 Tottori Japan Asia N/A N/A > 25 million

2016 Hurricane 09/28/15 10/10/16 Hurricane Matthew

Lesser Antilles, Leeward, Antilles, Venezuela, Columbia, Jamaica, Hispaniola, Cuba, Lucayan, Archipelago, eastern Canada


2016 Hurricane 08/28/16 09/06/16 Hurricane Hermine Dominican Republic, Cuba, The Bahamas N/A N/A > 25 million

2017 Earthquake 01/18/17 Earthquake Italy Europe N/A N/A > 25 million2017 Earthquake 01/28/17 Earthquake China Asia N/A N/A > 25 million2017 Earthquake 02/10/17 Earthquake Philippines Asia N/A N/A > 25 million2017 Earthquake 03/27/17 Earthquake China Asia N/A N/A > 25 million

2017 Cyclone 03/28/17 04/05/17 CY Debbie Australia Queensland, New South Wales, New Zealand N/A N/A > 25 million

2017 Earthquake 05/11/17 Earthquake China Asia N/A N/A > 25 million

2017 Typhoon 07/29/17 07/31/17 TY Nesat & TS Haitang China, Taiwan, Philippines Asia N/A N/A > 25 million

2017 Typhoon 08/07/17 08/09/17 Typhoon Noru Japan Asia N/A N/A > 25 million2017 Earthquake 08/08/17 Earthquake China Asia N/A N/A > 25 million2017 Typhoon 08/23/17 08/24/17 TY Hato China Macau, Hong Kong N/A N/A > 25 million2017 Typhoon 08/25/17 08/28/17 TY Pakhar China Asia N/A N/A > 25 million

2017 Hurricane 08/25/17 09/02/17 Hurricane HarveyWindward Islands, Suriname, Guyana, Nicaragua, Honduras, Belize, Cayman Island, Yucatan Peninsula,


2017 Hurricane 08/30/17 09/16/17 Hurricane IrmaCape Verde, Leeward Islands, Greater Antilles, Turks and Caicos Islands, The Bahamas


2017 Hurricane 09/05/17 09/26/17 Hurricane Jose Leeward Islands, Bahamas, Bermuda, Nova Scotia N/A N/A > 25 million

2017 Hurricane 09/16/17 10/03/17 Hurricane Maria

Lesser Antilles, Puerto Rico, Dominican Republic, Haiti, Turks and Caico Islands, The Bahamas, Ireland, United Kingdom, France and Spain


2017 Earthquake 09/07/17 Earthquake Mexico, Guatemala N/A N/A > 25 million2017 Earthquake 09/19/17 Earthquake Mexico Mexico City >200 N/A > 25 million

2017 Hurricane 10/04/17 Hurricane Nate Central America, Cayman Islands, Cuba Yucatan Peninsula N/A N/A > 25 million

2018 Earthquake 02/06/18 Earthquake Taiwan > 25 million2018 Earthquake 02/16/18 Earthquake Mexico > 25 million

2018 Cyclone 02/09/18 02/20/18 CY Gita Tonga, Fiji, Samoa, New Zealand > 25 million

2018 Earthquake 02/26/18 Earthquake Papua New Guinea > 25 million

Attachment Two



2018 Earthquake 03/05/18 Earthquake Papua New Guinea > 25 million

2018 Cyclone 03/17/18 CY Marcus > 25 million

2018 Tropical Storm 05/23/18 05/27/18 Tropical Storm Mekunu Yamen, Oman , Saudi Arabia > 25 million

2018 Tropical Storm 06/02/18 06/07/18 Tropical Storm EwiniarVietnam, China, Taiwan, Philippines and Ryukyu Islands

Guangdong Province, Jiangxi, Fujian, Zhejiang Provinces, and Hainan Island.

> 25 million

2018 Earthquake 06/18/18 Earthquake Japan > 25 million

2018 Super Typhoon 07/10/18 07/12/18 STY Maria China, Taiwan, Guam and Japan

Fujian province, Yantze River Basin, Japan's Ryukyu Islands > 25 million

2018 Tropical Storm 07/17/18 07/24/18 TS Sonh-Tinh Vietnam, China, Loas Japan, Russian Far East > 25 million

2018 Tropical Storm 07/22/18 07/25/15 TS Ampil China Jiangsu, Zhejiang, Shandong, and Hebei > 25 million

2018 Typhoon 07/27/18 08/03/18 TY Jongdari Japan, China > 25 million2018 Earthquake 08/05/15 08/09/18 Earthquake Indonesia > 25 million

2018 Tropical Storm 08/09/18 08/15/18 TS Yagi Philippines, China Zhejiang, Anhui, Jiangsu and Shandong Provinces. > 25 million

2018 Tropical Storm 08/13/18 08/19/18 TS Bebinca China Hong Kong, Guangdong and Hainan > 25 million

2018 Typhoon 08/16/18 08/18/18 TY Rumbia China Shanghai, Jiangsu, Zhehiang, Anhui, Shandong and Henan > 25 million

2018 Typhoon 08/23/18 08/25/18 TY SoulikJapan, South Korea, China and Russia

Haenam County, South Jeolla Province > 25 million

2018 Typhoon 09/04/18 09/05/18 RY Jebi

Japan, Mariana Islands, Taiwan, Japan, Russian Far East and Artic

> 25 million

2018 Earthquake 09/06/18 Earthquake Japan Hokkaido > 25 million

2018 Super Typhoon 09/15/18 0918/18 STY MangkhutN. Mariana Islands, Philippines, China and Hong Kong

> 25 million

2018 Hurricane Leslie 09/23/18 Hurricane Leslie Azores, Bermuda, Europe

Azores, Bermuda, Madeira, Iberian Peninsula, France > 25 million

2018 Hurricane 10/07/18 10/16/18 Hurricane Michael

Central American, Yucatan Peninsula, Cayman Islands, Cuba, Atlantic, Canad

> 25 million

2019 Cyclone 05/03/19 05/05/19 Cyclone Fani India, Bangladesh >500 million2019 Earthquake 06/17/19 Earthquake China > 25 million

2019 Tropical Storm 08/01/19 08/08/19 Tropical Storm Wipha China, Vietnam > 25 million

2019 Typhoon 08/09/19 08/11/19 Typhoon Lekima China > 855 million2019 Typhoon 08/15/19 08/16/19 Typhoon Krosa Japan >25 million

Attachment Two



2019 Hurricane 08/31/19 09/07/19 Hurricane Dorian Caribbean, Bahamas, Canada >1 billion

2019 Typhoon 09/05/19 09/08/19 Typhoon Lingling Japan, China, Korea >5.78 billion

2019 Typhoon 09/08/19 09/09/19 Typhoon Faxai Japan > 7 billion2019 Hurricane 09/19/19 09/22/19 Hurricane Humberto Bermuda >25+ million2019 Hurricane 09/17/19 09/26/19 Hurricane Lorenzo Portugal >25+ million2019 Earthquake 11/26/19 Earthquake Albania >25+ million

2019 Cyclone 11/08/19 11/11/19 Cyclone Matmo (Bulbul) India, Bangladesh >25+ million

2019 Typhoon 10/01/19 10/02/19 Typhoon Hagibis Japan > 7 billion2019 Earthquake 12/18/19 Earthquake Philippines >25+ million

Source: Munich Re's NAT CAT Service, Swiss Re Sigma and Aon Benfield

Attachment Two


© 2019 National Association of Insurance Commissioners Att3_GI_Question_24_Proposal.doc 1

NAIC BLANKS (E) WORKING GROUP

Blanks Agenda Item Submission Form

DATE:

CONTACT PERSON:

TELEPHONE:

EMAIL ADDRESS:

ON BEHALF OF:

NAME:

TITLE:

AFFILIATION:

ADDRESS:

FOR NAIC USE ONLY Agenda Item # Year 2020 Changes to Existing Reporting [ X ] New Reporting Requirement [ ]

REVIEWED FOR ACCOUNTING PRACTICES AND PROCEDURES IMPACT

No Impact [ X ] Modifies Required Disclosure [ ]

DISPOSITION

[ ] Rejected For Public Comment [ ] Referred To Another NAIC Group [ ] Received For Public Comment [ ] Adopted Date [ ] Rejected Date [ ] Deferred Date [ ] Other (Specify)

BLANK(S) TO WHICH PROPOSAL APPLIES

[ X ] ANNUAL STATEMENT [ X ] INSTRUCTIONS [ ] CROSSCHECKS [ ] QUARTERLY STATEMENT [ X ] BLANK

[ X ] Life, Accident & Health/Fraternal [ ] Separate Accounts [ X ] Title [ X ] Property/Casualty [ ] Protected Cell [ ] Other _______________________ [ X ] Health [ ] Health (Life Supplement)

Anticipated Effective Date: Annual 2020

IDENTIFICATION OF ITEM(S) TO CHANGE

Remove Line 24.04 from the General Interrogatories, Part 1 and renumber remaining lines for Interrogatory Question 24. Modify Lines 24.05 and 24.06 to require reporting amounts for conforming and non-conforming collateral programs.

REASON, JUSTIFICATION FOR AND/OR BENEFIT OF CHANGE**

Interrogatory Questions 24.05 and 24.06 are completed dependent on the answer to Question 24.04 which works for companies that have either all conforming or all non-conforming collateral programs. When a company has both, only the collateral amount of the conforming programs is captured. This proposal allows the capture of the amount of collateral for both conforming and non-conforming collateral programs when a company has both.

NAIC STAFF COMMENTS

Comment on Effective Reporting Date:

Other Comments:

___________________________________________________________________________________________________ ** This section must be completed on all forms. Revised 7/18/2018

Attachment Three


ANNUAL STATEMENT INSTRUCTIONS – LIFE/FRATERNAL, HEALTH, PROPERTY AND TITLE

GENERAL INTERROGATORIES

PART 1 – COMMON INTERROGATORIES

Detail Eliminated to Conserve Space

INVESTMENT 24. For the purposes of this interrogatory, “exclusive control” means that the company has the exclusive right to

dispose of the investment at will, without the necessity of making a substitution thereof. For purposes of this interrogatory, securities in transit and awaiting collection, held by a custodian pursuant to a custody arrangement or securities issued subject to a book entry system are considered to be in actual possession of the company.

If bonds, stocks and other securities owned December 31 of the current year, over which the company has exclusive control are: (1) securities purchased for delayed settlement, or (2) loaned to others, the company should respond “NO” to 24.01 and “YES” to 25.1.

24.03 Describe the company’s securities lending program, including value for collateral and amount of loaned

securities, and whether the collateral is held on- or off-balance sheet. Note 17 of Notes to Financial Statement provides a full description of the program.

24.04 A company with a conforming securities lending program as defined in the risk-based capital instructions

should respond “YES.” 24.045 Report amount of collateral for conforming programs (24.04 answer is “YES”). 24.056 Report amount of collateral for other programs (24.04 answer is “NO”). 24.1091 The fair value amount reported should equal the grand total of Schedule DL, Part 1, Column 5 plus

Schedule DL, Part 2, Column 5.

The fair value amount reported amount should also equal the fair value amount reported in Note 5E(5)a1(m). 24.1092 The book adjusted/carrying value amount reported should equal the grand total of Schedule DL, Part 1,

Column 6 plus Schedule DL, Part 2, Column 6. 24.1093 The payable for securities lending amount reported should equal current year column for payable for securities

lending line on the liability page.


Attachment Three


ANNUAL STATEMENT BLANK – LIFE/FRATERNAL, HEALTH, PROPERTY AND TITLE

GENERAL INTERROGATORIES

PART 1 – COMMON INTERROGATORIES


INVESTMENT

24.01 Were all the stocks, bonds and other securities owned December 31 of current year, over which the reporting entity has exclusive control, in the actual possession of the reporting entity on said date? (other than securities lending programs addressed in 24.03)

Yes [ ] No [ ]

24.02 If no, give full and complete information, relating thereto ................................................................................................................................ 24.03 For security lending programs, provide a description of the program including value for collateral and amount of loaned securities, and

whether collateral is carried on or off-balance sheet. (an alternative is to reference Note 17 where this information is also provided) .......... ............................................................................................................................................................................................................................. 24.04 Does the company's security lending program meet the requirements for a conforming program as outlined in the Risk-Based Capital

Instructions? 24.045 If answer to 24.04 is yes, report Report amount of collateral for conforming programs. 24.056 If answer to 24.04 is no, report Report amount of collateral for other programs.

Yes [ ] No [ ] N/A [ ] $ ______________________ $ ______________________

24.067 Does your securities lending program require 102% (domestic securities) and 105% (foreign securities) from the counterparty at the outset of the contract?

24.08 Does the reporting entity non-admit when the collateral received from the counterparty falls below 100%? 24.098 Does the reporting entity or the reporting entity’s securities lending agent utilize the Master Securities Lending Agreement (MSLA) to

conduct securities lending?

Yes [ ] No [ ] N/A [ ] Yes [ ] No [ ] N/A [ ] Yes [ ] No [ ] N/A [ ]

24.109 For the reporting entity’s security lending program, state the amount of the following as of December 31 of the current year: 24.1091 Total fair value of reinvested collateral assets reported on Schedule DL, Parts 1 and 2 $ ______________________ 24.1092 Total book adjusted/carrying value of reinvested collateral assets reported on Schedule DL, Parts 1 and 2 $ ______________________ 24.1093 Total payable for securities lending reported on the liability page $ ______________________


W:\QA\BlanksProposals\Proposals In Progress\General Interrogatory Question 24\GI_Question_24_Proposal.doc

Attachment Three

CAPITAL ADEQUACY (E) TASK FORCE January 27, 2020 1.27... · background on the RBC as a reference when reviewing the numerous referrals and proposal that pass to the Capital Adequacy

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