NAIC Solvency Modernization

[California]

http://www.naic.org/index_smi.htm

Updates
March 17, 2010 SMI Update

http://www.naic.org/documents/index_smi_update_100317.pdf

[JMO]

Interesting links.

I have been following the work of the International Accounting Standards working group, here (http://www.naic.org/committees_ex_isftf_iswg.htm).

Besides the Capital Requirements document and those regarding governance, all of which are consultation drafts, responses from various individuals and organizations are currently available at the link I provided. (I'm not sure how long they will remain available, though.)

I have been thinking about the total balance sheet approach, which seems to be the way most folks want to go. If we move in that direction, we will also need to take a new look at how we do the ratio tests. Instead of comparing actual capital with RBC, I think it would be more appropriate to compare actual assets with the Total Asset Requirement (TAR).

I have also seen something analogous to the TAR split into two parts - TAR(assets) and TAR(liabilities). In that case the ratio might also be persented as
TAR(liabilities)/{actual assets less TAR(assets)}