Post on 03-Apr-2019
transcript
FO
RE
CA
STIN
G
RBCRisk-Based Capital
Fraternal Fraternal
201&
INST
RU
CT
ION
S
Risk-Based Capital Forecasting & Instructions
Fraternal
2017
The NAIC is the authoritative source for insurance industry information. Our expert solutions support the efforts of regulators, insurers and researchers by providing detailed and comprehensive insurance information. The NAIC offers a wide range of publications in the following categories:
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NAIC Capital Markets& Investment Analysis OfficeOne New York Plaza, Suite 4210New York, NY 10004212.398.9000
NAIC Fraternal Risk Based CapitalNewsle erAugust 2017Volume 10
What RBC Pages Should Be Submitted?
For year-end 2017 fraternal RBC, submit hard copies of pages FR001 through FR049 to any state that requests a hard copy. A hardcopy is not required to be submitted to the NAIC.
If any actuarial certifications are required per the RBC instructions, those should be included as part of the hard-copy filing. Other pages, such as the mortgage and real estate worksheets, do not need to be submitted, but they still need to be retained by the company as documenta-tion.
Risk-Based Capital Level of Action
As a result of the adoption of agenda item 2017-01-L-RBC Ratio by the Capital Adequacy (E) Task Force at the Spring National Meeting, a line was added to FR034 Risk-Based Capital Level of Action to show the Author-ized Control Level RBC ratio to be consistent with the other RBC formulas and to simplify data pulls.
XXX/AXXX Reinsurance Primary Security Shortfall by Cession As a result of the adoption of agenda item 2017-02-L Primary Security Shortfall Instruction Change by the Capital Adequacy (E) Task Force on its June 28 confer-ence call, changes were made to the instructions to clarify only list cessions subject to Actuarial Guideline XLVIIIActuarial Opinion and Memorandum Require-ments for the Reinsurance of Policies Required to be Valued Under Sections 6 and 7 of the NAIC Valuation of Life Insurance Policies Model Regulation (AG 48). For treaties that include some policies subject to AG 48 and some policies subject to the Term and Universal Life Insurance Reserve Financing Model Regulation (#787),only the portion of the cession regulated by AG 48 is to be included
Operational Risk
As a result of a technical issue that was presented during the June 28 Capital Adequacy (E) Task Force conference call, implementation of a risk factor for Operational Risk has been deferred for at least a year. The Task Force adopted agenda item 2016-13-O at the Spring National Meeting and modified it on its June 28 conference call. At the Spring National Meeting, the Task Force, in essence, voted to go live for 2017 reporting by adopt-ing the structural change to remove the proxy-based approach, move the add-on approach for basic opera-tional risk to page FR031 and retain the growth risk por-tion of the information only page. On its June 28 confer-ence call, the Task Force adopted the operational risk instructions but voted to reduce the recommended RBC charge from 1.5% to 0% for 2017 to allow the Operation-al Risk (E) Subgroup to address the technical concerns raised.
In This Issue:What RBC Pages to Submit .......................................... 1 Risk-Based Capital Level of Action .............................. 1 XXX/AXXX Reins. Primary Sec. Shortfall .................. 1 Operational Risk ............................................................ 1 Money Market Mutual Funds ........................................ 2 Unaffiliated Common Stock Money Market Mutual
Funds .......................................................................... 2 Supp. Ben. w/Stand-Alone Med. Pt. D Coverage .......... 2 Stop Loss ..................................................................... ..2 Contact Information ...................................................... 2
Fraternal Risk-Based Capital Newsletter Page 2
2017 National Association of Insurance Commissioners
Fraternal Risk-Based Capital Newsletter Volume 10. Pub-lished annually or whenever needed by the NAIC for insurance regulators, professionals and consumers.
Direct correspondence to: Dave Fleming, RBC Newslet-ters, NAIC, 1100 Walnut Street, Suite 1500, Kansas City, MO 64106-2197. Phone: (816) 783-8121. Email: dflem-ing@naic.org. Address corrections requested. Please mail the old address label with the correction to: NAIC Publications Department, 1100 Walnut Street, Suite 1500, Kansas City, MO 64106-2197. Phone: (816) 783-8300. Email: prodserv@naic.org.
Money Market Mutual Funds
As a result of the reclassification of money market mu-tual funds (MMMFs) to cash equivalents by the Statu-tory Accounting Principles (E) Working Group, the Capital Adequacy (E) Task Force adopted agenda item 2016-15-CA at the Spring National MMMFs will be isolated on their own line on the Miscellaneous Assets schedule and subtracted from the cash equivalents. The Annual Statement Source will be Schedule E, Part 2, Column 7, Line 8599999.
Unaffiliated Common Stock MMMFs
As a result of the adoption of agenda item 2017-06-CA, by the Capital Adequacy (E) Task Force on the June 28 conference call, the factor was modified to 0% on Line (22) on FR005 Unaffiliated Preferred and Common Stock. The purpose of the modification is to avoid the double counting of MMMFs in both cash equivalents and common stock. The instructions were also revised to reflect the change.
Stop Loss
As a result of the adoption of agenda item 2016-17-CA by the Capital Adequacy (E) Task Force at the Spring National Meeting, a tiered factor approach will be ap-plied to Stop Loss premiums. A footnote was added to apply a factor of 0.350 to the first $25 million in stop loss premium and a factor of 0.250 to premium in ex-cess of $25 million.
Supplemental Benefits within Stand-Alone Medicare Part D Coverage
As a result of the adoption of agenda item 2016-16-CA by the Capital Adequacy (E) Task Force at the Spring National Meeting, the factor for Supplemental Benefits within Stand-Alone Medicare Part D Coverage was in-creased to 0.500 and will be applied to claims incurred.
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Nat
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2017
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Off
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Und
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or In
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1
998-
2017
Nat
iona
l Ass
ocia
tion
of In
sura
nce
Com
mis
sion
ers
10
/20/
2017
Cal
cula
tion
of T
otal
Adj
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d C
apita
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clud
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Tota
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sitiv
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......
......
......
.... 9
2 R
isk-
Bas
ed C
apita
l Lev
el o
f Act
ion
(Inc
ludi
ng T
otal
Adj
uste
d C
apita
l Tax
Sen
sitiv
ity T
est) .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
. 94
Tren
d Te
st ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. 95
XX
X/A
XX
X R
eins
uran
ce P
rimar
y Se
curit
y Sh
ortfa
ll by
Ces
sion
.....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... 95
X
XX
/AX
XX
Cap
tive
Rei
nsur
ance
Con
solid
ated
Exh
ibit
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 9
7 Se
nsiti
vity
Tes
ts ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
......
......
......
......
......
......
......
... 10
1 Fe
dera
l AC
A R
isk
Adj
ustm
ent a
nd R
isk
Cor
ridor
Sen
sitiv
ity T
est .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 1
01
Aff
iliat
ed In
vest
men
ts ..
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
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......
......
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......
......
......
......
......
......
......
103
MO
DC
O o
r Fun
ds W
ithhe
ld R
eins
uran
ce A
gree
men
ts ..
......
......
......
......
......
......
......
......
......
......
......
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......
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......
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......
......
... 10
9 Ex
empt
ion
Test
: Cas
h Fl
ow T
estin
g Fo
r C-3
RB
C ...
......
......
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......
......
... 11
1 A
ppen
dix
1
Cas
h Fl
ow T
estin
g fo
r C-3
RB
C ...
......
......
......
......
......
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......
......
... 11
2 A
ppen
dix
1a
Cas
h Fl
ow T
estin
g fo
r C-3
RB
C M
etho
dolo
gy ..
......
......
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......
... 11
4 A
ppen
dix
1b
Fre
quen
tly A
sked
Que
stio
ns fo
r Cas
h Fl
ow T
estin
g fo
r C-3
RB
C ...
......
......
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......
... 11
6 A
ppen
dix
2
Com
mon
ly U
sed
Hea
lth In
sura
nce
Term
s ....
......
......
......
......
......
......
......
......
......
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......
..... 1
17
App
endi
x 3
C
omm
only
Use
d Te
rms f
or S
tand
-Alo
ne M
edic
are
Part
D C
over
age .
......
......
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......
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......
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......
......
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......
......
......
......
......
......
.. 119
C
ompa
ny In
form
atio
n Pa
ge (J
urat
) ....
......
......
......
......
......
......
......
......
......
......
......
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......
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......
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......
......
... F
R00
1 B
onds
......
......
......
......
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......
......
......
......
......
......
......
......
......
......
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......
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......
......
......
......
......
......
..... F
R00
2 M
ortg
age
Expe
rienc
e A
djus
tmen
t ....
......
......
......
......
......
......
......
......
......
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......
......
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......
......
......
......
......
......
..... F
R00
3 M
ortg
ages
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
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......
......
......
......
......
......
.... F
R00
4 U
naff
iliat
ed P
refe
rred
and
Com
mon
Sto
ck ..
......
......
......
......
......
......
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......
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......
......
......
......
..... F
R00
5 Se
para
te A
ccou
nts .
......
......
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......
......
......
.. FR
006
Rea
l Est
ate .
......
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......
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......
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......
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......
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......
......
......
......
......
......
.. FR
007
Oth
er L
ong-
Term
Ass
ets .
......
......
......
......
......
......
......
......
......
......
......
......
......
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.... F
R00
8 Sc
hedu
le B
A M
ortg
ages
......
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......
......
......
......
......
......
......
......
......
......
......
......
......
FR
009
Ass
et C
once
ntra
tion
Fact
or ..
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
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......
......
......
......
......
......
......
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......
......
......
......
......
......
..... F
R01
0 C
omm
on S
tock
Con
cent
ratio
n Fa
ctor
.....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
.... F
R01
1 M
isce
llane
ous A
sset
s ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
. FR
012
Rep
licat
ion
(Syn
thet
ic A
sset
) Tra
nsac
tions
and
Man
dato
ry C
onve
rtibl
e Se
curit
ies .
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
......
.... F
R01
3 H
edge
d A
sset
Bon
d Sc
hedu
le ...
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
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......
......
......
......
......
......
......
......
......
......
......
. FR
014
Hed
ged
Ass
et C
omm
on S
tock
Sch
edul
e ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
. FR
015
Rei
nsur
ance
.....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
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......
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......
......
......
......
......
......
......
......
......
......
......
.. FR
016
Off
-Bal
ance
She
et a
nd O
ther
Item
s ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... F
R01
7 O
ff-B
alan
ce S
heet
Col
late
ral (
Incl
udin
g an
y Sc
hedu
le D
L, P
art 1
Ass
ets n
ot In
clud
ed in
the
Ass
et V
alua
tion
Res
erve
) ....
......
......
......
......
......
......
......
......
......
... F
R01
8 H
ealth
Pre
miu
ms .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... F
R01
9 U
nder
writ
ing
Ris
k
Expe
rienc
e Fl
uctu
atio
n R
isk .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
......
. FR
020
Und
erw
ritin
g R
isk
(For
Info
rmat
ion
Purp
oses
Onl
y) ...
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
......
......
......
......
......
......
......
... FR
020-
A
Und
erw
ritin
g R
isk
O
ther
.....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... F
R02
1 U
nder
writ
ing
Ris
k
Man
aged
Car
e C
redi
t .....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. FR
022
Long
-Ter
m C
are .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
......
......
......
......
......
......
......
..... F
R02
3 H
ealth
Cla
ims R
eser
ves .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
FR
024
Life
Insu
ranc
e ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
FR
025
1
998-
2017
Nat
iona
l Ass
ocia
tion
of In
sura
nce
Com
mis
sion
ers
10
/20/
2017
Prem
ium
Sta
biliz
atio
n R
eser
ves .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
..... F
R02
6 In
tere
st R
ate
Ris
k an
d M
arke
t Ris
k ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... F
R02
7 H
ealth
Cre
dit R
isk
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
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......
......
......
......
......
......
......
... F
R02
8 B
usin
ess R
isk .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... F
R02
9 O
pera
tiona
l Ris
k (F
or In
form
atio
nal P
urpo
ses O
nly)
.....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
FR02
9-A
C
alcu
latio
n of
Tax
Eff
ect f
or R
isk-
Bas
ed C
apita
l .....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... F
R03
0 C
alcu
latio
n of
Aut
horiz
ed C
ontro
l Lev
el R
isk-
Bas
ed C
apita
l ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... F
R03
1 C
apita
l Not
es B
efor
e Li
mita
tion .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
..... F
R03
2 C
alcu
latio
n of
Tot
al A
djus
ted
Cap
ital (
Incl
udin
g To
tal A
djus
ted
Cap
ital T
ax S
ensi
tivity
Tes
t) ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
FR
033
Ris
k-B
ased
Cap
ital L
evel
of A
ctio
n (I
nclu
ding
Tax
Sen
sitiv
ity T
est)
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. FR
034
Tren
d Te
st ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
. FR
035
XX
X/A
XX
X R
eins
uran
ce P
rimar
y Se
curit
y Sh
ortfa
ll by
Ces
sion
.....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. FR
036
XX
X/A
XX
X C
aptiv
e R
eins
uran
ce C
onso
lidat
ed E
xhib
it ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
FR
037
Add
ition
al In
form
atio
n R
equi
red
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... F
R03
8 Se
nsiti
vity
Tes
ts
50%
of t
he R
BC
Am
ount
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... F
R03
9 Se
nsiti
vity
Tes
ts
Tot
al A
djus
ted
Cap
ital .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
. FR
040
Fede
ral A
CA
Ris
k A
djus
tmen
t and
Ris
k C
orrid
or S
ensi
tivity
Tes
t ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. FR
041
Sum
mar
y fo
r Aff
iliat
ed In
vest
men
ts ..
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... F
R04
2 C
ross
chec
king
for A
ffili
ated
Inve
stm
ents
.....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... F
R04
3 D
etai
ls fo
r Aff
iliat
ed In
vest
men
ts ..
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
. FR
044
MO
DC
O o
r Fun
ds W
ithhe
ld R
eins
uran
ce A
gree
men
ts
Rei
nsur
ance
Ced
ed B
onds
C-1
o ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. FR
045
MO
DC
O o
r Fun
ds W
ithhe
ld R
eins
uran
ce A
gree
men
ts
Rei
nsur
ance
Ass
umed
Bon
ds C
-1o .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
FR
046
MO
DC
O o
r Fun
ds W
ithhe
ld R
eins
uran
ce A
gree
men
ts
Rei
nsur
ance
Ced
ed A
ll O
ther
Ass
ets C
-0, C
-1o
and
C-1
cs ...
......
......
......
......
......
......
......
......
......
......
... F
R04
7 M
OD
CO
or F
unds
With
held
Rei
nsur
ance
Agr
eem
ents
R
eins
uran
ce A
ssum
ed A
ll O
ther
Ass
ets C
-0, C
-1o
and
C-1
cs ..
......
......
......
......
......
......
......
......
......
..... F
R04
8 Ex
empt
ion
Test
: Cas
h Fl
ow T
estin
g fo
r C-3
RB
C ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
..... F
R04
9
1
998-
2017
Nat
iona
l Ass
ocia
tion
of In
sura
nce
Com
mis
sion
ers
i 10
/20/
2017
NA
IC F
rate
rnal
Ben
efit
Soci
etie
s Ris
k-B
ased
Cap
ital R
epor
t
INT
RO
DU
CT
ION
Ris
k-ba
sed
capi
tal (
RB
C)
is a
met
hod
of m
easu
ring
the
min
imum
am
ount
of
capi
tal a
ppro
pria
te f
or a
n in
sura
nce
soci
ety/
com
pany
to s
uppo
rt its
ove
rall
busi
ness
ope
ratio
ns in
co
nsid
erat
ion
of it
s si
ze a
nd ri
sk p
rofil
e. It
pro
vide
s an
ela
stic
mea
ns o
f set
ting
the
capi
tal r
equi
rem
ent i
n w
hich
the
degr
ee o
f ris
k ta
ken
by th
e in
sure
r is
the
prim
ary
dete
rmin
ant.
The
five
maj
or c
ateg
orie
s of r
isks
invo
lved
are
:
Ass
et R
isk
- Aff
iliat
es
C0
Th
is is
the
risk
of a
sset
s d
efau
lt fo
r cer
tain
aff
iliat
ed in
vest
men
ts.
A
sset
Ris
k - O
ther
C1
Th
is is
the
risk
of a
sset
s d
efau
lt of
prin
cipa
l and
inte
rest
or f
luct
uatio
n in
fair
valu
e.
In
sura
nce
Ris
k
C2
Th
is is
the
risk
of u
nder
estim
atin
g lia
bilit
ies f
rom
bus
ines
s alre
ady
writ
ten
or in
adeq
uate
ly p
ricin
g bu
sines
s to
be w
ritte
n in
the
com
ing
year
.
Inte
rest
Rat
e R
isk,
C3
Th
is is
the
risk
of lo
sses
due
to c
hang
es in
inte
rest
rate
leve
ls a
nd th
e ris
k th
at h
ealth
ben
efits
pre
paid
to p
rovi
ders
bec
ome
H
ealth
Cre
dit R
isk
and
the
oblig
atio
n of
the
heal
th in
sure
r onc
e ag
ain,
and
risk
of l
osse
s due
to c
hang
es in
mar
ket l
evel
s ass
ocia
ted
with
var
iabl
e
Mar
ket R
isk
pr
oduc
ts w
ith g
uara
ntee
s.
Bus
ines
s Ris
k
C4
Th
is is
the
risk
of g
ener
al b
usin
ess.
A s
ocie
tys
ris
k-ba
sed
capi
tal i
s ca
lcul
ated
by
appl
ying
fac
tors
to v
ario
us a
sset
, pre
miu
m, c
laim
, exp
ense
and
res
erve
item
s. Th
e fa
ctor
is h
ighe
r fo
r th
ose
item
s w
ith g
reat
er
unde
rlyin
g ris
k an
d lo
wer
for
less
ris
ky it
ems.
The
adeq
uacy
of
a so
ciet
ys
actu
al c
apita
l can
then
be
mea
sure
d by
a c
ompa
rison
to it
s ris
k-ba
sed
capi
tal a
s de
term
ined
by
the
form
ula.
R
isk-
base
d ca
pita
l st
anda
rds
will
be
used
by
regu
lato
rs t
o se
t in
mot
ion
appr
opria
te r
egul
ator
y ac
tions
rel
atin
g to
ins
urer
s th
at s
how
ind
icat
ions
of
wea
k or
det
erio
ratin
g co
nditi
ons.
It al
so p
rovi
des a
n ad
ditio
nal s
tand
ard
for m
inim
um c
apita
l req
uire
men
ts th
at so
ciet
ies s
houl
d m
eet t
o av
oid
bein
g pl
aced
in re
habi
litat
ion
or li
quid
atio
n.
PU
RPO
SE O
F T
HIS
RE
POR
T
This
repo
rt pr
esen
ts th
e N
AIC
frat
erna
l ben
efit
soci
etie
s ris
k-ba
sed
capi
tal f
orm
ula
in a
n in
stru
ctio
nal f
orm
at th
at sh
ould
be
help
ful t
o an
yone
resp
onsi
ble
for s
ubm
ittin
g da
ta. T
his
form
ula
is a
n im
porta
nt to
ol fo
r reg
ulat
ors.
Det
erm
inin
g ac
cura
te a
nd ti
mel
y da
ta is
an
impo
rtant
par
t of t
his
proc
ess.
This
is m
ost l
ikel
y to
occ
ur w
hen
ever
yone
, fro
m th
e so
ciet
y C
EO to
the
indi
vidu
al p
repa
ring
the
data
, has
a b
asic
und
erst
andi
ng o
f the
form
ula.
Whi
le th
is re
port
prov
ides
this
und
erst
andi
ng in
a c
onci
se p
acka
ge, i
t is s
trong
ly re
com
men
ded
that
the
per
son
or p
erso
ns c
ompi
ling
and
ente
ring
the
info
rmat
ion
be s
enio
r so
ciet
y of
ficia
ls w
ith a
goo
d un
ders
tand
ing
of t
he f
inan
cial
asp
ects
of
frat
erna
ls.
It is
als
o re
com
men
ded
that
soc
ietie
s se
ek th
e as
sist
ance
of t
heir
inde
pend
ent a
ccou
ntan
ts a
nd/o
r act
uarie
s w
hen
prep
arin
g th
is re
port.
Ple
ase
com
plet
e th
e Ju
rat s
igna
ture
requ
irem
ents
in
acco
rdan
ce w
ith th
e re
quire
men
ts o
f the
dom
icili
ary
stat
e. D
irect
any
que
stio
ns c
once
rnin
g si
gnat
ure
requ
irem
ents
to th
at st
ate.
1
998-
2017
Nat
iona
l Ass
ocia
tion
of In
sura
nce
Com
mis
sion
ers
ii 10
/20/
2017
WH
AT
S IN
TH
E R
EPO
RT
C
erta
in te
rms r
elat
ing
to ri
sk-b
ased
cap
ital u
sed
in th
is re
port
are
defin
ed in
the
Ris
k-B
ased
Cap
ital (
RB
C) f
or In
sure
rs M
odel
Act
. G
ener
ally
, eac
h na
rrat
ive
page
dis
cuss
es a
diff
eren
t seg
men
t of e
ach
risk
clas
sific
atio
n (e
.g.,
ther
e is
a n
arra
tive
for B
onds
, Mor
tgag
es, P
refe
rred
and
Com
mon
Sto
cks,
etc.
with
in
the
Ass
et R
isk
Sect
ion)
. The
form
ula
is p
rese
nted
in w
orks
heet
form
follo
win
g al
l of t
he n
arra
tive
sect
ions
. M
ost
narr
ativ
e pa
ges
have
a b
rief
sum
mar
y of
the
bac
kgro
und
of t
he d
evel
opm
ent
of t
he f
acto
rs, c
alle
d th
e B
asis
of
the
Fact
ors.
Dev
elop
men
t of
cer
tain
fac
tors
req
uire
d so
phis
ticat
ed m
odel
ing
tech
niqu
es b
ut th
e ba
sic
conc
epts
are
not
com
plic
ated
. Ea
ch n
arra
tive
page
als
o ha
s a
sect
ion
on
Spec
ific
Inst
ruct
ions
for
App
licat
ion
of th
e Fo
rmul
a.
This
sec
tion
shou
ld s
erve
as
a gu
idel
ine
for
thos
e w
ho a
ssem
ble
the
data
or
anal
yze
the
resu
lts. I
t inc
lude
s de
finiti
ons
and
expl
anat
ions
for s
peci
fic it
ems
that
sho
uld
be c
alcu
late
d, c
larif
icat
ion
on th
e in
tent
of t
he s
truct
ure
of c
erta
in se
ctio
ns o
f the
form
ula
and
inst
ruct
ions
on
reco
ncili
atio
n of
cer
tain
tota
ls.
Ann
ual s
tate
men
t sou
rces
ref
erre
d to
in th
is r
epor
t and
on
the
RB
C s
oftw
are
do n
ot u
se p
aren
thes
es, i
.e.,
a re
fere
nce
to th
e cu
rren
t yea
rs
tota
l Ass
et V
alua
tion
Res
erve
on
the
Liab
ilitie
s pag
e in
the
annu
al st
atem
ent w
ill re
ad a
s Pag
e 3
Col
umn
1 Li
ne 2
1.1.
Ann
ual s
tate
men
t ref
eren
ces w
ill b
egin
with
a p
age
num
ber o
nly
for P
ages
2 a
nd 3
. Oth
erw
ise
the
refe
renc
e w
ill b
e an
exh
ibit
num
ber (
e.g.
, Exh
ibit
9), a
sche
dule
lette
r (e.
g., S
ched
ule
D) o
r a n
ame
of a
n ex
hibi
t or s
ched
ule
(e.g
., Ex
hibi
t of L
ife In
sura
nce
or E
OLI
). R
isk-
base
d ca
pita
l ref
eren
ces
in th
is re
port
will
use
par
enth
eses
aro
und
the
line
and
colu
mn
num
ber.
For e
xam
ple,
a re
fere
nce
to th
e FR
002
Bon
ds p
age
Line
8 C
olum
n 2
in th
is
repo
rt w
ill re
ad,
Bon
ds L
ine
(8) C
olum
n (2
).
Neg
ativ
e va
lues
can
som
etim
es a
ppea
r in
the
Sta
tem
ent
Val
ue c
olum
n, B
ook/
Adj
uste
d C
arry
ing
Val
ue o
r R
BC
Sub
tota
l co
lum
n of
thi
s re
port.
The
se n
egat
ive
valu
es i
n th
e St
atem
ent V
alue
or
the
RB
C S
ubto
tal c
olum
n ar
e re
tain
ed to
fac
ilita
te c
ross
-che
ckin
g of
am
ount
s re
porte
d in
the
annu
al s
tate
men
t aga
inst
am
ount
s re
porte
d in
the
RB
C f
iling
. H
owev
er, w
hen
a ne
gativ
e nu
mbe
r ap
pear
s in
the
Stat
emen
t Val
ue, B
ook/
Adj
uste
d C
arry
ing
Val
ue o
r th
e R
BC
Sub
tota
l col
umns
, tha
t val
ue w
ill b
e co
nver
ted
to z
ero
befo
re
dete
rmin
ing
the
RB
C R
equi
rem
ent.
For e
xam
ple,
a n
egat
ive
$10,
000
for a
sset
NA
IC 1
long
-term
bon
ds [B
onds
, pag
e FR
002
Col
umn
(1) L
ine
(2)]
will
pro
duce
a z
ero
($0
times
0.
004)
in C
olum
n (2
), R
BC
Req
uire
men
t, ra
ther
than
a n
egat
ive
$40
(-$1
0,00
0 tim
es 0
.004
). Si
mila
rly, a
neg
ativ
e $5
0,00
0 in
aff
iliat
e lif
e re
serv
e cr
edits
[R
eins
uran
ce, p
age
FR01
6 C
olum
n (3
) Lin
e (8
) will
pro
duce
a z
ero
($0
times
-0.0
08) i
n C
olum
n (4
), R
BC
Req
uire
men
t, ra
ther
than
a p
ositi
ve $
400
(-$5
0,00
0 tim
es -0
.008
).
MA
NA
GE
ME
NT
DIS
CU
SSIO
N A
ND
AN
AL
YSI
S Ea
ch c
ompa
ny h
as th
e op
portu
nity
to p
repa
re a
writ
ten
anal
ysis
of t
heir
com
pany
s ri
sk-b
ased
cap
ital r
esul
ts. T
his
anal
ysis
is n
ot a
requ
irem
ent.
A c
ompa
ny m
ay e
xpla
in s
peci
al
situ
atio
ns a
s it
deem
s w
arra
nted
. Com
pani
es s
houl
d al
so g
ive
expl
anat
ions
whe
re li
ne it
ems
do n
ot r
econ
cile
with
am
ount
s re
fere
nced
to a
nnua
l sta
tem
ent s
ourc
es. H
owev
er,
mod
ifica
tion
of th
e ris
k-ba
sed
capi
tal f
orm
ula
is n
ot a
ccep
tabl
e. F
acto
rs, R
BC
am
ount
s th
at g
o to
the
Cal
cula
tion
of A
utho
rized
Con
trol L
evel
Ris
k-B
ased
Cap
ital p
age
(C-0
, C-
1cs,
C-1
o, C
-2, C
-3a,
C-3
b, C
-3c,
C-4
a, C
-4b)
, and
the
Tota
l Adj
uste
d C
apita
l am
ount
shou
ld n
ot b
e ov
erw
ritte
n.Th
is w
ritte
n an
alys
is sh
ould
not
be
cons
trued
as t
he
RB
C P
lan
re
quire
d in
the
Ris
k-B
ased
Cap
ital (
RB
C) f
or In
sure
rs M
odel
Act
.
1
998-
2017
Nat
iona
l Ass
ocia
tion
of In
sura
nce
Com
mis
sion
ers
iii
10/2
0/20
17
APP
LIC
AB
ILIT
Y O
F N
AIC
FR
AT
ER
NA
L R
BC
RE
POR
T
The
NA
IC F
rate
rnal
RB
C R
epor
t has
bee
n de
velo
ped
for U
.S. f
rate
rnal
soc
ietie
s w
ho fi
le th
e N
AIC
Fra
tern
al A
nnua
l Sta
tem
ent
brow
n bl
ank.
In
som
e st
ates
, U.S
. ins
urer
s th
at
writ
e on
ly a
lien
busi
ness
may
be
excl
uded
fro
m r
isk-
base
d ca
pita
l req
uire
men
ts. I
n ad
ditio
n, o
ther
org
aniz
atio
ns m
ay b
e ex
empt
ed f
rom
fili
ng a
n R
BC
rep
ort b
ased
on
thei
r in
sura
nce
oper
atio
ns.
C
HA
NG
ES
TO
TH
E F
OR
MU
LA
C
hang
es to
the
form
ula
may
be
mad
e ne
cess
ary
by a
nnua
l sta
tem
ent p
rese
ntat
ion,
acc
ount
ing
proc
edur
es a
nd re
finem
ent o
f the
form
ula.
All
such
cha
nges
will
be
dete
rmin
ed b
y th
e C
apita
l Ade
quac
y (E
) Tas
k Fo
rce.
HO
W T
O S
UB
MIT
DA
TA
Pr
inte
d R
BC
repo
rts a
nd e
lect
roni
c su
bmis
sion
s sho
uld
be su
bmitt
ed a
s spe
cifie
d in
the
indi
vidu
al st
ate
filin
g ch
eckl
ists
. The
re m
ay b
e pl
aces
whe
re th
e sc
reen
dis
play
of t
he R
BC
pr
ogra
m a
nd th
e pr
into
ut fo
rmat
var
y sl
ight
ly fr
om th
e bo
okle
t. In
thos
e in
stan
ces,
the
book
let s
houl
d ex
plai
n th
e di
ffer
ence
s; h
owev
er, t
he o
vera
ll ca
lcul
atio
n w
ill b
e th
e sa
me.
In
addi
tion,
the
risk-
base
d ca
pita
l am
ount
s are
repo
rted
on li
nes 1
7 an
d 18
of t
he F
ive-
Yea
r His
toric
al D
ata
page
of t
he fr
ater
nal a
nnua
l sta
tem
ent.
W
OR
KPA
PER
S W
orkp
aper
s ne
eded
to
prep
are
this
rep
ort
shou
ld b
e re
tain
ed a
nd a
vaila
ble
for
exam
inat
ion
in a
ccor
danc
e w
ith r
ecor
d re
tent
ion
requ
irem
ents
of
the
dom
estic
sta
te l
aws
or
regu
latio
ns.
Q
UE
STIO
NS
Con
tact
Dav
e Fl
emin
g by
pho
ne a
t 816
-783
-812
1 or
by
e-m
ail a
t dfle
min
g@na
ic.o
rg f
or R
BC
for
mul
a an
d re
porti
ng q
uest
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. The
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inan
cial
Rep
ortin
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an a
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onta
cted
at 8
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400
for f
orm
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and
repo
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que
stio
ns.
1
998-
2017
Nat
iona
l Ass
ocia
tion
of In