Issue Brief - Introduction to Insurance Group Capital Requirements - Key Points

• Both the Aggregation Method Risk-Based Capital Concept and the consolidated ICS exhibit favorable characteristics, To protect policyholders, insurance regulators throughout the world have contributing value to the developed requirements for minimum capital adequacy for insurance comprehension of group-wide capital sufficiency. [...] Outlook\I2N794SX\about-naic.pdf At the federal level, the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010)4 granted the Board of Governors of the Federal Reserve (the Federal Reserve) the authority to supervise certain insurers. [...] The objective of the ICS is to “create a common language for supervisory discussions of group solvency to enhance global convergence among group capital standards.”6 The ICS uses a group-wide consolidated basis, which views the group as a single economic unit. [...] the NAIC has adopted the previously mentioned Group Capital Calculation (GCC),9 which is a version of the AM, while the Federal Reserve has adopted a version of the AM called the Building Block Approach (BBA). [...] PAGE 5 | ISSUE BRIEF | INTRODUCTION TO INSURANCE GROUP CAPITAL REQUIREMENTS Summary The new standards for group capital can help companies and regulators better assess the quality and sufficiency of the total capital held relative to group-wide risks.