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FO
RE
CA
STIN
G
RBCRisk-Based Capital
201&
INST
RU
CT
ION
S
Risk-Based Capital Forecasting & Instructions
Property/Casualty
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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© 1994-2017 National Association of Insurance Commissioners. All rights reserved.
ISBN: 978-1-945655-23-4
Printed in the United States of America
No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any storage or retrieval system, without written permission from the NAIC.
NAIC Executive Office444 North Capitol Street, NWSuite 700Washington, DC 20001202.471.3990
NAIC Central Office1100 Walnut StreetSuite 1500Kansas City, MO 64106816.842.3600
NAIC Capital Markets& Investment Analysis OfficeOne New York Plaza, Suite 4210New York, NY 10004212.398.9000
NAIC Property and Casualty Risk BasedCapital Newsle erAugust 2017Volume 21.1
What RBC Pages Should Be Submitted? For year-end 2017 property/casualty (P/C) risk-based capital (RBC), hard copies of pages PR001 through PR035, as well as PR038 and PR039, should be submit-ted to any state that requests a hard copy. Beginning with the year-end 2011 RBC, a hard copy was not required to be submitted to the NAIC, but a portable document format (PDF) file representing the hard copy filing is part of the electronic filing with the NAIC.
Type 7 Affiliated Investments As a result of the adoption of agenda item 2014-29-P by the Capital Adequacy (E) Task Force at the 2016 Fall National Meeting, the calculation of the RBC charge for the ownership of investment affiliates (affiliate Type 7) will be simplified by applying a fixed 22.5% times the book-adjusted carrying value (BACV) of the common stocks, preferred stocks and bonds.
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 adopting the structural change to remove the informational only page and move the “add-on” approach for basic operational risk to Page PR032. On its June 28 conference call, the Task Force adopted the operational risk instructions for pages PR003 and PR032, but voted to reduce the recommended RBC charge from 1.5% to 0% for 2017 to allow the Opera-tional Risk (E) Subgroup to address the technical concerns raised.
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 applied to Line (9) on page PR019. A footnote was added to apply a factor of 0.350 to the first $25,000,000 in stop loss premium and apply a factor of 0.250 to the remaining premium in excess of $25,000,000.
In This Issue: What RBC Pages to Submit .......................................... 1 Type 7 Affiliated Investments ..................................... 1 Operational Risk .......................................................... 1 Stop Loss ..................................................................... 1 Money Market Mutual Funds ...................................... 1 Catastrophe Risk Formula ........................................... 1 Unaff. Common Stock Money Market Mutual Funds . 2 Supp. Ben w/Stand-Alone Med Pt D Coverage ........... 2 New Underwriting Risk Factors .................................. 2 Industry Average Risk Factors .................................... 3 Editorial Change .......................................................... 3
Money Market Mutual Funds As a result of the reclassification of money market mutual funds (MMMFs) to cash equivalents by the Statutory Accounting Principles (E) Working Group, the Capital Adequacy (E) Task Force adopted agenda item 2016-15-CA at Spring National Meeting. 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 Sch E Pt 2 C7 L8599999.
Catastrophe Risk 1. Catastrophe risk, long identified as the most significant risk missing from the RBC formula, will finally become part of the formula for 2017 reporting after more than a decade of development. This is taking place as a result of the adoption of agenda item 2016-07-CR by the Capital Adequacy (E) Task Force at the Spring National Meeting. Please see the proposal for the detail of the changes.
2. A clarifying change was made to the interrogatory that provides insurers with little or no exposure to earthquake or hurricane risk to obtain exemption from reporting catastrophe risk. As a result of the adoption of agenda item 2016-11-CR by the Capital Adequacy (E) Task Force at the Fall National Meeting, the revised interroga-tory will separate the earthquake and hurricane risks into two sections so that a company has to complete this inter-rogatory if either the earthquake or the hurricane RBC charge is zero.
P/C Risk-Based Capital Newsletter Page 2 Unaffiliated Common Stock Money Market Mutual Funds As a result of the adoption of agenda item 2016-15-CA, the Capital Adequacy (E) Task Force adopted agenda item 2017-06-CA on its June 28 conference call. To avoid double counting MMMFs in both cash equivalents and common stock, the factor was changed to 0.00 in Line (16) on page PR007. The instructions also were revised to reflect the change.
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 (Page PR019, Line (3.2) and Line (10.2) were increased to 0.500 and will be applied to claims incurred.
New Underwriting Risk Factors On its June 28 conference call, the Capital Adequacy (E) Task Force adopted the new factors for the Underwriting Risk page PR017 Underwriting Risk—Reserves Line (4) and PR018 Underwriting Risk—Net Written premium Line (4) .
Unlike the Line (1) industry average factors that are updated annually, these factors had not been updated since 2010 reporting. An updated review of the factors using the revised methodology was completed by the American Academy of Actuaries (Academy). After further discussion and study by the Property and Casualty Risk-Based Capital (E) Working Group, it was agreed to update the Line (4) factors based on the scenario #1 (10% capped) in the report of 2017 Property and Casualty Risk-Based Capital Underwriting Line 4 Factors by the Academy. The factors will be re-evaluated again and expected to reach the fully proposed values in next four years. The new 2017 factors will be as follows:
PR017 Underwriting Risk – Reserves
Line (4), Industry Losses & Loss Adjustment Expense Ratio
Col. Line of Business 2016
Factor2017
Factor(1) H/F 0.201 0.213 (2) PPA 0.192 0.181 (3) CA 0.230 0.243 (4) WC 0.324 0.336 (5) CMP 0.465 0.494 (6) MPL Occurrence 0.431 0.417 (7) MPL Clms Made 0.306 0.297 (8) SL 0.257 0.270 (9) OL 0.511 0.531
(10) Fidelity / Surety 0.325 0.338 (11) Special Property 0.191 0.207 (12) Auto Physical Damage 0.112 0.121 (13) Other (credit A&H) 0.172 0.186 (14) Financial / Mortgage
Guaranty 0.200 0.194
(15) INTL 0.327 0.336 (16) REIN. P&F Lines 0.286 0.304 (17) REIN. Liability 0.769 0.711 (18) PL 0.643 0.688 (19) Warranty 0.325 0.338
PR018 Underwriting Risk – Net Written Premiums
Line (4), Industry Losses & Loss Adjustment Expense Ratio
Col. Line of Business 2016
Factor2017
Factor(1) H/F 0.937 0.927 (2) PPA 0.969 0.969 (3) CA 0.988 1.005 (4) WC 1.033 1.044 (5) CMP 0.921 0.892 (6) MPL Occurrence 1.822 1.778 (7) MPL Clms Made 1.092 1.103 (8) SL 0.904 0.898 (9) OL 1.042 1.027
(10) Fidelity / Surety 0.883 0.875 (11) Special Property 0.941 0.907 (12) Auto Physical Damage 0.843 0.836 (13) Other (credit A&H) 0.893 0.906 (14) Financial / Mortgage
Guaranty 1.482 1.515
(15) INTL 1.169 1.187 (16) REIN. P&F Lines 1.349 1.223 (17) REIN. Liability 1.507 1.449 (18) PL 1.214 1.228 (19) Warranty 0.883 0.875
P/C Risk-Based Capital Newsletter Page 3 New Industry Average Risk Factors – Annual Update On its June 28 conference call, the Capital Adequacy (E) Task Force adopted the annual update of industry average development factors:
Editorial Change The Column (4) headings of PR003 Detail for Affiliated Bonds and Stocks were updated to “Affiliate’s RBC After Covariance Before Operational Risk”, and the line references for life and P/C were changed to Line (67) + (70) and Line (73), respectively.
PR017 Underwriting Risk – Reserves
Line (1), Industry Average Development Factors
Col. Line of Business 2016
Factor2017
Factor(1) H/F 0.972 0.984 (2) PPA 1.002 1.012 (3) CA 1.015 1.034 (4) WC 0.971 0.971 (5) CMP 0.942 0.956 (6) MPL Occurrence 0.841 0.868 (7) MPL Clms Made 0.822 0.854 (8) SL 0.919 0.926 (9) OL 0.929 0.952
(10) Fidelity / Surety 1.035 1.016 (11) Special Property 0.973 0.982 (12) Auto Physical Damage 0.995 1.001 (13) Other (credit A&H) 0.986 0.981 (14) Financial / Mortgage
Guaranty 0.853 0.820
(15) INTL 0.897 0.855 (16) REIN. P&F Lines 0.814 0.814 (17) REIN. Liability 0.896 0.914 (18) PL 0.937 0.935 (19) Warranty 0.977 0.989
PR018 Underwriting Risk – Net Written Premiums
Line (1), Industry Average Loss and Expense Ratios
Col. Line of Business 2016
Factor2017
Factor(1) H/F 0.701 0.688 (2) PPA 0.792 0.800 (3) CA 0.689 0.706 (4) WC 0.752 0.751 (5) CMP 0.648 0.647 (6) MPL Occurrence 0.767 0.777 (7) MPL Clms Made 0.691 0.722 (8) SL 0.572 0.567 (9) OL 0.618 0.629
(10) Fidelity / Surety 0.464 0.430 (11) Special Property 0.559 0.555 (12) Auto Physical Damage 0.711 0.727 (13) Other (credit A&H) 0.699 0.712 (14) Financial / Mortgage
Guaranty 1.293 1.175
(15) INTL 0.607 0.565 (16) REIN. P&F Lines 0.512 0.459 (17) REIN. Liability 0.600 0.609 (18) PL 0.684 0.670 (19) Warranty 0.611 0.645
© 2017 National Association of Insurance Commissioners
Property and Casualty Risk-Based Capital Newsletter Volume 21.1. Published annually or whenever needed by the NAIC for insurance regulators, professionals and consumers.
Direct correspondence to: Eva Yeung, RBC Newsletters, NAIC, 1100 Walnut Street, Suite 1500, Kansas City, MO 64106-2197. Phone: 816-783-8407. Email: [email protected]. 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: [email protected].
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© 1
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......
......
......
......
..7
UN
AFF
ILIA
TED
ASS
ETS,
PR
006
– PR
014 .
......
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.....
8 PR
006
- Una
ffili
ated
Bon
ds a
nd B
ond
Size
Fac
tor A
djus
tmen
t .....
......
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......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. 8
Bas
is o
f Gen
eral
Bon
d Fa
ctor
s ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 8
B
ond
Size
Fac
tor .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
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......
......
.... 8
PR
007
- Una
ffili
ated
Pre
ferr
ed, C
omm
on S
tock
and
Hyb
rid S
ecur
ities
......
......
......
......
......
......
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......
......
......
......
......
......
. 9
Una
ffili
ated
Pre
ferr
ed S
tock
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
9
Una
ffili
ated
Com
mon
Sto
ck ...
......
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......
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......
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......
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......
......
......
......
......
......
... 9
PR
008
- Oth
er L
ong–
Term
Ass
ets .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... 9
R
eal E
stat
e ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
.....
9 M
ortg
age
Loan
s on
Rea
l Est
ate .
......
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......
......
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......
9
Sche
dule
BA
Ass
ets (
Oth
er In
vest
ed A
sset
s – e
xclu
ding
col
late
ral l
oans
, low
inco
me
hous
ing
tax
cred
its a
nd W
CFI
) ....
......
......
......
......
......
......
......
......
......
......
......
......
9
Low
Inco
me
Hou
sing
Tax
Cre
dits
......
......
......
......
......
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......
......
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......
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......
......
......
......
......
......
......
......
......
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......
......
......
......
. 10
Wor
king
Cap
ital F
inan
ce In
vest
men
ts ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
......
......
.... 1
0
© 1
994-
2017
Nat
iona
l Ass
ocia
tion
of In
sura
nce
Com
mis
sion
ers
10/2
0/20
17
PR00
9 - M
isce
llane
ous A
sset
s ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 1
0 PR
010
- 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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......
......
......
......
......
......
......
. 11
Bas
is o
f Fac
tors
.....
......
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......
......
......
......
......
......
......
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......
......
......
......
......
......
......
......
......
11
Spec
ific
Inst
ruct
ions
for A
pplic
atio
n of
For
mul
a ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 1
1 PR
011
- Ass
et C
once
ntra
tion .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... 1
2 PR
012
- Cre
dit R
isk
for R
ecei
vabl
es ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
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......
......
......
......
......
......
......
......
......
......
. 13
Rei
nsur
ance
Rec
over
able
s ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
... 1
3 M
isce
llane
ous R
ecov
erab
les .
......
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......
......
......
......
... 1
3 PR
012A
- C
redi
t Ris
k fo
r Rec
eiva
bles
For
Info
rmat
iona
l Pur
pose
s Onl
y ....
......
......
......
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.... 1
4 R
eins
uran
ce R
ecov
erab
les .
......
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......
......
......
......
......
......
......
......
......
......
14
Mis
cella
neou
s Rec
over
able
s ....
......
......
......
......
......
......
......
......
......
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......
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......
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......
......
......
......
......
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......
......
......
......
......
......
......
15
PR01
3 - H
ealth
Cre
dit R
isk
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
15
Bas
is o
f Fac
tors
.....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
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......
......
......
......
......
......
......
......
......
16
Spec
ific
Inst
ruct
ions
for A
pplic
atio
n of
the
Form
ula .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
. 16
PR01
4 - O
ff-B
alan
ce S
heet
and
Oth
er It
ems .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
......
......
......
... 1
8 Sp
ecifi
c In
stru
ctio
ns fo
r App
licat
ion
of th
e Fo
rmul
a ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
......
......
......
.... 1
8 O
FF-B
ALA
NC
E SH
EET
CO
LLA
TER
AL
AN
D S
CH
EDU
LE D
L, P
AR
T 1
ASS
ETS,
PR
015 .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 2
0 Sp
ecifi
c In
stru
ctio
ns fo
r App
licat
ion
of th
e Fo
rmul
a ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 2
0 EX
CES
SIV
E PR
EMIU
M G
RO
WTH
, PR
016 .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. 21
U
ND
ERW
RIT
ING
RIS
K, P
R01
7 –
PR01
8 ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... 2
2 PR
017
- Und
erw
ritin
g R
isk
– R
eser
ves .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.....
22
PR01
8 - U
nder
writ
ing
Ris
k –
Net
Writ
ten
Prem
ium
s ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 2
4 LR
BC
FO
RM
ULA
APP
LIC
ATI
ON
FO
R P
&C
CO
MPA
NY
’S A
&H
BU
SIN
ESS,
PR
019
– PR
026
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. 26
PR
019
- Hea
lth P
rem
ium
s ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 2
6 B
asis
of F
acto
rs ..
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... 2
6 Sp
ecifi
c In
stru
ctio
ns fo
r App
licat
ion
of th
e Fo
rmul
a ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 2
6 PR
020
- Und
erw
ritin
g R
isk
– Pr
emiu
m R
isk fo
r Com
preh
ensi
ve M
edic
al, M
edic
are
Supp
lem
ent a
nd D
enta
l and
Vis
ion .
......
......
......
......
......
......
......
......
......
......
......
......
.... 3
1 C
laim
s Exp
erie
nce
Fluc
tuat
ion .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.....
31
PR02
0A -
Und
erw
ritin
g R
isk
– Pr
emiu
m R
isk
for C
ompr
ehen
sive
Med
ical
, Med
icar
e Su
pple
men
t and
Den
tal a
nd V
isio
n (F
or In
form
atio
nal P
urpo
ses O
nly)
.....
......
......
36
PR02
1 - U
nder
writ
ing
Ris
k –
Man
aged
Car
e C
redi
t ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
42
PR02
2 - U
nder
writ
ing
Ris
k –
Oth
er a
nd T
otal
Net
Hea
lth P
rem
ium
RB
C ..
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 4
6 A
dmin
istra
tive
Expe
nses
for C
erta
in A
&H
Cov
erag
es a
nd fo
r Hea
lth A
SO/A
SC ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... 4
6 Sp
ecifi
c In
stru
ctio
ns fo
r App
licat
ion
of th
e Fo
rmul
a ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 4
6 PR
023
- Lon
g-Te
rm C
are .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. 47
PR
024
- Hea
lth C
laim
Res
erve
s ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
. 47
PR02
5 - P
rem
ium
Sta
biliz
atio
n R
eser
ves .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. 47
B
asis
of F
acto
rs ..
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... 4
7 Sp
ecifi
c In
stru
ctio
ns fo
r App
licat
ion
of th
e Fo
rmul
a ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 4
7 PR
026
– Fe
dera
l AC
A R
isk
Adj
ustm
ent a
nd R
isk
Cor
ridor
Sen
sitiv
ityTe
st ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
48
CA
LCU
LATI
ON
OF
CA
TAST
RO
PHE
RIS
K C
HA
RG
E R
6 A
ND
R7
AN
D O
PER
ATI
ON
AL
RIS
K, P
R02
7 –
PR02
8 ..
......
......
......
......
......
......
......
......
......
......
......
......
......
.... 5
0 PR
027
– C
alcu
latio
n of
Cat
astro
phe
Ris
k C
harg
e R
6 an
d R
7 (F
or In
form
atio
nal P
urpo
ses O
nly)
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
50
PR02
8 –
Ope
ratio
nal R
isk
(For
Info
rmat
iona
l Pur
pose
s Onl
y) ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... 5
2
© 1
994-
2017
Nat
iona
l Ass
ocia
tion
of In
sura
nce
Com
mis
sion
ers
10/2
0/20
17
TOTA
L A
DJU
STED
CA
PITA
L A
ND
CO
MPA
RIS
ON
TO
RIS
K–B
ASE
D C
API
TAL,
PR
029
– PR
035
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
53
PR02
9 - C
apita
l Not
es B
efor
e Li
mita
tion .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. 53
PR
030
- Cal
cula
tion
of T
otal
Adj
uste
d C
apita
l ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. 53
PR
031
– PR
033
- Com
puta
tion
of T
otal
Risk
-Bas
ed C
apita
l Afte
r Cov
aria
nce .
......
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......
......
......
......
......
......
.... 5
4 PR
035
- Com
paris
on o
f Tot
al A
djus
ted
Cap
ital a
nd A
utho
rized
Con
trol L
evel
Ris
k-B
ased
Cap
ital ..
......
......
......
......
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......
. 56
APP
END
IX 1
- C
OM
MO
NLY
USE
D H
EALT
H IN
SUR
AN
CE
TER
MS .
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......
. 57
APP
END
IX 2
– C
OM
MO
NLY
USE
D T
ERM
S FO
R M
EDIC
AR
E PA
RT
D C
OV
ERA
GE
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... 5
9 C
OM
PAN
Y IN
FOR
MA
TIO
N P
AG
E (J
UR
AT)
.....
......
......
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......
PR00
1 A
TTES
TATI
ON
RE:
CA
TAST
RO
PHE
MO
DEL
ING
USE
D IN
RB
C C
ATA
STR
OPH
E R
ISK
CH
AR
GES
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
. PR
002
DET
AIL
S FO
R A
FFIL
IATE
D B
ON
DS
AN
D S
TOC
KS .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
... PR
003
SUB
SID
IAR
Y, C
ON
TRO
LLED
AN
D A
FFIL
IATE
D IN
VES
TMEN
TS ...
......
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......
......
......
......
......
......
PR00
4 SU
MM
AR
Y F
OR
SU
BSI
DIA
RY
, CO
NTR
OLL
ED A
ND
AFF
ILIA
TED
INV
ESTM
ENTS
FO
R C
RO
SS-C
HEC
KIN
G S
TATE
MEN
T V
ALU
ES ..
......
......
......
......
......
..... P
R00
5 U
NA
FFIL
IATE
D B
ON
DS
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. PR
006
UN
AFF
ILIA
TED
PR
EFER
RED
, CO
MM
ON
STO
CK
AN
D H
YB
RID
SEC
UR
ITIE
S ....
......
......
......
......
......
......
......
......
......
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......
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......
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......
......
......
......
......
......
......
.. PR
007
OTH
ER L
ON
G-T
ERM
ASS
ETS
......
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......
......
......
......
......
......
.... P
R00
8 M
ISC
ELLA
NEO
US
ASS
ETS .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. PR
009
REP
LIC
ATI
ON
(SY
NTH
ETIC
ASS
ET) T
RA
NSA
CTI
ON
S A
ND
MA
ND
ATO
RY
CO
NV
ERTI
BLE
SEC
UR
ITIE
S ....
......
......
......
......
......
......
......
......
......
......
......
......
......
. PR
010
ASS
ET C
ON
CEN
TRA
TIO
N ..
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. PR
011
CR
EDIT
RIS
K F
OR
REC
EIV
AB
LES
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.. PR
012
CR
EDIT
RIS
K F
OR
REC
EIV
AB
LES
(FO
R IN
FOR
MA
TIO
NA
L PU
RPO
SES
ON
LY) .
......
......
......
......
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......
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......
......
......
......
......
......
......
......
......
.... P
R01
2A
HEA
LTH
CR
EDIT
RIS
K ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
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......
......
......
......
......
......
. PR
013
OFF
-BA
LAN
CE
SHEE
T IT
EMS
AN
D O
THER
ITEM
S ...
......
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......
PR01
4 O
FF-B
ALA
NC
E SH
EET
CO
LLA
TER
AL
AN
D S
CH
EDU
LE D
L, P
AR
T 1
ASS
ETS .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
..... P
R01
5 EX
CES
SIV
E PR
EMIU
M G
RO
WTH
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
......
......
......
.... P
R01
6 U
ND
ERW
RIT
ING
RIS
K –
RES
ERV
ES ...
......
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......
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......
......
......
......
......
......
......
.. PR
017
UN
DER
WR
ITIN
G R
ISK
– N
ET W
RIT
TEN
PR
EMIU
MS
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
PR01
8 H
EALT
H P
REM
IUM
S ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... P
R01
9 U
ND
ERW
RIT
ING
RIS
K –
PR
EMIU
M R
ISK
FO
R C
OM
PREH
ENSI
VE
MED
ICA
L, M
EDIC
AR
E SU
PPLE
MEN
T A
ND
DEN
TAL
& V
ISIO
N...
......
......
......
......
......
..... P
R02
0 U
ND
ERW
RIT
ING
RIS
K –
PR
EMIU
M R
ISK
FO
R C
OM
PREH
ENSI
VE
MED
ICA
L, M
EDIC
AR
E SU
PPLE
MEN
T A
ND
DEN
TAL
& V
ISIO
N (F
OR
INFO
RM
ATI
ON
AL
PUR
POSE
S O
NLY
) ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.... P
R02
0A
UN
DER
WR
ITIN
G R
ISK
– M
AN
AG
ED C
AR
E C
RED
IT ..
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
..... P
R02
1 U
ND
ERW
RIT
ING
RIS
K –
OTH
ER A
ND
TO
TAL
NET
HEA
LTH
PR
EMIU
M R
BC
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
PR02
2 LO
NG
-TER
M C
AR
E ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
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......
......
......
. PR
023
HEA
LTH
CLA
IM R
ESER
VES
......
......
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......
......
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......
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......
......
......
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......
......
......
......
......
......
......
. PR
024
PREM
IUM
STA
BIL
IZA
TIO
N R
ESER
VES
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
..... P
R02
5FE
DER
AL
AC
A R
ISK
AD
JUST
MEN
T A
ND
RIS
K C
OR
RID
OR
SEN
SITI
VIT
Y T
EST
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
PR02
6 C
ALC
ULA
TIO
N O
F C
ATA
STR
OPH
E R
ISK
CH
AR
GE
R6
AN
D R
7 (F
OR
INFO
RM
ATI
ON
AL
PUR
POSE
S O
NLY
) ....
......
......
......
......
......
......
......
......
......
......
......
......
. PR
027
CA
PITA
L N
OTE
S B
EFO
RE
LIM
ITA
TIO
N ..
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.PR
028
CA
LCU
LATI
ON
OF
TOTA
L A
DJU
STED
CA
PITA
L ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
..PR
029
CA
LCU
LATI
ON
OF
TOTA
L R
ISK
-BA
SED
CA
PITA
L A
FTER
CO
VA
RIA
NC
E ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
PR03
0TR
END
TES
T ....
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
.....
PR03
3C
OM
PAR
ISO
N O
F TO
TAL
AD
JUST
ED C
API
TAL
TO R
ISK
-BA
SED
CA
PITA
L ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
....P
R03
4U
ND
ERW
RIT
ING
AN
D IN
VES
TMEN
T EX
HIB
IT –
PR
EMIU
MS
WR
ITTE
N ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
....P
R03
5
© 1
994-
2017
Nat
iona
l Ass
ocia
tion
of In
sura
nce
Com
mis
sion
ers
10/2
0/20
17
SCH
F P
T 3
REI
NSU
RA
NC
E C
RED
IT A
ND
MED
TA
BU
LAR
RES
ERV
E ...
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
....P
R03
8G
RO
SS W
RIT
TEN
PR
EMIU
MS .
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
......
..PR
039
© 1
994-
2017
Nat
iona
l Ass
ocia
tion
of In
sura
nce
Com
mis
sion
ers
i 10
/20/
2017
NA
IC P
rope
rty/
Cas
ualty
Ris
k-B
ased
Cap
ital R
epor
t
INT
RO
DU
CT
ION
Ris
k-ba
sed
capi
tal i
s a
met
hod
of e
stab
lishi
ng th
e m
inim
um a
mou
nt o
f cap
ital a
ppro
pria
te fo
r an
insu
ranc
e co
mpa
ny to
sup
port
its o
vera
ll bu
sine
ss o
pera
tions
in c
onsi
dera
tion
of it
s si
ze a
nd ri
sk p
rofil
e. It
pro
vide
s an
elas
tic m
eans
of s
ettin
g th
e m
inim
um c
apita
l req
uire
men
t in
whi
ch th
e de
gree
of r
isk
take
n by
the
insu
rer i
s the
prim
ary
dete
rmin
ant.
A c
ompa
ny’s
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 a
nd r
eser
ve it
ems.
The
fact
or is
hig
her
for
thos
e ite
ms
with
gre
ater
und
erly
ing
risk
and
low
er fo
r les
s ris
ky it
ems.
The
adeq
uacy
of a
com
pany
’s a
ctua
l cap
ital m
ay th
en b
e m
easu
red
by a
com
paris
on to
its r
isk-
base
d ca
pita
l as d
eter
min
ed b
y th
e fo
rmul
a.
Ris
k-ba
sed
capi
tal s
tand
ards
will
be
used
by
regu
lato
rs to
set
in m
otio
n ap
prop
riate
regu
lato
ry a
ctio
ns re
latin
g to
insu
rers
that
sho
w in
dica
tions
of w
eak
or d
eter
iora
ting
cond
ition
s. It
also
pro
vide
s an
addi
tiona
l sta
ndar
d fo
r min
imum
cap
ital r
equi
rem
ents
that
com
pani
es sh
ould
mee
t to
avoi
d be
ing
plac
ed in
con
serv
ator
ship
.
PUR
POSE
OF
TH
IS R
EPO
RT
This
repo
rt pr
esen
ts th
e 20
17 N
AIC
Pro
perty
/Cas
ualty
Ris
k-B
ased
Cap
ital f
orm
ula
inan
inst
ruct
iona
l for
mat
that
sho
uld
be h
elpf
ul to
any
one:
(a) r
espo
nsib
le fo
r sub
mitt
ing
data
to
the
NA
IC a
nd/o
r the
stat
es o
r (b)
resp
onsi
ble
for c
ompu
ting
the
RB
C fo
r an
indi
vidu
al c
ompa
ny.
This
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
extre
mel
y im
porta
nt p
art o
f thi
s pro
cess
. Thi
s is m
ost l
ikel
y to
occ
ur w
hen
ever
yone
, fro
m
the
com
pany
CEO
to th
e in
divi
dual
pre
parin
g th
e da
ta, h
as a
bas
ic u
nder
stan
ding
of
the
form
ula.
Whi
le th
is r
epor
t pro
vide
s th
is u
nder
stan
ding
in a
con
cise
pac
kage
, it i
s st
rong
ly
reco
mm
ende
d th
at th
e pe
rson
or
pers
ons
prep
ari