A National Association of Insurance Commissioners group is reviewing recent regulatory considerations.
The Macroprudential Working Group (MWG) of the National Association of Insurance Commissioners (NAIC) has announced that it is examining the impact on the insurance industry from private equity firms.
The MWG recently gave its approval to a “regulatory considerations” list which it will be reviewing.
Recently, The MWG gave its approval to a regulatory considerations list. That list will be a part of this new examination. The group has already left comments about it and will be continuing to do so throughout its review.
Justin Schrader is chair of the MWG as well as the chief financial examiner for the Nebraska Department of Insurance. According to Schrader, that group isn’t the only one from within MWG that is looking at the private equity impact on the insurance industry. Schrader said that there are several NAIC groups and task forces working on various issues and challenges presented by private equity. Initial meetings are now being held for the coordination of the efforts among those various groups.
Private equity firms accounted for $487 billion in BACV across the insurance industry in 2020.
According to the most recent NAIC Capital Markets Special Report, private equity firms were the owners of 117 insurers at the close of 2020. At that time, private equity firms comprised $487 billion in book adjusted carrying value (BACV) of total cash and invested assets. Comparatively, that same figure for year end 2019 was $344 billion.
Moreover, the BACV of total cash and invested assets for insurers owned by private equity firms represented about 6.5 percent of the United States insurance industry 2020 year end total of $7.5 trillion. At the moment, private equity firms hold control over what is essentially a small number of insurers. That said, every year, the share held by those firms is continuing to grow. This is based on the data collected from the NAIC Capital Markets Special Report.
The MWG is now examining that trend as well as how its new regulatory considerations are impacting the industry. The review will provide the group with insight into both the direction being taken and the way the current regulations are affecting it.