Tim Antonelli, CFA, FRM, SCR, Multi-Asset Insurance Strategist, Wellington Management
Geoff Austein-Miller, Investment Specialist, Wellington Management
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Changes in US industry regulations tend to proceed at a slow, sometimes glacial pace. The recent implementation of the National Association of Insurance Commissioners’ (NAIC’s) latest revisions to risk-based capital (RBC) charges for insurers’ fixed income investments was no exception. While US insurers were required to start reporting more detail on their fixed income holdings as of year-end 2020, the NAIC’s new bond risk charges did not fully take effect until year-end 2021 — but they’re finally here.
What remains to be seen is the extent to which these regulatory changes will truly impact the day-to-day portfolio management of insurance company assets and/or their longer-term strategic asset allocation decisions.