Comments to SAPWG on Reinsurance Collateral for Ceded Business Valued under Principles-Based Reserving

The Risk Management and Financial Reporting Council’s Reinsurance Working Group sent comments to the NAIC’s Statutory Accounting Principles (E) Working Group (SAPWG) on proposed changes to SSAP No. 61, paragraph 50, explaining that aggregated principles-based reserves can leave collateral insufficient when offsetting risks are ceded to different reinsurers. The letter identifies standalone treaty-level reserves as one possible solution while recommending consideration of offsetting risks, alternative shortfall liabilities, and potential double counting. It also calls for coordinated accounting, valuation, and reinsurance-law changes, along with clear transition periods, scope, grandfathering, and ongoing review.