CIPR Homepage
Key Initiative
Group Capital Calculation

Last Updated 10/28/2020

Issue: U.S. state insurance regulators are developing a group capital calculation for use in solvency-monitoring activities. The calculation is intended to provide additional analytical information to the lead state for use in assessing group risks and capital adequacy to complement the current holding company analysis in the U.S. It will include information on potential risks to policyholders emanating from outside the insurance companies, as well as location and sources of capital within the group. The calculation will help regulators perform an assessment of capital when combined with other information obtained by regulators. This includes group organizational information provided on Schedule Y, enterprise risk information on Form F and internal risk self-assessment information in Own Risk and Solvency Assessment (ORSA) filings (where applicable).

Background: Beginning in 2008, through the NAIC Solvency Modernization Initiative (SMI), U.S. state insurance regulators devised plans for revisions to group supervision. During and after the SMI, considerable attention was given to the framework around group supervision. Considerable revisions were made to the Insurance Holding Company Regulatory Act (Holding Company Act), which introduced supervisory colleges and included the implementation of a new regulatory filing: the Enterprise Risk Report (Form F). In addition to these revisions, state regulators also implemented the Risk Management and Own Risk and Solvency Assessment Model Act (ORSA Model Act), which required certain insurance companies and/or insurance groups to file an Own Risk and Solvency Assessment summary report (ORSA Report) with their lead state regulator.

The Group Capital Calculation is intended to fit seamlessly and efficiently with these and other group supervision tools implemented currently by state regulators. This analytical tool is designed to include information on potential risks, as well as the location and sources of capital within the group. As such, the tool can only be helpful to the extent it’s consistent with the lead-state regulator’s view of such risks and sources. The scope of the group is determined by the lead state based upon their understanding of the group and considering the input of other domestic states or other regulators that have an entity in the group.

While the default starting point for the group should be the ultimate controlling person as defined in the Holding Company Act, it’s incumbent upon the lead state to define the scope of application differently if the facts and circumstances suggest a different approach is more appropriate. The proposed approach to establish the scope of the group for purposes of applying the Group Capital Calculation leverages off existing group supervision tools and allows for lead-state regulators to utilize information gained from these tools, as well as communication with other regulators to drive the implementation of the group capital calculation.

In addition, the NAIC is working with other interested jurisdictions, both domestic and international, to develop the “Aggregation Method”.  While influenced by the GCC and calculated in a similar manner, the AM will be more jurisdictional agnostic, and therefore perhaps simpler, than the GCC. By 2024, the IAIS will be assessing whether this method provides comparable outcomes to the consolidated group insurance capital standard (ICS) that they have been developing for use with Internationally Active Insurance Groups (IAIGs). In November 2019, the IAIS agreed to a definition and approach to assessment of comparable outcomes. While there are still a number of unknowns (including how the ICS is intended to be implemented as a Prescribed Capital Requirement and the exact relationship of the AM and GCC), this agreement does provide a path for the Aggregation Method to be “outcome-equivalent” to the ICS.

Status: States are committed to the development of a group capital calculation as an additional solvency evaluation tool. The Group Capital Calculation (E) Working Group leads this effort. The Working Group completed its field testing of the calculation in May of 2020 and then revised the group capital calculation template and instructions.  Several subsequent public comment periods have resulted in further revisions and the calculation is nearing final form.  In addition, the Working Group has proposed revisions to the NAIC Model Holding Company Model Act (#440) in order to implement submission of the calculation on a confidential basis.  Furthermore, analytics guidance is being drafted by a group consisting of several members of the Working Group and several interested parties. When finalized the guidance will be become part of the NAIC Financial Analysis Handbook which regulators will use in reviewing the group capital submissions. The calculation and corresponding instructions, along with the revisions to the model law are expected to be adopted by the NAIC by the end of 2020.  The Handbook guidance will be completed in early 2021.

Committees Active on This Topic

Additional Resources

Group Capital Calculation Collection
NAIC Research Library

Group Capital Calculation Presentation
2018 Insurance Summit

Insurance Group Supervision
April 2012, CIPR Newsletter

NAIC Group Capital Calculation Recommendation
2015 ComFrame Development and Analysis (G) Working Group (CDAWG) Document


Media queries should be directed to the NAIC Communications Division at 816-783-8909 or

Dan Daveline
Director, Financial Regulatory Services
Phone: 816-783-8134

Lou Felice
Solvency and Capital Policy Advisor
Phone: 212-386-1956

NAIC Center for Insurance Policy and Research (CIPR)

CIPR Homepage