Skip to main content

Back to Insurance Topics

Group Capital Calculation


Last Updated: 5/9/2024

Issue: U.S. state insurance regulators have adopted a group capital calculation (GCC) 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 includes information on potential risks to policyholders emanating from outside the insurance companies, as well as the location and sources of capital within the group. The calculation will help state insurance regulators perform an assessment of capital when combined with other information obtained by state insurance 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 System Regulatory Act (#440), which introduced supervisory colleges and included the implementation of a new regulatory filing; i.e., the Enterprise Risk Report (Form F). In addition to these revisions, state insurance regulators also implemented the Risk Management and Own Risk and Solvency Assessment Model Act (#505), which required certain insurance companies and/or insurance groups to file an ORSA summary report with their lead state insurance regulator. 

The GCC is intended to fit seamlessly and efficiently with these and other group supervision tools currently implemented by state insurance 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 that it is consistent with the lead state insurance 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 state insurance 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 Model #440, it is 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 establishing the scope of the group for the purposes of applying the GCC leverages existing group supervision tools and allows for lead state insurance regulators to utilize information gained from these tools, as well as communication with other state insurance regulators to drive the implementation of the GCC. 

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


On December 16, 2021, the NAIC Executive (EX) Committee and Plenary adopted the Process for Evaluating Jurisdictions that Recognize and Accept the Group Capital Calculation.  

In May of 2022, the Group Capital Calculation (E) Working Group adopted the 2022 GCC Instructions and Template which have been used by a number of states for year-end 2022 filings. This comes after the NAIC had previously adopted the initial GCC Instructions and Template in 2020 along with revisions to Model #440 and the Insurance Holding Company System Model Regulation with Reporting Forms and Instructions (#450). The amendments to the models provide legislative language for states use in enabling the GCC. Also adopted by the NAIC was regulatory guidance for utilizing the GCC in the form of changes to the NAIC Financial Analysis Handbook.

As of 2023, the Mutual Recognition of Jurisdictions (E) Working Group oversees the process for evaluating jurisdictions, and maintains a listing of jurisdictions that meet the NAIC requirements and accepting the NAIC GCC.


View upcoming meetings or use the completed tab to view the last 150 days.

Couldn't find any upcoming meetings or calls...