October 2025 Financial Condition Committee call

On its October 7, 2025 call, the Financial Condition (E) Committee exposed a discussion draft of an alternative proposal to the revisions to SSAP No. 61 and the Question & Answer (Q&A) of Appendix A-791 for combination reinsurance contracts with interdependent features. Comments are due November 7, 2025. 

The discussion draft proposes that revisions to SSAP No. 61 about evaluation of risk transfer for combination reinsurance: 

• be effective December 31, 2026 for existing agreements that have not been submitted to the domiciliary regulator;
• be effective December 31, 2028 for existing agreements that have been reviewed but for which a response (i.e., approval or non-disapproval) has not been received from the domiciliary regulator; and
• not be applicable to reinsurance transactions that have been reviewed and approved or not disapproved by the insurance regulatory authority in the ceding insurer’s domiciliary state, with such approval or non-disapproval documented and retained by the ceding insurer.

The discussion document also proposes to add:

• direction for insurers to record a change resulting from the clarification as a change in accounting principle as defined in SSAP No. 3; and 
• clarification to Q&A of Appendix A-791 that in the absence of other risk transfer criteria, standalone cash flow testing may be used to demonstrate risk transfer for combination contracts with interdependent features. The analysis should include all related cash flows and moderately conservative scenarios consistent with asset adequacy testing. A contract is considered to transfer risk if reserves are sufficient or if the agreement reduces or limits a reserve deficiency. The standalone analysis does not eliminate the need to include these agreements in annual cash flow testing.