The National Association of Insurance Commissioners’ (“NAIC”) Macroprudential Working Group (“MWG”) is reviewing the influence that private equity firms have over the insurance industry. The MWG has recently approved a list of “regulatory considerations” that the MWG will be reviewing and considering. The list can be found here, and the MWG’s comments can be found here.
The Group is chaired by Justin Schrader, the chief financial examiner for the Nebraska Department of Insurance. According to Schrader, there are currently other NAIC groups and task forces also working on private equity related issues and initial meetings will be held to coordinate efforts among groups.
Per the last NAIC Capital Markets Special Report, private-equity firms owned 117 insurers at the end of 2020. Private-equity firms accounted for $487 billion in BACV [book-adjusted carrying value] of total cash and invested assets, compared to about $344 billion at year-end 2019. Further, the BACV of total cash and invested assets for PE-owned insurers was 6.5% of the U.S. insurance industry’s $7.5 trillion at year-end 2020. Currently, PE firms control a relatively small number of insurers, though the share has been growing year over year. Statistics gathered from the NAIC Capital Markets Special Report.
Locke Lord will continue to monitor the developments on this issue
