2000-1

  • (p117) - ATTACHMENT FIVE - Suitability of Sales of Life Insurance and Annuities - Draft March 15, 2000
  • Separate Accounts Working Group - Chicago, Illinois - March 13, 2000
  • (p77) - Ron Panneton (National Association of Insurance and Financial Advisors—NAIFA) said this discussion reminded him of a similar discussion the Life Disclosure Working Group had on equity indexed products.
    • In response to that problem, a checklist was created to help regulators to become convinced that people are adequately prepared to describe the complexities of the product.
  • Receive Status Report from Risk Assessment Approach Subgroups
  • Commissioner Vaughan stated that all three Risk Assessment Approach Subgroups would give update reports.
  1. Mr. Moriarty and Mr. Ward reported for the Banking Subgroup that they had been very successful in obtaining information from the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), and the Office of the Comptroller of Currency (OCC).
    • Mr. Moriarty and Mr. Ward both expressed a superior level of cooperation in receiving information from all groups. 
    • Mr. Ward explained that his research encompassed reviews of the OCC's Board and Banking Supervision Handbook and the OTS's Banking and Loan Supervision Manual.
    • Mr. Ward stated that the banking regulator's examinations focused on identifying areas of risk to evaluate the overall financial condition of the bank.
    • According to Mr. Moriarty, bank examinations differed from insurance examinations that focus on verification of account balances and balance sheet adequacy.
    • Mr. Ward further added that banks are given a CAMELS rating based upon the bank's capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk.
    • Mr. Ward also reported that bank examinations for a particular consolidated entity take place every 12 to 18 months.
    • Final bank examination reports are confidential and focus on the net risk of the consolidated entity verses an individual entity.
    • Mr. Ward reported that this reporting structure is similar to that of an insurance holding company.
    • Mr. Ward also added that the bank regulators do not express an opinion on the bank's financial statements; however, a rating is given to the bank based upon how the bank measures, monitors and controls its risk.
    • Mr. Moriarty stated that these bank ratings range from a one to a five with one being the best rating.
    • Mr. Moriarty reported that these ratings also encompass evaluations of the banks' credit risk, legal risk, market risk, liquidity risk, operational risk and reputation risk.
    • Mr. Moriarty stated that the Banking Subgroup's risk assessment approach report would be finalized prior to the interim meeting.
  2. Mr. Stolte provided the group with an update on the Public Accounting Subgroup's progress.
    1. Mr. Stolte reported that he is currently in the process of obtaining a risk identification questionnaire practice aide from the American Institute of Certified Public Accountants.
  • The Multidisciplinary Working Group was created this past summer, with the New York Federal Reserve chairing the group.
    • Commissioner Vaughan stated that the working group hopes to conduct a pilot disclosure program with a subset of international firms around the world.
    • The disclosure program would encompass items such as credit risk, liquidity risk, market risk and catastrophe risk.
    • Commissioner Vaughan stated that she would provide further details on this matter to anyone that was interested.
  • 4. American Academy of Actuaries Presentation
    • A presentation was given by the American Academy of Actuaries on Dynamic Financial Analysis.

ATTACHMENT FIVE - Financial Services Holding Company Examination/Analysis/Review Working Group - Chicago, IL - March 14, 2000

2000-1, NAIC Proceedings