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NAIC Evaluates Private Equity Involvement in Insurance Industry | Locke Lord LLP

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The National Association of Insurance Commissioners’ (“NAIC”) Macroprudential Working Group (“MWG”) examines the influence of private equity firms on the insurance industry. The MWG recently approved a list of “regulatory considerations” that the MWG will review and consider. The list can be found here, and 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 issues and initial meetings will be held to coordinate efforts between the groups.

According to the latest 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 approximately $344 billion at the end of 2019. In addition, the BACV of total cash and invested assets for insurers held by PEs represented 6.5% of the 7 .5 trillion dollars from the US insurance industry at the end of 2020. Currently, private equity firms control a relatively small number of insurers, although their share has increased year on year. Statistics from the NAIC Capital Markets Special Report.