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Senate Commerce Committee Statement - Senate Bill No. 4212, New Jersey (December 6, 2021)

Summary

Senate Commerce Committee statement to Senate, No. 4212, State of New Jersey, dated December 6, 2021, reporting favorably Senate Bill No. 4212. The bill revises current State law on insurance holding company systems to adopt changes recommended by the National Association of Insurance Commissioners. The statement says the NAIC adopted changes to the model Insurance Holding Company System Regulatory Act in December 2020 to enable the requirement for the Group Capital Calculation (GCC) and the Liquidity Stress Test (LST). It states that the bill establishes provisions for a group capital calculation and a liquidity stress test, and requires confidentiality for the calculation, the test results and supporting disclosures.

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“Senate Commerce Committee Statement - Senate Bill No. 4212, New Jersey (December 6, 2021).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2021-12-06-scm-s4212-s1-e4caeb92c7/, SHA-256 98e0779b9ad43c734b7c268893d6962398ab1ee118a12f6f0dcafa3e2ba043b9.

Full text

     SENATE COMMERCE COMMITTEE

                    STATEMENT TO

                  SENATE, No. 4212

 STATE OF NEW JERSEY
                   DATED: DECEMBER 6, 2021

    The Senate Commerce Committee reports favorably Senate Bill
No. 4212.
   This bill revises current State law on insurance holding company
systems to adopt changes recommended by the National
Association of Insurance Commissioners.
   In December 2020, the National Association of Insurance
Commissioners (NAIC) adopted changes to the model Insurance
Holding Company System Regulatory Act to enable the requirement
for the Group Capital Calculation (GCC) and the Liquidity Stress
Test (LST).
   The GCC requirement is a financial tool that assists state
insurance regulators in identifying risks that may emanate from a
holding company system. The GCC is intended to comply with the
requirements of the “Bilateral Agreement Between the United
States of America and the European Union on Prudential Measures
Regarding Insurance and Reinsurance,” which was signed on Sept.
22, 2017. On Dec. 18, 2018, a similar covered agreement was
signed with the United Kingdom.
   The LST was developed to provide state insurance regulators
with insights into a key macroprudential risk monitored by the
Financial Stability Oversight Council and other jurisdictions
internationally. The LST requires the ultimate controlling person of
an insurer to provide the results of a specific year’s LST to the lead
state insurance commissioner.
   State insurance regulators currently perform group analysis on
all U.S. insurance groups, including assessing the risks and
financial position of the insurance holding company system but lack
the ability to assess the capital position of the group, as a whole.
The GCC and LST will provide additional insight and transparency
to insurance regulators regarding insurance groups.
   This bill provides additional analytical tools for conducting
group-wide supervision. The bill establishes provisions for a group
capital calculation for assessing group risks and capital adequacy.
The bill also establishes a liquidity stress test for assessing group
liquidity risks. The bill requires confidentiality for the group
capital calculation, liquidity stress test results and supporting
disclosures.

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