IAIS Insurance Capital Standard: 2026 Assessment Puts US Aggregation Method to a Global Test

The International Association of Insurance Supervisors adopted the Insurance Capital Standard on December 5, 2024, closing a development cycle begun in 2013 and creating the first global risk-based group capital measure calibrated to 99.5 percent value-at-risk over one year. It now covers 61 Internationally Active Insurance Groups across 19 jurisdictions. The IAIS cannot compel any jurisdiction to legislate it, which is why the 2026 self-assessment matters more than the adoption did.

Key Takeaways

61 IAIGs across 19 jurisdictions are in scope as of the September 2025 register, up from 59 across 18, on a test of three-jurisdiction activity plus $50 billion in assets or $10 billion in gross written premium.
The US does not implement the ICS directly. The NAIC's Aggregation Method builds on state-level RBC aggregated across the group, and the IAIS found in November 2024 that it provides a basis for comparable outcomes.
Two gaps were flagged, not closed: the treatment of interest rate risk, and the timing of supervisory intervention.
Excess Relative Ratio scalars are calibrated at 200 percent of the NAIC RBC Authorized Control Level, which is how the Aggregation Method reaches for comparability with a market-consistent standard.
No consensus exists on disclosure. The ICS requires public reporting of group capital positions; the Group Capital Calculation results feeding the AM are confidential supervisory information.

What Was Adopted, and What It Cannot Do

ICS Version 2.0 was adopted in 2019 and spent five years in confidential monitoring from 2020 through 2024, during which IAIGs reported data that was never used to trigger supervisory action. The Executive Committee approved formal adoption on November 14, 2024 and simultaneously concluded the Aggregation Method comparability assessment. The full membership voted three weeks later.

The measure rests on three components. Market-Adjusted Valuation builds a consolidated group balance sheet from audited GAAP or statutory accounts, with liabilities at a current estimate plus a Margin Over Current Estimate, discounted through a three-bucket approach that sorts liabilities into General, Middle and Top buckets with different yield curve adjustments, on prescribed curves for the 35 most traded currencies. The capital requirement aggregates insurance, market, credit and operational risk charges through correlation matrices. Qualifying capital resources are tiered by loss-absorption capacity, and the ratio is resources over requirement.

The scope test is mechanical: activity in three or more jurisdictions with at least 10 percent of gross written premium outside the home market, plus $50 billion of assets or $10 billion of gross written premium on a three-year rolling average. That currently captures 61 groups, including AIG, Berkshire Hathaway, Chubb, MetLife and Prudential Financial in the US, Allianz, AXA, Munich Re and SCOR in Europe, and Tokio Marine, Sompo and MS&AD in Japan.

The IAIS has no legal authority to mandate implementation into jurisdictional legislation. Members are committed to implementing its standards while adapting them to local circumstances, which is precisely the heterogeneity the 2026 baseline self-assessment and the 2027 targeted jurisdictional reviews are built to surface.

Three Frameworks, One Comparability Claim

The interesting question is not whether the ICS is coherent. It is whether three structurally different measures can be said to produce the same answer.

Feature	ICS	US Aggregation Method	Solvency II
Calibration target	99.5% VaR, 1-year	Comparable outcomes via ERR scalars at 200% ACL	99.5% VaR, 1-year
Valuation basis	Market-adjusted (MAV)	US statutory (SAP) aggregated across group	Market-consistent (best estimate + risk margin)
Group-level scope	Consolidated group balance sheet	Aggregation of solo-entity RBC positions	Consolidated group balance sheet
Structured credit treatment	Look-through to underlying collateral	NAIC designation-based factors (SVO/NRSRO ratings)	Look-through with spread risk stresses
Affiliated reinsurance	Consolidated; intra-group eliminated	Entity-level cession reflected, then aggregated	Consolidated; intra-group eliminated
Disclosure	Public group capital disclosure required	GCC results currently confidential	Public SFCR and QRT disclosures
Internal models	Permitted for certain risk categories	Not applicable (factor-based)	Full and partial internal models permitted

Europe starts closest. Solvency II already targets the same 99.5 percent one-year VaR, and the revised Directive 2025/2, adopted November 2024 with member state transposition due January 30, 2027, added tougher spread-risk stresses, revised risk margin methodology and new extrapolation for long-term liabilities. For EEA IAIGs the self-assessment is a mapping exercise against an existing framework rather than the construction of a new one.

The US took the other path. The Aggregation Method builds up from solo-entity RBC positions rather than a consolidated group balance sheet, and reaches for comparability through Excess Relative Ratio scalars calibrated at 200 percent of the NAIC RBC Authorized Control Level. The IAIS found in November 2024 that this provides a basis for producing comparable outcomes, and US-based IAIGs will not implement the ICS as a prescribed capital requirement.

That finding was conditional, and the condition is actuarial. The interest rate gap is the difference between MAV's prescribed discount curves and the US statutory framework, where cash flow testing and principle-based reserving generate their own discount dynamics. Monitoring period data showed the two approaches producing materially different capital sensitivity profiles for the same life insurance block, most during periods of rapid rate movement. Skadden's assessment is that the discount rate methodology is one of the most significant drivers of ICS results, with small calibration changes producing significant swings.

The second gap is intervention. The ICS prescribes a solvency control level below which supervisors must act. The US operates through entity-level RBC action levels, with group-level tools that are consultative rather than prescriptive. The open question is whether the AM triggers action at a comparable point or permits more group capital erosion first. Neither gap is a question of which framework is correct; both are questions of whether the divergence fits inside the word comparable.

The Question the Working Group Has Not Answered

The Aggregation Method Implementation working group met at the Spring 2026 National Meeting on March 23 and discussed a draft outline covering interest rate sensitivity, intervention mechanisms, the ERR scalars and reporting.

On the last of those, no consensus was reached, and the reason is structural rather than procedural. The ICS requires public disclosure of group capital positions. The Group Capital Calculation results that feed the Aggregation Method are treated as confidential supervisory information. Those are not two drafting preferences to be reconciled in a working group; they are opposite answers to the question of who the capital measure is for.

The timeline leaves little room. A draft Aggregation Method is targeted for mid-2026, a final version for 2027 or later, and implementation for 2027 at the earliest, while the IAIS begins targeted jurisdictional assessments in 2027 using site visits and detailed review of selected IAIG supervisory files. Any recommendation touching the GCC or ORSA frameworks routes to the Financial Condition (E) Committee first.

Insurance Europe has already named the outcome to avoid, and it applies on both sides of the Atlantic. Its support for the ICS is conditioned on the revised Solvency II becoming the EU's implementation of it, so that European insurers are not placed in what it calls the unacceptable situation of running their business under two prudential regimes. A US group whose Aggregation Method is found comparable but incomplete on interest rate risk, intervention timing and disclosure lands in exactly that position, reporting to a domestic aggregation framework while its supervisor answers to an international standard that measures a different balance sheet.

IAIS Insurance Capital Standard: 2026 Assessment Puts US Aggregation Method to a Global Test

Key Takeaways

What Was Adopted, and What It Cannot Do

Three Frameworks, One Comparability Claim

The Question the Working Group Has Not Answered

Further Reading

Sources