The Life Actuarial (A) Task Force exposed an initial draft AG 55 Guidance Document on September 10 that asks every ceding company to report, for each cash-flow-tested treaty, its RBC ratio "calculated with the block of business on a pre-reinsurance basis" beside the reserve credit the treaty produces (NAIC LATF, September 2026). Comments close October 9. The first AG 55 cycle filed on templates alone; year-end 2026 filers get fourteen dollar lines and four RBC values per treaty.

It is a request for information from the Valuation Analysis (E) Working Group. The American Academy of Actuaries asked for it in October 2025, suggesting "an accompanying Guidance document similar to the AG 53 template" (American Academy of Actuaries, October 2025). AG 53 filers have worked from one for several year-ends, and the AG 53 redline exposed the same day changes three sections. The AG 55 document is new from its first line.

Key Takeaways

  • Fourteen dollar lines per treaty go into the Counterparty tab: pre-reinsurance reserves are lines (1) plus (4), post-reinsurance reserves are (1) plus (2) minus (3), and line (2) is the assuming company's reserve "using the local jurisdiction requirements", a Bermuda scenario-based figure for most of the book.
  • Four RBC values per treaty follow in Section II.c: the ceding company's RBC denominator and ratio as filed, and both recalculated as if the block were recaptured, with Section V.c asking which of C-1, C-2 or C-3 drove the difference.
  • $1.3 trillion of reserves sat offshore at year-end 2025, 72% of it with affiliates (Fitch Ratings via Reinsurance News, September 2026); Section V.b asks the reason for a treaty only when the reinsurer is affiliated and reserves did not fall.
  • Five policyholder-behavior risks are named in Section III.a, including MYGA holders who renew at the end of the initial guarantee where lapse was assumed, and in-the-money GLWB elections that force sales of illiquid assets.

The Fourteen Lines on the Counterparty Tab

The year-end 2026 templates keep the eleven tabs of the 2025 set and add one block, rows 26 to 40 of the Counterparty tab. Lines (1) through (4) are the inputs. They are the US statutory reserve on retained business, the assuming company's reserve on its local basis, the part of that reserve backed by Guideline Excluded Assets, and the US statutory reserve the ceded liabilities would carry "if no reinsurance arrangement existed". AG 55 Section 3.F lists the excluded assets: non-admitted assets, letters of credit, contingent and credit-linked notes, excess-of-loss reinsurance and parental guarantees (NAIC, August 2025).

Lines (5) and (6) do the arithmetic. Pre-reinsurance reserves are (1) plus (4); post-reinsurance reserves are (1) plus (2) minus (3). Those totals diverge because line (2) is valued where the reinsurer sits, and for a Bermuda counterparty that is a scenario-based reserve. The Attribution tab walks the gap in steps; its placeholder runs from 100 to 60. A stylized funds-withheld coinsurance treaty on a MYGA block runs through all fourteen lines in the table below, in millions of dollars.

Line Item Stylized treaty
(1)US statutory reserves, retained business400
(2)Assuming company reserve, local basis880
(3)Of (2), backed by Guideline Excluded Assets40
(4)US statutory reserve on ceded liabilities, no reinsurance1,000
(5)Pre-reinsurance reserves: (1) + (4)1,400
(6)Post-reinsurance reserves: (1) + (2) − (3)1,240
(7)Starting Asset Amount, mandatory run1,240
(8)Starting Asset Amount, Alternative Run1,300
(9)Excess Capital in (8), beyond moderately adverse60
(10)Reserve credit for the block1,000
(11)Excess Capital % of reserve credit: (9) / (10)6.0%
(12)Contract overcollateralization2.0%
(13)(11) + (12)8.0%
(14)VM-22 reserven/a

Line (9) is the Excess Capital inside the Alternative Run's starting assets identified to support the block "in conditions that are beyond moderately adverse", the phrase Section 6.B.iv.(a)(4)(A) of the guideline ties to the RBC Model Act. Line (11) states it as a percentage of reserve credit, line (12) adds contractual overcollateralization, and line (13) sums them. In the stylized case a reserve decrease of 160, 16% of the ceded statutory reserve, sits behind a cushion of 8.0% of reserve credit.

RBC With and Without the Transaction

Section II.c asks for the ceding company's RBC denominator and ratio as filed, and again "calculated with the block of business on a pre-reinsurance basis", one treaty or aggregated set at a time. Section V.c then asks "what risk components (e.g., C-1, C-2, C-3) are driving the change in RBC" (NAIC LATF, September 2026).

An asset-intensive coinsurance treaty moves the annuity liability and the assets behind it, so the cedent's C-1 charge falls with the asset risk that transfers and its C-3 charge falls with the interest-sensitive liabilities. C-2 barely moves on a MYGA block. What remains on the cedent's side is a reserve credit and, on life RBC page LR016, a 0.78% counterparty charge that an offsetting 0.78% credit for affiliated, unauthorized and funds-withheld cessions returns to zero, per the site's August coverage of the E Committee's RBC referral.

Recomputing the ratio pre-reinsurance restores the C-1 and C-3 the treaty released. A treaty whose relief is mostly C-1 depends on the asset book behind it, and Section III.b reads that book directly: haircuts on selling private and illiquid assets, prepayment on assets assumed never to be sold, and "reliance on corporate bond default rates for assets with much higher gross yields than typical corporate bonds", with a cross-reference to the cedent's AG 53 report. Both guidance documents now read one portfolio, from the reserve side and the treaty side.

Milliman's January worked example shows how thin the cushion runs: $100 million of funds withheld, $95 million of it non-excluded, against a $90 million post-reinsurance reserve and $7 million of required RBC, leaves $1 million of dedicated excess capital (Milliman, January 2026). The E Committee's August 14 referral directed the Life RBC Working Group to build a recapture factor for year-end 2027. This guidance collects the per-treaty recapture arithmetic a year earlier, from the roughly 100 treaties the first cycle put in scope.

Negative IMR, the Affiliated Treaty That Kept Its Reserve, and the MYGA Spread

Section V says which filings the working group expects to question. Section V.b asks for "the reason(s) for the reinsurance transaction" only when the assuming company is affiliated and the post-reinsurance reserve is greater than or equal to the pre-reinsurance reserve. Fitch puts offshore ceded reserves at $1.3 trillion at year-end 2025, 72% affiliated and 85% in Bermuda (Reinsurance News, September 2026). An affiliated treaty that produced no reserve decrease has RBC relief as its remaining rationale, and Section II.c now puts a figure on it.

Section V.f asks for "commentary on the handling of negative IMR in relation to the retained reserve and the post-reinsurance AG 55 modeling". A deferred loss on bonds sold to fund a cession is negative IMR; whether it sits in the retained reserve, in the post-reinsurance modeling, or in neither moves line (6) and the starting assets in line (7). The NAIC deferred the IMR collateral question in the spring, as the site's June coverage noted, so the disclosure lands before the accounting rule it depends on.

Section V.e requires, "for disclosure only", a self-support demonstration for the MYGA product with the richest guarantee: average earned rate, guaranteed credited rate and its length, expenses as a percentage of account value, and whether post-guarantee profits are relied on. Read with Section III.a's third item, holders who renew at the end of the guarantee where lapse was assumed, the report states the spread on the block's richest guarantee and the lapse assumption that makes it work. The first cycle asked for neither.

The pre-reinsurance RBC ratio rests on a recapture that most of these treaties do not contemplate. Line (4) restates the ceded liabilities at US statutory value, but the assets that would return with them are the ones Section III.b asks the cedent to haircut, and the local reserve in line (2) would not survive the trip back. Cedents will be defending a ratio computed under conditions they cannot execute, for the Life RBC Working Group to calibrate a factor that applies whether or not they ever do.

Further Reading

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