Risk & Regulatory Consulting, LLC (“RRC” or “we”) supports the efforts of the Financial Stability (EX) Task Force and the Liquidity Assessment (EX) Subgroup (“Subgroup”) to provide additional tools to enable an assessment of macroprudential impacts on the broader financial markets of a liquidity stress impacting a number of insurers simultaneously.

We have reviewed the draft document “2019 NAIC Liquidity Stress Test Framework for Life Insurers Meeting the Scope Criteria” dated as of December 2019 and offer the following comments for your consideration. We would be glad to answer any questions, and we welcome the opportunity to offer our comments.

General Comments

1. We appreciate the efforts of the Subgroup to thoughtfully consider the issue and to develop a Liquidity Stress Test (“LST”) framework for large life insurers that would “aim to capture the impact on the broader financial markets of aggregate asset sales under a liquidity stress.” However, we would suggest the Subgroup not limit the objective to capturing the impact of asset sales only, but consider other impacts as well, such as consumer confidence issues, run-on-the-bank outcomes, debt market capacity, etc. and their impacts on the broader economy. This might serve to inform the actual development of the framework itself and provide even more benefit.