With the NAIC's April 1, 2026 filing deadline for Actuarial Guideline 55 (AG 55) less than a month away, life insurers with asset-intensive reinsurance transactions face concrete compliance obligations that many are still working through. AG 55, effective December 31, 2025, requires cedants to incorporate reinsured business alongside net retained business in asset adequacy testing — a structural shift designed to ensure that cedants hold sufficient statutory reserves as offshore and onshore reinsurance volumes have grown significantly in recent years.
A hypothetical case study of Company XYZ, a large U.S. life insurer with multiple reinsurance counterparties, illustrates how a cedant applies the full AG 55 framework in practice — from scoping which treaties fall within the Guideline to assembling compliant documentation ahead of the filing deadline. This is the fourth paper in Milliman's ongoing AG 55 series, intended as a practical implementation reference for appointed actuaries navigating the first filing cycle.
Highlights
- Scoping and risk identification: How to apply the AG 55 decision tree across a mixed portfolio of onshore and offshore reinsurance treaties, including the size and concentration thresholds that determine whether a treaty is in scope.
- Testing approach: What AG 55 expects for methodology selection, scenario design, and assumption margins — and how to proceed when reinsurer asset data is unavailable.
- Starting asset amount: How to determine the mandatory cash flow testing starting asset amount and the conditions under which optional alternative runs may be justified.
- Attribution analysis and aggregation: How to decompose reserve differences between Pre- and Post-reinsurance reserves into attributable components, and the rules governing aggregation across treaties with the same counterparty.