Defined terms for the annuity market and lifetime income landscape.
Related-party investment is an asset held in an insurance carrier's general account in which the asset, the issuer, or the asset manager is affiliated with the carrier's ownership group, governed by state insurance holding company act provisions on intra-group transactions.
Risk-based capital is the NAIC's standard framework for measuring the capital adequacy of US insurance carriers, calculating a required capital amount that scales with the specific risks each carrier bears and comparing it to actual capital to determine whether intervention is warranted.
The risk-based capital ratio is the standard summary measure of an insurance carrier's capital adequacy, calculated as the ratio of the carrier's total adjusted capital to its authorized control level risk-based capital amount and reported as a percentage.
A run-off carrier is an insurance company that has stopped writing new business and is administering its existing book of contracts until those contracts terminate through claims, surrender, death, or other natural expiry, without acquiring new policy obligations.
Spread compression is the narrowing of the difference between an insurance carrier's investment yield and the rate it credits to the contracts that yield supports, typically driven by rate changes that affect new-money asset yields more than the rates already promised to in-force owners.
