US insurers are filing their annual statutory reports under a fundamentally different set of rules this year, after regulators approved the most sweeping overhaul of investment disclosure requirements in more than a decade.
S&P Global said the changes, which took effect with 2025 filings, mark the most significant revision to statutory investment schedules in 14 years and introduce new reinsurance transparency requirements for life insurers.
At the center of the overhaul is the Principles-Based Bond Definition framework, which replaced a decades-old rules-based classification system on January 1, 2025. Insurers must now assess the economic substance of each holding.
Securities that do not represent a true creditor relationship, including instruments with equity-like features that previously qualified as bonds, must be moved to Schedule BA, where they carry higher capital charges.
The shift was years in the making. As Forvis Mazars noted in an August 2024 analysis, prolonged low interest rates had driven carriers and the investment community to develop vehicles blending debt- and equity-like features to generate yield while still meeting legacy classification requirements.
Schedule D, Part 1 has been reorganized into two sections, Issuer Credit Obligations and Asset-Backed Securities, with new data fields covering interest income, payment-in-kind interest, overcollateralization and collateral-type disclosure.
S&P noted that year-over-year comparisons will be limited, as 2025 filings lack a prior-year baseline for many of the new fields.
More troubling is the consistency of reporting. S&P's review of identical securities held by multiple insurers found that roughly 30% were classified under different asset types, with some securities assigned up to nine categories.
Many carried private placement CUSIPs, suggesting they were structured specifically for insurance company balance sheets.
The problem is widely recognized. At the NAIC's Spring 2025 national meeting, staff acknowledged that reporting under the new codes had proven inconsistent across companies. J.P. Morgan Asset Management noted in its meeting summary that P&C and health insurers with securities reclassified to Schedule BA now face capital charges as high as 20%.
The NAIC has since proposed new examiner handbook procedures requiring insurers to document how they determine whether a security qualifies as a bond under the PBBD.
The revisions also target the life sector's growing use of capital-motivated reinsurance. A new Schedule S, Part 8 requires life insurers to disclose ceded and assumed assets supporting modified coinsurance and funds-withheld arrangements.
S&P said the schedule addresses a reporting gap that has widened as these structures have proliferated.
Through the first three quarters of 2025, asset-backed securities holdings grew faster than issuer credit obligations across both P&C and life sectors, S&P said. Private letter rated bonds stood at 11.6% of estimated bond fair value for life groups as of September 30, 2025.
Life insurers also remain more heavily concentrated in NAIC-2 rated investment grade bonds than their P&C counterparts.
In most jurisdictions, annual statutory filings were due on or before March 1.
