Private Credit: A More Balanced Review of the NAIC PLR Review Process for Insurance Balance Sheets

In August 2024, the National Association of Insurance Commissioners (NAIC) passed an amendment that granted the Securities Valuation Office (SVO) the ability to review and challenge credit ratings that it does not believe are a reasonable measure of risk for regulatory purposes (the Discretion Amendment). Although the Discretion Amendment’s original January 2026 implementation has been delayed, it has focused attention on private letter ratings (PLR), the regulatory treatment of rated private assets, and the potential implications for U.S. life insurers’ risk-based capital (RBC) positions. KBRA views the potential impact of the Discretion Amendment through a measured analytical lens that considers the likely scope of reviews, the security-specific nature of potential outcomes, the distinction between required capital and statutory capital impairment, and the broader capital management tools available to insurers.

Key Takeaways