MetLife explains new NAIC RBC factors that will impact insurer portfolios. Expect a similar change in AM Best BCAR factors?
"Taken as a whole, U.S. life insurance industry capital charges will increase as a result of the more granular RBC bond factors, largely owing to significant increases in capital charges for single-A and mid-to-low BBB securities. The biggest “winners” were the at the highest quality (AAA and AA+) and some high yield ratings buckets (BB+, B+ and CCC+), which received capital relief relative to the prior regime."
"There could be asset allocation implications as a result of the new RBC bond and REE factors: all else equal, compared to the prior RBC regime, high-quality structured finance, loans and real estate equity are more capital efficient, while private fixed income remains attractive given spread premiums to publics."