Monthly LRA Update: August 2026

JUDICIAL DEVELOPMENTS

Court Rules in Favor of Genworth in COI Dispute

On August 3, 2026, the U.S. District Court for the Eastern District of Virginia ruled in favor of Genworth Life and Annuity Insurance Company (“Genworth”) versus TVPX ARS, Inc. (“TVPX”).

The core of the litigation centered on whether Genworth had a contractual duty to reduce COI charges as mortality expectations improved. TVPX alleged Genworth breached the universal life policy contract by failing to lower COI rates (and in some periods increasing them), thereby overcharging policy cash values and depleting account values for thousands of policyholders. The plaintiff’s theory relied on a uniform COI provision stating COI rates “are determined by us according to expectations of future mortality” and that the insurer “can change the rates from time to time,” arguing those terms obligated affirmative adjustments when mortality improved.

The court granted class certification on the COI overcharge theory, finding the uniform policy language and a damages model suitable for class-wide adjudication. However, on the merits the court granted summary judgment for Genworth. Applying Connecticut contract law, the judge interpreted the COI clause as permissive rather than mandatory, concluding the language “we can change the rates from time to time” gives the insurer discretion to change rates but does not impose an affirmative duty to lower COI in response to improved mortality. The court further held that a “change in rates” reasonably refers to replacing or revising the underlying guaranteed COI Table (which Genworth had not done since 1995), not to periodic recalibrations tied to mortality improvements.

OTHER DEVELOPMENTS

NAIC Exposure Draft regarding ICOLI Reporting and RBC Treatment

On August 13, 2026, the Financial Condition (E) Committee agenda materials included Ref#2026‑08 — an exposure draft (“Exposure Draft”) of proposed revisions to SSAP No. 21 concerning Insurer‑Company‑Owned Life Insurance (ICOLI). The exposure packet and accompanying blanks proposals were formally posted for public comment.

The Exposure Draft notes that ICOLI investments have more than doubled in the four years since 2021 and that some companies’ ICOLI assets make up a significant portion of surplus (with one company over 100% and others over 50%). Because ICOLI policies are currently reported as “other-than-invested assets,” the carrying value is fully exempt from RBC for life insurers and only subject to a 5% charge for P/C and health insurers.

The Exposure Draft seeks comment on whether the amounts reported under SSAP No. 21, paragraph 9, should be reclassified to Schedule BA with a new reporting category for “Realizable Amounts Under ICOLI Policies,” with reporting lines to capture the amount outside of an investment vehicle, and the amounts within an investment vehicle, divided by investment category.

NAIC staff also recommended a referral to the Capital Adequacy (E) Task Force to inform them of this Exposure Draft and request initial feedback on the potential inclusion of these items as admitted invested assets and the appropriate RBC factors.

Three NAIC bodies are currently involved with this issue:

• The Statutory Accounting Principles (E) Working Group is the technical author of SSAP language and exposure drafts; it drafts the proposed accounting treatment, definitions, and disclosure requirements.
• The Accounting Practices & Procedures (E) Task Force assesses practical implementation, blank form mapping, and filing procedures, ensuring the SSAP changes can be reflected on the annual statement and related schedules.
• The Financial Condition (E) Committee provides oversight, receives referrals and exposure drafts from the Working Group and Task Force, coordinates cross‑group review (e.g., Capital Adequacy (E) Task Force or Life RBC Working Group), and ultimately votes on adoption or further referral.

As noted above, the Capital Adequacy (E) Task Force will likely be the body to deliberate what RBC treatment may be appropriate for ICOLI.

Comments are due by October 2, 2026.