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May 6, 2026 – Today, Pinpoint Policy Institute Executive Director Eric Ventimiglia testified before the National Association of Insurance Commissioners (NAIC) Risk-Based Capital Investment Risk and Evaluation (E) Working Group, urging commissioners to halt a proposed dramatic increase in risk-based capital (RBC) charges on middle-market collateralized loan obligations (MM CLOs).
The NAIC is considering a rule change that would force insurance companies to set aside significantly more money as a financial cushion against their investments in a specific type of financial product called a middle-market collateralized loan obligation, or MM CLO. MM CLOs pool together loans made to mid-sized American businesses and are used by insurers as investments. The proposed changes would dramatically increase the capital reserves insurers are required to hold against these investments — in some cases by more than sixfold — even though the data shows MM CLOs have a strong track record and the study behind the proposal never actually analyzed them. If insurers are forced to hold more capital, they may raise premiums on consumers or pull back from financing the mid-sized businesses that are the backbone of the American economy.
In his testimony, Ventimiglia stated:
“The analytical foundation for applying new RBC charges to middle-market CLOs does not exist. The American Academy of Actuaries study that underlies this proposal was built entirely on broadly syndicated loan CLO data. The Academy has said so publicly. It has explicitly stated that it cannot speak to the application of its proposed factors to MM CLOs because it did not analyze them. That is not a technicality. That is the entire basis for applying these charges to a categorically different asset class — and it is missing.”
Ventimiglia also raised serious concerns about the transparency of the deliberative process, noting that key determinations have been made in closed-door, regulator-only sessions without commissioner votes, and without opportunity for public comment.
Middle-market CLOs finance more than 200,000 American companies employing approximately 48 million people and accounting for roughly one-third of private-sector GDP. Since 2009, not a single MM CLO in S&P’s ratings coverage universe has defaulted.
The full text of Ventimiglia’s written testimony is available here.
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