At its recent meeting on April 4, 2023, the Restructuring Mechanisms (E) Working Group (the “Working Group”) of the US National Association of Insurance Commissioners (“NAIC”) continued to advance the best practices framework it is developing for Insurance Business Transfers (“IBTs”) and Corporate Divisions (“CDs”) in the United States.
An IBT is a transaction whereby a transferor insurer transfers existing insurance obligations to a transferee insurer without policyholder consent, but subject to regulatory and/or court approvals. As a result of an IBT, the transferee insurer becomes directly liable for the policyholders and the transferor insurer’s obligations in respect of the transferred policies are extinguished. By contrast, a CD is the division of one insurer into two or more resulting insurers, with assets and liabilities allocated among the resulting insurers, without policyholder consent but subject to regulatory and/or court approvals.
