Ohio regulators are weighing whether to shield risk-based capital (RBC) ratios of annuity issuers from public view, a move that has stirred debate within the financial industry. The discussion centers on how much capital insurers hold to meet their obligations to policyholders and annuity contract owners. The RBC ratio is a key metric in assessing an insurer’s financial health.
Allison Bell March 11, 2025
The primary concern driving this potential change, according to officials, is that public disclosure of these ratios could inadvertently encourage healthy insurers to take actions that may ultimately harm their financial stability. The argument is that making RBC ratios public could lead to market pressures that incentivize risky behavior, potentially undermining the long-term security of the annuity market.
However, representatives from industry giants such as Transamerica and the American Council of Life Insurers (ACLI) have voiced opposition, arguing that transparency surrounding RBC ratios is beneficial for both investors and consumers. They state that public access to this information allows for informed decision-making. Proponents of transparency believe that open communication fosters trust and allows consumers and investors to better evaluate the financial health of annuity providers.
The debate highlights the conflicting priorities of regulators seeking to maintain financial market stability while also ensuring that the public has access to the information necessary to make sound financial choices. The final decision by Ohio regulators will likely have ramifications for the annuity market and could set a precedent for other states facing similar considerations.
