In the summer of 2025, Milliman conducted a brief survey with U.S. life and annuity industry companies to gauge the degree of industry readiness for the significant upcoming regulatory reforms involving the Generator of Economic Scenarios (GOES) and VM-22 principle-based reserving (PBR) for non-variable annuities. Given the scope and complexity of the changes involved, we believed a qualitative survey was valuable to understand common themes and perspectives amongst industry participants.

Since then, formal adoption of these reforms has been passed by the National Association of Insurance Commissioners (NAIC), and companies have begun mobilizing around 2026 implementation for GOES and potential optional adoption of VM-22. Despite the certainty of adoption for both GOES and VM-22 PBR reform, there were still a number of open decision points observed in survey responses. While the full survey results are only available to participants, below we present some of the key findings across the life and annuity industry.

How will the life and annuity industry implement GOES reform?

With the adoption of GOES reform around the corner, survey participants appear to still be somewhat undecided on how they will incorporate the new economic scenario generator into their principles-based reserving. Part of the indecision could be attributable to the same sentiments underpinning VM-22 reform readiness since, for some companies, the combination of GOES and VM-22 PBR reforms represents a significant regulatory shift to prepare for. However, based on industry feedback submitted throughout the GOES reform, it was not surprising to see that companies are still grappling with certain financial and operational implications of GOES reform.

How familiar are insurers with GOES scenarios?

In terms of operational readiness, general consensus leaned toward a limited level of comfort and familiarity with GOES scenarios. However, one important caveat is that the timing of this survey does not capture shifting outlooks companies have, as some may have ramped up engagement as adoption nears. Participating companies indicated an interest in more GOES documentation¹ and more time training their teams to build familiarity with the new generator, as many in the industry have developed a deep understanding of the American Academy of Actuaries’ Interest Rate Generator (AIRG), used for current PBR stochastic valuation and required capital calculations as the industry standard for many years. Delivery of the scenarios raised consistent concerns regarding version control of the GOES model and timing of data availability. Companies were largely undecided about the purchase of a GEMS Economic Scenario Generator license from Conning to access the scenarios, suggesting they are still weighing the GEMS license against reliance on the publicly accessible dataset, which will come from the NAIC via Conning.

Understanding assumption and methodology implications under GOES

A similar narrative played out regarding responses about assumption and methodology implications. The GOES model has an expanded lineup of modeled funds, but participants have not indicated whether that would change their modeling philosophy. The survey asked about the companies’ approach to fund mapping decisions, as well as modeling of custom funds and alternatives. Where applicable, there was clear variation in approach but, where custom funds or alternative assets were present, responding participants indicated they had existing methodologies to approximate these cases in ways that should be supported once GOES is adopted. Responses indicated it was unlikely for most participants that GOES reform would necessitate a change in hedge strategy or hedge modeling in a PBR framework.

GOES reform has been a priority for the NAIC for several years, and two rounds of field-testing have been supported, along with model office testing. Despite the field-testing, approximately half of the companies were unclear regarding the impacts of the new GOES reform on stochastic CTE results (for PBR) or had not performed testing. This could indicate that a number of companies have prioritized impact testing in the second half of 2025, as the NAIC has begun refreshing more recent valuation dates for testing in recent months. For those participants with a clearer view from the field-testing, reaction was mixed, with some companies expressing minimal impact and some companies indicating more research was necessary to understand the shift in CTE results with the new GOES. This is expected, as the impact of GOES, though generally expected to be adverse deep in the tail relative to the existing AIRG, will vary significantly based on each company’s business mix and risk profile. Richness of the liabilities, liability assumptions, hedge target, level of equity exposure, and other factors can all contribute to different impacts on reserves and capital levels (and consequently RBC ratios).

How will the life and annuity industry implement VM-22 PBR: Survey findings

As the industry approaches the VM-22 optional effective date of January 1, 2026, survey results are mixed regarding implementation decisions. In terms of adoption date, approximately half of the participants plan to implement VM-22 early (i.e., January 1, 2026). Other participants noted they will phase in adoption by product or wait until January 1, 2029, to implement, giving their company more time to get operationally prepared for the additional complications of VM-22. The two prevalent motivating factors for adoption decisions were operational readiness and anticipated reduction in reserves from the new framework.

Regarding the companies that are anticipating a product-by-product rollout of VM-22, the products being prioritized to implement first are fixed index annuities (FIAs), particularly the FIAs with guaranteed living benefit (GLB) riders. This parallels responses from survey participants on the tested impacts of VM-22, where participants that had tested impacts showed anticipated decreases of up to 20% for FIAs with GLB rider products. Other products tested by survey participants showed less of a reserve change and possible reserve increases.

VM-22 will introduce principles-based stochastic valuation for non-variable annuity products. Roughly half of the survey participants indicated they already perform stochastic analysis on non-variable annuities at their company. Examples of stochastic analysis already in place cited were cash-flow testing, risk planning, and U.S. GAAP market risk benefit modeling. Additionally, roughly half of the participants in the survey indicated a plan to evaluate the use of deterministic reserves and the stochastic exclusion test.

Companies will need to consider whether any changes to asset segmentation are necessary under VM-22. Most survey participants indicated they were still undecided on the impact of asset segmentation, and that they were in the early stages of evaluating any changes to asset segmentation. The expectation is that asset modeling under a VM-22 PBR framework will be a key implementation consideration for both pricing and valuation.

Next steps for implementing GOES reform and VM-22 PBR

As we approach 2026, we anticipate that companies will need to continue to evaluate their internal processes and actuarial models to be ready for implementation. As evidenced in the survey responses, there is still uncertainty in the industry about how to appropriately implement the changes and the impact these reforms may have on their financials.

Please reach out to the authors of this paper if you have any questions concerning the upcoming regulatory changes.

¹ On this point, Conning and NAIC appear to be receptive to the feedback, having recently published additional technical documentation relative to the timing of this article, although proprietary constraints may still remain.