2005 Nevada Revised Statutes - Chapter 681B — Assets and Liabilities
CHAPTER 681B - ASSETS AND LIABILITIES
NRS 681B.010 Assets.
NRS 681B.020 Assetsnot allowed.
NRS 681B.030 Disallowanceof asset arranged to deceive.
NRS 681B.040 Liabilities.
NRS 681B.050 Reservesfor losses from casualty insurance.
NRS 681B.060 Reservefor unearned premiums.
NRS 681B.070 Reservefor unearned premiums for marine and transportation insurance.
NRS 681B.080 Reservesfor policies of health insurance.
NRS 681B.100 Contingencyreserves for insurance of repayment of debt secured by mortgage.
NRS 681B.110 Standardof valuation: Valuation and calculation of reserves; acceptance of valuation byanother state or jurisdiction.
NRS 681B.120 Standardof valuation: Minimum standards for policies and contracts.
NRS 681B.125 Standardof valuation: Interest rates for minimum standard.
NRS 681B.130 Standardof valuation: Reserves; modified net premiums; calculations; minimum aggregatereserves.
NRS 681B.140 Standardof valuation: Calculation of reserves on higher or lower standards; rate ofinterest.
NRS 681B.145 Standardof valuation: Reserves for plan of life insurance.
NRS 681B.150 Standardof valuation: Minimum reserve.
NRS 681B.160 Valuationof bonds.
NRS 681B.170 Valuationof other securities.
NRS 681B.180 Valuationof property.
NRS 681B.190 Valuationof purchase money mortgages.
NRS 681B.200 Lifeinsurance: Qualified actuary defined.
NRS 681B.210 Lifeinsurance: Insurer to submit annual opinion of qualified actuary as tocomputation of reserves and related actuarial items.
NRS 681B.220 Lifeinsurance: Insurer to submit annual opinion of qualified actuary as tosufficiency of reserves and related actuarial items.
NRS 681B.230 Lifeinsurance: Opinion of actuary to be supported by memorandum; Commissioner maycause independent actuary to review opinion under certain circumstances.
NRS 681B.240 Lifeinsurance: Requirements for opinion of actuary.
NRS 681B.250 Lifeinsurance: Liability of qualified actuary; disciplinary action.
NRS 681B.260 Lifeinsurance: Confidentiality of material provided by insurer to Commissioner.
NRS 681B.270 Regulationsregarding standards for valuation of reserves of insurers.
NRS 681B.280 Insurersto report material acquisition or disposition of assets; regulations.
NRS 681B.290 Insurerto report its level of risk-based capital; regulations; exemption.
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NRS
1. Cash in the possession of the insurer, or intransit under its control, and including the true balance of any deposit in asolvent bank, credit union or trust company.
2. Investments, securities, properties and loansacquired or held in accordance with this Code, and in connection therewith thefollowing items:
(a) Interest due or accrued on any bond or evidence ofindebtedness which is not in default and which is not valued on a basisincluding accrued interest.
(b) Declared and unpaid dividends on stock and shares,unless such amount has otherwise been allowed as an asset.
(c) Interest due or accrued upon a collateral loan inan amount not to exceed 1 years interest thereon.
(d) Interest due or accrued on deposits in solventbanks, credit unions and trust companies, and interest due or accrued on otherassets, if such interest is, in the judgment of the Commissioner, a collectibleasset.
(e) Interest due or accrued on a mortgage loan, in anamount not exceeding in any event the amount, if any, of the excess of thevalue of the property less delinquent taxes thereon over the unpaid principal;but in no event may interest accrued for a period in excess of 18 months beallowed as an asset.
(f) Rent due or accrued on real property if such rentis not in arrears for more than 3 months, and rent more than 3 months in arrearsif the payment of such rent is adequately secured by property held in the nameof the tenant and conveyed to the insurer as collateral.
(g) The unaccrued portion of taxes paid before the duedate on real property.
3. Premium notes, policy loans and other policy assetsand liens on policies and certificates of life insurance and annuity contractsand accrued interest thereon, in an amount not exceeding the legal reserve andother policy liabilities carried on each individual policy.
4. The net amount of uncollected and deferred premiumsand annuity considerations in the case of a life insurer.
5. Premiums in the course of collection, other thanfor life insurance, not more than 3 months past due, less commissions payablethereon. The foregoing limitation does not apply to premiums payable directlyor indirectly by the United States Government or by any of itsinstrumentalities.
6. Installment premiums other than life insurancepremiums to the extent of the unearned premium reserve carried on the policy towhich premiums apply.
7. Notes and like written obligations not past due,taken for premiums other than life insurance premiums, on policies permitted tobe issued on such basis, to the extent of the unearned premium reserves carriedthereon.
8. The full amount of reinsurance recoverable by aceding insurer from a solvent reinsurer, which reinsurance is authorized under
9. Amounts receivable by an assuming insurerrepresenting money withheld by a solvent ceding insurer under a reinsurancetreaty.
10. Deposits or equities recoverable from underwritingassociations, syndicates and reinsurance funds, or from any suspended financialinstitution, to the extent deemed by the Commissioner available for the paymentof losses and claims and at values to be determined by him.
11. All such assets, whether or not consistent withthe provisions of this section, as may be allowed pursuant to the annualstatement form approved by the Commissioner for the kinds of insurance to bereported upon therein.
12. As to a title insurer, its title plant andequipment reasonably necessary for the conduct of its abstract or titleinsurance business, at not to exceed the cost thereof.
13. Electronic and mechanical machines and relatedequipment constituting a data processing, recordkeeping or accounting system orsystems if the cost of each such system is at least $25,000, which cost must beamortized in full over a period not to exceed 10 years. The aggregate amountinvested in all such systems must not exceed 5 percent of the insurers assets.
14. Other assets, not inconsistent with the provisionsof this section, deemed by the Commissioner to be available for the payment oflosses and claims at values to be determined by him.
(Added to NRS by 1971, 1607; A 1993, 1447; 1995, 470;1997, 299; 1999, 1547)
NRS
1. In additionto assets impliedly excluded by the provisions of
(a) Goodwill,trade names and other like intangible assets.
(b) Advances toofficers, other than policy loans, whether secured or not, and advances toemployees, agents and other persons on personal security only.
(c) Stock ofsuch insurer, owned by it, or any equity therein or loans secured thereby, orany proportionate interest in such stock acquired or held through the ownershipby such insurer of an interest in another firm, corporation or business unit.
(d) Furniture,fixtures, furnishings, safes, vehicles, libraries, stationery, literature andsupplies, other than data processing, recordkeeping and accounting systems authorizedunder subsection 13 of NRS 681B.010,except:
(1) Inthe case of title insurers such materials and plants as the insurer is expresslyauthorized to invest in under NRS 682A.220;and
(2) Inthe case of any insurer, such personal property as the insurer is permitted tohold pursuant to chapter 682A of NRS, orwhich is reasonably necessary for the maintenance and operation of realproperty lawfully acquired and held by the insurer other than real propertyused by it for home office, branch office and similar purposes.
(e) The amount,if any, by which the aggregate book value of investments as carried in theledger assets of the insurer exceeds the aggregate value thereof as determinedunder this Code.
2. If any successor organization to the StateIndustrial Insurance System that was established by section 79 of chapter 642,Statutes of Nevada 1981, at page 1449, wishes to transact in this stateproperty or casualty insurance other than industrial insurance, the moneyrequired to be held in trust by that organization pursuant to
(Added to NRS by 1971, 1608; A
NRS
1. The Commissioner shall disallow as an asset or as acredit against liabilities any reinsurance found by him after a hearing thereonto have been arranged for the purpose principally of deception as to the cedinginsurers financial condition as of the date of any financial statement of theinsurer. Without limiting the general purport of the foregoing provision, reinsuranceof any substantial part of the insurers outstanding risks contracted for infact within 4 months prior to the date of any such financial statement andcancelled in fact within 4 months after the date of such statement, orreinsurance under which the reinsurer bears no substantial insurance risk orchance of net loss to itself, shall prima facie be deemed to have been arrangedprincipally for the purpose of deception.
2. The Commissioner shall disallow as an asset anydeposit, funds or other assets of the insurer found by him after a hearingthereon:
(a) Not to be in good faith the property of theinsurer;
(b) Not freely subject to withdrawal or liquidation bythe insurer at any time for the payment or discharge of claims or otherobligations arising under its policies; and
(c) To be resulting from arrangements made principallyfor the purpose of deception as to the insurers financial condition as at thedate of any financial statement of the insurer.
3. The Commissioner may suspend or revoke thecertificate of authority of any insurer which has knowingly been a party to anysuch deception or attempted deception.
(Added to NRS by 1971, 1609)
NRS
1. The amount of its capital stock outstanding, ifany.
2. The amount, estimated to be consistent with theprovisions of this Code, necessary to pay all of its unpaid losses and claimsincurred on or prior to the date of the statement, whether reported orunreported, together with the expenses of adjustment or settlement thereof.
3. With reference to life insurance policies andannuity contracts, and disability and accidental death benefits in orsupplemental thereto:
(a) The amount of reserves on life insurance policiesand annuity contracts in force, valued according to the tables of mortality,rates of interest and methods adopted pursuant to this Code which areapplicable thereto.
(b) Reserves for disability benefits, for both activeand disabled lives.
(c) Reserves for accidental death benefits.
(d) Any additional reserves which may be required bythe Commissioner consistent with applicable customary and general practice in insuranceaccounting.
4. As to health insurance policies, the reservesrequired under NRS 681B.080.
5. With reference to insurance other than specified insubsections 3 and 4, and other than title insurance, the amount of the unearnedpremium reserves computed in accordance with
6. Taxes, expenses and other obligations due oraccrued at the date of the statement.
(Added to NRS by 1971, 1609)
NRS
1. As to casualty insurance transacted by it, eachinsurer shall maintain at all times reserves in an amount estimated in theaggregate to provide for payment of all losses and claims incurred, whetherreported or unreported, which are unpaid and for which the insurer may beliable and to provide for the expenses of adjustment or settlement of lossesand claims. The reserves must be computed in accordance with regulationsadopted from time to time by the Commissioner upon reasonable consideration ofthe ascertained experience and the character of such kind of business for thepurpose of adequately protecting the insured and the solvency of the insurer.
2. Whenever the loss and loss expense experience ofthe insurer show that reserves, calculated in accordance with thoseregulations, are inadequate, the Commissioner may require the insurer tomaintain additional reserves.
3. The minimum reserve requirements prescribed by theCommissioner for unpaid losses and loss expenses incurred during each of themost recent 3 years for coverages included in the lines of business describedin the insurers annual statement as workmens compensation, liability otherthan automobile (B.I.), and automobile liability (B.I.) must not be less thanthe following: For workmens compensation, 65 percent of premiums earned duringeach year less the amount already paid for losses and expenses incidentalthereto incurred during the year; for liability other than automobile (B.I.)and automobile liability (B.I.), 60 percent of premiums earned during each yearless the amount already paid for losses and expenses incidental theretoincurred during the year.
4. The Commissioner may, by regulation, prescribe themanner and form of reporting pertinent information concerning the reservesprovided for in this section.
(Added to NRS by 1971, 1610; A 1981, 105)
NRS
1. As to property, casualty and surety insurance theinsurer shall maintain as a liability an unearned premium reserve on allpolicies in force.
2. Except as provided in
(Added to NRS by 1971, 1611)
NRS
(Added to NRS by 1971, 1611)
NRS
(Added to NRS by 1971, 1611)
NRS
1. Casualty or surety insurers insuring real propertymortgage lenders against loss by reason of nonpayment of the mortgageindebtedness by the borrower shall maintain a contingency reserve for theprotection of policyholders against the effects of adverse economic cycles.
2. The insurer shall contribute to such contingencyreserve 50 percent of net premiums (gross premiums less premiums returned topolicyholders) written on such insurance remaining after establishment of theunearned premium reserve.
3. Subject to the Commissioners approval, thecontingency reserve shall be available for payment of losses only when theinsurers incurred losses in any 1 calendar year exceed the rate formulaexpected losses by 10 percent of the related earned premiums.
(Added to NRS by 1971, 1612)
NRS
1. The Commissioner shall, in the manner provided by
2. The Commissioner may certify the amount of any suchreserves, specifying the mortality table or tables, rate or rates of interestand methods used in the calculation of the reserves.
3. The Commissioner may:
(a) Use any method, including group methods and the netlevel premium method, in the calculation of the reserves.
(b) Use approximate averages for fractions of a year orother period to calculate the reserves.
(c) In lieu of the valuation of the reserves requiredof any foreign or alien company, accept any valuation made, or caused to bemade, by an insurance supervisory officer of any other state or jurisdiction ifhis valuation complies with the minimum standard required by
4. Any such insurer which at any time has adopted anystandard of valuation producing greater aggregate reserves than thosecalculated according to the minimum standard provided in
(Added to NRS by 1971, 1612; A 1983, 938)
NRS
1. Except as otherwise provided in subsection 3 and inNRS 681B.125, the minimum standardsfor the valuation of all policies and contracts issued before January 1, 1972,are as follows:
(a) The legal minimum standard for valuation ofcontracts issued before January 1, 1942, is a basis not lower than that usedfor the annual statement of the year during which the policies were issued, andfor contracts issued on and after January 1, 1942, is the American ExperienceTable of Mortality with either Craigs or Buttolphs Extension for ages under10, with interest at not more than 3.5 percent per annum. Annuities and pureendowments purchased under group annuity and pure endowment contracts must bevalued in the same manner, with interest at not more than 5 percent. Suchpolicies may provide for not more than 1-year preliminary term insurance byincorporating therein a clause plainly showing that the first years insuranceunder the contract is term insurance purchased by the whole or part of thepremiums to be received during the first year of the contract.
(b) The legal minimum standard for the valuation ofgroup life insurance policies under which the premium rates are not guaranteedfor more than 5 years is the American Men Ultimate Table of Mortality withinterest at not more than 3.5 percent per annum.
(c) The legal minimum standard for the valuation ofindustrial policies is the American Experience Table of Mortality or theStandard Industrial Mortality Table or the Substandard Industrial MortalityTable with interest at not more than 3.5 percent per annum by the net levelpremium method, or in accordance with their terms by the modified preliminaryterm method described in this section.
(d) Reserves for all such policies and contracts may becalculated, at the option of the insurer, according to any standards whichproduce greater aggregate reserves than the minimum reserves required by thissubsection.
2. Except as otherwise provided in subsection 3 and inNRS 681B.125, the minimum standardsfor the valuation of all policies and contracts issued on or after January 1,1972, are the Commissioners reserve valuation methods defined in
(a) For all ordinary policies of life insurance issuedon the standard basis, excluding any disability and accidental death benefitsin such policies, the Commissioners 1941 Standard Ordinary Mortality Tableuntil the operative date of NRS 688A.340,and, for all such policies issued on and after the operative date of
(1) The Commissioners 1980 Standard OrdinaryMortality Table;
(2) At the election of the insurer for any oneor more specified plans of life insurance, the Commissioners 1980 StandardOrdinary Mortality Table with Ten-Year Select Mortality Factors; or
(3) Any ordinary mortality table which isadopted after 1980 by the National Association of Insurance Commissioners andis approved by a regulation adopted by the Commissioner,
may be usedin determining the minimum standard of valuation for such policies.
(b) For all industrial life insurance policies issuedon the standard basis, excluding any disability and accidental death benefitsin such policies, the 1941 Standard Industrial Mortality Table for suchpolicies issued before the operative date of
(c) For individual annuity and pure endowmentcontracts, excluding any disability and accidental death benefits in suchpolicies, the 1937 Standard Annuity Mortality Table, or, at the option of theinsurer, the Annuity Mortality Table for 1949, Ultimate, or any modification ofeither of these tables approved by the Commissioner.
(d) For group annuity and pure endowment contracts,excluding any disability and accidental death benefits in such policies, theGroup Annuity Mortality Table for 1951, any modification of that table approvedby the Commissioner, or, at the option of the insurer, any of the tables ormodifications of tables specified for individual annuity and pure endowmentcontracts.
(e) For total and permanent disability benefits in orsupplementary to ordinary policies or contracts, for policies or contractsissued on or after January 1, 1966, the tables of Period 2 disablement ratesand the 1930 to 1950 termination rates of the 1952 Disability Study of theSociety of Actuaries, with due regard to the type of benefit, or any tables ofdisablement rates and termination rates which are adopted after 1980 by theNational Association of Insurance Commissioners and are approved by aregulation adopted by the Commissioner for use in determining the minimumstandard of valuation for such policies; and for policies or contracts issuedon or after January 1, 1961, and before January 1, 1966, either such tables or,at the option of the insurer, the Class (3) Disability Table (1926).
(f) Benefits for accidental death in or supplementaryto policies, for policies issued on or after January 1, 1966, the 1959Accidental Death Benefits Table, or any accidental death benefits table whichis adopted after 1980 by the National Association of Insurance Commissioners andis approved by a regulation adopted by the Commissioner for use in determiningthe minimum standard of valuation for such policies; and for policies issued onor after January 1, 1961, and before January 1, 1966, either such table or, atthe option of the insurer, the Inter-Company Double Indemnity Mortality Table.Either table must be combined with a mortality table permitted for calculatingthe reserves for life insurance policies.
(g) For group life insurance, for life insurance issuedon the substandard basis and for special benefits, such tables as may beapproved by the Commissioner.
3. Except as provided in
(a) For individual annuity and pure endowment contractsissued before July 1, 1977, excluding any disability and accidental deathbenefits in such contracts, the 1971 Individual Annuity Mortality Table, or anymodification of the table approved by the Commissioner, and 6 percent interestfor single premium immediate annuity contracts, and 4 percent interest for allother individual annuity and pure endowment contracts.
(b) For individual single premium immediate annuitycontracts issued on or after July 1, 1977, excluding any disability andaccidental death benefits in such contracts, the 1971 Individual AnnuityMortality Table, or any individual annuity mortality table which is adoptedafter 1980 by the National Association of Insurance Commissioners and is approvedby a regulation adopted by the Commissioner for use in determining the minimumstandard of valuation for such contracts, or any modification of those tablesapproved by the Commissioner, and 7.5 percent interest.
(c) For individual annuity and pure endowment contractsissued on or after July 1, 1977, other than single premium immediate annuitycontracts, excluding any disability and accidental death benefits in suchcontracts, the 1971 Individual Annuity Mortality Table or any individualannuity mortality table which is adopted after 1980 by the National Associationof Insurance Commissioners and is approved by a regulation adopted by theCommissioner for use in determining the minimum standard of valuation for suchcontracts, or any modification of those tables approved by the Commissioner,and 5.5 percent interest for single premium deferred annuity and pure endowmentcontracts and 4.5 percent interest for all other such individual annuity andpure endowment contracts.
(d) For all annuities and pure endowments purchasedbefore July 1, 1977, under group annuity and pure endowment contracts,excluding any disability and accidental death benefits purchased under suchcontracts, the 1971 Group Annuity Mortality Table, or any modification of thattable approved by the Commissioner, and 6 percent interest.
(e) For all annuities and pure endowments purchased onor after July 1, 1977, under group annuity and pure endowment contracts,excluding any disability and accidental death benefits purchased under suchcontracts, the 1971 Group Annuity Mortality Table, or any group annuitymortality table which is adopted after 1980 by the National Association ofInsurance Commissioners and is approved by a regulation adopted by the Commissionerfor use in determining the minimum standard of valuation for such annuities andpure endowments, or any modification of those tables approved by theCommissioner, and 7.5 percent interest.
4. After July 1, 1973, any insurer may file with theCommissioner a written notice of its election to comply with the provisions ofsubsection 3 after a specified date before January 1, 1979, which then becomesthe valuation operative date for the insurer, but an insurer may elect adifferent valuation operative date for individual annuity and pure endowmentcontracts from that elected for group annuity and pure endowment contracts. Ifan insurer makes no such election, the valuation operative date for the insureris January 1, 1979.
(Added to NRS by 1971, 1613; A 1973, 721; 1977, 682;1983, 939)
NRS
1. This section sets forth the interest rates used indetermining the minimum standard for valuation of:
(a) All life insurance policies issued in a particularcalendar year on or after the operative date of
(b) All individual annuity and pure endowment contractsissued in a particular calendar year on or after January 1, 1984;
(c) All annuities and pure endowments purchased in aparticular calendar year on or after January 1, 1984, under group annuity andpure endowment contracts; and
(d) The net increase, if any, in a particular calendaryear after January 1, 1984, in amounts held under contract which haveguaranteed interest.
2. The interest rates for valuation must be determinedas follows, and the results rounded to the nearer one-quarter of 1 percent:
(a) For life insurance:
I = .03+ W (R1 - .03) + W/2 (R
(b) For single-premium immediate annuities and forannuity benefits involving life contingencies arising from other annuities withoptions for cash settlement and from contracts which have guaranteed interestwith options for cash settlement:
I = .03+ W (R - .03)
where
R1is the lesser of R and .09,
R2is the greater of R and .09,
R is the reference interest rate definedin this
section, and
W is the weighting factor defined in thissection.
(c) For other annuities with options for cashsettlement and contracts which have guaranteed interest with options for cashsettlement, valued on the basis of the year issued, except as stated inparagraph (b), the formula for life insurance set forth in paragraph (a)applies to annuities and contracts which have guaranteed interest with aguaranteed duration in excess of 10 years, and the formula for single-premium immediateannuities stated in paragraph (b) applies to annuities and contracts which haveguaranteed interest with guaranteed durations of 10 years or less.
(d) For other annuities with no options for cashsettlement and for contracts which have guaranteed interest with no options forcash settlement, the formula for single-premium immediate annuities set forthin paragraph (b) applies.
(e) For other annuities with options for cashsettlement and contracts which have guaranteed interest with no options forcash settlement which are valued on the basis of a change in its fund theformula for single-premium immediate annuities stated in paragraph (b) applies.
(f) If the interest rate for valuation for any lifeinsurance policies issued in any calendar year determined without reference tothis sentence differs from the corresponding actual rate for similar policiesissued in the immediately preceding calendar year by less than one-half of 1percent, the interest rate for the valuation of such life insurance policies isequal to the corresponding actual rate for the immediately preceding calendaryear. The interest rate for the valuation of life insurance policies issued ina calendar year must be determined for 1980 using the reference interest ratedefined for 1979 and must be determined for each subsequent calendar year regardlessof when NRS 688A.325 becomes operativewith respect to the insurer.
3. The weighting factors referred to in the formulasset forth in subsection 2 are given in the following tables:
(a) Weighting Factors for Life Insurance:
Guarantee
Duration Weighting
(Years) Factors
10 or less.............................................................................................................. .50
More than 10 but not more than 20................................................................. .45
More than 20....................................................................................................... .35
For life insurance, the duration of the guarantee is themaximum number of years the life insurance can remain in force on a basisguaranteed in the policy or under options to convert to plans of life insurancewith premium rates or nonforfeiture values, or both, which are guaranteed inthe original policy;
(b) The weighting factor for single-premium immediateannuities and for annuity benefits involving life contingencies arising fromother annuities with options for cash settlement and contracts which haveguaranteed interest with options for cash settlement is .80; and
(c) Weighting factors for other annuities and forcontracts which have guaranteed interest except as stated in paragraph (b), arespecified in the tables in subparagraphs (1), (2) and (3), according to therules and definitions in subparagraphs (4), (5) and (6) as follows:
(1) For annuities and contracts which haveguaranteed interest valued on the basis of the year issued:
Guarantee
Duration WeightingFactor
(Years) forPlan Type
A B C
5 or less...................................................................... .80 .60 .50
More than 5, but not more than 10........................ .75 .60 .50
More than 10, but not more than 20...................... .65 .50 .45
More than 2............................................................... .45 .35 .35
(2) For annuities and contracts which haveguaranteed interest valued on a change in fund basis, the factors shown insubparagraph (1):
WeightingFactor
forPlan Type
A B C
Increased by............................................................. .15 .25 .05
(3) For annuities and contracts which haveguaranteed interest valued on the basis of the year issued, (other than thosewith no options for cash settlement) which do not guarantee interest onconsiderations received more than 1 year after issue or purchase and forannuities and contracts which have guaranteed interest valued on a change infund basis which do not guarantee interest rates on considerations receivedmore than 12 months beyond the valuation date, the factors shown insubparagraph (1) or derived in subparagraph (2) increased by .05.
(4) For other annuities with options for cashsettlement and contracts which have guaranteed interest with options for cashsettlement, the guaranteed duration is the number of years for which thecontract guarantees interest rates in excess of the interest rate for thevaluation of life insurance policies with a guaranteed duration in excess of 20years. For other annuities with no options for cash settlement and forcontracts which have guaranteed interest with no options for cash settlement,the guaranteed duration is the number of years from the date of issue or dateof purchase to the date on which the annuity benefits are scheduled tocommence.
(5) The types of plans listed in this subsectionhave the following characteristics:
Plan Type A
Under this plan the policyholder:
(I) May withdraw money only with anadjustment to reflect changes in interest rates or the value of assets sincethe insurers receipt of the money, or without such an adjustment but ininstallments payable over 5 years or more;
(II) May withdraw money as an immediatelife annuity; or
(III) Is not permitted to withdraw money.
Plan Type B
Under this plan, before expiration of theguaranteed interest rate, the policyholder:
(I) May withdraw money only with anadjustment to reflect changes in interest rates or the value of assets sincethe insurers receipt of the money, or without such an adjustment but ininstallments payable over 5 years or more; or
(II) Is not permitted to withdraw money.
At the endof the guaranteed interest rate, the policyholder may withdraw money withoutsuch an adjustment in a single sum or in installments over a period of lessthan 5 years.
Plan Type C
Under this plan the policyholder may withdrawmoney before expiration of the guaranteed interest rate in a single sum or ininstallments over a period of less than 5 years:
(I) Without any adjustment to reflectchanges in interest rates or the value of assets since the insurers receipt ofthe money; or
(II) Subject only to a fixed charge forsurrender which is stipulated in the contract as a percentage of the fund.
(6) An insurer may elect to value contractswhich have guaranteed interest with options for cash settlement and annuitieswith options for cash settlement on the basis of the year issued or a change infund basis. Contracts which have guaranteed interest but no options for cashsettlement and annuities with no options for cash settlement must be valued onthe basis of the year issued. As used in this section, valuation on the basisof the year issued means a basis of valuation under which the interest rateused to determine the minimum standard of valuation for the entire duration ofan annuity or contract with guaranteed interest is the interest rate ofvaluation for the year of issue or the year of purchase of the annuity orcontract, and change in fund basis of valuation means a basis of valuationunder which the interest rate used to determine the minimum standard ofvaluation applicable to each change in the fund held under the annuity orcontract is the interest rate for valuation for the year of the change in thefund.
4. For purposes of subsection 2, reference interestrate means:
(a) For all life insurance, the lesser of the averageover 36 months and the average over 12 months, ending on June 30 of thecalendar year next preceding the year of issue, of Moodys Corporate Bond YieldAverageMonthly Average Corporates, as published by Moodys Investors Service,Inc.
(b) For single-premium immediate annuities, annuitybenefits involving life contingencies arising from other annuities with optionsfor cash settlement and contracts which have guaranteed interest with optionsfor cash settlement, the average over 12 months, ending on June 30 of thecalendar year of issue or year of purchase, of Moodys Corporate Bond YieldAverageMonthly Average Corporates, as published by Moodys Investors Service,Inc.
(c) For other annuities with options for cashsettlement and contracts which have guaranteed interest with options for cashsettlement, valued on the basis of the year issued, except as stated inparagraph (b), with a guaranteed duration of more than 10 years, the lesser ofthe average over 36 months and the average over 12 months, ending on June 30 ofthe calendar year of issue or purchase, of Moodys Corporate Bond YieldAverageMonthly Average Corporates, as published by Moodys Investors Service,Inc.
(d) For other annuities with options for cashsettlement and guaranteed interest with options for cash settlement, valued onthe basis of the year issued, except as stated in paragraph (b), with aguaranteed duration of 10 years or less, the average over 12 months, ending onJune 30 of the calendar year issued or purchased, of Moodys Corporate BondYield AverageMonthly Average Corporates, as published by Moodys InvestorsService, Inc.
(e) For other annuities with no options for cashsettlement and for contracts which have guaranteed interest with no option forcash settlement, the average over 12 months, ending on June 30 of the calendaryear issued or purchased, of Moodys Corporate Bond Yield AverageMonthlyAverage Corporates, as published by Moodys Investors Service, Inc.
(f) For other annuities with options for cashsettlement and contracts which have guaranteed interest with options for cashsettlement valued on a change in fund basis, except as stated in paragraph (b),the average over 12 months, ending on June 30 of the calendar year of thechange in the fund, of Moodys Corporate Bond Yield AverageMonthly AverageCorporates, as published by Moodys Investors Service, Inc.
5. If the publication of Moodys Corporate Bond YieldAverageMonthly Average Corporates by Moodys Investors Service, Inc., ends orthe National Association of Insurance Commissioners determines that MoodysCorporate Bond Yield AverageMonthly Average Corporates is no longerappropriate for determination of the reference interest rate, an alternativemethod for determination of the reference interest rate which is adopted by theNational Association of Insurance Commissioners and approved by regulation ofthe Commissioner may be substituted.
(Added to NRS by 1983, 934)
NRS
1. Except as otherwise provided in subsection 4 and inNRS 681B.150, reserves, according tothe Commissioners reserve valuation method, for the life insurance andendowment benefits of policies providing for a uniform amount of insurance andrequiring the payment of uniform premiums must be the excess, if any, of thepresent value, at the date of valuation, of the future guaranteed benefits providedfor by the policies over the then present value of any future modified net premiumstherefor. The modified net premiums for the policy must be such a uniformpercentage of the respective contract premiums for those benefits that thepresent value, at the date of issue of the policy, of all the modified netpremiums are equal to the sum of the then present value of the benefitsprovided for by the policy and the excess of the premium set forth in paragraph(a) over that set forth in paragraph (b), as follows:
(a) A net level annual premium equal to the presentvalue, at the date of issue, of such benefits provided for after the firstpolicy year, divided by the present value, at the date of issue, of an annuityof one per annum payable on the first and each subsequent anniversary of suchpolicy on which a premium falls due. The net level annual premium must notexceed the net level annual premium on the 19-year premium whole life plan forinsurance of the same amount at an age 1 year higher than the age at the timethe policy is issued.
(b) A net 1-year term premium for such benefitsprovided for in the first policy year.
2. If any life insurance policy issued on or afterJanuary 1, 1987, for which the contract premium in the first policy yearexceeds that of the second year, and for which no comparable additional benefitis provided in the first year in return for the excess premium and whichprovides an endowment benefit or a cash surrender value or a combinationthereof in an amount greater than the excess premium, the reserve according tothe Commissioners reserve valuation method as of any policy anniversaryoccurring on or before the assumed ending date, which is the first policy anniversaryon which the sum of any endowment benefit and any cash surrender value thenavailable is greater than the excess premium, must, except as otherwise providedin NRS 681B.150, be the greater of:
(a) The reserve as of the policy anniversary calculatedas described in subsection 1; and
(b) The reserve as of the policy anniversary calculatedas described in subsection 1, but with:
(1) The value defined in paragraph (a) ofsubsection 1 being reduced by 15 percent of the amount of the excess first-yearpremium;
(2) All present values of benefits and premiumsbeing determined without reference to premiums or benefits provided for by thepolicy after the assumed ending date;
(3) The policy being assumed to mature on suchdate as an endowment; and
(4) The cash surrender value provided on thatdate being considered as an endowment benefit. In making the above comparison,the mortality and interest bases stated in NRS681B.120 and 681B.125 must beused.
3. Reserves according to the Commissioners reservevaluation method for:
(a) Life insurance policies providing for a varyingamount of insurance or requiring the payment of varying premiums;
(b) Group annuity and pure endowment contractspurchased under a retirement plan or plan of deferred compensation, establishedor maintained by an employer (including a partnership or sole proprietorship),by an employee organization or by both, other than a plan providing individualretirement accounts or individual retirement annuities under section 408 of theInternal Revenue Code, as amended;
(c) Disability and accidental death benefits in allpolicies and contracts; and
(d) All other benefits, except life insurance andendowment benefits in life insurance policies and benefits provided by allother annuity and pure endowment contracts,
must becalculated by a method consistent with the principles of subsection 1 and thissubsection, except that any extra premiums charged because of impairments orspecial hazards must be disregarded in the determination of modified netpremiums.
4. This subsection applies to all annuity and pureendowment contracts except those group annuity and pure endowment contracts forwhich reserves according to the Commissioners reserve valuation method are tobe calculated by a method consistent with the principles of subsections 1, 2and 3. Reserves according to the Commissioners annuity reserve method forbenefits under annuity or pure endowment contracts, excluding any disabilityand accidental death benefits in those contracts must be the greatest of therespective excesses of the present values, at the date of valuation, of thefuture guaranteed benefits, including guaranteed nonforfeiture benefits,provided for by those contracts at the end of each respective contract year,over the present value, at the date of valuation, of any future valuationconsiderations derived from future gross considerations, required by the termsof the contract, which become payable before the end of such respectivecontract year. The future guaranteed benefits must be determined by using themortality table, if any, and the interest rate or rates specified in suchcontracts for determining guaranteed benefits. The valuation considerations arethe portions of the respective gross considerations applied under the terms ofthe contracts to determine nonforfeiture values.
5. An insurers aggregate reserves for all lifeinsurance policies, excluding disability and accidental death benefits, issuedon or after January 1, 1972, must not be less than the aggregate reservescalculated in accordance with the methods set forth in this section,
6. An insurers aggregate reserves for all policies,contracts and benefits must not be less than the aggregate reserves determinedby a qualified actuary to be necessary for a favorable opinion under
(Added to NRS by 1971, 1614; A 1977, 685; 1983, 942;1995, 1770)
NRS
1. Reserves for any category of policies, contracts orbenefits as established by the Commissioner, issued on or after January 1,1972, may be calculated, at the option of the insurer, according to anystandards which produce greater aggregate reserves for the category than thosecalculated according to the minimum standards provided by subsections 2 and 3of NRS 681B.120 and
2. Any insurer which has adopted a standard ofvaluation producing greater aggregate reserves as described in subsection 1may, with the approval of the Commissioner, adopt a lower standard ofvaluation, but not lower than the minimum described in subsection 1.
(Added to NRS by 1971, 1615; A 1977, 687; 1983, 945;1995, 1772)
NRS
1. Appropriate in relation to the benefits and thepattern of premiums for the plan; and
2. Computed by a method which is consistent with theprinciples of standard valuation contained in this chapter.
(Added to NRS by 1983, 938)
NRS
1. The reserve calculated according to the mortalitytable, rate of interest and method actually used for the policy or contract; or
2. The reserve calculated by the method actually usedfor the policy or contract, but using the minimum valuation standards of mortalityand rate of interest, and replacing the valuation net premium by the actualgross premium in each contract year for which the valuation net premium exceedsthe actual gross premium. The minimum valuation standards of mortality and rateof interest referred to in this section are the standards stated in
3. If any life insurance policy is issued on or afterJanuary 1, 1987, for which the gross premium in the first policy year exceedsthat of the second year and no comparable additional benefit is provided in thefirst year in return for the excess premium, and which provides an endowment benefitor a cash surrender value, or a combination thereof, in an amount greater thanthe excess premium, the provisions of this section must be applied as if themethod actually used in calculating the reserve for the policy were the methoddescribed in NRS 681B.130 other thanin subsection 2 of that section. The minimum reserve required at each policyanniversary of such a policy is the greater of the minimum reserve calculatedin accordance with NRS 681B.130,including subsection 2 of that section, and the minimum reserve calculated inaccordance with this section.
(Added to NRS by 1971, 1616; A 1977, 687; 1983, 945)
NRS
1. Except as otherwise provided in subsection 5, allbonds or other evidences of debt having a fixed term and rate of interest heldby an insurer may, if amply secured and not in default as to principal orinterest, be valued as follows:
(a) If purchased at par, at the par value.
(b) If purchased above or below par, on the basis ofthe purchase price adjusted so as to bring the value to par at maturity and soas to yield in the meantime the effective rate of interest at which thepurchase was made or, in lieu of that method, according to an accepted methodof valuation that is approved by the Commissioner.
2. The purchase price must not be taken at a higherfigure than the actual market value at the time of purchase, plus actualbrokerage, transfer, postage or express charges paid in the acquisition of suchsecurities.
3. Unless otherwise provided by a valuationestablished or approved by the Commissioner, the security must not be carriedat above the call price for the entire issue during any period within which thesecurity may be so called.
4. The Commissioner has full discretion in determiningthe method of calculating values pursuant to this section.
5. A valuation determined pursuant to this sectionmust not be inconsistent with any applicable valuation or method then currentlyformulated or approved by the National Association of Insurance Commissionersor its successor organization.
(Added to NRS by 1971, 1616; A
NRS
1. Except as otherwise provided in subsection 4,securities, other than those specified in NRS681B.160, held by an insurer must be valued, in the discretion of theCommissioner, at their market value, or at their appraised value, or at pricesdetermined by him as representing their fair market value.
2. Preferred or guaranteed stocks or shares whilepaying full dividends may be carried at a fixed value in lieu of market value,at the discretion of the Commissioner and in accordance with a method ofcomputation approved by the Commissioner.
3. The stock of a subsidiary of an insurer must bevalued on the basis of the value of only those assets of the subsidiary aswould constitute lawful investments of the insurer if acquired or held directlyby the insurer.
4. A valuation determined pursuant to this sectionmust not be inconsistent with any applicable valuation or method then currentlyformulated or approved by the National Association of Insurance Commissionersor its successor organization.
(Added to NRS by 1971, 1616; A
NRS
1. Real property acquired pursuant to a mortgage loanor contract for sale, in the absence of a recent appraisal deemed by theCommissioner to be reliable, must not be valued at an amount greater than theunpaid principal of the defaulted loan or contract plus interest due andaccrued at the date of acquisition, together with any taxes and expenses paidor incurred in connection with the acquisition, and the cost of improvementsthereafter made by the insurer and any amounts thereafter paid by the insureron assessments levied for improvements in connection with the property.
2. Other real property held by an insurer must not bevalued at an amount in excess of the lesser of the fair value as determined byrecent appraisal or the actual cost, plus capitalized improvements, less normaldepreciation. If valuation is based on an appraisal more than 3 years old, theCommissioner may, at his discretion, call for and require a new appraisal inorder to determine fair value.
(Added to NRS by 1971, 1617; A 1995, 1772)
NRS
(Added to NRS by 1971, 1617)
NRS
(Added to NRS by 1995, 1768)
NRS
(Added to NRS by 1995, 1768)
NRS
1. Every such insurer, unless exempted by or pursuantto regulation, shall also annually submit an opinion of the same qualifiedactuary as to whether the reserves and related actuarial items held in supportof the policies and contracts specified by the Commissioner by regulation, whenconsidered in light of the assets held by the insurer with respect to thereserves and related actuarial items, including the earnings on the assetsinvested and the considerations anticipated to be received and retained underthe policies and contracts, make adequate provision for the insurers obligationsunder the policies and contracts, including the benefits under and expenses associatedwith the policies and contracts.
2. The Commissioner may provide by regulation for aperiod of transition for establishing any higher reserves which the qualifiedactuary may deem necessary in order to render the opinion required by thissection and NRS 681B.210.
3. The holding of additional reserves determined by aqualified actuary to be necessary to render the opinion required by thissection or NRS 681B.210, shall not bedeemed to be the adoption of a higher standard of valuation for the purposes ofNRS 681B.120 or
(Added to NRS by 1995, 1768)
NRS
1. Each opinion required by
2. If an insurer fails to provide a supportingmemorandum at the request of the Commissioner within a period specified byregulation, or the Commissioner determines that the supporting memorandumprovided by the insurer fails to meet the standards prescribed by theregulations or is otherwise unacceptable to him, he may engage a qualifiedactuary at the expense of the insurer to review the opinion and the basis forthe opinion and prepare such supporting memorandum as is required by theCommissioner.
(Added to NRS by 1995, 1769)
NRS
1. Every opinion must:
(a) Be submitted with the annual statement reflectingthe valuation of reserve liabilities for each year ending on or after December31, 1996.
(b) Apply to all business in force including, withoutlimitation, individual and group health insurance plans, in form and substanceacceptable to the Commissioner as specified by regulation.
(c) Be based on standards adopted from time to time bythe Actuarial Standards Board or a successor organization approved by theCommissioner and on such additional standards as the Commissioner may byregulation prescribe.
2. In the case of an opinion required to be submittedby a foreign or alien company, the Commissioner may accept the opinion filed bythat company with the commissioner of insurance of another state if hedetermines that the opinion reasonably meets the requirements applicable to aninsurer domiciled in this state.
(Added to NRS by 1995, 1769; A 1997, 1623, 3024;
NRS
1. Except in a case of fraud or willful misconduct, aqualified actuary is not liable for damages to any person other than anaffected insurer or the Commissioner for any act, error, omission, decision orconduct with respect to the actuarys opinion.
2. Disciplinary action by the Commissioner against anactuary must be prescribed by regulation by the Commissioner.
(Added to NRS by 1995, 1769)
NRS
1. Except as otherwise provided in this section, anopinion, and any other material provided by an insurer to the Commissioner inconnection therewith, must be kept confidential by the Commissioner, is notopen to the public, and is not subject to subpoena, except for the purpose ofdefending an action seeking damages from any person by reason of any actionrequired by NRS 681B.200 to
2. A memorandum or other material may be released bythe Commissioner with the written consent of the insurer or to the AmericanAcademy of Actuaries or its successor organization upon request stating thatthe memorandum or other material is required for the purpose of professionaldisciplinary proceedings and setting forth procedures satisfactory to theCommissioner for preserving the confidentiality of the memorandum or othermaterial.
3. If any portion of a confidential memorandum iscited by the insurer in its marketing or is cited before any governmentalagency other than a state commissioner of insurance or is released by aninsurer to the public, all portions of the memorandum are no longerconfidential.
(Added to NRS by 1995, 1769)
NRS
(Added to NRS by 1995, 1770)
NRS
(Added to NRS by 1995, 1770)
NRS
1. Except as otherwise provided in subsection 3, on orbefore March 1 of each year, each domestic insurer, and each foreign insurerdomiciled in a state which does not have requirements for reporting risk-basedcapital, that transacts property, casualty, life or health insurance in thisstate shall prepare and submit to the Commissioner, and to each persondesignated by the Commissioner, a report of the level of the risk-based capitalof the insurer as of the end of the immediately preceding calendar year. Thereport must be in such form and contain such information as required by theregulations adopted by the Commissioner pursuant to this section.
2. The Commissioner shall adopt regulations concerningthe amount of risk-based capital required to be maintained by each insurerlicensed to do business in this state that is transacting property, casualty,life or health insurance in this state. The regulations must be consistent withthe instructions for reporting risk-based capital adopted by the NationalAssociation of Insurance Commissioners, as those instructions existed onJanuary 1, 1997. If the instructions are amended, the Commissioner may amendthe regulations to maintain consistency with the instructions if he determinesthat the amended instructions are appropriate for use in this state.
3. The Commissioner may exempt from the provisions ofthis section a domestic insurer who:
(a) Does not transact insurance in any other state; and
(b) Does not assume reinsurance that is more than 5percent of the direct premiums written by the insurer.
(Added to NRS by 1997, 3023; A
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