Current through Register Vol. 42, No. 5, February 29, 2024
(1) General
Description. The statement of actuarial opinion submitted in accordance with
this rule shall consist of all of the following:
(a) A paragraph identifying the appointed
actuary and his or her qualifications (see subparagraph (a) of paragraph (2)
this rule).
(b) A scope paragraph
identifying the subjects on which an opinion is to be expressed and describing
the scope of the appointed actuary's work, including a tabulation delineating
the reserves and related actuarial items which have been analyzed for asset
adequacy and the method of analysis (see subparagraph (b) of paragraph (2) of
this rule), and identifying the reserves and related actuarial items covered by
the opinion which have not been so analyzed.
(c) A reliance paragraph describing those
areas, if any, where the appointed actuary has deferred to other experts in
developing data, procedures or assumptions (e.g., anticipated cash flows from
currently owned assets, including variation in cash flows according to economic
scenarios (see subparagraph (c) of paragraph (2) of this rule)), supported by a
statement of each such expert in the form prescribed by paragraph (5) of this
rule.
(d) An opinion paragraph
expressing the appointed actuary's opinion with respect to the adequacy of the
supporting assets to mature the liabilities (see subparagraph (f) of paragraph
(2) of this rule).
(e) One or more
additional paragraphs will be needed in individual company cases as follows:
1. If the appointed actuary considers it
necessary to state a qualification of his or her opinion.
2. If the appointed actuary must disclose an
inconsistency in the method of analysis or basis of asset allocation used at
the prior opinion date with that used for this opinion.
3. If the appointed actuary must disclose
whether additional reserves as of the prior opinion date are released as of
this opinion date, and the extent of the release.
4. If the appointed actuary chooses to add a
paragraph briefly describing the assumptions that form the basis for the
actuarial opinion.
(2) Recommended Language. The following
paragraphs are to be included in the statement of actuarial opinion in
accordance with this rule. Language is that which in typical circumstances
should be included in a statement of actuarial opinion. The language may be
modified as needed to meet the circumstances of a particular case, but the
appointed actuary should use language that clearly expresses his or her
professional judgment. However, in any event the opinion shall retain all
pertinent aspects of the language provided in this rule.
(a)
1. The
opening paragraph should generally indicate the appointed actuary's
relationship to the company and his or her qualifications to sign the opinion.
For a company actuary, the opening paragraph of the actuarial opinion should
read as follows:
"I, [name], am [title] of [insurance company name] and a member
of the American Academy of Actuaries. I was appointed by, or by the authority
of, the Board of Directors of said insurer to render this opinion as stated in
the letter to the Commissioner dated [insert date]. I meet the Academy
qualification standards for rendering the opinion and am familiar with the
valuation requirements applicable to life and health insurance
companies."
2. For a
consulting actuary, the opening paragraph should contain a sentence such as the
following:
"I, [name], a member of the American Academy of Actuaries, am
associated with the firm of [name of consulting firm]. I have been appointed
by, or by the authority of, the Board of Directors of [name of company] to
render this opinion as stated in the letter to the Commissioner dated [insert
date]. I meet the Academy qualification standards for rendering the opinion and
am familiar with the valuation requirements applicable to life and health
insurance companies."
(b) The scope paragraph should include a
statement such as the following:
"I have examined the actuarial assumptions and actuarial
methods used in determining reserves and related actuarial items listed below,
as shown in the annual statement of the company, as prepared for filing with
state regulatory officials, as of December 31, 20[ ]. Tabulated below are those
reserves and related actuarial items which have been subjected to asset
adequacy analysis.
Asset Adequacy Tested Amounts - Reserves and
Liabilities
|
Statement Item
|
Formula
Reserves
(1)
|
Additional
Actuarial
Reserves
(a) (2)
|
Analysis Method (b)
|
Other
Amount
(3)
|
Total
Amount
(1) + (2) + (3)
(4)
|
Exhibit 5
A Life Insurance
|
B Annuities
|
C Supplementary Contracts Involving Life
Contingencies
|
D Accidental Death Benefit
|
E Disability -Active
|
F Disability -Disabled
|
G Miscellaneous
|
Total (Exhibit 5 Item 1, Page 3)
|
Exhibit 6
A Active Life Reserve
|
B Claim Reserve
|
Total (Exhibit 6 Item 2, Page 3)
|
Exhibit 7
Premiums and Other Deposit Funds (Column 5, Line
14)
|
Guaranteed Interest Contracts (Column 2, Line
14)
|
Other (Column 6, Line 14)
|
Supplemental Contracts (Column 3, Line 14)
|
Dividend Accumulations or Refunds (Column 4, Line
14)
|
Total Exhibit 7 (Column 1, Line 14)
|
Exhibit 8 Part 1
1 Life (Page 3, Line 4.1)
|
2 Health (Page 3, Line 4.2)
|
Total Exhibit 8, Page 1
|
Separate Accounts (Page 3 of the Annual Statement of
the Separate Accounts, Lines 1, 2, 3.1, 3.2, 3.3)
|
TOTAL RESERVES
|
IMR (General Account, Page Line )
|
(Separate Accounts, Page Line )
|
AVR (Page Line )
|
(c)
|
Net Deferred and Uncollected Premium
|
Notes:
(a) The
additional actuarial reserves are the reserves established under subparagraph
(b) of paragraph (5) of Rule
482-1-112-.05.
(b) The appointed actuary should indicate the
method of analysis, determined in accordance with the standards for asset
adequacy analysis referred to in paragraph (4) of Rule
482-1-112-.05,
by means of symbols which should be defined in footnotes to the
table.
(c) Allocated amount of
Asset Valuation Reserve (AVR)."
(c)
1. If
the appointed actuary has relied on other experts to develop certain portions
of the analysis, the reliance paragraph should include a statement such as the
following:
"I have relied on [name], [title] for [e.g., "anticipated cash
flows from currently owned assets, including variations in cash flows according
to economic scenarios" or "certain critical aspects of the analysis performed
in conjunction with forming my opinion"] as certified in the attached
statement. I have reviewed the information relied upon for
reasonableness."
2. A
statement of reliance on other experts should be accompanied by a statement by
each of the experts in the form prescribed by paragraph (5) of this
rule.
(d) If the
appointed actuary has examined the underlying asset and liability records, the
reliance paragraph should include a statement such as the following:
"My examination included such review of the actuarial
assumptions and actuarial methods and of the underlying basic asset and
liability records and such tests of the actuarial calculations as I considered
necessary. I also reconciled the underlying basic asset and liability records
to [exhibits and schedules listed as applicable] of the company's current
annual statement."
(e)
1. If the appointed actuary has not examined
the underlying records, but has relied upon data (e.g., listings and summaries
of policies in force or asset records) prepared by the company, the reliance
paragraph should include a statement such as the following:
"In forming my opinion on [specify types of reserves] I relied
upon data prepared by [name and title of company officer certifying in-force
records or other data] as certified in the attached statements. I evaluated
that data for reasonableness and consistency. I also reconciled that data to
[exhibits and schedules to be listed as applicable] of the company's current
annual statement. In other respects, my examination included review of the
actuarial assumptions and actuarial methods used and tests of the calculations
I considered necessary."
2.
The section shall be accompanied by a statement by each person relied upon in
the form prescribed by paragraph (5) of this rule.
(f) The opinion paragraph should include a
statement such as the following:
"In my opinion the reserves and related actuarial values
concerning the statement items identified above:
(a) Are computed in accordance with presently
accepted actuarial standards consistently applied and are fairly stated, in
accordance with sound actuarial principles;
(b) Are based on actuarial assumptions that
produce reserves at least as great as those called for in any contract
provision as to reserve basis and method, and are in accordance with all other
contract provisions;
(c) Meet the
requirements of the Insurance Law and regulation of the state of [state of
domicile], and are at least as great as the minimum aggregate amounts required
by the state in which this statement is filed;
(d) Are computed on the basis of assumptions
consistent with those used in computing the corresponding items in the annual
statement of the preceding year-end (with any exceptions noted below);
and
(e) Include provision for all
actuarial reserves and related statement items which ought to be established.
1. The reserves and related items, when
considered in light of the assets held by the company with respect to such
reserves and related actuarial items including, but not limited to, the
investment earnings on such assets, and the considerations anticipated to be
received and retained under the policies and contracts, make adequate
provision, according to presently accepted actuarial standards of practice, for
the anticipated cash flows required by the contractual obligations and related
expenses of the company. (At the discretion of the commissioner, this language
may be omitted for an opinion filed on behalf of a company doing business only
in this state and in no other state.)
2. The actuarial methods, considerations, and
analyses used in forming my opinion conform to the appropriate Standards of
Practice as promulgated by the Actuarial Standards Board, which standards form
the basis of this statement of opinion.
3. This opinion is updated annually as
required by statute. To the best of my knowledge, there have been no material
changes from the applicable date of the annual statement to the date of the
rendering of this opinion which should be considered in reviewing this opinion.
Or
4. The
following material changes which occurred between the date of the statement for
which this opinion is applicable and the date of this opinion should be
considered in reviewing this opinion: (Describe the change or changes.)
Note: Choose one of the above two paragraphs, whichever is
applicable.
5. The impact
of unanticipated events subsequent to the date of this opinion is beyond the
scope of this opinion. The analysis of asset adequacy portion of this opinion
should be viewed recognizing that the company's future experience may not
follow all the assumptions used in the analysis.
_______________________________
Signature of Appointed Actuary
_______________________________
Address of Appointed Actuary
_______________________________
Telephone Number of Appointed Actuary
_______________________________
Date"
(3) Assumptions for New Issues. The adoption
for new issues or new claims or other new liabilities of an actuarial
assumption that differs from a corresponding assumption used for prior new
issues or new claims or other new liabilities is not a change in actuarial
assumptions within the meaning of this rule.
(4) Adverse Opinions. If the appointed
actuary is unable to form an opinion, then he or she shall refuse to issue a
statement of actuarial opinion. If the appointed actuary's opinion is adverse
or qualified, then he or she shall issue an adverse or qualified actuarial
opinion explicitly stating the reasons for the opinion. This statement should
follow the scope paragraph and precede the opinion paragraph.
(5) Reliance on Data Furnished by Other
Persons. If the appointed actuary relies on the certification of others on
matters concerning the accuracy and completeness of any data underlying the
actuarial opinion, or the appropriateness of any other information used by the
appointed actuary in forming the actuarial opinion, the actuarial opinion
should so indicate the persons the actuary is relying upon and a precise
identification of the items subject to reliance. In addition, the persons on
whom the appointed actuary relies shall provide a certification that precisely
identifies the items on which the person is providing information and a
statement as to the accuracy, completeness or reasonableness, as applicable, of
the items. This certification shall include the signature, title, company,
address and telephone number of the person rendering the certification, as well
as the date on which it is signed.
(6) Alternate Option.
(a) The Standard Valuation Law gives the
Commissioner broad authority to accept the valuation of a foreign insurer when
that valuation meets the requirements applicable to a company domiciled in this
state in the aggregate. As an alternative to the statement set forth in
paragraph (c) of opinion paragraph in subparagraph (f) of paragraph (2) above,
the Commissioner may make one or more of the following additional approaches
available to the opining actuary:
1. A
statement that the reserves "meet the requirements of the insurance laws and
regulations of the State of [state of domicile] and the formal written
standards and conditions of this state for filing an opinion based on the law
of the state of domicile." If the Commissioner chooses to allow this
alternative, a formal written list of standards and conditions shall be made
available. If a company chooses to use this alternative, the standards and
conditions in effect on July 1 of a calendar year shall apply to statements for
that calendar year, and they shall remain in effect until they are revised or
revoked. If no list is available, this alternative is not available.
2. A statement that the reserves "meet the
requirements of the insurance laws and regulations of the State of [state of
domicile] and I have verified that the company's request to file an opinion
based on the law of the state of domicile has been approved and that any
conditions required by the commissioner for approval of that request have been
met." If the Commissioner chooses to allow this alternative, a formal written
statement of such allowance shall be issued no later than March 31 of the year
it is first effective. It shall remain valid until rescinded or modified by the
Commissioner. The rescission or modifications shall be issued no later than
March 31 of the year they are first effective. Subsequent to that statement
being issued, if a company chooses to use this alternative, the company shall
file a request to do so, along with justification for its use, no later than
April 30 of the year of the opinion to be filed. The request shall be deemed
approved on October 1 of that year if the Commissioner has not denied the
request by that date.
3. A
statement that the reserves "meet the requirements of the insurance laws and
regulations of the State of [state of domicile] and I have submitted the
required comparison as specified by this state."
(i) If the Commissioner chooses to allow this
alternative, a formal written list of products (to be added to the table in
subparagraph (ii) below) for which the required comparison shall be provided
will be published. If a company chooses to use this alternative, the list in
effect on July 1 of a calendar year shall apply to statements for that calendar
year, and it shall remain in effect until it is revised or revoked. If no list
is available, this alternative is not available.
(ii) If a company desires to use this
alternative, the appointed actuary shall provide a comparison of the gross
nationwide reserves held to the gross nationwide reserves that would be held
under NAIC codification standards. Gross nationwide reserves are the total
reserves calculated for the total company in force business directly sold and
assumed, indifferent to the state in which the risk resides, without reduction
for reinsurance ceded. The information provided shall be at least:
(1)
Product Type
|
(2)
Death Benefit or Account Value
|
(3)
Reserves Held
|
(4)
Codification Reserves
|
(5)
Codification Standard
|
(iii)
The information listed shall include all products identified by either the
state of filing or any other states subscribing to this alternative.
(iv) If there is no codification standard for
the type of product or risk in force or if the codification standard does not
directly address the type of product or risk in force, the appointed actuary
shall provide detailed disclosure of the specific method and assumptions used
in determining the reserves held.
(v) The comparison provided by the company is
to be kept confidential to the same extent and under the same conditions as the
actuarial memorandum.
(b) Notwithstanding the above, the
Commissioner may reject an opinion based on the laws and regulations of the
state of domicile and require an opinion based on the laws of this state. If a
company is unable to provide the opinion within sixty (60) days of the request
or such other period of time determined by the Commissioner after consultation
with the company, the Commissioner may contract an independent actuary at the
company's expense to prepare and file the opinion.
(c) Any document, material or other
information provided to the commissioner in connection with a memorandum in
support of an opinion submitted under Section 27-36 A-4 but which is determined
by the commissioner to be unrelated to the memorandum will be rejected and
returned to the insurer. Such returned document, material or other information
will then not be considered as filed in connection with the opinion.
Author: Commissioner of Insurance
Statutory Authority:
Code of Ala.
1975, §§ 27-2 -17,
27-36-7.