Current through February 24, 2025
(a) An insurer,
(1) for policies issued before January 1,
2009, may elect to use the 1980 CSO valuation tables with select mortality
factors or other valuation mortality tables under
3
AAC 28.600 -
3
AAC 28.690 as the minimum mortality standard for basic
reserves for one or more specified types of life insurance policies;
(2) for policies issued on or after January
1, 2009, shall use valuation mortality tables under
3
AAC 28.600 -
3
AAC 28.690, as required under
3
AAC 28.620(c), as the minimum
mortality standard for basic reserves for one or more specified types of life
insurance policies.
(b)
Except as provided in (c) of this section, an insurer may not use select
mortality factors to determine basic reserves or deficiency reserves beyond the
first segment.
(c) In determining
basic reserves or deficiency reserves, an insurer may use
(1) any select mortality factors in the first
segment; and
(2) if the first
segment is less than 10 years, the 10-year select mortality factors
incorporated into the 1980 CSO valuation tables after the end of the first
segment through the 10th policy year from the date of issue.
(d) If an insurer elects to use
the select mortality factors to determine basic reserves as allowed under
(a)(1) of this section, the factors must be
(1) the 10-year select mortality factors
incorporated into the 1980 CSO valuation tables; or
(2) the select mortality factors in Appendix
A of this section.
(e)
An insurer shall calculate deficiency reserves for each policy to equal the
larger of the following amounts:
(2) the basic reserve
calculated using guaranteed gross premiums instead of net premiums when
guaranteed gross premiums are less than the corresponding net premiums minus
the basic reserve.
(f)
An insurer,
(1) for policies issued before
January 1, 2009, may elect to use the 1980 CSO valuation tables with select
mortality factors or other valuation mortality tables under
3
AAC 28.600 -
3
AAC 28.690 to determine deficiency reserves under (e)
of this section for one or more specified types of life insurance
policies;
(2) for policies issued
on or after January 1, 2009, shall use valuation mortality tables under
3
AAC 28.600 -
3
AAC 28.690, as required under
3
AAC 28.620(c), as the minimum
mortality standard to determine deficiency reserves under (e) of this section
for one or more specified types of life insurance policies.
(g) If an insurer elects to use
the select mortality factors under (f)(1) of this section, the factors must be
(1) the 10-year select mortality factors
incorporated into the 1980 CSO valuation tables;
(2) the select mortality factors in Appendix
A of this section; or
(3) during
the first segment, X percent of the select mortality factors in Appendix A of
this section, subject to the following:
(A) X
may vary by policy year, policy form, underwriting classification, issue age,
or any other policy factor expected to affect mortality experience;
(B) X must be determined so that using the
valuation interest rate required under
AS
21.18.110 for basic reserves, the actuarial
present value of future death benefits calculated using the mortality rates
resulting from application of X is greater than or equal to the actuarial
present value of future death benefits calculated using the anticipated
mortality experience without recognition of mortality improvement beyond the
valuation date;
(C) X must be
determined so that the mortality rates resulting from the application of X are
greater than or equal to the anticipated mortality experience without
recognition of mortality improvement beyond the date of valuation in each of
the first five years after the valuation date;
(D) the appointed actuary shall increase X at
a valuation date if needed in order to meet the requirements of this
subsection;
(E) the appointed
actuary may decrease X at a valuation date if X continues to meet all the
requirements of this subsection;
(F) the appointed actuary shall specifically
take into account the adverse effect on expected mortality and lapse of any
anticipated or actual increase in gross premiums;
(G) if X is less than 100 percent at any
duration for a policy,
(i) the appointed
actuary shall annually prepare an actuarial opinion and memorandum for the
company in compliance with
3
AAC 21.800 -
3
AAC 21.845;
(ii) the appointed actuary shall disclose, in
the regulatory asset adequacy issues summary required under
3
AAC 21.835(g), the impact of the
insufficiency of assets to support the payment of benefits and expenses and the
establishment of statutory reserves during one or more interim
periods;
(iii) the X factors must
reflect anticipated future mortality, without recognition of mortality
improvement beyond the valuation date, taking into account relevant emerging
experience; and
(iv) the appointed
actuary shall annually opine on whether the mortality rates resulting from the
application of X meet the requirements of this subsection; the opinion must be
supported by an actuarial report consistent with appropriate actuarial
standards of practice as adopted by the Actuarial Standards Board.
(h)
Guaranteed gross premiums without policy fees may be used to determine basic or
deficiency reserves that use guaranteed gross premium only if the policy fee is
a level dollar amount after the first policy year.
(i) Guaranteed gross premiums with policy
fees may be used to determine deficiency reserves even if guaranteed gross
premiums without policy fees are used to determine the basic
reserves.
(j) For policies in which
guaranteed gross premiums, guaranteed benefits, guaranteed charges, or
guaranteed credits are changed unilaterally by the insurer after issue and for
which the changes are effective for more than one year after the date of the
change, reserves must be calculated as the largest of
(1) reserves calculated ignoring the
guarantee;
(2) reserves assuming
the guarantee was made at issue; or
(3) reserves assuming that the policy was
issued on the date of the guarantee.
(k) The director may require a company to
file documentation of the adequacy of reserves for specified blocks of
insurance, including policies issued before January 1, 2011.
(l) Documentation under (k) of this section
may include a demonstration of the extent to which aggregation with other
blocks of business were relied upon in developing the actuarial opinion under
3
AAC 21.800 -
3
AAC 21.845.
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TABLE
Authority:AS
21.06.090
AS 21.18.110
AS
21.18.160
