Current through February 24, 2025
(a) An appointed
actuary shall prepare a memorandum that describes the analysis done in support
of the actuary's opinion regarding the reserves covered in an actuarial opinion
prepared under
3
AAC 21.830. The memorandum must be made available for
examination upon request of the director. The director will return the
memorandum to the company after examination.
(b) In preparing a memorandum under this
section, an appointed actuary may rely upon, and include as a part of the
memorandum, a memorandum previously prepared and signed by another appointed or
qualified actuary regarding the area that is being relied upon in the current
memorandum.
(c) The qualified
actuary engaged by the director under
AS
21.18.110(r) may not be an
employee of a consulting firm involved in the preparation of any prior
actuarial opinion or memorandum for the company in the previous four years. Any
information provided by the company to the actuary engaged by the director is
subject to the confidentiality requirements of
AS
21.18.110(s).
(d) An appointed actuary shall prepare a
regulatory asset adequacy issues summary in compliance with (e) of this
section. A company shall submit the regulatory asset adequacy issues summary to
the director upon request, and the director will hold the regulatory asset
adequacy issues summary confidential subject to the confidentiality
requirements of
AS
21.18.110(s).
(e) A memorandum prepared under this section
must demonstrate that the analysis has been done according to the actuarial
standards of practice adopted by the Actuarial Standards Board as required by
AS
21.18.110(n) and the
requirements under
3
AAC 21.800 -
3
AAC 21.845 and must provide the following:
(1) information about reserves that includes
(A) product descriptions, including market
description, underwriting, and other aspects of a risk profile, and the
specific risks that the appointed actuary considers significant;
(B) the source of liability in
force;
(C) the reserve method and
basis;
(D) the investment
reserves;
(E) the reinsurance
arrangements;
(F) identification of
(i) any explicit or implied guarantees made
by the general account in support of benefits provided through a separate
account or under a separate account policy or contract; and
(ii) the methods used by the appointed
actuary to provide for the guarantees in the asset adequacy analysis;
and
(G) documentation of
assumptions to test reserves for
(i) base and
excess lapse rates;
(ii) interest
crediting rate strategy;
(iv) policyholder
dividend strategy;
(v) competitor
or market interest rate;
(vi)
annuitization rates;
(vii)
commissions and expenses; and
(2) information about assets that
includes
(A) portfolio descriptions, including
a risk profile that discloses the quality, distribution, and types of
assets;
(B) the investment and
disinvestment assumption used by the actuary;
(C) the source of asset data;
(D) the asset valuation bases; and
(E) documentation of assumptions for
(iii) mortgage prepayment function;
(iv) determining market value for assets sold
due to disinvestment strategy; and
(v) determining yield on assets acquired
through the investment strategy;
(3) the basis upon which the analysis was
performed that includes the
(B) rationale for inclusion
or exclusion of different blocks of business and how pertinent risks were
analyzed;
(C) rationale for the
degree of rigor in analyzing different blocks of business including the level
of materiality used in determining how rigorously to analyze different blocks
of business;
(D) criteria used for
determining asset adequacy including the precise basis for determining whether
assets are adequate to cover reserves; and
(E) whether the impact of federal income
taxes was considered and the method of treating reinsurance in the asset
adequacy analysis;
(4) a
summary of material changes in methods, procedures, or assumptions from the
prior year's asset adequacy analysis;
(5) a summary of results;
(6) a description of all conclusions formed
by the analysis.
(f)
Documentation of assumptions under (e) of this section must be in a manner that
allows another actuary reviewing the actuarial assumptions to form a conclusion
regarding the reasonableness of the assumptions.
(g) The regulatory asset adequacy issues
summary required under (d) of this section must include
(1) a description of each scenario tested
including whether the scenario is stochastic or deterministic;
(2) a description of the sensitivity testing
done relative to the scenarios described under (1) of this
subsection;
(3) a description of
the tests and statement of the amounts of additional reserve necessary to
eliminate negative aggregate surplus values, if negative ending surplus values
result under any of the scenarios tested under (1) and (2) of this
subsection;
(4) disclosure of the
extent to which the appointed actuary uses assumptions in the asset adequacy
analysis that are materially different than the assumptions used in the
previous asset adequacy analysis;
(5) the amount of reserves and a description
of each insurance product that was subject to asset adequacy analysis in the
previous opinion but was not subject to asset adequacy analysis in the current
opinion;
(6) disclosure of interim
results that are of significant concern to the appointed actuary, including the
impact of the insufficiency of assets to support the payment of benefits and
expenses and the establishment of reserves required under AS 21.18 during one
or more interim periods;
(7) a
description of the methods used by the actuary to account for the impact of
reinsurance under each of the scenarios tested under (1) and (2) of this
subsection on the company's asset and liability cash flows;
(8) a statement by the appointed actuary
relative to whether the actuary is satisfied that all options in any asset or
liability, including options that affect cash flows in fixed income securities,
and equity-like features in any investment are appropriately considered in the
asset adequacy analysis;
(9) the
name of the company for which the summary is being supplied; and
(10) the signature of and date the appointed
actuary signed the opinion.
(h) The actuarial memorandum must include a
statement in substantially the following form:
"The actuarial methods, considerations, and analyses used
in the preparation of this memorandum conform to the appropriate standards of
practice adopted by the Actuarial Standards Board as required by
AS
21.18.110(n)."
Authority:AS
21.06.090
AS 21.18.110
AS
21.18.160
