(4) Statement of Actuarial Opinion Based On
an Asset Adequacy Analysis.
(A) General
Description. The statement of actuarial opinion submitted in accordance with
this section shall consist of:
1. A paragraph
identifying the appointed actuary and his/her qualifications (see paragraph
(4)(B)1.);
2. 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 paragraph (4)(B)2.) and identifying
the reserves and related actuarial items covered by the opinion which have not
been so analyzed;
3. A reliance
paragraph describing those areas, if any, where the appointed actuary has
deferred to other experts in developing data, procedures, or assumptions (for
example, anticipated cash flows from currently owned assets, including
variation in cash flows according to economic scenarios (see paragraph
(4)(B)3.) supported by a statement of each expert in the form prescribed by
subsection (4)(E);
4. An opinion
paragraph expressing the appointed actuary's opinion with respect to the
adequacy of the supporting assets to mature the liabilities (see paragraph
(4)(B)6.); and
5. One (1) or more
additional paragraphs will be needed in individual company cases as follows:
A. If the appointed actuary considers it
necessary to state a qualification of his/her opinion;
B. 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;
C. If the appointed actuary must disclose
whether additional reserves of the prior opinion date are released as of this
opinion date and the extent of the release; and
D. If the appointed actuary chooses to add a
paragraph briefly describing the assumptions which form the basis for the
actuarial opinion.
(B) Recommended Language. The following
paragraphs are to be included in the statement of actuarial opinion in
accordance with this section. 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 which clearly expresses his/her
professional judgment. However, in any event the opinion shall retain all
pertinent aspects of the language provided in this section.
1. The opening paragraph should generally
indicate the appointed actuary's relationship to the company and his/her
qualifications to sign the opinion. For a company actuary, the opening
paragraph of the actuarial opinion should include a statement such as: "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
director 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." For a consulting actuary,
the opening paragraph should contain a statement such as: "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 director dated (insert date). I meet the Academy qualification
standards for rendering this opinion and am familiar with the valuation
requirements, relating to life and health companies."
2. The scope paragraph should include a
statement such as: "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 as follows are
those reserves and related actuarial items which have been subjected to asset
adequacy analysis."
Reserves And Liabilities
Asset Adequacy Tested Amounts
Statement Item (c) | Formula Reserves
(1) | Additional Actuarial Reserves (a) (2) | Analysis Method (b)
| Other Amount Amount (3) | Total Amount (1)+(2)+(3)+(4) |
TOTAL RESERVES | ___________
| _____________ | _____________ | _____________ |
IMR (Page _____ Line _____) | ___________ |
AVR (Page _____ Line _____) | ___________
(d) |
(a) The
additional actuarial reserves are the reserves established under paragraph
(3)(E)2.
(b) The appointed actuary
should indicate the method of analysis, determined in accordance with the
standards for asset adequacy analysis referred to in subsection (3)(D) of this
regulation, by means of symbols which should be defined in footnotes to the
table.
(c) Statement Items should
describe lines of business subjected to asset adequacy analysis and contain
appropriate references to the exhibits, pages, and lines of the insurer's
annual statement filed with the director to which the amounts listed
reconcile.
(d) Allocated amount of
Asset Valuation Reserve (AVR).
3. 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:
"I have relied on (name), (title) for (for example,
anticipated cash flows from currently owned assets, including variations in
cash flows according to economic scenarios) and, as certified in the attached
statement I have reviewed the information relied upon for
reasonableness."
A statement of reliance on other experts should be
accompanied by a statement by each of these experts in the form prescribed by
subsection (4)(E).
4. If
the appointed actuary has examined the underlying asset and liability records,
the reliance paragraph should include a statement such as: "My examination
included a review of the actuarial assumptions and actuarial methods and of the
underlying basic asset and liability records and 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."
5. 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 sentence such as: "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 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
and tests of the calculations I considered necessary." This section shall be
accompanied by a statement by each person relied upon in the form prescribed by
subsection (4)(E).
6. The opinion
paragraph should include a statement such as: "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 which
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 here);
E. "Include provision for all actuarial
reserves and related statement items which ought to be established.
"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 the
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 director, 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.)
"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.
"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
"The following material change(s) 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(s).)" (Note: Choose one of the preceding two (2) paragraphs, whichever
is applicable.)
"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)"
(C) Assumptions for New Issues. The adoption
for new issues or new claims or other new liabilities of an actuarial
assumption which 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 section.
(D) Adverse Opinions. If the appointed
actuary is unable to form an opinion, then she/he shall refuse to issue a
statement of actuarial opinion. If the appointed actuary's opinion is adverse
or qualified, then she/he shall issue an adverse or qualified actuarial opinion
explicitly stating the reason(s) for that opinion. This statement should follow
the scope paragraph and precede the opinion paragraph.
(E) Reliance on Information Furnished by
Other Persons. If the appointed actuary relies on the certification of others
on matters concerning the accuracy or 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.
(F) Alternate Option.
1. Section 376.380.4(4)(d), RSMo 2000, gives
the director 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 requirements of subparagraph
(4)(B)6.C., the director may make one (1) or more of the following additional
approaches available to the opining actuary:
A. 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 director
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;
B. 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 director for approval
of that request have been met." If the director 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 director. 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
director has not denied the request by that date; and/or
C. 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 director chooses to allow
this alternative, a formal written list of products (to be added to the table
in Part (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 National Association of Insurance Commissioners (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.
2. Notwithstanding the above, the director
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 director after consultation with the
company, the director may contract with an independent actuary at the company's
expense to prepare and file the opinion.