1. A supporting
memorandum provided pursuant to
NRS
681B.230 must conform to the "Actuarial
Standards of Practice" adopted from time to time by the Actuarial Standards
Board and any additional standards set forth in NAC 681B.100 to 681B.245,
inclusive, and demonstrate that the asset adequacy analysis has been performed
in accordance with the provisions of NAC 681B.175. The memorandum must specify:
(a) For reserves:
(1) The product descriptions, including
market description, underwriting and other aspects of a risk profile, and the
specific risks the appointed actuary deems significant;
(2) The source of liability in
force;
(3) The reserve method and
basis;
(4) The investment
reserves;
(5) The reinsurance
arrangements;
(6) Each guarantee,
whether express or implied, made by the general account in support of benefits
provided through a separate account or under a separate account policy or
contract and the methods used by the appointed actuary to provide for the
guarantee in the asset adequacy analysis; and
(7) The documentation of the assumptions used
by the qualified actuary to test reserves for:
(I) Lapse rates, including both base and
excess rates;
(II) Interest
crediting rate strategy;
(III)
Mortality;
(IV) Policyholder
dividend strategy;
(V) Competitor
or market interest rate;
(VI)
Annuitization rates;
(VII)
Commissions and expenses; and
(VIII) Morbidity.
The documentation of the assumptions must be such that an
actuary reviewing the actuarial memorandum could form a conclusion as to the
reasonableness of the assumptions.
(b) For assets:
(1) The portfolio descriptions, including a
risk profile disclosing the quality, distribution and types of
assets;
(2) The investment and
disinvestment assumptions;
(3) The
source of asset data;
(4) The asset
valuation bases; and
(5) The
documentation of the assumptions made for:
(I) Default costs;
(II) Bond call function;
(III) Mortgage prepayment function;
(IV) Determination of market value for assets
sold pursuant to a disinvestment strategy; and
(V) Determination of yield on assets acquired
through an investment strategy.
The documentation of the assumptions must be such that an
actuary reviewing the actuarial memorandum could form a conclusion as to the
reasonableness of the assumptions.
(c) The analysis basis, including:
(1) The methodology;
(2) The rationale for inclusion or exclusion
of different blocks of business and the manner in which pertinent risks were
analyzed;
(3) The rationale for
degree of rigor in analyzing different blocks of business, including, without
limitation, the level of materiality used to determine how rigorously to
analyze different blocks of business;
(4) The criteria for determining asset
adequacy, including, without limitation, the precise basis for determining if
assets are adequate to cover reserves under moderately adverse conditions or
other conditions as specified in the applicable standards of actuarial
practice; and
(5) Whether the
effect of federal income taxes was considered and the method of treating
reinsurance in the asset adequacy analysis.
(d) A summary of any material change in
method, procedure or assumptions from the immediately preceding asset adequacy
analysis.
(e) A summary of
results.
(f) A conclusion or
conclusions.
2. The
memorandum must include the following statement:
Actuarial methods, considerations and analyses used in the
preparation of this memorandum conform to the appropriate "Actuarial Standards
of Practice" adopted by the Actuarial Standards Board, which standards form the
basis for this memorandum.
Added to NAC by Comm'r
of Insurance, eff. 5-23-96; A by R146-12,
10-4-2013