Current through Register Vol. 56, No. 24, December 18, 2024
(a) The
statement of actuarial opinion submitted in accordance with this section shall
consist of:
1. A paragraph identifying the
appointed actuary and his or her qualifications in the format set forth in (b)1
below;
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 that have been analyzed for asset
adequacy and the method of analysis in the format set forth in (b)2 below, and
identifying the reserves and related actuarial items covered by the opinion
that 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 as set forth
in (b)3 below, supported by a statement of each such expert in the form
prescribed in (e) below);
4. An
opinion paragraph expressing the appointed actuary's opinion with respect to
the adequacy of the supporting assets to mature the liabilities in the format
set forth in (b)6 below; and
5. One
or more additional paragraphs as may be needed in individual company cases as
follows:
i. If the appointed actuary
considers it necessary to state a qualification of his or her
opinion;
ii. 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;
iii. 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
iv. If the appointed actuary chooses to add a
paragraph briefly describing the assumptions that form the basis for the
actuarial opinion.
(b) The following paragraphs shall be
included in the statement of actuarial opinion in accordance with this section.
The language is that which in typical circumstances shall 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 shall 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 section.
1. The opening
paragraph should generally indicate the appointed actuary's relationship to the
company and his or her qualifications to sign the opinion.
i. 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
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."
ii. For a consulting actuary, the opening
paragraph should include 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 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. The scope
paragraph shall 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 below are those reserves and related actuarial items which have
been subject to asset adequacy analysis."
i.
The tabulation of reserves and related actuarial items included in the scope
paragraph shall be in the format of the Exhibits set forth in the Appendix to
these rules and incorporated herein by reference, as modified to reflect the
exhibits of the annual statement in use for the year for which the opinion is
filed.
3. If the
appointed actuary has relied on other experts to develop certain portions of
the analysis, the reliance paragraph shall 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" 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."
Such a statement of reliance on other experts should be
accompanied by a statement by each of such experts in the form prescribed by
(e) below.
4. If the
appointed actuary has examined the underlying asset and liability records, the
reliance paragraph shall include a statement such as:
"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."
5. If
the appointed actuary has not examined underlying records, but has relied upon
data (for example, listings and summaries of polices in force and/or asset
records) prepared by the company, the reliance paragraph shall include a
statement 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
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."
Such a statement shall be accompanied by a statement by each
person relied upon in the form prescribed in (e) below.
6. The opinion paragraph shall include a
statement such as:
i. "In my opinion the
reserves and related actuarial values concerning the statement items identified
above:
(1) Are computed in accordance with
presently accepted actuarial standards consistently applied and are fairly
stated, in accordance with sound actuarial principles.
(2) 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;
(3) Meet the
requirements of the insurance laws and regulations of the state of [company's
state of domicile]; and are at least as great as the minimum aggregate amounts
required by the state in which this statement is filed;
(4) 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
(5) Include provision for all
actuarial reserves and related statement items which ought to be
established;"
ii. "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." This statement
may be omitted for a company domiciled in this State and doing business only in
this State, if the Commissioner so approves pursuant to (f) below;
iii. "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;"
iv. One of the following as applicable:
(1) "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
(2) "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 or changes];"
v. "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"; and
vi. Following
the last paragraph of the opinion, the signature of appointed actuary as well
as the address and telephone number of appointed actuary, and the
date.
(c) 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 shall not be deemed a change in
actuarial assumptions within the meaning of this section.
(d) If the appointed actuary is unable to
form an opinion, he or she shall refuse to issue a statement of actuarial
opinion. If the appointed actuary's opinion is adverse or qualified, he or she
shall issue an adverse or qualified actuarial opinion explicitly stating the
reason(s) for the opinion. This statement should follow the scope paragraph and
precede the opinion paragraph.
(e)
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) A company domiciled in this State and
doing business only in this State may, with the Commissioner's approval, omit
from the opinion the statement set forth at (b)6ii above. In determining
whether to grant this approval, the Commissioner shall consider the following:
1. The size of the company as measured by its
admitted assets;
2. The company's
capital and surplus in relation to its admitted assets;
3. The percentage of total liability
associated with universal or interest-sensitive life insurance, annuities, and
other deposit contracts;
4. The
percentage of admitted assets held in investments other than cash or investment
grade debt securities;
5. Any
recent change in the size, lines of business, or capital and surplus;
and
6. Any liabilities requiring
additional analysis for their determination by the Commissioner.
