Current through Register Vol. 46, No. 39, September 25, 2024
(a) An
insurance company that maintains one or more separate accounts subject to this
Part shall submit to the superintendent annually an actuarial opinion by March
1st and an actuarial memorandum by March 15th following the December 31st
valuation date showing the status of such accounts as of December 31st. The
actuarial opinion and memorandum must be in form and substance satisfactory to
the superintendent.
(b) The
actuarial opinion shall state that, after taking into account any risk charge
payable from the separate account assets and the amount of any reserve
liability of the general account with respect to the asset maintenance
requirement, the account assets make good and sufficient provision for contract
liabilities. The opinion shall be accompanied by a certificate of an officer of
the company responsible for the daily monitoring of compliance with the asset
maintenance and reserve requirements for such separate accounts, describing the
extent to and manner in which during the preceding year:
(1) actual benefit payments conformed to the
benefit payments estimated to be made as described in the plan of
operations;
(2) the level of risk
charges, if any, retained in the general account was appropriate in view of
such factors as the nature of the guaranteed contract liabilities and losses
experienced in connection with account contracts; and disclosing the data
required to be reported in accordance with section
97.5(m)(1) of
this Part;
(3) after taking into
account any reserve liability of the general account with respect to the asset
maintenance requirement, the amount of the account assets satisfied the asset
maintenance requirement;
(4) the
determination of the market-value of the separate account assets conformed to
the valuation procedures described in the plan of operations, including (but
not limited to), a statement of the procedures and sources of information used
during such year;
(5) the
fixed-income asset portfolio(s) conformed to, and justified, the rates used to
discount contract liabilities for valuation pursuant to section
97.5(k) of this
Part;
(6) if the amount of the
asset maintenance requirement depended on the separate account assets, or a
subportfolio thereof, being duration matched, the actual experience of the
separate account assets or such subportfolio thereof and actual benefit
payments conformed to the assumptions made in the plan of operations for
determining the duration of such assets and the duration of guaranteed contract
liabilities (or the guaranteed contract liabilities funded by the
subportfolio);
(7) if the amount of
the asset maintenance requirement depended on the separate account assets, or a
subportfolio thereof, being cash-flow matched, the cash inflows from the
separate account assets or such subportfolio thereof matched the cash outflows
to meet guaranteed contract liabilities (or the guaranteed contract liabilities
funded by the subportfolio);
(8)
any rate or rates used pursuant to section
97.5(k) of this
Part to discount guaranteed contract liabilities and other items applicable to
the separate account were modified from the rate or rates described in the plan
of operations filed pursuant to section
97.4(b) of this
Part; and
(9) any assets were
transferred to or from the insurance company's general account, or any amounts
were paid to the insurance company by any contractholder to support the
insurance company's guarantee.
(c) The actuarial opinion shall cover the
applicable points set forth in section
95.8 of this Title.
(d) The actuarial memorandum shall:
(1) either:
(i) substantially conform with those portions
of Part 95 of this Title that are applicable to testing and demonstrating the
sufficiency of assets based upon cash-flow analysis; or
(ii) demonstrate why cash flow analysis is
not appropriate and set forth the procedures used to determine the sufficiency
of account assets;
(2)
clearly describe the assumptions the qualified actuary used in support of the
actuarial opinion, including any assumptions made in projecting cash flows
under each class of assets, and any dynamic portfolio hedging techniques
utilized and the tests performed on the utilization of such
techniques;
(3) clearly describe
how the qualified actuary has reflected the risk of default on obligations and
mortgage loans, including obligations and mortgage loans that are not
investment grade;
(4) if the plan
of operations provides for investments in separate account assets other than
United States government obligations, demonstrate that the rates used to
discount contract liabilities pursuant to section
97.5(k) of this
Part conservatively reflect expected investment returns (taking into account
any foreign exchange risks);
(5) if
the account contracts provide that in certain circumstances they would cease to
be funded by a separate account and, instead, would become contracts funded by
the general account, clearly describe how any increased reserves would be
provided for if and to the extent such circumstances occurred;
(6) state the amount of reserves and
supporting assets as of December 31st and where such reserves are shown in the
annual statement; and
(7) state the
amount of any contingency reserve carried as part of surplus.
