Current through all regulations passed and filed through September 16, 2024
(A) Purpose
The purpose of this rule is to recognize new annuity mortality
tables for use in determining the minimum standard of valuation for annuity and
pure endowment contracts.
(B) Authority
This rule is
promulgated pursuant to
the
authority vested in the superintendent under sections
3901.041
,
3903.723 and
3903.725
of the Revised
Code.
(C) Definitions
(1) The "1983 table 'A'" means the mortality
table developed by the society of actuaries committee to recommend a new
mortality basis for individual annuity valuation and adopted as a recognized
mortality table for annuities in June 1982 by the national association of
insurance commissioners (NAIC). (See appendix A to this
rule).
(2) The "1983 GAM
table" means the mortality table developed by the society of actuaries
committee on annuities and adopted as a recognized mortality table for
annuities in December 1983 by the NAIC. (See appendix B to this rule).
(3) The "1994 GAR table" means the mortality
table developed by the society of actuaries group annuity valuation task force
and adopted as a recognized mortality table for annuities in December 1996 by
the NAIC. (See appendix C to this rule for males
and appendix D to this rule for
females).
(4) The "Annuity 2000
Mortality Table" means the mortality table developed by the society of
actuaries committee on life insurance research and adopted as a recognized
mortality table for annuities in December 1996 by the NAIC. (See appendix E
to this rule).
(5)
"Period Table"
means a table of mortality rates applicable to a given calendar year (the
period).
(6)
"Generational Mortality Table" means a mortality table
containing a set of mortality rates that decrease for a given age from one year
to the next based on a combination of a period table and a projection scale
containing rates of mortality improvement.
(7)
"2012 IAR Table"
means that generational mortality table developed by the society of actuaries
committee on life insurance research and containing rates,
qx
2012+n
, derived from a combination of the 2012 IAM period
table and projection scale G2, using the methodology in paragraph (E) of this
rule.
(8)
"2012 Individual Annuity Mortality Period Life (2012
IAM Period) Table" means the period table containing loaded mortality rates for
calendar year 2012. This table contains rates,
qx
2012, developed by the society of actuaries committee on life
insurance research (see appendices F and G to this rule).
(9)
"Projection
Scale G2 (Scale G2)" is a table of annual rates, G2
x
, of mortality
improvement by age for projecting future mortality rates beyond calendar year
2012. This table was developed by the society of actuaries committee on life
insurance research (see appendices H and I to this rule).
(D) Individual annuity or pure
endowment contracts
(1) Except as provided in
paragraph (D)(2) of this rule, the 1983 table "A" and the annuity 2000
mortality table are recognized and approved as individual annuity mortality
tables for valuation, and, at the option of the company, may be used for
purposes of determining the minimum standard of valuation for any individual
annuity or pure endowment contract issued on or after January 1,
1979.
(2) Except as provided in
paragraphs (D)(3) and
(D)(4) of this rule, the annuity 2000 mortality table shall be used for
determining the minimum standard of valuation for any individual annuity or
pure endowment contract issued on or after January 1, 1999.
(3)
Except as
provided in paragraph (D)(4) of this rule, the 2012 IAR mortality table shall
be used for determining the minimum standard of valuation for any individual
annuity or pure endowment contract issued on or after January 1,
2016.
(4) The 1983 table "A" without projection is to be
used for determining the minimum standards of valuation for an individual
annuity
or
pure endowment contract issued on or after January 1, 1999, solely when the
contract is based on life contingencies and is issued to fund periodic benefits
arising from:
(a) Settlements of various
forms of claims pertaining to court settlements or out of court settlements
from tort actions;
(b) Settlements
involving similar actions such as worker's compensation claims; or
(c) Settlements of long term disability
claims where a temporary or life annuity has been used in lieu of continuing
disability payments.
(E)
Application of
the 2012 IAR mortality table
In using the 2012 IAR mortality table,
the mortality rate for a person age x in year (2012+n) is calculated as
follows:
q
x
2012+n=q
x
2012(1-G2
x
)n
The resulting q
x
2012+n
shall be rounded to three decimal places per one
thousand, e.g., 0.741 deaths per one thousand. Also, the rounding shall occur
according to the formula, starting at the 2012 period table rate.
For example, for a male age thirty,
q
x
2012= 0.741
q
x
2013= 0.741 *(1- 0.010)^1=
0.73359, which is rounded to 0.734.
q x
2014= 0.741 *(1- 0.010)^2=
0.7262541, which is rounded to 0.726.
A method leading to incorrect rounding
would be to calculate q
x
2014as q
x
2013*(1- 0.010), or 0.734 * 0.99 = 0.727.
It is incorrect to use the already
rounded q
x
2013
to calculate q x
2014.
(F) Group annuity or pure endowment contracts
(1) The 1983 GAM table, the 1983 table "A"
and the 1994 GAR table are recognized and approved as group annuity mortality
tables for valuation, and, at the option of the company, any one of these
tables may be used for purposes of valuation for any annuity
or pure
endowment purchased on or after January 1, 1979 under a group annuity or pure
endowment contract.
(2) The 1994
GAR table shall be used for determining the minimum standard of valuation for
any annuity or pure endowment purchased on or after January 1, 1999 under a
group annuity or pure endowment contract.
(G) Application of the
1994 GAR table
In using the 1994 GAR table, the mortality rate for a person
age x in year (1994 + n) is calculated as follows:
q x
1994 + n
= q x
1994(1 - AA
x)n
Where the q
x1994s and the
AAx s are as specified in the 1994 GAR table.
(H)
Severability
If any paragraph, term or provision of
this rule is adjudged invalid for any reason, the judgment shall not affect,
impair or invalidate any other paragraph, term or provision of this rule, but
the remaining paragraphs, terms and provisions shall be and continue in full
force and effect.
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Effective: 10/29/2015
Five Year
Review (FYR) Dates: 08/14/2015 and
08/31/2020
Promulgated
Under: 119.03
Statutory
Authority: 3901.041,
3903.723,
3903.725
Rule
Amplifies: 3903.72,
3903.725
Prior
Effective Dates: 5/1/1998, 4/13/2006
