Current through Reg. 50, No. 13; March 28, 2025
(a) General description. The statement of
actuarial opinion required by this section must consist of the following
paragraphs:
(1) a paragraph identifying the
appointed actuary and his or her qualifications, recommended language is
provided in subsection (b)(1) of this section;
(2) a scope paragraph (recommended language
is provided in subsection (b)(2) of this section) 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, and identifying the reserves and related actuarial items covered by
the opinion that have not been so analyzed;
(3) a reliance paragraph (recommended
language is provided in subsection (b)(3) of this section) describing those
areas, if any, where the appointed actuary has deferred to other experts in
developing data, procedures, or assumptions (e.g., anticipated cash flows from
currently owned assets, including variation in cash flows according to economic
scenarios), supported by a statement of each such expert with the information
prescribed by subsection (e) of this section; and
(4) an opinion paragraph expressing the
appointed actuary's opinion with respect to the adequacy of the supporting
assets to mature the liabilities (recommended language is provided in
subsection (b)(6) of this section).
(5) One 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 or 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 as of the prior opinion date are released as of
this opinion date, and the extent of the release; or
(D) if the appointed actuary chooses to add a
paragraph briefly describing the assumptions that 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. The language is that which should be included in
typical circumstances 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 or her
professional judgment. Regardless of the language used, the opinion must 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.
(A) For a
company actuary, the opening paragraph of the actuarial opinion should include
a statement such as:
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(B) For
a consulting actuary, the opening paragraph should include a statement such as:
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(2) The scope paragraph should include a
statement such as:
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(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:
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(4) If
the appointed actuary has examined the underlying asset and liability records,
the reliance paragraph should include a statement such as:
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(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 statement such
as:
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(6) The
opinion paragraph should include a statement such as:
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(c) Assumptions for new issues. 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 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 he or she must refuse to issue a
statement of actuarial opinion. If the appointed actuary's opinion is adverse
or qualified, then he or she must issue an adverse or qualified actuarial
opinion explicitly stating the reasons for the 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 must 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 must include the signature, title, company,
address, email address, and telephone number of the person rendering the
certification, as well as the date on which it is signed.
(f) Alternate option.
(1) Insurance Code Chapter 425, Subchapter B,
gives the commissioner 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 subsection (b)(6) of this section, the commissioner may make one 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
commissioner chooses to allow this alternative, a formal written list of
standards and conditions must be made available. If a company chooses to use
this alternative, the standards and conditions in effect on July 1 of a
calendar year apply to statements for that calendar year and 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 commissioner for approval of that
request have been met." If the commissioner chooses to allow this alternative,
a formal written statement of such allowance must be issued no later than March
31 of the year it is first effective. It will remain valid until rescinded or
modified by the commissioner. The rescission or modifications must 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 must 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 will be
deemed approved on October 1 of that year if the commissioner has not denied
the request by that date.
(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 commissioner chooses to allow this
alternative, a formal written list of products (to be added to the table in
Figure: 28 TAC §
3.1606(f)(1)(C)(ii))
for which the required comparison must be provided will be published. If a
company chooses to use this alternative, the list in effect on July 1 of a
calendar year applies to statements for that calendar year and remains 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 must
provide a comparison of the gross nationwide reserves held to the gross
nationwide reserves that would be held under §
7.18 of this title (relating to
NAIC Accounting Practices and Procedures Manual). 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 must be at least:
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(iii)
The information listed must 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
must provide detailed disclosure of the specific method and assumptions used in
determining the reserves held.
(2) The commissioner 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 60 days of the request or such other period of time determined
by the commissioner after consultation with the company, the commissioner may
contract with an independent actuary at the company's expense to prepare and
file the opinion.
