The purposes of this regulation are to prescribe:
This regulation is issued pursuant to the authority vested in the Commissioner of the Department of Banking, Insurance, Securities and Health Care Administration of the State of Vermont under 8 V.S.A § 15, § 3561, § 3577 and subchapter 4 of Chapter 103 (Standard Valuation Law).
This regulation shall apply to all life insurance companies and fraternal benefit societies doing business in this State and to all life insurance companies and fraternal benefit societies which are authorized to reinsure life insurance, annuities or accident and health insurance business in this State.
This regulation shall be applied in a manner that allows the appointed actuary to utilize his or her professional judgment in performing the asset analysis and developing the actuarial opinion and supporting memoranda, consistent with relevant actuarial standards of practice. However, the commissioner shall have the authority to specify specific methods of actuarial analysis and actuarial assumptions when, in the commissioner's judgment, these specifications are necessary for an acceptable opinion to be rendered relative to the adequacy of reserves and related items.
This regulation shall be applicable to all annual statements filed with the office of the commissioner after the effective date of this regulation. A statement of opinion on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with Section 6 of this regulation, and a memorandum in support thereof in accordance with Section 7 of this regulation, shall be required each year.
The following paragraphs are to be included in the statement of actuarial opinion in accordance with this section. Language is that which in typical circumstances should 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 should use language which 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.
For a company actuary, the opening paragraph of the actuarial opinion should read as follows:
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.
For a consulting actuary, the opening paragraph should contain a sentence 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.
Asset Adequacy Tested Amounts-Reserves and Liabilities | ||||||
Statement Item | Formula Reserves (1) | Additional Actuarial Reserves (a)(2) | Analysis Method (b) | Other Amounts (3) | Total Amount (1)+(2)+(3) (4) | |
Exhibit 5 | ||||||
Life Insurance | ||||||
Annuities | ||||||
Supplementary Contracts with Life Contingencies | ||||||
Accidental Death Benefit | ||||||
Disability--Active Lives | ||||||
Disability--Disabled Lives | ||||||
Miscellaneous Reserves | ||||||
Total-Line 9999999, Col. 2 (Statement of Liabilities, Surplus and Other Funds-Line 1) | ||||||
Exhibit 6 | ||||||
Active Life Reserve | ||||||
Claim Reserve | ||||||
Total-Line 16, Col. 1 (Statement of Liabilities, Surplus and Other Funds-Line 2) | ||||||
Exhibit 7 | ||||||
Premium and Other Deposit Funds-Line 14, Col. 6 | ||||||
Dividend Accumulations or Refunds-Line 14, Col. 5 | ||||||
Supplemental Contracts-Line 14, Col. 4 | ||||||
Annuities Certain-Line 14, Col. 3 | ||||||
Guaranteed Interest Contracts-Line 14, Col. 2 | ||||||
Total-Line 14, Col. 1 (Statement of Liabilities, Surplus and Other Funds-Line 3) | ||||||
Exhibit 8 Part 1 | ||||||
Life-Line 4.4, Col. 1 less sum of Cols. 9, 10 and 11 (Statement of Liabilities, Surplus and Other Funds-Line 4.1) | ||||||
Health-Line 4.4, Sum of Cols. 9, and 11 (Statement of Liabilities, Surplus and Other Funds-Line 4.2) | ||||||
Separate Accounts (Separate Accounts Annual Statement, Page 3, Lines 1 and 2) | ||||||
TOTAL RESERVES | ||||||
IMR (Statement of Liabilities, Surplus and Other Funds, Line 9.4) | ||||||
Separate Accounts IMR (Separate Accounts Annual Statement, Page 3, Line 3) | ||||||
AVR (Statement of Liabilities, Surplus and Other Funds, Line 24.1) | (c) | |||||
Net Deferred and Uncollected Premium (Statement of Assets, Lines 13.1 and 13.2) | ||||||
Notes: (a) The additional actuarial reserves are the reserves established under Paragraphs (2) of Section 5E. (b) The appointed actuary should indicate the method of analysis, determined in accordance with the standards for asset adequacy analysis referred to in Section 5D of this regulation, by means of symbols which should be defined in footnotes to the table. (c) Allocated amount of Asset Valuation Reserve (AVR). |
"I have relied on name , title for e.g., anticipated cash flows from currently owned assets, including variations in cash flows according to economic scenarios and, as certified in the attached statement. I have reviewed the information relied upon for reasonableness."
A statement of reliance on other experts should be accompanied by a statement by each of such experts of the form prescribed by Section 6E.
"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."
"In forming my opinion on specify types of reserves , I have relied upon listings and summaries of policies and contracts, of asset records prepared by name and title of company officer certifying in-force records as certified in the attached statement. 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 such review of the actuarial assumptions and actuarial methods and such tests of the actuarial calculations as I considered necessary."
Such a section must be accompanied by a statement by each person relied upon of the form prescribed by Section 8E.
"In my opinion the reserves and related actuarial values concerning the statement items identified above:
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 such assets, and the considerations anticipated to be received and retained under such 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. 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.
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
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.)
Note: Choose one of the above two paragraphs, whichever is applicable.
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.
___________________________________________
Signature of Appointed Actuary
______________________________________________
Address of Appointed Actuary
______________________________________________
Telephone Number of Appointed Actuary
The adoption for new issues or new claims or other new liabilities of an actuarial assumption which 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 6.
If the appointed actuary is unable to form an opinion, then he or she shall refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, then he or she shall issue an adverse or qualified actuarial opinion explicitly stating the reason(s) for such opinion.
This statement should follow the scope paragraph and precede the opinion paragraph.
If the appointed actuary relies on the certification of others on matters concerning the accuracy and completeness of any data underlying the actuarial opinion, e.g. the listings and summaries of policies in force and/or asset oriented information, 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, there shall be attached to the opinion the statement of a company officer or accounting firm who prepared such underlying data similar to the following:
I name of officer , title , of name of company or accounting firm , hereby affirm that the listings and summaries of policies and contracts in force as of December 31, 19 , and other liabilities prepared for and submitted to name of appointed actuary were prepared under my direction and, to the best of my knowledge and belief, are substantially accurate and complete.
Signature of the Officer of the Company or Accounting Firm
Address of the Officer of the Company or Accounting Firm
Telephone Number of the Officer of the Company or Accounting Firm
and/or
I, name of officer , title of name of company, accounting firm, or security analyst , hereby affirm that the listings, summaries and analyses relating to data prepared for and submitted to name of appointed actuary in support of the asset-oriented aspects of the opinion were prepared under my direction and, to the best of my knowledge and belief, are substantially accurate and complete.
Signature of the Officer of the Company, Accounting Firm or the Security Analyst Address of the Officer of the Company, Accounting Firm or the Security Analyst Telephone Number of the Officer of the Company, Accounting Firm or the Security Analyst
(1) Product Type | (2) Death Benefit or Account Value | (3) Reserve Held | (4) Codification Reserves | (5) Codification Standard |
The reviewing actuary shall not be an employee of a consulting firm involved with the preparation of any prior memorandum or opinion for the insurer pursuant to this regulation for any one of the current year or the preceding three (3) years.
When an actuarial analysis is provided, the memorandum shall demonstrate that the analysis has been done in accordance with the standards for asset adequacy referred to in Section 5D of this regulation and any additional standards under this regulation. It shall specify:
The documentation of the assumptions shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions.
The documentation of the assumptions shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions.
The memorandum shall include a statement:"Actuarial methods, considerations and analyses used in the preparation of this memorandum conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis for this memorandum."
An appropriate allocation of assets in the amount of the Interest Maintenance Reserve (IMR), whether positive or negative, must be used in any asset adequacy analysis. Analysis of risks regarding asset default may include an appropriate allocation of assets supporting the Asset Valuation Reserve (AVR); these AVR assets may not be applied for any other risks with respect to reserve adequacy.
Analysis of these and other risks may include assets supporting other mandatory or voluntary reserves available to the extent not used for risk analysis and reserve support. The amount of the assets used for the AVR must be disclosed in the Table of Reserves and Liabilities of the opinion and in the memorandum. The method used for selecting particular assets or allocated portions of assets must be disclosed in the memorandum.
The appointed actuary shall retain on file, for at least seven (7) years, sufficient documentation so that it will be possible to determine the procedures followed, the analyses performed, the bases for assumptions and the results obtained.
21-039 Code Vt. R. 21-020-039-X
EFFECTIVE DATE: August 16, 1997 Secretary of State Rule Log #97-37 (as Regulation 97-4)
AMENDED: July 9, 2010 Secretary of State Rule Log #10-024