Title 3 . Commerce, Community, and Economic Development

Chapter 21 . Miscellaneous

Section 830. Statement of actuarial opinion

3 AAC 21.830. Statement of actuarial opinion

(a) A statement of actuarial opinion must contain the following:

(1) an opening paragraph, in substantially the following form, that identifies the appointed actuary, lists the actuary's qualifications, and indicates the relationship between the actuary and the company for whom the opinion is written:

[FOR A COMPANY ACTUARY]

"I, ________ (name), am ________ (title) of ________ (company name) and a member of the American Academy of Actuaries. I was appointed directly by or through delegation of authority from the Board of Directors of ________ (company name) to render this opinion, as stated in a letter to the director dated ________ (insert date). I meet the academy qualification standards for rendering this opinion and have knowledge of the valuation requirements under AS 21.18.110 "; or

[FOR A CONSULTING ACTUARY]

"I, ________ (name), a member of the American Academy of Actuaries, am associated with the firm of ________ (name of consulting firm). I have been appointed directly by or through delegation of authority from the Board of Directors of ________ (name of company) to render this opinion, as stated in a letter to the director dated ________ (insert date). I meet the academy qualification standards for rendering this opinion and have knowledge of the valuation requirements under AS 21.18.110 ";

(2) a scope paragraph, in substantially the following form, that identifies the subjects on which an opinion is expressed and describes the scope of the appointed actuary's work, including a tabulation that delineates the reserves and related actuarial items that have been analyzed for asset adequacy, states the method of analysis, and identifies the reserves and related actuarial items covered by the opinion that have not been analyzed for asset adequacy:

"I have examined the actuarial assumptions and actuarial methods used in determining the 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, ______. Tabulated below are the reserves and related actuarial items that have been subjected to asset adequacy analysis":

RESERVES AND RELATED ACTUARIAL ITEMS

Asset Adequacy Tested Amounts Reserves and Liabilities Additional Total Formula Actuarial Other Amount Reserves Reserves (a) Analysis Amount (1)+(2)+(3) Statement Item (1) (2) Method (b) (3) (4) Exhibit 8 A Life Insurance B Annuities C Supplementary Contract Involving Life Contingencies D Accidental Death Benefit E Disability - Active F Disability - Disabled G Miscellaneous Total (Exhibit 8 Item 1, Page 3) Exhibit 9 A Active Life Reserve B Claim Reserve Total (Exhibit 9 Item 2, Page 3) Exhibit 10 Premiums and Other Deposit Funds (Column 5, Line 14 Guaranteed Interest Contracts (Column 2, Line 14) Other (Column 6, Line 4) Supplemental Contracts and Annuities Certain (Column 3, Line 14) Dividend Accumulations (Column 4, Line 14) Total Exhibit 10 (Column 1, Line 14) Exhibit 11 Part 1 1 Life (Page 3, Line 4.1) 2 Health (Page 3, Line 4.2) Total Exhibit 11, Part 1 Separate Accounts (Page 3 of the Annual Statement of the Separate Accounts, Lines 1, 2, 3.1, 3.2, 3.3) TOTAL RESERVES

IMR (General Account, Page ______, Line ______) (Separate Accounts, Page ______, Line ______) AVR (Page ______, Line ______) (c) Net Deferred and Uncollected Premium

Notes:

(a) The additional actuarial reserves are the reserves established under 3 AAC 21.830.

(b) The appointed actuary must indicate the method of analysis determined in accordance with the standards for asset adequacy analysis in the actuarial standards of practice adopted by the Actuarial Standards Board and required by AS 21.18.110 (n), and in 3 AAC 21.830, by means of symbols that are identified in footnotes to the table.

(c) Allocated amount of asset valuation reserve.

(3) a reliance section, in substantially the following form, that describes the areas where the appointed actuary has deferred to another expert in developing data, procedures, or assumptions, and that is supported by a statement of the expert in the form specified under (g) of this section:

"I have relied on ________ (name), ________ (title) for ________ (areas of deference, e.g., 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.";

(4) language in the reliance section, in substantially the following form, if the appointed actuary has examined the underlying asset and liability records:

"My examination included all the review of the actuarial assumptions and actuarial methods and of the underlying basic asset and liability records and the tests of the actuarial calculations that I considered necessary. I also reconciled the underlying basic asset and liability records to ________ (list of applicable exhibits and schedules) of the company's current annual statement.";

(5) language in the reliance section, in substantially the following form, if the appointed actuary has not examined the underlying records, but has relied upon data prepared by the company or a third party, such as listings and summaries of policies or contracts in force, or asset records:

"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.";

(6) an opinion section, in substantially the following form, that expresses the appointed actuary's opinion regarding the adequacy of the supporting assets to mature the liabilities:

"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 fairly stated, and in accordance with sound actuarial principles;

"2. are based on actuarial assumptions that produce reserves at least as great as those called for in a contract provision regarding the reserve basis and method, and are in accordance with all other contract provisions;

"3. meet the requirements of the insurance laws of the state of ________ (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 that are required to be established.

"The reserves and related items, when considered in light of the assets held by the company with respect to these reserves and related actuarial items, including the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision, in accordance with 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 adopted by the Actuarial Standards Board as required by AS 21.18.110 (n). These standards form the basis of this statement of opinion."

[ONE OF THE NEXT TWO PARAGRAPHS, WHICHEVER APPLIES]

"This opinion is updated annually as required by law. To the best of my knowledge, there have been no material changes between the date of the annual statement to which this opinion applies and the date of this opinion that should be considered when reviewing this opinion."; or

"The following material change(s) that occurred between the date of the annual statement to which this opinion applies and the date of this opinion should be considered when reviewing this opinion: (describe the change or changes)";

"The impact of unanticipated events after the date of this opinion is beyond the scope of this opinion. The analysis of the 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"

(b) The required language in (a) of this section may be modified as needed to meet the circumstances of a particular case, if the language clearly expresses the appointed actuary's professional judgment.

(c) If the appointed actuary considers it necessary, a statement of actuarial opinion may contain a

(1) qualification of the opinion;

(2) disclosure of an inconsistency in the method of analysis or the basis of asset allocation that was used in the prior opinion and the one used for this opinion; however, the adoption of an actuarial assumption for new issues, new claims, or other new liabilities 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;

(3) disclosure of whether additional reserves as of the prior opinion date are released as of this opinion date, and the amount of the release; or

(4) paragraph that briefly describes the assumptions that form the basis for the actuarial opinion.

(d) A statement of actuarial opinion rendered under this section must apply to all in-force business on the statement date regardless of whether directly issued or assumed or when or where the business was issued, and must conform to the actuarial standards of practice adopted by the Actuarial Standards Board as required by AS 21.18.110 (n).

(e) If the appointed actuary determines that a reserve must be held in addition to the aggregate reserve held by the company and calculated by the methods required under AS 21.18.110 , the company shall establish the additional reserve. Additional reserves established under this subsection that are subsequently determined to be unnecessary may be released. An amount released must be disclosed in the actuarial opinion for the applicable year. The release of the additional reserves will not be considered by the director to be an adoption of a lower standard of valuation.

(f) If the appointed actuary is unable to form an opinion, the appointed actuary shall issue a statement that explains why an opinion cannot be formed, instead of writing an opinion paragraph. In the case of an adverse or qualified opinion, the appointed actuary shall issue an adverse or qualified actuarial opinion that explicitly states the reason for the adverse or qualified opinion.

(g) 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 must identify each person the actuary is relying upon and a precise identification of the items subject to that reliance.

(h) A person upon whom the appointed actuary relies under (g) of this section shall provide a certification that precisely identifies the items on which the person is providing information and a statement of the accuracy, completeness, or reasonableness of the items.

(i) A certification under (h) of this section must include

(1) the signature, title, company, address, and telephone number of the person giving the certification; and

(2) the date the certification is signed.

(j) A company may provide an opinion 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 ________ (state of domicile)" instead of the statement required in item 3 under (a)(6) of this section, if the

(1) director issues an order

(A) allowing a company to use the opinion statement in this subsection instead of the statement required in item 3 under (a)(6) of this section; and

(B) listing standards and conditions for use of the opinion statement in this subsection; and

(2) company applies the standards and conditions in effect on July 1 of a calendar year for statements for that calendar year, and continues to use the standards and conditions until the director subsequently issues an order revising the standards and conditions or prohibiting the use of this opinion statement.

(k) A company may provide an opinion 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 director for approval of that request have been met" instead of the statement required in item 3 under (a)(6) of this section, if

(1) on or before April 30 of the year in which the actuarial opinion is applicable, the company files with the director a request to use the opinion statement in this subsection, and the director has not denied the request in writing before October 1 of that year; or

(2) on or before March 31 of the year in which the actuarial opinion is applicable, the director issues an order allowing a company to use the opinion statement in this subsection.

( l ) A company may provide an opinion 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" instead of the statement required in item 3 under (a)(6) of this section, if

(1) the director issues an order that allows a company to use the opinion statement in this subsection, and lists the insurance products for which that statement is applicable;

(2) the appointed actuary of a company that wants to use the opinion statement in this subsection provides a comparison of gross nationwide reserves held by the company to the gross nationwide reserves that the company would hold under the National Association of Insurance Commissioners' codification standards for the year in which the actuarial opinion is applicable;

(3) the comparison provided by the appointed actuary under (2) of this subsection lists for each product type identified by this state or another state in which the opinion statement is allowed, the associated death benefit or account value, reserves held by the company, codification reserve amount, and codification reserve standard; and

(4) a National Association of Insurance Commissioners' codification standard does not exist for or does not directly apply to a listed insurance product and the appointed actuary discloses the specific method and assumptions the actuary used to determine the reserves held by the company.

(m) The director may revise the standards and conditions or prohibit the use of the opinion statement under (j)(2) of this section by issuing an order on or before March 31 of the year in which the actuarial opinion is applicable.

(n) A list in an order issued under ( l )(1) of this section is valid until rescinded or modified by the director.

(o) The comparison that is provided by the appointed actuary under ( l )(2) of this section is confidential, subject to the confidentiality requirements of AS 21.18.110 (s).

(p) If the director rejects an actuarial opinion under AS 21.18.110 (o) the company shall file an actuarial opinion based on the laws of this state.

(q) The director may contract with an independent qualified actuary at the company's expense to prepare and file an actuarial opinion based on the laws of this state under (p) of this section, if the company is unable to provide the opinion within 60 days after the date the director notifies the company that the company must file the opinion.

(r) In this section, "gross nationwide reserves" means the total reserves calculated for all of a company's in-force business directly sold and assumed without reduction for reinsurance ceded.

History: Eff. 9/1/96, Register 139; am 1/1/2005, Register 172

Authority: AS 21.06.090

AS 21.09.200

AS 21.18.110

AS 21.18.160