ACLI Withholds Support For VA Draft

Option pricing as part of the standard scenario; and,

Whether full termination of nonguaranteed revenue sharing with service providers such as mutual funds is too conservative.

On the issue of an appropriate CTE level, Tom Campbell, a life actuary representing Hartford Life Insurance Co., Simsbury, Conn., says for the sake of compromise it would agree to a CTE level, but it may not necessarily be appropriate to apply a principle-based reserving approach to life and nonvariable annuity products.

On the issue of principle-based reserving, Kling told regulators on behalf of the ACLI that the industry believes “it is important to get it right or as right as it can be.”

The industry agrees with regulators that guarantees in products potentially can be dangerous to the financial health of life insurers, he said.

Although reserves and capital are needed, there is also a need to assess the risk and not make the industry take solutions that could include leaving the market, seeking offshore solutions, increasing prices to consumers or creating an uneven playing field for large and small companies, Kling said.

ACLI has asked its members for data on the effects of VA-CARVM, which it expects to receive before the NAIC summer meeting in June. Both industry and regulators agree that when data becomes available, it might help reach a resolution on the proposal.

“Hopefully, the numbers will shed some light,” observed William Carmello, a life actuary with the New York insurance department. “But regulators might decide that even if the ACLI does not support it, it is the right thing to do” to maintain their position on the draft.