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September 03, 2006 at 04:00 PM
Regulators adopted motions on several issues including an interim solution on reserving for universal life products, release of a draft on life settlement guidelines, and agreement on a definition for hybrid securities.
The actions were taken in preparation for the fall meeting of the National Association of Insurance Commissioners, which takes place Sept. 9-12 in St. Louis.
The Life and Annuities “A” Committee adopted a package that included Actuarial Guideline 38 for UL products with secondary guarantees. The proposal uses lapse support assumptions in establishing reserves. The package, developed with assistance from the American Council of Life Insurers, also includes splitting the current 2001 CSO mortality table in order to create preferred mortality tables.
Jim Poolman, North Dakota insurance commissioner and chair of the “A” committee, added two provisions including a Dec. 31, 2010 sunset in anticipation of development of a full-fledged principles-based reserving system. He also included a proposal to include asset adequacy testing to give regulators greater comfort that there was enough conservatism in the provision.
The motion was adopted and will in all likelihood go before the executive and plenary committee in St. Louis.
The measure was adopted by the Life & Health Actuarial Task Force on Aug. 29 amid concern that lapse-supported assumptions are not consistent with the Standard Valuation Law and that it would have been preferable to wait 3-6 months until new preferred mortality tables were developed with newer data. During the call, the issue of “political expediency” versus actuarial science was raised.
