The New York State Insurance Department is beefing up charitable gift annuity reserve requirements.

A charity that sponsors a program must either file an actuarial opinion supporting the adequacy of program assets, or else hold reserves equal to at least 115% of the reserves that Section 4217 of the New York Insurance Law would require an insurer with a comparable annuity program to hold, officials write in a new notice.

New York officials report in the notice that they have concerns about the adequacy of reserves being held by some charitable gift annuity programs.

The mortality rates used in annuity program calculations “are not conservative and do not make a provision for adverse deviations in experience,” officials write.

Officials also question whether the maximum valuation interest rates specified in the annuity law are conservative enough.

In addition, “many organizations have a high degree of [asset liability mismatch] risk and are holding a high concentration of assets with substantial volatility and/or credit risk,” officials write. “However, reserves are not being held for potential declines in asset values.”