After nearly a decade of work and many incarnations, a reserving guideline for variable annuities with guarantees took a major step toward adoption by the National Association of Insurance Commissioners.
The NAIC’s Life & Health Actuarial Task Force unanimously decided to adopt draft Actuarial Guideline VA-CARVM and to sunset two temporary guidelines. Those 2 interim measures, AG 34 and AG 39, would expire the day before VA-CARVM becomes effective Dec. 31, 2009.
The NAIC’s Life & Annuities “A” Committee as well as the NAIC’s Executive Committee and Plenary must still adopt VA-CARVM.
The issue of properly reserving for VAs with guarantees came to light nearly a decade ago as the popularity of these products grew. Regulators failed to reach consensus on a guideline, however, before the vote on the current draft, which the LHATF released July 10. The issue has been before at least 4 LHATF chairs.
Leslie Jones, a life actuary with the South Carolina Department of Insurance who spearheaded the issue for LHATF, said after the vote, “This was a long, arduous project, but I think it is an excellent result.”
Before the vote, representatives of CIGNA Corp., Philadelphia, raised an issue about tax reserves. But most companies had no problem with the proposal as it stood, and CIGNA’s request was not advanced by regulators.