RULE 054.00.14-003 - Amended Rule 38: An Annuity Mortality Table for Use in Determining Reserve Liabilities for Annuities

RULE 054.00.14-003. Amended Rule 38: An Annuity Mortality Table for Use in Determining Reserve Liabilities for Annuities

Section 1. Purpose

The purpose of this rule is to recognize the following mortality tables for use in determining the minimum standard of valuation for annuity and pure endowment contracts: the 1983 Table "a", the 1983 Group Annuity Mortality (1983 GAM) Table, the Annuity 2000 Mortality Table, the 2012 Individual Annuity Reserving (2012 IAR) Table, and the 1994 Group Annuity Reserving (1994 GAR) Table.

Section 2. Authority

This rule is promulgated pursuant to the authority granted to the Arkansas Insurance Commissioner ("Commissioner") by Ark. Code Ann. §§ 23-84-101, et seq., 23-61-108, and 25-15-201, et seq.

Section 3. Definitions

A. As used in this Rule "1983 Table 'a'" means that mortality table developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation and adopted as a recognized mortality table for annuities in June 1982 by the National Association of Insurance Commissioners.

B. As Used in this Rule "1983 GAM Table" means that mortality table developed by the Society of Actuaries Committee on Annuities and adopted as a recognized mortality table for annuities in December 1983 by the National Association of Insurance Commissioners.

C. As used in this rule "1994 GAR Table" means that mortality table developed by the Society of Actuaries Group Annuity Valuation Task Force and shown on pages 866-867 of Volume XLVII of the Transactions of the Society of Actuaries (1995).

D. As used in this rule "Annuity 2000 Mortality Table" means that mortality table developed by the Society of Actuaries Committee on Life Insurance Research and shown on page 240 of Volume XLVII of the Transactions of the Society of Actuaries (1995).

E. As used in this rule, "Period table" means a table of mortality rates applicable to a given calendar year (the Period).

F. As used in this rule, "Generational mortality table" means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a Period table and a projection scale containing rates of mortality improvement.

G. As used in this rule "2012 IAR Mortality Table" means that Generational mortality table developed by the Society of Actuaries Committee on Life Insurance Research and containing rates, qx2012+n, derived from a combination of the 2012 IAM Period Table and Projection Scale G2, using the methodology stated in Section 5.

H. As used in this rule, "2012 Individual Annuity Mortality Period Life (2012 IAM Period) Table" means the Period table containing loaded mortality rates for calendar year 2012. This table contains rates, qx, developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices 1-2.

I. As used in this rule, "Projection Scale G2 (Scale G2)" is a table of annual rates, G2X, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012. This table was developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices 3-4.

Section 4. Individual Annuity or Pure Endowment Contracts

A. Except as provided in Subsections B and C of this section, the 1983 Table "a" is recognized and approved as an individual annuity mortality table for valuation and, at the option of the company, may be used for purposes of determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after March 18,1977.

B. Except as provided in Subsection C of this section, either the 1983 Table "a" or the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after December 16,1985.

C. Except as provided in Subsection D of this section, the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 1999.

D. Except as provided in Subsection E of this section, the 2012 IAR Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2015.

E. The 1983 Table "a" without projection is to be used for determining the minimum standards of valuation for an individual annuity or pure endowment contract issued on or after January 1, 1999, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from:

(1) Settlements of various forms of claims pertaining to court settlements or out of court settlements from tort actions;

(2) Settlements involving similar actions such as workers' compensation claims; or

(3) Settlements of long term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments.

Section 5. Application of the 2012 IAR Mortality Table

In using the 2012 IAR Mortality Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows:

q2012+n =q2012(1 " G2x)n

The resulting qx2012+n shall be rounded to three decimal places per 1,000, e.g., 0.741 deaths per 1,000. Also, the rounding shall occur according to the formula above, starting at the 2012 period table rate.

For example, for a male age 30, qx2012 = 0.741.

qx2013= 0.741 * (1 - 0.010)A 1 = 0.73359, which is rounded to 0.734.

20i4=0J41 * (1 _ 0 qj A2=07262541, which is rounded to 0.726. A method leading to incorrect rounding would be to calculate qx as qx * (1 -0.010), or 0.734 * 0.99 = 0.727. It is incorrect to use the already rounded qx2013 to calculate qx2014.

Section 6. Group Annuity or Pure Endowment Contracts

A. Except as provided in Subsections B and C of this section, the 1983 GAM Table, the 1983 Table "a", and the 1994 GAR Table are recognized and approved as group annuity mortality tables for valuation and, at the option of the company, any one of these tables may be used for purposes of valuation for any annuity or pure endowment purchased on or after March 18,1977 under a group annuity or pure endowment contract.

B. Except as provided in Subsection C of this section, either the 1983 GAM Table or the 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after October 1, 1985 under a group annuity or pure endowment contract.

C. The 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after January 1, 1999 under a group annuity or pure endowment contract.

Section 7. Application of the 1994 GAR Table

In using the 1994 GAR Table, the mortality rate for a person age x in year (1994 + n) is calculated as follows:

where the q£994 and AAX are as specified in the 1994 GAR Table.

Section 8. Separability

If any provision of this rule or its application to any person or circumstances is for any reason held to be invalid, the remainder of the regulation and the application of its provisions to other persons or circumstances shall not be affected.

Section 9. Effective Date

The provisions of this rule shall be effective January 1, 2015, upon statutory filing per Arkansas law.

APPENDIX I

2012 IAM Period Table Female, Age Nearest Birthday

AGE

1000

. "2012 Hx

AGE

1000

. n2012 Hx

AGE

1000

.,,2012 Hx

AGE

1000 * qf12

0

1.621

30

0.300

60

3.460

90

88.377

1

0.405

31

0.321

61

3.916

91

97.491

2

0.259

32

0.338

62

4.409

92

107.269

3

0.179

33

0.351

63

4.933

93

118.201

4

0.137

34

0.365

64

5.507

94

130.969

5

0.125

35

0.381

65

6.146

95

146.449

6

0.117

36

0.402

66

6.551

96

163.908

7

0.110

37

0.429

67

7.039

97

179.695

8

0.095

38

0.463

68

7.628

98

196.151

9

0.088

39

0.504

69

8.311

99

213.150

10

0.085

40

0.552

70

9.074

100

230.722

11

0.086

41

0.600

71

9.910

101

251.505

12

0.094

42

0.650

72

10.827

102

273.007

13

0.108

43

0.697

73

11.839

103

295.086

14

0.131

44

0.740

74

12.974

104

317.591

15

0.156

45

0.780

75

14.282

105

340.362

16

0.179

46

0.825

76

15.799

106

362.371

17

0.198

47

0.885

77

17.550

107

384.113

18

0.211

48

0.964

78

19.582

108

400.000

19

0.221

49

1.051

79

21.970

109

400.000

20

0.228

50

1.161

80

24.821

110

400.000

21

0.234

51

1.308

81

28.351

111

400.000

22

0.240

52

1.460

82

32.509

112

400.000

23

0.245

53

1.613

83

37.329

113

400.000

24

0.247

54

1.774

84

42.830

114

400.000

25

0.250

55

1.950

85

48.997

115

400.000

26

0.256

56

2.154

86

55.774

116

400.000

27

0.261

57

2.399

87

63.140

117

400.000

28

0.270

58

2.700

88

71.066

118

400.000

29

0.281

59

3.054

89

79.502

119

400.000

APPENDIX II

2012IAM Period Table Male, Age Nearest Birthday

AGE

1000

. "2012 Hx

AGE

1000

. n2012 Hx

AGE

1000

. "2012 Hx

AGE

1000

. "2012 Hx

0

1.605

30

0.741

60

5.096

90

109.993

1

0.401

31

0.751

61

5.614

91

123.119

2

0.275

32

0.754

62

6.169

92

137.168

3

0.229

33

0.756

63

6.759

93

152.171

4

0.174

34

0.756

64

7.398

94

168.194

5

0.168

35

0.756

65

8.106

95

185.260

6

0.165

36

0.756

66

8.548

96

197.322

7

0.159

37

0.756

67

9.076

97

214.751

8

0.143

38

0.756

68

9.708

98

232.507

9

0.129

39

0.800

69

10.463

99

250.397

10

0.113

40

0.859

70

11.357

100

268.607

11

0.111

41

0.926

71

12.418

101

290.016

12

0.132

42

0.999

72

13.675

102

311.849

13

0.169

43

1.069

73

15.150

103

333.962

14

0.213

44

1.142

74

16.860

104

356.207

15

0.254

45

1.219

75

18.815

105

380.000

16

0.293

46

1.318

76

21.031

106

400.000

17

0.328

47

1.454

77

23.540

107

400.000

18

0.359

48

1.627

78

26.375

108

400.000

19

0.387

49

1.829

79

29.572

109

400.000

20

0.414

50

2.057

80

33.234

110

400.000

21

0.443

51

2.302

81

37.533

111

400.000

22

0.473

52

2.545

82

42.261

112

400.000

23

0.513

53

2.779

83

47.441

113

400.000

24

0.554

54

3.011

84

53.233

114

400.000

25

0.602

55

3.254

85

59.855

115

400.000

26

0.655

56

3.529

86

67.514

116

400.000

27

0.688

57

3.845

87

76.340

117

400.000

28

0.710

58

4.213

88

86.388

118

400.000

29

0.727

59

4.631

89

97.634

119

400.000

                 

120

1000.000

APPENDIX III

Projection Scale G2 Female, Age Nearest Birthday

AGE

G2X

AGE

G2X

AGE

G2X

AGE

G2X

0

0.010

30

0.010

60

0.013

90

0.006

1

0.010

31

0.010

61

0.013

91

0.006

2

0.010

32

0.010

62

0.013

92

0.005

3

0.010

33

0.010

63

0.013

93

0.005

4

0.010

34

0.010

64

0.013

94

0.004

5

0.010

35

0.010

65

0.013

95

0.004

6

0.010

36

0.010

66

0.013

96

0.004

7

0.010

37

0.010

67

0.013

97

0.003

8

0.010

38

0.010

68

0.013

98

0.003

9

0.010

39

0.010

69

0.013

99

0.002

10

0.010

40

0.010

70

0.013

100

0.002

11

0.010

41

0.010

71

0.013

101

0.002

12

0.010

42

0.010

72

0.013

102

0.001

13

0.010

43

0.010

73

0.013

103

0.001

14

0.010

44

0.010

74

0.013

104

0.000

15

0.010

45

0.010

75

0.013

105

0.000

16

0.010

46

0.010

76

0.013

106

0.000

17

0.010

47

0.010

77

0.013

107

0.000

18

0.010

48

0.010

78

0.013

108

0.000

19

0.010

49

0.010

79

0.013

109

0.000

20

0.010

50

0.010

80

0.013

110

0.000

21

0.010

51

0.010

81

0.012

111

0.000

22

0.010

52

0.011

82

0.012

112

0.000

23

0.010

53

0.011

83

0.011

113

0.000

24

0.010

54

0.011

84

0.010

114

0.000

25

0.010

55

0.012

85

0.010

115

0.000

26

0.010

56

0.012

86

0.009

116

0.000

27

0.010

57

0.012

87

0.008

117

0.000

28

0.010

58

0.012

88

0.007

118

0.000

29

0.010

59

0.013

89

0.007

119

0.000

                 

120

0.000

APPENDIX IV

Projection Scale G2 Male, Age Nearest Birthday

AGE

G2X

AGE

G2X

AGE

G2X

AGE

G2X

0

0.010

30

0.010

60

0.015

90

0.007

1

0.010

31

0.010

61

0.015

91

0.007

2

0.010

32

0.010

62

0.015

92

0.006

3

0.010

33

0.010

63

0.015

93

0.005

4

0.010

34

0.010

64

0.015

94

0.005

5

0.010

35

0.010

65

0.015

95

0.004

6

0.010

36

0.010

66

0.015

96

0.004

7

0.010

37

0.010

67

0.015

97

0.003

8

0.010

38

0.010

68

0.015

98

0.003

9

0.010

39

0.010

69

0.015

99

0.002

10

0.010

40

0.010

70

0.015

100

0.002

11

0.010

41

0.010

71

0.015

101

0.002

12

0.010

42

0.010

72

0.015

102

0.001

13

0.010

43

0.010

73

0.015

103

0.001

14

0.010

44

0.010

74

0.015

104

0.000

15

0.010

45

0.010

75

0.015

105

0.000

16

0.010

46

0.010

76

0.015

106

0.000

17

0.010

47

0.010

77

0.015

107

0.000

18

0.010

48

0.010

78

0.015

108

0.000

19

0.010

49

0.010

79

0.015

109

0.000

20

0.010

50

0.010

80

0.015

110

0.000

21

0.010

51

0.011

81

0.014

111

0.000

22

0.010

52

0.011

82

0.013

112

0.000

23

0.010

53

0.012

83

0.013

113

0.000

24

0.010

54

0.012

84

0.012

114

0.000

25

0.010

55

0.013

85

0.011

115

0.000

26

0.010

56

0.013

86

0.010

116

0.000

27

0.010

57

0.014

87

0.009

117

0.000

28

0.010

58

0.014

88

0.009

118

0.000

29

0.010

59

0.015

89

0.008

119

0.000

                 

120

0.000

(12/8/2014)

The following state regulations pages link to this page.