(a) General description. The statement of
actuarial opinion submitted in accordance with this section shall consist of:
(1) A paragraph identifying the appointed
actuary and the actuary's qualifications (see subsection (b)(1));
(2) A scope paragraph identifying the
subjects on which an opinion is being expressed and describing the scope of the
appointed actuary's work, including a tabulation delineating the reserves and
related actuarial items which have been analyzed for asset adequacy and the
method of analysis, (see subsection (b)(2)) and identifying the reserves and
related actuarial items covered by the opinion which have not been so
analyzed;
(3) A reliance paragraph
describing those areas, if any, where the appointed actuary has deferred to
other experts in developing data, procedures, or assumptions, (e.g.,
anticipated cash flows from currently owned assets, including variation in cash
flows according to economic scenarios (see subsection (b)(3)), supported by a
statement of each such expert in the form prescribed by subsection (e);
and
(4) An opinion paragraph
expressing the appointed actuary's opinion with respect to the adequacy of the
supporting assets to mature the liabilities (see subsection (b)(6)).
(5) One or more additional paragraphs will be
needed in individual company cases as follows:
(A) If the appointed actuary considers it
necessary to state a qualification of the opinion;
(B) If the appointed actuary must disclose an
inconsistency in the method of analysis or basis of asset allocation used at
the prior opinion date with that used for this opinion.
(C) If the appointed actuary must disclose
whether additional reserves of the prior opinion date are released as of this
opinion date, and the extent of the release.
(D) If the appointed actuary chooses to add a
paragraph briefly describing the assumptions which form the basis for the
actuarial opinion.
(b) Recommended language. The following
paragraphs are to be included in the statement of actuarial opinion in
accordance with this section. Language is that which in typical circumstances
should be included in a statement of actuarial opinion. The language may be
modified as needed to meet the circumstances of a particular case, but the
appointed actuary should use language which clearly expresses the actuary's
professional judgment. However, in any event the opinion shall retain all
pertinent aspects of the language provided in this section.
(1) The opening paragraph should generally
indicate the appointed actuary's relationship to the company and the actuary's
qualifications to sign the opinion. For a company actuary, the opening
paragraph of the actuarial opinion should read as follows:
"I, (name), am (title) of (insurance company name) and a
member of the American Academy of Actuaries. I was appointed by, or by the
authority of, the Board of Directors of said insurer to render this opinion as
stated in the letter to the commissioner dated (insert date). I meet the
Academy qualification standards for rendering the opinion and am familiar with
the valuation requirements applicable to life and health insurance
companies."
For a consulting actuary, the opening paragraph should
contain a sentence such as:
"I, (name), a member of the American Academy of Actuaries,
am associated with the firm of (name of consulting firm). I have been appointed
by, or by the authority of, the Board of Directors of (name of company) to
render this opinion as stated in the letter to the commissioner dated (insert
date). I meet the Academy qualification standards for rendering the opinion and
am familiar with the valuation requirements applicable to life and health
insurance companies."
(2)
The scope paragraph should include a statement such as the following:
"I have examined the actuarial assumptions and actuarial
methods used in determining reserves and related actuarial items listed in
Appendix A, chapter 16-169, Hawaii Administrative Rules, as shown in the annual
statement of the company, as prepared for filing with state regulatory
officials, as of December 31, 20(). Tabulated in Appendix A, chapter 16-169,
Hawaii Administrative Rules, are those reserves and related actuarial items
which have been subjected to asset adequacy analysis."
(3) If the appointed actuary has relied on
other experts to develop certain portions of the analysis, the reliance
paragraph should include a statement such as the following:
"I have relied on (name), (title) for (e.g., anticipated
cash flows from currently owned assets, including variations in cash flows
according to economic scenarios or certain critical aspects of the analysis
performed in conjunction with forming my opinion,) and as certified in the
attached statement. I have reviewed the information relied upon for
reasonableness."
A statement of reliance on other experts should be
accompanied by a statement by each of the experts in the form prescribed by
subsection (e).
(4) If the
appointed actuary has examined the underlying asset and liability records, the
reliance paragraph should also include a statement such as the following:
"My examination included such review of the actuarial
assumptions and actuarial methods and of the underlying basic asset and
liability records and such tests of the actuarial calculations as I considered
necessary. I also reconciled the underlying bank asset and liability records to
(exhibit and schedules listed as applicable) of the company's annual
statement."
(5) If the
appointed actuary has not examined the underlying records, but has relied on
data (e.g., listings and summaries of policies in force or asset records,
prepared by the company), the reliance paragraph should include a sentence such
as:
"In forming my opinion on (specify types of reserves) I
relied upon data prepared by (name and title of company officer certifying in
force records or other data) as certified in the attached statements. I
evaluated that data for reasonableness and consistency. I also reconciled that
data to (exhibits and schedules to be listed as applicable) of the company's
current annual statement. In other respects, my examination included review of
the actuarial assumptions and actuarial methods used and tests of the
calculations I considered necessary.
The section shall be accompanied by a statement by each
person relied upon of the form prescribed by subsection (e).
(6) The opinion paragraph should include a
statement such as:
"In my opinion the reserves and related actuarial values
concerning the statement items identified above:
(A) Are computed in accordance with presently
accepted actuarial standards consistently applied and are fairly stated, in
accordance with sound actuarial principles;
(B) Are based on actuarial assumptions which
produce reserves at least as great as those called for in any contract
provision as to reserve basis and method, and are in accordance with all other
contract provisions;
(C) Meet the
requirements of the Insurance Law and regulation of the state of (state of
domicile) and are at least as great as the minimum aggregate amounts required
by the state in which this statement is filed;
(D) Are computed on the basis of assumptions
consistent with those used in computing the corresponding items in the annual
statement of the preceding year-end (with any exceptions noted below);
and
(E) Include provision for all
actuarial reserves and related statement items which ought to be established.
The reserves and related items, when considered in light of
the assets held by the company with respect to such reserves and related
actuarial items including, but not limited to, the investment earnings on such
assets, and the considerations anticipated to be received and retained under
such policies and contracts, make adequate provision, according to presently
accepted actuarial standards of practice, for the anticipated cash flows
required by the contractual obligations and related expenses of the
company.
The actuarial methods, considerations, and analyses used in
forming my opinion conform to the appropriate Standards of Practice as
promulgated by the Actuarial Standards Board, which standards form the basis of
this statement of opinion.
This opinion is updated annually as required by statute. To
the best of my knowledge, there have been no material changes from the
applicable date of the annual statement to the date of the rendering of this
opinion which should be considered in reviewing this opinion.
or
The following material changes which occurred between the
date of the statement for which this opinion is applicable and the date of this
opinion should be considered in reviewing this opinion: (Describe the change or
changes.)
Note: Choose one of the above two paragraphs,
whichever is applicable.
The impact of unanticipated events subsequent to the date of
this opinion is beyond the scope of this opinion. The analysis of asset
adequacy portion of this opinion should be viewed recognizing that the
company's future experience may not follow all the assumptions used in the
analysis.
__________________________
Signature of Appointed Actuary
__________________________
Address of Appointed Actuary
__________________________
Telephone Number of Appointed Actuary
__________________________
Date"
(c)
Assumptions for new issues. The adoption for new issues or new claims or other
new liabilities of an actuarial assumption which differs from a corresponding
assumption used for prior new issues or new claims or other new liabilities is
not a change in actuarial assumptions within the meaning of this
section.
(d) Adverse opinions. If
the appointed actuary is unable to form an opinion, then the actuary shall
refuse to issue a statement of actuarial opinion. If the appointed actuary's
opinion is adverse or qualified, then the actuary shall issue an adverse or
qualified actuarial opinion explicitly stating the reasons for the opinion.
This statement should follow the scope paragraph and precede the opinion
paragraph.
(e) Reliance on
Information Furnished by Other Persons. If the appointed actuary relies on the
certification of others on matters concerning the accuracy or completeness of
any data underlying the actuarial opinion, or the appropriateness of any other
information used by the appointed actuary in forming the actuarial opinion, the
actuarial opinion should so indicate whom the actuary is relying upon and a
precise identification of the items subject to reliance. In addition, the
persons upon whom the appointed actuary relies shall provide a certification
that precisely identifies the information provided by that person and a
statement as to the accuracy, completeness, or reasonableness, as applicable,
of the information. This certification shall include the signature, title,
company, address, and telephone number of the person rendering the
certification, as well as the date on which it is signed.
(f) Alternate Option. The Standard Valuation
Law section 431:5.307, HRS, gives the commissioner broad authority to accept
the valuation of a foreign insurer when that valuation meets the requirements
applicable to a company domiciled in this state in the aggregate. As an
alternative to the requirements of subsection (b)(6), the commissioner may make
one or more of the following additional approaches available to the opining
actuary:
(1) A statement that the reserves
"meet the requirements of the insurance laws and regulations of the state of
(state of domicile) and the formal written standards and conditions of this
state for filing an opinion based on the law of the state of domicile." If the
commissioner chooses to allow this alternative, a formal written list of
standards and conditions shall be made available. If a company chooses to use
this alternative, the standards and conditions in effect on July 1 of the
applicable calendar year shall apply to statements for that calendar year, and
they shall remain in effect until they are revised or revoked. If no list is
available, this alternative shall not be available;
(2) A statement that the reserves "meet the
requirements of the insurance laws and regulations of the state of (state of
domicile) and I have verified that the company's request to file an opinion
based on the law of the state of domicile has been approved and that any
conditions required by the commissioner for approval of that request have been
met." If the commissioner chooses to allow this alternative, a formal written
statement of such allowance shall be issued no later than March 31 of the year
it is first effective. It shall remain valid until rescinded or modified by the
commissioner. The rescission or modifications shall be issued no later than
March 31 of the year they are first effective. Subsequent to that statement
being issued, if a company chooses to use this alternative, the company shall
file a request to do so, along with justification for its use, no later than
April 30 of the year of the opinion to be filed. The request shall be deemed
approved on October 1 of that year if the commissioner has not denied the
request by that date; or
(3) A
statement that the reserves "meet the requirements of the insurance laws and
regulations of the state of (state of domicile) and I have submitted the
required comparison as specified by this State."
(A) If the commissioner chooses to allow this
alternative, the company shall provide and publish a formal written list of
products (to be added to the table in subparagraph (B)) for the required
comparison. If a company chooses to use this alternative, the list in effect on
July 1 of a calendar year shall apply to statements for that calendar year, and
it shall remain in effect until it is revised or revoked. If no list is
available, this alternative shall not be available;
(B) If a company desires to use this
alternative, the appointed actuary shall provide a comparison of the gross
nationwide reserves held to the gross nationwide reserves that would be held
under NAIC codification standards. Gross nationwide reserves are the total
reserves calculated for the total company in force business directly sold and
assumed, indifferent to the state in which the risk resides, without reduction
for reinsurance ceded. The information provided shall be at least:
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(1)
Product
Type
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(2)
Death Benefit or Account Value
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(3)
Reserves Held
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(4)
Codification Reserves
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(5)
Codification Standard
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(C)
The information listed shall include all products identified by either the
state of filing or any other states subscribing to this alternative;
(D) If there is no codification standard for
the type of product or risk in force or if the codification standard does not
directly address the type of product or risk in force, the appointed actuary
shall provide detailed disclosure of the specific method and assumptions used
in determining the reserves held; and
(E) The comparison provided by the company is
to be kept confidential to the same extent and under the same conditions as the
actuarial memorandum.
Notwithstanding the above, the commissioner may reject an
opinion based on the laws and regulations of the state of domicile and require
an opinion based on the laws of this State. If a company is unable to provide
the opinion within sixty (60) days of the request or such other period of time
determined by the commissioner after consultation with the company, the
commissioner may contract an independent actuary at the company's expense to
prepare and file the opinion.
