N.M. Admin. Code § 13.9.13.9 - COMPUTATION OF SEGMENTED RESERVES

A. The uniform percentage for each segment is such that, at the beginning of the segment; the present value of the net premiums within the segment equals:

(1) the present value of the death benefits within the segment, plus

(2) the present value of any unusual guaranteed cash value (see 13 nmac 9.13.18 [now 13.9.13.18 NMAC] occurring at the end of the segment; less

(3) any unusual guaranteed cash value occurring at the start of the segment, plus

(4) for the first segment only, the excess of item A over item B, as follows:

(a) Item A: A net level annual premium equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.

(b) Item B: A net one year term premium for the benefits provided for in the first policy year.

B. The length of each segment is determined in accordance with 13 NMAC 9.13.7.2 and 9.13.8 [now Subsection B of 13.9.13.7 NMAC and 13.9.13.8 NMAC].

C. The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the lengths of all segments of the policy.

D. For both basic reserves and deficiency reserves computed by the segmented method, present values shall include future benefits and net premiums in the current segment and in all subsequent segments.

Notes

N.M. Admin. Code § 13.9.13.9

1/1/00; Recompiled 11/30/01