31 Pa. Code § 84b.8 - Statement of actuarial opinion based on an asset adequacy analysis
General description. The statement of actuarial opinion required under § 84b.5 (relating to general requirements) must consist of the following:
(1) An opening paragraph that meets the
following requirements:
(i) Identifies the
actuary's name and title.
(ii)
Identifies the insurance company employing the actuary, or if a consulting
actuary, the name of the firm with which the actuary is associated.
(iii) States that the actuary is a member of
the American Academy of Actuaries (Academy) and that the actuary meets the
Academy qualification standards for rendering the opinion.
(iv) States that the actuary was appointed
by, or by the authority of, the board of directors of the insurer to render the
opinion and is familiar with the valuation requirements applicable to life and
health insurance companies.
(v)
States the date of the notification letter sent to the Commissioner with
respect to the appointment.
(2) A scope paragraph that meets the
following requirements:
(i) Describes the
extent of the appointed actuary's work.
(ii) Includes a tabulation that meets the
following requirements:
(A) Reconciles the
reserves and related actuarial items that are covered by the opinion to the
annual statement of the company.
(B) Identifies the reserves and related
actuarial items that have been analyzed for asset adequacy and the method of
analysis.
(C) Identifies the
reserves and related actuarial items that have not been analyzed for asset
adequacy.
(D) Indicates, for each
applicable annual statement item the formula reserves, additional actuarial
reserves, analysis method, other amount, and total amount in a format
consistent with the "Reserves and Liabilities" Table as adopted by the NAIC in
the Actuarial Opinion and Memorandum Model Regulation No. 822.
(iii) Includes a statement that
the actuary has examined the actuarial assumptions and actuarial methods used
in determining reserves and related actuarial items that are included in the
tabulation and reported in the annual statement of the company, as prepared for
filing with state regulatory officials, as of December 31 of the relevant
year.
(3) A reliance
paragraph that meets the following requirements:
(i) Documents the appointed actuary's
reliance on other experts to develop certain portions of the analysis in
accordance with subsection (c) and states that the actuary has reviewed the
information relied upon for reasonableness.
(ii) If the appointed actuary has examined
the underlying asset and liability records, includes the following statements:
(A) The examination included a review of the
actuarial assumptions and actuarial methods and of the underlying basic asset
and liability records and tests of the actuarial calculations, as considered
necessary by the actuary.
(B) The
actuary reconciled the underlying basic asset and liability records to the
applicable exhibits and schedules of the company's current annual
statement.
(iii) If the
appointed actuary has not examined the underlying records, but has relied upon
data (for example, listings and summaries of policies in force or asset
records) prepared by the company, includes the following:
(A) Documentation of the reliance in
accordance with subsection (c).
(B)
A statement that, in forming the opinion on specified types of reserves, the
actuary relied upon data prepared by a company officer certifying in force
records or other data.
(C) The name
and title of the company officer certifying in force records or other
data.
(D) A statement confirming
that the actuary evaluated that data for reasonableness and consistency and
reconciled that data to the applicable exhibits and schedules of the company's
current annual statement.
(E) A
statement confirming that the actuary's examination included review of the
actuarial assumptions and actuarial methods used and tests of calculations, as
considered necessary by the actuary.
(4) An opinion paragraph that meets the
following requirements:
(i) States that the
reserves and related actuarial items identified in the tabulation:
(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 that
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 other
contract provisions.
(C) Meet the
requirements of the valuation law and regulations of the state of [state of
domicile].
(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 changes in
actuarial assumptions noted as exceptions in a separate paragraph. The adoption
for new issues or new claims or other new liabilities of an actuarial
assumption that differs from a corresponding assumption used for prior new
issues or new claims or other new liabilities is not a change in actuarial
assumption within the meaning of this clause.
(E) Provide for all reserves and related
actuarial items that ought to be established.
(ii) Includes a statement substantially
similar to the following, except that the statement may be omitted, at the
discretion of the Commissioner, for an opinion filed on behalf of a company
doing business only in this Commonwealth:
"The reserves and related actuarial 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."
(iii) States that
the actuarial methods, considerations and analyses used in forming the
actuary's 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.
(iv)
Includes one of the following items, as applicable:
(A) A statement that the opinion is updated
annually as required by statute, and to the best of the actuary's knowledge,
there have been no material changes from the applicable date of the annual
statement to the date of the rendering of the opinion that should be considered
in reviewing the opinion.
(B) A
description of the material changes that occurred between the date of the
statement for which the opinion is applicable and the date of the opinion that
should be considered in reviewing the opinion.
(v) States that the impact of unanticipated
events subsequent to the date of the opinion is beyond the scope of the
opinion.
(vi) States that the asset
adequacy portion of the opinion should be viewed recognizing that the company's
future experience may not follow all the assumptions used in the
analysis.
(vii) Includes the date
and signature, address and telephone number of the appointed actuary.
(5) One or more paragraphs
addressing the following items to the extent applicable:
(i) Disclosure of any qualification of the
opinion.
(ii) Disclosure of any
inconsistency in the method of asset allocation used at the prior opinion date
with that used for the opinion.
(iii) Disclosure of any inconsistency in the
method of analysis used at the prior opinion date with that used for the
opinion.
(iv) Identification of the
existence and extent of additional actuarial reserves released subsequent to
the prior opinion date.
(v) At the
option of the appointed actuary, assumptions forming the basis for the
actuarial opinion.
(b)
Adverse opinions. If the appointed actuary is unable to form
an opinion, the appointed actuary shall refuse to issue a statement of
actuarial opinion. If the appointed actuary's opinion is adverse or qualified,
the appointed actuary shall issue an adverse or qualified actuarial opinion
explicitly stating the reason for the opinion. This statement should follow the
scope paragraph and precede the opinion paragraph.
(c)
Reliance on information furnished
by other persons. If the appointed actuary relies upon other persons
regarding the accuracy or completeness of any data underlying the actuarial
opinion or appropriateness of any other information used by the appointed
actuary in forming the actuarial opinion, the actuarial opinion must:
(1) Precisely identify the items subject to
reliance and the persons relied upon.
(2) Include a signed, dated certification
from each person upon whom the actuary is relying that includes the following:
(i) The name, title, company, address and
telephone number of the person upon whom the actuary is relying.
(ii) The items on which the person is
providing information.
(iii) A
statement as to the accuracy, completeness or reasonableness, as applicable, of
the items.
Notes
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