The commissioner may, at the commissioner's discretion,
require the data specified in this section from any insurance companies which
are subject to this subchapter. These requirements apply to individual
annuities, group annuities, and any supplemental provisions of riders attached
to an individual life insurance policy or a group life insurance policy
whenever on any valuation date contracts of the nature described are in force
which guarantee interest rates in excess of the applicable maximum reserve
valuation interest rate as defined by the Standard Valuation Law for that type
of annuity or pure endowment contract to future premiums or other deposits of
unspecified amounts or timing for or at any period of time subsequent to the
valuation date. (Foreign companies will be required to furnish this data only
with respect to their Texas issues.) Required data:
(1) number of individuals covered under such
contracts;
(2) the actual premium
received under such contracts during the 12 months preceding the applicable
valuation date;
(3) the reserves
held on such contracts on the valuation date; and
(4) an evaluation of the potential liability
with respect to premiums or other deposits which may be received subsequent to
the valuation date calculated in the following manner. Potential liability is
the excess, if any, of the present value of the future cash value generated by
"assumed future premiums" at the end of the last period of interest guarantees
higher than the maximum reserve valuation rate as defined by the Standard
Valuation Law for that type of annuity or pure endowment contract over the
present value of "assumed future premiums" all valued at the maximum reserve
valuation rate as defined by the Standard Valuation Law for that type of
annuity or pure endowment contract. (If interest rate guarantees higher than
the applicable maximum reserve valuation interest rate as defined by the
Standard Valuation Law for that type of annuity or pure endowment contract
extend beyond attained age 70 of the applicable individual, then the present
value of future cash values may be calculated at the 10th anniversary of the
contract or on the anniversary nearest age 70, whichever is later.)
(A) "Assumed annual future premiums" must be
level and equal in amount to the average annual premium received over the
duration of the contract, counting any contract which is less than one year old
as being a full year old.
(B) The
assumed future payment period terminates on the earliest of the following:
(i) the end of the period during which
guarantees are made regarding future premiums or deposits;
(ii) the end of the continuous period from
date of valuation during which interest rates greater than the applicable
maximum reserve valuation interest rate as defined in the Standard Valuation
Law for that type of annuity or pure endowment contract;
(iii) the maturity date or retirement date
specified in the contract; or
(iv)
the later to occur of the 10th contract anniversary or the contract anniversary
nearest age 65 of the prospective annuitant under the contract.
(C) Premium payments may be
assumed to occur, at the choice of the company:
(i) annually on each July 1 succeeding the
valuation date;
(ii) annually on
the contract anniversary; or
(iii)
monthly in the amount of 1/12th of the annual assumed premium, on a day of the
month to be chosen by the company.
(D) If the probability of death is introduced
into the above calculation, a statement of methods of application, including
any subsequent changes, must be filed with the Texas Department of Insurance
along with a certification by a qualified actuary that introduction of such
probability is appropriate to the contracts to which it is to be
applied.
(E) Group methods and
approximations which yield substantially the same potential liability valuation
may be used.
(5) The
validity of all such data and methods as specified in paragraphs (1) - (4) of
this section must be attested to by the actuary signing the annual convention
blank.
Notes
28
Tex. Admin. Code §
3.1006
The provisions of
this §3.1006 adopted to be effective January 1, 1976; amended to be effective
December 10, 1982, 7 TexReg 4106; Amended by
Texas
Register, Volume 47, Number 18, May 6, 2022, TexReg
2761, eff.
5/11/2022
