28 Tex. Admin. Code § 4.2806 - Statement of Actuarial Opinion Based on an Asset Adequacy Analysis
(a) General description. The statement of
actuarial opinion required by this section must consist of the following
paragraphs:
(1) a paragraph identifying the
appointed actuary and their qualifications, recommended language is provided in
subsection (b)(1) of this section;
(2) a scope paragraph (recommended language
is provided in subsection (b)(2) of this section) identifying the subjects on
which an opinion is to be expressed and describing the scope of the appointed
actuary's work, including a tabulation delineating the reserves and related
actuarial items that have been analyzed for asset adequacy and the method of
analysis, and identifying the reserves and related actuarial items covered by
the opinion that have not been so analyzed;
(3) a reliance paragraph (recommended
language is provided in subsection (b)(3) of this section) 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), supported by a statement of each such expert with the information
prescribed by subsection (e) of this section; and
(4) an opinion paragraph expressing the
appointed actuary's opinion with respect to the adequacy of the supporting
assets to mature the liabilities (recommended language is provided in
subsection (b)(6) of this section).
(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 their 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 as of the prior opinion date are released as of
this opinion date, and the extent of the release; or
(D) if the appointed actuary chooses to add a
paragraph briefly describing the assumptions that 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. The language is what should be included in
typical circumstances 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 that clearly expresses their professional
judgment. Regardless of the language used, the opinion must 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 appointed
actuary's qualifications to sign the opinion.
(A) For a company actuary, the opening
paragraph of the actuarial opinion should include a statement such as:
(B) For a consulting actuary, the
opening paragraph should include a statement such as:
(2) The scope paragraph
should include a statement such as:
(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:
(4) If the appointed actuary has
examined the underlying asset and liability records, the reliance paragraph
should include a statement such as:
(5) If the appointed actuary has
not examined the underlying records, but has relied upon data (e.g., listings
and summaries of policies in force or asset records) prepared by the company,
the reliance paragraph should include a statement such as:
(6) The opinion paragraph should
include a statement such as:
(c) Assumptions for new
issues. 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 assumptions within the meaning of this section.
(d) Adverse opinions. If the appointed
actuary is unable to form an opinion, then the appointed actuary must refuse to
issue a statement of actuarial opinion. If the appointed actuary's opinion is
adverse or qualified, then the appointed actuary must 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 the persons the actuary is relying upon
and a precise identification of the items subject to reliance. In addition, the
persons on whom the appointed actuary relies must provide a certification that
precisely identifies the items on which the person is providing information and
a statement as to the accuracy, completeness, or reasonableness, as applicable,
of the items. This certification must include the signature, title, company,
address, email address, and telephone number of the person rendering the
certification, as well as the date on which it is signed.
(f) Alternate option.
(1) Insurance Code Chapter 425, Subchapter B,
concerning Standard Valuation Law, 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) of this section, the
commissioner may make one or more of the following additional approaches
available to the opining actuary.
(A) 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 must be made
available. If a company chooses to use this alternative, the standards and
conditions in effect on July 1 of a calendar year apply to statements for that
calendar year and remain in effect until they are revised or revoked. If no
list is available, this alternative is not available.
(B) 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 must be issued no later than March 31 of the year
it is first effective. It will remain valid until rescinded or modified by the
commissioner. The rescission or modifications must be issued no later than
March 31 of the year they are first effective. Before that statement may be
issued, if a company chooses to use this alternative, the company must 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 will be deemed approved on
October 1 of that year if the commissioner has not denied the request by that
date.
(C) 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."
(i) If the
commissioner chooses to allow this alternative, a formal written list of
products (to be added to the table in Figure: 28 TAC §
4.2806(f)(1)(C)(ii))
for which the required comparison must be provided will be published. If a
company chooses to use this alternative, the list in effect on July 1 of a
calendar year applies to statements for that calendar year and remains in
effect until it is revised or revoked. If no list is available, this
alternative is not available.
(ii)
If a company desires to use this alternative, the appointed actuary must
provide a comparison of the gross nationwide reserves held to the gross
nationwide reserves that would be held under §
7.18 of this title (relating to
National Association of Insurance Commissioners Accounting Practices and
Procedures Manual). 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 must include the following:
(iii) The information listed must
include all products identified by either the state of filing or any other
states subscribing to this alternative.
(iv) 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
must provide detailed disclosure of the specific method and assumptions used in
determining the reserves held.
(2) 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 60 days of the request or such other period of time determined
by the commissioner after consultation with the company, the commissioner may
contract with an independent actuary at the company's expense to prepare and
file the opinion.
Notes
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