2023 New York Laws › ISC - Insurance › Article 42 - Life Insurance Companies and Accident and Health Insurance Companies and Legal Services Insurance Companies › 4217 - Valuation of Insurance Policies and Contracts.

§  4217.  Valuation  of  insurance policies and contracts. (a) (1) The
superintendent shall annually value, or cause to be valued, the  reserve
liabilities  (hereinafter called reserves) for all outstanding insurance
policies and contracts of every life insurance company doing business in
this state, except that, in the case of an alien company, such valuation
shall be limited to its United States  business,  and  may  certify  the
amount  of  any such reserves, specifying the mortality table or tables,
rate or rates of interest and  methods  (net  level  premium  method  or
other)  used  in  the  calculation of such reserves. In calculating such
reserves, the superintendent  may  use  group  methods  and  approximate
averages for fractions of a year or otherwise.
(2)  In  lieu  of the valuation of the reserves herein required of any
foreign or alien company, the superintendent may  accept  any  valuation
made, or caused to be made, by the insurance supervisory official of any
state  or  other  jurisdiction  when  such  valuation  complies with the
minimum standard herein provided and if the official of  such  state  or
jurisdiction  accepts as sufficient and valid for all legal purposes the
certificate of valuation of the  superintendent  when  such  certificate
states  the  valuation to have been made in a specified manner according
to which the aggregate reserves would be at least as large  as  if  they
had  been  computed in the manner prescribed by the law of that state or
jurisdiction.
(3) (A) The superintendent may, in his discretion, vary the  standards
of  mortality  applicable  to policies of insurance on substandard lives
and other extra-hazardous lives issued by  any  life  insurance  company
doing business in this state.
(B) He may also, in his discretion, vary the standards of interest and
mortality  applicable  to  contracts  issued  by  an  alien  insurer  in
countries other than the United States, if such alien insurer  maintains
the  trusteed  surplus  prescribed by section one thousand three hundred
twelve of this chapter.
(4) (A) Any life insurance company doing business in this state  which
has  adopted  as a basis for the valuation of its insurance policies and
contracts standards producing greater reserves in the aggregate than the
minimum standards herein prescribed may  continue  to  use  such  higher
standards as a basis of valuation.
(B)  After  January  first, nineteen hundred forty, any life insurance
company doing business in this state may, subject to the  provisions  of
paragraph  eight  of  subsection (c) of this section, adopt as the basis
for the valuation of its  insurance  policies  and  contracts  standards
producing  greater  reserves in the aggregate than the minimum standards
herein prescribed; and any such company which shall  have  at  any  time
adopted such higher standards of valuation may, with the approval of the
superintendent, adopt lower standards of valuation, but in no case lower
than  the  minimum standards herein prescribed, provided, however, that,
for the purposes of this paragraph, the holding of  additional  reserves
determined  by a qualified actuary to be necessary to render the opinion
required by subsection (e) of this section shall not be deemed to be the
adoption of a higher standard of valuation.
(C) The superintendent may approve any such change if  he  finds  that
the  proposed standards are for the best interests of the holders of the
policies and contracts and annuitants of such company.
(D) Nothing contained herein shall be deemed to affect the contractual
rights or obligations of the holder of any such policy or contract.
(b) (1) This  subsection  shall  apply  only  to  those  policies  and
contracts  issued  prior  to the operative date of section four thousand
two hundred twenty-one of this article.
(2) Except as provided in  paragraph  six  hereof  the  legal  minimum
standards  for  the  valuation  of  life insurance contracts shall be as
follows:
(A)  For  the  valuation of all such contracts issued before the first
day of January, nineteen hundred one, it  shall  be  the  Actuaries'  or
Combined Experience Table of Mortality with interest at four percent per
annum.
(B)  For  the valuation of such contracts issued on or after said day,
except as provided in subparagraphs (C) and (D) hereof, it shall be  the
American  Experience  Table of Mortality with Craig's extension for ages
under ten years and with interest at  three  and  one-half  percent  per
annum.
(C)  For  the  valuation  of group term insurance policies under which
premium rates are not guaranteed for a period in excess of  five  years,
it  shall  be the American Men Ultimate Table of Mortality with interest
at three and one-half percent per annum.
(D) Any life insurance company may, at  its  option,  value  its  life
insurance  contracts  issued  on  or  after  the  first  day of January,
nineteen hundred thirty, in accordance with their terms on the basis  of
the  American  Men  Ultimate  Table  of  Mortality, supplemented by such
extension and modification for  ages  under  twenty  years,  as  may  be
approved  by  the  superintendent,  with  interest at three and one-half
percent per annum by the level net premium method  or  by  the  modified
preliminary term method prescribed in paragraph four hereof.
(3)  Life  insurance  policies  issued  on  or  after the first day of
January, nineteen hundred seven, may, at the option of the  insurer,  be
valued  in  accordance with their terms by the modified preliminary term
method prescribed in paragraph four hereof, or in  accordance  with  the
select  and  ultimate  method  on  the  basis that the rate of mortality
during the first  five  years  after  the  issuance  of  said  contracts
respectively  shall be calculated according to the following percentages
of the rates shown by the American Experience Table of Mortality:
For the first insurance year, fifty percent thereof;  for  the  second
insurance  year,  sixty-five  percent  thereof;  for the third insurance
year, seventy-five percent  thereof;  for  the  fourth  insurance  year,
eighty-five   percent   thereof;  and  for  the  fifth  insurance  year,
ninety-five percent thereof.
(4) (A) Life insurance policies may provide for not more than one year
of preliminary term insurance by incorporating in the provisions thereof
specifying the premium consideration to be received by  the  insurer,  a
clause  plainly  showing  that  the  first  year's  insurance under such
policies is term insurance, purchased by the whole  or  a  part  of  the
premium to be received during the first policy year.
(B)  Such  policies  may, in accordance with their terms, be valued on
the basis of the mortality  tables  and  interest  rates  prescribed  in
paragraph two hereof, by the modified preliminary term plan described as
follows:    If  the  premium  charged for term insurance under a limited
payment life preliminary term policy providing for the  payment  of  all
premiums  thereon in less than twenty years from the date of the policy,
or under an endowment preliminary term policy, exceeds that charged  for
like  insurance  under  twenty payment life preliminary term policies of
the same company, the reserve thereon at the end of any year,  including
the  first,  shall be not less than the reserve on a twenty payment life
preliminary term policy issued in the same year and  at  the  same  age,
together with an amount which shall be equivalent to the accumulation of
a  level  net  premium sufficient to provide for a pure endowment at the
end of the premium paying period equal to the difference  between  items
(i)  and (ii) hereof as follows: (i) the value at the end of such period

of such a twenty payment life preliminary term policy and (ii) the  full
level net premium reserve at such time of such a limited payment life or
endowment policy.
(C)  The  premium paying period referred to above is the period during
which premiums are concurrently payable under such twenty  payment  life
preliminary  term  policy  and  such  limited  payment life or endowment
policy.
(5) (A) The legal minimum standard for the valuation of all individual
annuity contracts issued on or after  January  first,  nineteen  hundred
forty  (including  life  annuities  provided or available under optional
modes of settlement in insurance contracts issued on or after such date)
shall be the Combined Annuity Tables with age set back  one  year,  with
interest at three and one-half percent per annum.
(B)  The  legal  minimum  standard for the valuation of all individual
annuity contracts issued prior to January first, nineteen hundred  forty
(including  annuities  provided  or  available  under  optional modes of
settlement in insurance contracts issued prior to such date) shall be in
accordance with the provisions of law applicable thereto as of the  date
of issuance.
(C)  Except  as  otherwise  provided  in  paragraphs three and four of
subsection (c) hereof for group annuity and  pure  endowment  contracts,
the  legal  minimum  standard  for  the  valuation  of all group annuity
contracts shall be the  1971  Group  Annuity  Mortality  Table,  or  any
modification  of  this  table  approved  by the superintendent, and five
percent interest.
(D) Annuities, annuity benefits and guaranteed interest  contracts  to
which  this  subsection  applies  shall  be  subject  to  item  (vi)  of
subparagraph (B) of paragraph four of subsection (c) of this section.
(6) (A) The legal minimum standard for the valuation of all industrial
life insurance policies issued  on  or  after  January  first,  nineteen
hundred  forty  shall,  at  the option of the company, be either (i) the
1941  Standard  Industrial  Mortality  Table  or  the  1941  Substandard
Industrial  Mortality Table, with interest at three and one-half percent
per annum by the net level premium method, or (ii) either of the  tables
specified  in  item  (i) hereof, by the modified preliminary term method
prescribed in paragraph four hereof, in accordance with the terms of the
policy, or (iii) in the case of policies issued on the  monthly  premium
plan, the New York Standard Intermediate Table of Mortality (1907 Table)
with  interest  at three and one-half percent per annum. In lieu of such
tables, at the option of the company, the Standard Industrial  Mortality
Table (1907) or the Substandard Industrial Mortality Table (1907) may be
used  with  respect  to  such  policies  issued  prior to January first,
nineteen hundred forty-two.
(B) The legal minimum standard for the  valuation  of  all  industrial
life  insurance policies issued prior to January first, nineteen hundred
forty shall be the minimum standard required by the law of this state in
force at the date of issuance.
(7) The legal minimum standard for the  valuation  of  all  accidental
death  benefits  and disability benefits, provided in connection with or
supplemental to life insurance policies or annuity  contracts  shall  be
such tables as the superintendent may prescribe.
(c)  (1)  This  subsection  shall apply only to policies and contracts
issued on or after the operative  date  of  section  four  thousand  two
hundred  twenty-one  of  this  article,  except as otherwise provided in
paragraphs three and four of this subsection for group annuity and  pure
endowment contracts issued prior to such operative date.
(2)  Except as otherwise provided in paragraphs three, four and ten of
this subsection, the minimum standard for  the  valuation  of  all  such

policies  and  contracts  shall  be  the commissioners reserve valuation
method defined in paragraph six of this subsection and in  section  four
thousand  two  hundred  eighteen of this article, three percent interest
for  all life insurance policies issued prior to January first, nineteen
hundred sixty-six and for all  individual  annuity  and  pure  endowment
contracts  issued  prior  to  January  first, nineteen hundred sixty, or
three and one-half percent interest  for  all  life  insurance  policies
issued  on  or after January first, nineteen hundred sixty-six and prior
to June thirteenth, nineteen hundred seventy-four and for all individual
annuity and pure endowment contracts issued on or after  January  first,
nineteen  hundred  sixty,  and  prior to the operative date of paragraph
three of  this  subsection,  or  four  percent  interest  for  all  life
insurance  policies issued on or after June thirteenth, nineteen hundred
seventy-four and prior to January first, nineteen hundred  seventy-nine,
or  four  and one-half percent interest for all life insurance policies,
issued on or after January first, nineteen hundred seventy-nine, or five
percent interest for all annuities purchased or to  be  purchased  under
group annuity contracts, and the following tables:
(A) For all ordinary policies of life insurance issued on the standard
basis,  excluding  any  disability and accidental death benefits in such
policies, the Commissioners 1941 Standard Ordinary Mortality  Table  for
such  policies  issued  prior to the operative date of subsection (h) of
section four thousand  two  hundred  twenty-one  of  this  article,  the
Commissioners  1958  Standard Ordinary Mortality Table for such policies
issued on or after such operative date and prior to the  operative  date
of  subsection  (k)  of  such section; provided that for any category of
such policies issued on female  risks  all  modified  net  premiums  and
present  values  may be calculated according to an age not more than six
years younger than the actual age of the insured, and for such  policies
issued  on  or  after the operative date of such subsection, and, at the
option of the company, for such policies not providing for nonforfeiture
benefits which are issued on or after nineteen  hundred  eighty-one  and
prior  to  the  operative date of such subsection, (i) the Commissioners
1980 Standard Ordinary Mortality Table, or (ii) at the election  of  the
company  for  any  one  or  more  specified plans of life insurance, the
Commissioners 1980  Standard  Ordinary  Mortality  Table  with  Ten-Year
Select Mortality Factors, or (iii) any ordinary mortality table, adopted
after  nineteen  hundred eighty by the National Association of Insurance
Commissioners, that  is  approved  by  the  superintendent  for  use  in
determining the minimum standard of valuation for such policies, or (iv)
any  other  ordinary  mortality table, or any modification of any of the
foregoing tables, approved by the superintendent for any specified class
or classes of risks.
(B) For all industrial life insurance policies issued on the  standard
basis,  excluding  any  disability and accidental death benefits in such
policies, the 1941 Standard Industrial Mortality Table for such policies
issued prior to the operative date of subsection  (i)  of  section  four
thousand  two  hundred twenty-one of this article, and for such policies
issued on or after  such  operative  date  (i)  the  Commissioners  1961
Standard  Industrial  Mortality  Table, or (ii) any industrial mortality
table, adopted after nineteen hundred eighty by the National Association
of Insurance Commissioners, that is approved by the  superintendent  for
use  in determining the minimum standard of valuation for such policies,
or (iii) any other industrial mortality table, or  any  modification  of
any  of  the  foregoing  tables,  approved by the superintendent for any
specified class or classes of risks.
(C) For individual annuity and pure endowment contracts, excluding any
disability and accidental death benefits in  such  contracts,--the  1937

Standard  Annuity  Mortality Table or, at the option of the company, the
Annuity Mortality Table for  1949,  Ultimate,  or  any  modification  of
either of these tables approved by the superintendent.
(D)  For  group  annuity  and  pure endowment contracts, excluding any
disability and accidental death benefits in  such  contracts,--the  1971
Group Annuity Mortality Table or any modification of this table approved
by the superintendent.
(E) For total and permanent disability benefits in or supplementary to
ordinary  policies  or contracts--for policies or contracts issued on or
after January first, nineteen hundred sixty-six, the tables of Period  2
disablement  rates  and  the  1930 to 1950 termination rates of the 1952
Disability Study of the Society of Actuaries, with  due  regard  to  the
type  of  benefits  or  any  tables of disablement rates and termination
rates, adopted after nineteen hundred eighty by the National Association
of Insurance Commissioners, that are approved by the superintendent  for
use  in  determining the minimum standard of valuation for such policies
or any other tables of disablement rates and termination rates,  or  any
modification   of   any   of  the  foregoing  tables,  approved  by  the
superintendent for any specified class or classes of risks; for policies
or contracts issued prior to January first, nineteen hundred  sixty-six,
either  such  tables  or,  at  the  option of the company, the Class (3)
Disability Table (1926). Any such table  shall,  for  active  lives,  be
combined  with  a mortality table permitted for calculating the reserves
for life insurance policies.
(F) For accidental death benefits in or  supplementary  to  policies--
for  policies  issued  on  or  after  January  first,  nineteen  hundred
sixty-six, the 1959 Accidental Death Benefits Table  or  any  accidental
death  benefits  table,  adopted  after  nineteen  hundred eighty by the
National Association of Insurance Commissioners, that is approved by the
superintendent for use in determining the minimum standard of  valuation
for  such  policies or any other accidental death benefits table, or any
modification  of  any  of  the  foregoing  tables,   approved   by   the
superintendent for any specified class or classes of risks; for policies
issued  prior  to January first, nineteen hundred sixty-six, either such
table or, at  the  option  of  the  company,  the  Inter-Company  Double
Indemnity  Mortality  Table.  Any  such  table  shall be combined with a
mortality  table  permitted  for  calculating  the  reserves  for   life
insurance policies.
(G) For group life insurance, life insurance issued on the substandard
basis,  annuities  involving  life  contingencies  provided or available
under optional modes of settlement in life insurance policies or annuity
contracts and other special benefits--such tables as may be approved  by
the superintendent.
(3)  Except as provided in paragraph four hereof, the minimum standard
for the valuation of all individual annuity and pure endowment contracts
issued on or after the operative date  of  this  paragraph,  as  defined
herein,  and  for  all  annuities and pure endowments purchased or to be
purchased on or after the operative date under group  annuity  and  pure
endowment contracts, shall be the commissioners reserve valuation method
defined  in  paragraph  six hereof and the following tables and interest
rates:
(A) For individual annuity and pure endowment contracts  issued  prior
to   January   first,   nineteen  hundred  seventy-nine,  excluding  any
disability and accidental death benefits in such contracts and excluding
any annuities, purchased under individual deferred annuity contracts, to
which the company has elected to have subparagraph (B) hereof apply--the
1971 Individual Annuity Mortality Table, or  any  modification  of  this
table  approved  by  the  superintendent,  and  six percent interest for

single premium immediate annuity contracts, and  four  percent  interest
for  all  other individual annuity and pure endowment contracts, or such
higher rate or rates of interest for any of such  contracts  as  may  be
approved from time to time by the superintendent.
(B)  For  individual annuity and pure endowment contracts issued on or
after  January  first,  nineteen  hundred  seventy-nine,  excluding  any
disability  and accidental death benefits in such contracts, and, at the
election of the company, for annuities purchased on or after  such  date
under individual deferred annuity contracts--the 1971 Individual Annuity
Mortality  Table,  or  any  individual  annuity mortality table, adopted
after nineteen hundred eighty by the National Association  of  Insurance
Commissioners,  that  is  approved  by  the  superintendent  for  use in
determining the minimum standard of valuation for such contracts, or any
other individual annuity mortality table, or any modification of any  of
the  foregoing  tables,  approved  by  the superintendent, and seven and
one-half percent interest for all single  premium  individual  immediate
annuity contracts and all annuities, purchased under individual deferred
annuity  contracts,  to  which  the  company  has  elected  to have this
subparagraph apply and five and one-half percent interest for all  other
individual   annuity   and   pure  endowment  contracts,  excluding  any
annuities, purchased under deferred annuity  contracts,  for  which  the
interest rate is seven and one-half percent or such higher rate or rates
of  interest  for  any  of  such  contracts or annuities purchased under
deferred annuity contracts as may be approved from time to time  by  the
superintendent.
(C) For all annuities and pure endowments purchased or to be purchased
prior  to  January  first,  nineteen  hundred  seventy-seven under group
annuity and pure  endowment  contracts,  excluding  any  disability  and
accidental  death  benefits  purchased  under  such contracts,--the 1971
Group Annuity  Mortality  Table,  or  any  modification  of  this  table
approved by the superintendent, and six percent interest, or such higher
rate  or rates of interest for any of such annuities and pure endowments
as may be approved from time to time by the superintendent.
(D) For all annuities and pure endowments purchased or to be purchased
on or after January first, nineteen hundred  seventy-seven  under  group
annuity  and  pure  endowment  contracts,  excluding  any disability and
accidental death benefits purchased under such contracts--the 1971 Group
Annuity Mortality Table, or any group annuity mortality  table,  adopted
after  nineteen  hundred eighty by the National Association of Insurance
Commissioners, that  is  approved  by  the  superintendent  for  use  in
determining  the  minimum  standard  of valuation for such annuities and
pure endowments, or any other group  annuity  mortality  table,  or  any
modification   of   any   of  the  foregoing  tables,  approved  by  the
superintendent, and seven and one-half percent interest, or such  higher
rate  or rates of interest for any such annuities and pure endowments as
may be approved from time to time by the superintendent.
(E) After June thirteenth, nineteen hundred seventy-four, any  company
may  file  with  the  superintendent a written notice of its election to
comply with the provisions of this  paragraph  after  a  specified  date
before  January first, nineteen hundred seventy-nine, which shall be the
operative date of this paragraph for  such  company,  provided  that  an
insurer  may elect a different operative date for individual annuity and
pure endowment contracts from that elected for group  annuity  and  pure
endowment  contracts. If a company makes no such election, the operative
date of this paragraph for such company shall be January first, nineteen
hundred seventy-nine.
(F) Annuities, annuity benefits and guaranteed interest  contracts  to
which  this  subsection  applies  shall  be  subject  to  item  (vi)  of
subparagraph (B) of paragraph four of this subsection.
(4)  (A)  The  interest rates used in determining the minimum standard
for the valuation of:
(i) all life insurance policies issued in a particular calendar  year,
on or after January first, nineteen hundred eighty-two,
(ii)  all  individual annuity and pure endowment contracts issued in a
particular calendar year on or after  January  first,  nineteen  hundred
eighty-two,  and,  at the option of the company, all annuities purchased
in a particular calendar year on or after  such  date  under  individual
deferred annuity contracts issued prior thereto,
(iii)  all  annuities  and  pure  endowments purchased in a particular
calendar year on or after January  first,  nineteen  hundred  eighty-two
under group annuity and pure endowment contracts, and
(iv)  the  net  increase,  if any, in a particular calendar year after
January first,  nineteen  hundred  eighty-two,  in  amounts  held  under
guaranteed interest contracts,
shall be the calendar year statutory valuation interest rates as defined
in  this subsection, or such higher rate or rates of interest for any of
such policies, contracts or annuities as may be approved  from  time  to
time by the superintendent.
(B)  The  calendar year statutory valuation interest rates ("I") shall
be determined in accordance with the following formulae (where R is  the
reference  interest rate, and W is the weighting factor, defined in this
paragraph) and the results rounded to  the  nearer  one-quarter  of  one
percent:
(i)   For  life  insurance,  except  as  otherwise  provided  in  this
subparagraph,
I = .03 + W(R1 - .03) + W/2 (R2 - .09);
where R1 is the lesser of R and .09,
R2 is the greater of R and .09,
(ii) For single premium immediate annuities and for  annuity  benefits
arising from life insurance policies and annuity and guaranteed interest
contracts with cash settlement options,
I = .03 + W(R - .03)
(iii)  For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, valued on an issue year
basis, except as stated in item (ii), the  formula  for  life  insurance
stated  in  item  (i)  shall  apply to annuities and guaranteed interest
contracts with guarantee durations  in  excess  of  ten  years  and  the
formula for single premium immediate annuities stated in item (ii) shall
apply  to  annuities  and  guaranteed  interest contracts with guarantee
durations of ten years or less, and to  single  premium  life  insurance
policies  of the kind referred to in item (vi) valued on a year of issue
basis with guarantee durations of ten years or less,
(iv) For other annuities with  no  cash  settlement  options  and  for
guaranteed  interest  contracts  with  no  cash  settlement options, the
formula for single premium immediate annuities stated in item (ii) shall
apply,
(v) For other annuities with cash settlement  options  and  guaranteed
interest  contracts with cash settlement options, and for single premium
life insurance policies of the kind referred to in item (vi), valued  on
a  change  in  fund  basis,  the  formula  for  single premium immediate
annuities stated in item (ii) shall apply,
(vi) Single premium life insurance policies of the kind referred to in
this item are all single premium life insurance policies, issued  on  or
after  January first, nineteen hundred eighty-two, which provide for the

crediting of additional amounts pursuant to subsection  (b)  of  section
four  thousand  two  hundred  thirty-two of this article and under which
interest rates provided in, or declared pursuant to, the policy are, for
some  period,  guaranteed  to  exceed the greater of (I) six percent per
annum and (II) the calendar year statutory valuation interest  rate  for
other  life  insurance  policies  with  guarantee durations in excess of
twenty years.
(C) If the calendar year statutory valuation  interest  rate  for  any
life  insurance  policies,  other  than  single  premium  life insurance
policies of the kind referred to in item (vi)  of  subparagraph  (B)  of
this paragraph, issued in any calendar year determined without reference
to  this sentence differs from the corresponding actual rate for similar
policies issued in the immediately preceding calendar year by less  than
one-half  of  one percent the calendar year statutory valuation interest
rate  for  such  life  insurance  policies  shall  be   equal   to   the
corresponding  actual  rate for the immediately preceding calendar year.
For  purposes  of  applying  the  immediately  preceding  sentence,  the
calendar  year  statutory  valuation  interest  rate  for life insurance
policies issued in a calendar year  shall  be  determined  for  nineteen
hundred  eighty, (using the reference interest rate defined for nineteen
hundred seventy-nine)  and  shall  be  determined  for  each  subsequent
calendar year regardless of when subsection (k) of section four thousand
two hundred twenty-one of this article becomes operative.
(D) The weighting factors referred to in the formulas stated above are
given in the following tables:
(i) Weighting factors for life insurance:
Guarantee Duration (Years)               Weighting Factors
10 or less                                    .50
More than 10, but not more than 20            .45
More than 20                                  .35
except  that  the  factors  shown  above  shall  be increased for single
premium policies of the kind referred to in item  (vi)  of  subparagraph
(B)  of  this  paragraph  valued  on  an issue year basis by .05 and for
single premium policies of such kind valued on a change in fund basis by
.10.
For life insurance, other than single premium  policies  of  the  kind
referred  to  in  item  (vi)  of subparagraph (B) of this paragraph, the
guarantee duration is the maximum number of years the life insurance can
remain in force on a basis guaranteed in the policy or under options  to
convert  to  plans of life insurance with premium rates or nonforfeiture
values or both which are guaranteed in the  original  policy;  for  such
single  premium  policies  of  the  kind  referred  to  in  item (vi) of
subparagraph (B) of this paragraph, the guarantee duration is the number
of years for which interest rates provided in, or declared pursuant  to,
the  policy  are guaranteed to exceed the greater of (I) six percent per
annum and (II) the calendar year statutory valuation interest  rate  for
life  insurance  policies, other than such single premium policies, with
guarantee durations in excess of twenty years;
(ii) Weighting factor for single premium immediate annuities, and  for
annuity  benefits  arising  from life insurance policies and annuity and
guaranteed interest contracts with cash settlement options:   .80
(iii)  Weighting  factors  for  other  annuities  and  for  guaranteed
interest contracts, except as stated in item (ii), shall be as specified
in  tables  (I),  (II), (III), according to the rules and definitions in
tables (IV) and (V):
Weighting Factor
for Plan Type
Guarantee Duration (Years)                         A    B    C
(I) For annuities and guaranteed interest contracts valued on an issue
year basis:
5 or less:                                         .80  .60  .50
More than 5, but not more than 10:                 .75  .60  .50
More than 10, but not more than 20:                .65  .50  .45
More than 20:                                      .45  .35  .35
(II)   For  annuities  and  guaranteed
interest contracts valued on a change in
fund basis, the factor  shown  in  table
(I) above increased by:                                .15  .25  .05
(III)  For  annuities  and  guaranteed
interest contracts valued  on  an  issue
year  basis  (other  than  those with no
cash settlement options)  which  do  not
guarantee   interest  on  considerations
received more than one year after  issue
or   purchase   and  for  annuities  and
guaranteed interest contracts valued  on
a  change  in  fund  basis  which do not
guarantee     interest     rates      on
considerations received more than twelve
months  beyond  the  valuation date, the
factors shown in table (I) or derived in
table (II) increased by:                               .05  .05  .05
(IV) For other annuities with cash settlement options  and  guaranteed
interest  contracts with cash settlement options, the guarantee duration
is the number of years for which the  interest  rates  provided  in,  or
declared pursuant to, the contract are guaranteed to exceed the calendar
year statutory valuation interest rate for life insurance policies other
than  single  premium  policies  of the kind referred to in item (vi) of
subparagraph (B) of this paragraph, with guarantee durations  in  excess
of twenty years.
For other annuities with no cash settlement options and for guaranteed
interest  contracts  with  no  cash  settlement  options,  the guarantee
duration is the number of years from  the  date  of  issue  or  date  of
purchase to the date annuity benefits are scheduled to commence.
(V) Plan type as used in the above tables is defined as follows:
Plan  Type  A:  The  policyholder  may withdraw funds only (i) with an
adjustment to reflect changes in interest rates or  asset  values  since
receipt  of  the  funds  by  the insurance company, or (ii) without such
adjustment but in installments over five years or more, or (iii)  as  an
immediate life annuity.
Plan  Type  B:  The  policyholder  may  not  withdraw funds before the
expiration of  the  interest  rate  guarantee  or,  if  withdrawals  are
permitted  before  the  expiration of such guarantee, may withdraw funds
only (i) with an adjustment to reflect  changes  in  interest  rates  or
asset  values  since  receipt  of the funds by the insurance company, or
(ii) without such adjustment but in  installments  over  five  years  or
more.  At the end of the interest rate guarantee, funds may be withdrawn
without such adjustment in a single sum or installments over  less  than
five years.
Plan Type C: The policyholder may withdraw funds before the expiration
of the interest rate guarantee in a single sum or installments over less
than  five  years  either  (i)  without adjustment to reflect changes in
interest rates or asset  values  since  receipt  of  the  funds  by  the
insurance  company,  or  (ii)  subject  only to a fixed surrender charge
stipulated in the contract as a percentage of the fund.
(E) A company  may  elect  to  value  single  premium  life  insurance
policies  of  the  kind  referred to in item (vi) of subparagraph (B) of
this paragraph,  guaranteed  interest  contracts  with  cash  settlement
options  or  other  annuities  with cash settlement options on either an
issue  year  basis  or  on  a  change in fund basis. Guaranteed interest
contracts with no cash settlement options and other  annuities  with  no
cash  settlement  options must be valued on an issue year basis. As used
in  this  paragraph,  and  except  as   otherwise   permitted   by   the
superintendent,  an  issue year basis of valuation refers to a valuation
basis under which the  interest  rate  used  to  determine  the  minimum
valuation standard for the entire duration of the life insurance policy,
annuity  contract  or  guaranteed interest contract is the calendar year
valuation interest rate for the year of issue or year of purchase of the
policy or contract, and the change in fund basis of valuation refers  to
a  valuation  basis  under which the interest rate used to determine the
minimum valuation standard applicable to each change in  the  fund  held
under  the  policy  or  contract is the calendar year valuation interest
rate for the year of the change in the fund.
(F) The reference interest rate referred to above shall be defined  as
follows:
(i) For all life insurance, except single premium policies of the kind
referred  to  in  item  (vi)  of subparagraph (B) of this paragraph, the
lesser of the average over a period of thirty-six months and the average
over a period of twelve months, ending on June thirtieth of the calendar
year next preceding the year of issue, of Moody's Corporate  Bond  Yield
Average  - Monthly Average Corporates, as published by Moody's Investors
Service, Inc.
(ii) For single premium immediate annuities and for  annuity  benefits
arising from life insurance policies and annuity and guaranteed interest
contracts  with  cash  settlement  options, the average over a period of
twelve months, ending on June thirtieth of the calendar year of issue or
year of purchase, of Moody's Corporate  Bond  Yield  Average  -  Monthly
Average Corporates, as published by Moody's Investors Service, Inc.
(iii)  For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, and for single  premium
life  insurance  policies  of  the  kind  referred  to  in  item (vi) of
subparagraph (B) of this paragraph, valued on a  year  of  issue  basis,
except as stated in item (ii) hereof, with guarantee durations in excess
of  ten  years,  the  lesser  of the average over a period of thirty-six
months and the average over a period of twelve  months  ending  on  June
thirtieth  of  the  calendar  year  of  issue  or  purchase,  of Moody's
Corporate Bond Yield Average  -  Monthly  Corporates,  as  published  by
Moody's Investors Service, Inc.
(iv)  For  other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, and for single  premium
life  insurance  policies  of  the  kind  referred  to  in  item (vi) of
subparagraph (B) of this paragraph, valued on a  year  of  issue  basis,
except  as  stated  in item (ii) hereof, with guarantee durations of ten
years or less, the average over a period of  twelve  months,  ending  on
June  thirtieth  of  the  calendar year of issue or purchase, of Moody's
Corporate Bond Yield Average - Monthly Average Corporates, as  published
by Moody's Investors Service, Inc.
(v)  For  other  annuities  with  no  cash  settlement options and for
guaranteed interest contracts  with  no  cash  settlement  options,  the
average  over a period of twelve months, ending on June thirtieth of the
calendar year of issue or purchase,  of  Moody's  Corporate  Bond  Yield
Average  - Monthly Average Corporates, as published by Moody's Investors
Service, Inc.
(vi) For other annuities with cash settlement options  and  guaranteed
interest  contracts with cash settlement options, and for single premium
life insurance policies  of  the  kind  referred  to  in  item  (vi)  of
subparagraph  (B)  of  this paragraph, valued on a change in fund basis,
except  as  stated  in  item  (ii)  hereof, the average over a period of
twelve months, ending on June thirtieth of  the  calendar  year  of  the
change  in  the  fund, of Moody's Corporate Bond Yield Average - Monthly
Average Corporates, as published by Moody's Investors Service, Inc.
(G) In the event that Moody's Corporate Bond Yield Average  -  Monthly
Average  Corporates is no longer published by Moody's Investors Service,
Inc., or in  the  event  that  the  National  Association  of  Insurance
Commissioners  determines  that  Moody's  Corporate Bond Yield Average -
Monthly Average Corporates as published by  Moody's  Investors  Service,
Inc.,  is  no  longer appropriate for the determination of the reference
interest rate, then an  alternative  method  for  determination  of  the
reference interest rate, which is adopted by the National Association of
Insurance  Commissioners  and  approved  by  the  superintendent, may be
substituted.
(H) The provisions of  this  subparagraph  shall  apply  to  any  life
insurance  company  which has life insurance policies or annuity or pure
endowment contracts in effect which were issued in a foreign country and
under which premiums and benefits, and the assets supporting reserves in
respect thereof, are denominated in the currency of  a  foreign  country
which  is  rated  in  one  of  the  two  highest rating categories by an
independent, nationally recognized United States rating agency. For  the
purpose of determining the reference interest rate to be used in valuing
such  policies  and  contracts,  the  superintendent may permit any such
company, or may by regulation require  all  such  companies  (except  as
exempted  pursuant  to  such regulation), to adjust the yield average of
the applicable index published by Moody's Investors  Service,  Inc.  (or
the  yield  average  determined  on  the  basis of any substitute method
applicable  to  such  policies  or  contracts  and   approved   by   the
superintendent in accordance with subparagraph (G) of this paragraph) in
accordance   with  a  method  approved  by  the  superintendent,  or  to
substitute an alternative method approved by the superintendent in place
of the applicable index published by Moody's Investors Service, provided
that  any  such  substitute  or   alternative   method   shall   produce
year-to-year  consistency  in  reserving methods and shall appropriately
reflect the difference between the  yield  average  on  corporate  bonds
issued  in  the  United  States and the yield average on corporate bonds
issued in such foreign country. Any company which adjusts yield averages
in accordance with a method approved by the superintendent  pursuant  to
this  subparagraph shall continue to use such method with respect to the
valuation of  such  policies  and  contracts  until  the  superintendent
permits or requires such company to cease using such method.
(6)  (A)  Except  as  otherwise  provided in section four thousand two
hundred  eighteen  of  this   article,   reserves   according   to   the
commissioners  reserve  valuation  method  for  the  life  insurance and
endowment benefits  of  policies  providing  for  a  uniform  amount  of
insurance  and  requiring  the  payment of uniform premiums shall be the
excess, if any, of the present value, at the date of valuation, of  such
future  guaranteed benefits provided for by such policies, over the then
present value of any future modified net premiums therefor. The modified
net premiums for any such policy shall be such uniform percentage of the
respective contract premiums for such benefits that the  present  value,
at  the  date  of issue of the policy, of all such modified net premiums
shall be equal to the sum of the then present  value  of  such  benefits

provided for by the policy and the excess of item (i) over item (ii), as
follows:
(i) A net level annual premium equal to the present value, at the date
of  issue,  of  such  benefits provided for after the first policy year,
divided by the present value, at the date of issue, of an annuity of one
per annum payable on the first and each subsequent anniversary  of  such
policy  on  which  a premium falls due; provided, however, that such net
level annual premium shall not exceed the net level  annual  premium  on
the  nineteen  year  premium  whole  life plan for insurance of the same
amount at an age one year higher than the age at issue of such policy.
(ii) A net one year term premium for such benefits provided for in the
first policy year.
(B) Provided that for any life insurance policy  issued  on  or  after
January  first,  nineteen  hundred  eighty-six  for  which  the contract
premium in the first policy year exceeds that of the second year and for
which no comparable additional benefit is provided in the first year for
such excess and which provides an endowment benefit or a cash  surrender
value  or  a  combination  thereof in an amount greater than such excess
premium, the reserve according to the  commissioners  reserve  valuation
method  as  of any policy anniversary occurring on or before the assumed
ending date defined herein as the first policy anniversary on which  the
sum of any endowment benefit and any cash surrender value then available
is  greater than such excess premium shall, except as otherwise provided
in section four thousand two hundred eighteen of this  article,  be  the
greater  of  the  reserve  as  of  such policy anniversary calculated as
described in the preceding paragraph and the reserve as of  such  policy
anniversary  calculated as described in that paragraph, but with (i) the
value defined in item (i) of subparagraph (A) hereof  being  reduced  by
fifteen  percent  of  the amount of such excess first year premium, (ii)
all present values of benefits and  premiums  being  determined  without
reference  to  premiums or benefits provided for by the policy after the
assumed ending date, (iii) the policy being assumed to  mature  on  such
date as an endowment, and (iv) the cash surrender value provided on such
date  being  considered  as  an  endowment  benefit. In making the above
comparison, the mortality and interest bases stated  in  paragraphs  two
and four shall be used.
(C)  Reserves  according to the commissioners reserve valuation method
for (i) life insurance  policies  providing  for  a  varying  amount  of
insurance  or requiring the payment of varying premiums, (ii) disability
and accidental death benefits in all policies and contracts,  and  (iii)
all other benefits, except life insurance and endowment benefits in life
insurance   policies   and  benefits  in  annuity,  pure  endowment  and
guaranteed  interest  contracts,  shall  be  calculated  by   a   method
consistent  with the principles of this paragraph, except that any extra
premiums charged because of impairments  or  special  hazards  shall  be
disregarded in the determination of modified net premiums.
(D)  The  superintendent  may, by regulation, issue guidelines for the
application of the reserve valuation provisions of this section to  such
policies  and  contracts  as  the superintendent deems appropriate. Such
guidelines may provide that the minimum standard for  the  valuation  of
single  premium  life insurance policies of the kind referred to in item
(vi) of subparagraph (B) of paragraph four of  this  subsection  may  be
based  on interest rates determined in accordance with paragraph four of
subsection (c) of this section for the first  ten  years  following  the
date  of  valuation  and  thereafter  on  interest  rates  determined in
accordance with the formula stated in item (i) of  subparagraph  (B)  of
paragraph   four   of   this  subsection.  Such  guidelines  may  permit
recognition of surrender charges in determining reserves to  the  extent

and  under  the  conditions specified in the regulation. With respect to
annuity, pure endowment,  or  guaranteed  interest  contracts  providing
allocation  of  assets  to a separate account which qualifies under item
(iii)  of  paragraph five of subsection (a) of section four thousand two
hundred forty of this article and in which  the  assets  are  valued  at
their  market value in accordance with the terms of such contracts, such
guidelines may provide for  the  valuation  of  the  reserves  for  such
contracts in a consistent manner.
(7)  In  no  event  shall  a company's aggregate reserves for all life
insurance policies, excluding disability and accidental death  benefits,
be  less  than  the aggregate reserves calculated in accordance with the
methods set forth in paragraphs six and nine hereof  and  the  mortality
table  or  tables  and  rate  or  rates  of interest used in calculating
nonforfeiture benefits for such policies, nor less  than  the  aggregate
reserves calculated in accordance with section four thousand two hundred
eighteen  of  this  article.  This  paragraph  shall not apply to single
premium life insurance policies of the kind referred to in item (vi)  of
subparagraph  (B)  of  paragraph  four  of  this  subsection nor to life
insurance policies that provide for the crediting of additional  amounts
pursuant  to  subsection  (b)  of  section  four  thousand  two  hundred
thirty-two of this article  if  the  aggregate  reserves  for  all  such
policies  are  at  least equal to the greatest of present values, at the
date of valuation, of the future guaranteed cash surrender values at any
time under all such  policies,  assuming  no  future  premiums  and  the
mortality  tables and interest rates prescribed under paragraphs two and
four of this subsection.
(8) Notwithstanding  the  provisions  of  subsection  (a)  hereof  and
notwithstanding  the  provisions  of  subsection  (g)  of  section  four
thousand two hundred twenty-one of this article, after a life  insurance
company  has  established  reserves  for  participating  life  insurance
policies in accordance with a method consistent with the  provisions  of
this  chapter,  it  may  calculate  such reserves according to a rate of
interest lower than the rate of interest previously used in  calculating
reserves   for   the   same  policies  only  with  the  consent  of  the
superintendent, subject to such conditions, if any, as he may impose.
(9) In the case of any plan  of  life  insurance  which  provides  for
future  premium determination, the amounts of which are to be determined
by the insurance company based on then estimates of  future  experience,
or in the case of any plan of life insurance or annuity which is of such
a  nature  that the minimum reserves cannot be determined by the methods
described in paragraph six hereof and section four thousand two  hundred
eighteen  of  this  article,  the reserves which are held under any such
plan must:
(A) be appropriate in relation to the  benefits  and  the  pattern  of
premiums for that plan, and
(B) be computed by a method which is consistent with the principles of
such paragraph and such section as determined by the superintendent.
(10) (A) The superintendent shall, by regulation, issue guidelines for
the  determination of the minimum reserve value required by this section
for any plan or plans  of  life  insurance  policies  under  which  cash
surrender  values and policy loan values are adjusted in accordance with
a market-value adjustment formula.
(B) The regulation may require any company issuing or delivering  such
policies  in this state to submit to the superintendent with each annual
report  an  opinion,  in  form  and  substance   satisfactory   to   the
superintendent,  of  a  qualified actuary that the reserves for all such
policies in force at the end of the year, and the  assets  held  by  the
company  in  support  of  such reserves, make adequate provision for the

liabilities of the company with respect  thereto,  such  opinion  to  be
accompanied  by a memorandum, also in form and substance satisfactory to
the superintendent, of the qualified actuary describing the calculations
made  in  support  of  such  opinion  and  the  assumptions  used in the
calculations. The regulation may prescribe the calculations required  to
support such opinions and may provide that if the company has designated
particular  assets  primarily to support reserves for a class or classes
of policies, including reserves for policies  determined  in  accordance
with  the regulation, the opinion of the company's qualified actuary may
apply to the policies whose reserves are supported by such  assets.  For
purposes  hereof,  "qualified actuary" has the meaning ascribed to it by
subparagraph (E) of paragraph four of subsection (e) of this section.
(C) With respect to  any  policies  covered  by  the  regulation  that
provide  for  the  allocation  of  assets  to  a  separate account which
qualifies under item (iii)  of  paragraph  five  of  subsection  (a)  of
section  four  thousand  two  hundred forty of this article and in which
assets are valued at their market value in accordance with the terms  of
such  policies,  the  regulation  may  provide  for the valuation of the
reserves for such policies in a consistent manner.
(d) The company shall maintain reserves for all individual  and  group
accident  and  health  insurance policies which reserves shall reflect a
sound value placed on its liabilities under such policies and  shall  be
not   less   than   the  reserves  required  by  regulations  which  the
superintendent shall promulgate.
(e) Actuarial opinion of reserves.
(1) General. Every life insurance company doing business in this state
shall annually submit the opinion of a qualified actuary as  to  whether
the reserves and related actuarial items held in support of the policies
and contracts specified by the superintendent by regulation are computed
appropriately,  are  based  on  assumptions  which  satisfy  contractual
provisions, are consistent with prior reported amounts and  comply  with
applicable  laws  of  this state. The superintendent by regulation shall
define the specifics of this opinion and add any other items  deemed  to
be necessary to its scope.
(2)  (A)  Actuarial  analysis  of  reserves and assets supporting such
reserves. Every  life  insurance  company,  except  as  exempted  by  or
pursuant  to  regulation,  shall  also  annually  include in the opinion
required by paragraph one of this subsection, an  opinion  of  the  same
qualified actuary as to whether the reserves and related actuarial items
held  in  support  of  the  policies  and  contracts  specified  by  the
superintendent by regulation, when considered in  light  of  the  assets
held  by  the company with respect to the reserves and related actuarial
items, including but not limited  to  the  investment  earnings  on  the
assets  and  the  considerations anticipated to be received and retained
under the policies  and  contracts,  make  adequate  provision  for  the
company's  obligations  under  the policies and contracts, including but
not limited to the benefits  under  and  expenses  associated  with  the
policies and contracts.
(B)  The  superintendent  may  provide  by regulation for a transition
period for establishing any  additional  reserves  which  the  qualified
actuary  may  deem  necessary in order to render the opinion required by
this paragraph.
(3) Requirement for actuarial memorandum. (A) Except as exempted by or
pursuant to regulation, a memorandum, in form and  substance  acceptable
to  the  superintendent as specified by regulation, shall be prepared to
support each actuarial opinion submitted pursuant to subparagraph (A) of
paragraph two of this subsection. Each company required to prepare  such
memorandum shall submit such memorandum to the superintendent as part of

its  submission of the opinion of the qualified actuary pursuant to such
subparagraph (A), except as otherwise provided in  subparagraph  (B)  of
this  paragraph  and  except  that  if  a  foreign  or alien company has
submitted  a  memorandum in support of an opinion of a qualified actuary
for the prior year to the commissioner of  a  state  accredited  by  the
National  Association  of Insurance Commissioners and if that memorandum
was in form and substance acceptable to  the  commissioner  and  was  in
support  of  an opinion of a qualified actuary that was required by laws
or regulations of that state to meet standards adopted from time to time
by the Actuarial Standards Board and such additional  standards  as  the
superintendent  has prescribed, the foreign or alien company need submit
the memorandum required by this subparagraph only at the request of  the
superintendent or as the superintendent may by regulation require.
(B)  In lieu of preparing a memorandum as required by subparagraph (A)
of this paragraph, a company may increase its  reserves  in  the  manner
provided  by the superintendent by regulation. If a company that has not
so increased its reserves fails  to  file  a  supporting  memorandum  as
required  by  subparagraph  (A)  of this paragraph or fails to provide a
supporting memorandum at the request  of  the  superintendent  within  a
period specified by regulation or the superintendent determines that the
supporting  memorandum  provided  by  the  company  fails  to  meet  the
standards prescribed by the regulations or is otherwise unacceptable  to
the superintendent, the superintendent may engage a qualified actuary at
the  expense  of the company to review the opinion and the basis for the
opinion and prepare such supporting memorandum as  is  required  by  the
superintendent.
(4)  Requirement  for all opinions. Every opinion shall be governed by
the following provisions:
(A)  The  opinion  shall  be  submitted  with  the  annual   statement
reflecting  the  valuation  of  such  reserve  liabilities for each year
ending on or after December thirty-first, nineteen hundred ninety-four.
(B) The opinion  shall  apply  to  all  business  in  force  including
individual  and  group  health  insurance  plans,  in form and substance
acceptable to the superintendent as specified by regulation.
(C) The opinion shall be based on standards adopted from time to  time
by the Actuarial Standards Board and on such additional standards as the
superintendent may by regulation prescribe.
(D) In the case of an opinion required to be submitted by a foreign or
alien  company,  the  superintendent may accept the opinion submitted by
that company to the commissioner of a state accredited by  the  National
Association  of Insurance Commissioners if the superintendent determines
that the opinion reasonably  meets  the  requirements  applicable  to  a
company domiciled in this state.
(E)  For  the purposes of this subsection, "qualified actuary" means a
member in good standing of the American Academy of Actuaries  who  meets
the requirements prescribed by the superintendent by regulation.
(F)  Except in cases of fraud, willful misconduct or gross negligence,
the qualified actuary shall not be liable  for  damages  to  any  person
(other  than  the  insurance company or the superintendent) for any act,
error, omission, decision or  conduct  with  respect  to  the  actuary's
opinion  and  memorandum.  The provisions of this subparagraph shall not
operate to remove, condition or limit any rights, remedies or actions at
law or equity which the insurance company or the superintendent may have
or take against or with respect to the qualified actuary.
(G) Disciplinary action by the superintendent against the  company  or
the   qualified   actuary   shall  be  defined  in  regulations  by  the
superintendent.
(H)  Non-public  information  (meaning   information   not   otherwise
available  from public documents or records) contained in any memorandum
in support of the opinion, or in any  other  material  provided  by  the
company  to  the  superintendent  in  connection therewith, shall at the
written   request   of   the   company   be  kept  confidential  by  the
superintendent and shall not be made public, other than for the  purpose
of  enabling any person to defend against an action seeking damages from
such person by reason of any action  required  by  this  section  or  by
regulations   promulgated   hereunder;   provided,  however,  that  such
non-public information may otherwise be released by  the  superintendent
(i)  with  the written consent of the company or (ii) for the purpose of
professional disciplinary proceedings conducted by the superintendent or
by any professional body, provided that steps deemed appropriate by  the
superintendent  are  taken  to  preserve  the  confidentiality  of  such
non-public   information.      Notwithstanding   the   foregoing,    the
superintendent  shall  release  the  non-public  information  to persons
making demand therefor in  a  criminal  proceeding  pursuant  to  lawful
subpoena,  warrant  or  court  order or in response to a subpoena from a
grand jury served upon the superintendent.   Any  such  request  by  the
company  for confidentiality shall designate with reasonable specificity
the portion of such memorandum or other material with respect  to  which
confidentiality  is  requested  pursuant to this subparagraph. Once such
memorandum or other material, or any portion thereof containing  matters
with  respect  to  which confidentiality has been requested, is cited by
the company in its marketing or is cited before any governmental  agency
(other  than a state insurance department) or is released by the company
to the news media, all portions of such  memorandum  or  other  material
shall be no longer confidential.
(f)  (1)  An  insurer shall be deemed to meet the minimum standard for
the valuation of life insurance, if the amount of its aggregate reserves
for group life insurance, for ordinary life insurance and for industrial
life insurance, whether or not held in  separate  accounts  pursuant  to
section four thousand two hundred forty of this article, is in each case
at  least  equal  to  the  aggregate  minimum  standard required by this
section for the respective valuation thereof.
(2) An insurer shall be deemed to meet the minimum  standard  for  the
valuation  of  annuities and guaranteed interest contracts if the amount
of its aggregate reserves therefor, whether  or  not  held  in  separate
accounts  pursuant  to  such  section  forty-two  hundred  forty of this
article, is at least equal to the aggregate minimum standard required by
this section for the valuation thereof.
(3) An insurer shall be deemed to meet the minimum  standard  for  the
valuation of individual and group accident and health insurance policies
if  the  amount  of its aggregate reserves therefor is at least equal to
the  aggregate  minimum  standard  required  by  this  section  for  the
valuation thereof.
(4)  Without  the  specific  approval of the superintendent subject to
such conditions as he may prescribe and as provided  by  regulation,  an
insurer  shall  not aggregate the reserves referred to in two or more of
paragraph one, two or three of  this  subsection.  Such  regulation  may
prescribe  the  conditions  under  which  the  valuation  of two or more
classes of business  of  insurance  or  the  valuation  of  all  of  its
insurance business to which this section applies may be combined.
(5)  For  purposes  of this subsection, the aggregate minimum standard
required by this section for the valuation of any insurance policies  or
contracts  shall  be  deemed  to include such additional reserves as the
qualified actuary deems necessary, taking into  account  any  transition
rules  provided  by regulation pursuant to subparagraph (B) of paragraph

two of subsection (e) of this section, in order to  render  the  opinion
required  by subsection (e) of this section and such additional reserves
as may be necessary  to  comply  with  regulations  promulgated  by  the
superintendent pursuant to this section.
* (g)(1) This subsection shall apply only to individual and group life
insurance  policies  and  annuity  contracts  issued  on  or  after  the
operative  date  of  the  valuation  manual   as   prescribed   by   the
superintendent  by regulation, provided that the operative date shall be
no sooner than January first, two thousand nineteen.
(2) For the  purposes  of  this  subsection,  "NAIC"  shall  mean  the
National Association of Insurance Commissioners.
(3) For purposes of this subsection, "principle-based valuation" shall
mean  a  reserve valuation that uses methods and assumptions required by
paragraph eleven of  this  subsection  as  specified  in  the  valuation
manual.
(4)  For purposes of this subsection, "qualified actuary" shall mean a
member in good standing of the American Academy of Actuaries  who  meets
the requirements prescribed by the superintendent by regulation.
(5) For purposes of this subsection, "valuation manual" shall mean the
valuation  manual  adopted  by the NAIC on December second, two thousand
twelve, as subsequently amended, and as approved by  the  superintendent
upon a finding that such manual is for the best interests of the holders
of  policies  and contracts and annuitants of this state and which meets
the requirements as set forth in this subsection.
(6) Notwithstanding subsection (c) of this section  and  section  four
thousand  two hundred eighteen of this article, the minimum standard for
the valuation of all such policies and contracts shall be  the  standard
prescribed in the valuation manual.
(7)  The  valuation  manual  shall  not become operative in this state
unless and until the superintendent has approved of such manual and  has
adopted all necessary regulations to effectuate this subsection.
(8) (A) No amendment to the valuation manual shall take effect in this
state  unless  the  superintendent  finds that such amendment is for the
best interests of the holders of policies and contracts  and  annuitants
of this state.
(B)  The  superintendent  may  deviate,  through regulations, from the
reserve  standards,  valuation   methods,   assumptions,   and   related
requirements   in   the   valuation  manual,  including  for  individual
companies, provided, however, that such deviation shall  not  result  in
reserve  valuations that are lower than the minimum standards prescribed
in the valuation manual and may be based on a percentage of the reserves
being held for the policies and contracts  subject  to  this  subsection
prior to the operative date of such manual.
(9) The valuation manual shall specify all of the following:
(A)  Minimum  valuation  standards for and definitions of the policies
and  contracts  subject  to  this  subsection  as  determined   by   the
superintendent. Such minimum valuation standards shall be:
(i)  The  commissioners  reserve  valuation  method for life insurance
policies subject to this subsection; and
(ii) The commissioners annuity reserve valuation  method  for  annuity
contracts subject to this subsection.
(B) Requirements for the format of reports to the superintendent under
item  (iii)  of  subparagraph (B) of paragraph eleven of this subsection
and which shall  include  information  necessary  to  determine  if  the
valuation is appropriate and in compliance with this subsection;
(C)  Assumptions  for  risks  over  which  a  company  does  not  have
significant control or influence;
(D) Procedures for corporate governance and oversight of the actuarial
function, and a process for appropriate waiver or modification  of  such
procedures;
(E)  Other requirements, including, but not limited to, those relating
to reserve methods, models for measuring risk,  generation  of  economic
scenarios,   assumptions,  margins,  use  of  company  experience,  risk
measurement, disclosure, certifications, reports, actuarial opinions and
memorandums, transition rules and internal controls; and
(F) The data and form of the data required under paragraph  twelve  of
this  subsection,  with  whom  the  data  shall  be submitted, and other
requirements including data analyses and reporting of analyses.
(10) The superintendent may engage a qualified actuary, at the expense
of a company, to perform an actuarial examination of  such  company  and
opine on the appropriateness of any reserve assumption or method used by
such  company,  or to review and opine on such company's compliance with
any requirement set forth in this subsection.
(11) (A) A company that issues policies and contracts subject to  this
subsection  shall  establish  reserves using a principle-based valuation
that meets the following conditions for such policies and  contracts  as
specified in the valuation manual:
(i)  Quantify the benefits and guarantees, and the funding, associated
with  the  policies  or  contracts  and  their  risks  at  a  level   of
conservatism  that  reflects  conditions that include unfavorable events
that have a reasonable probability of occurring during the  lifetime  of
the  policies and contracts. For policies and contracts with significant
tail risk, reflect conditions appropriately adverse to quantify the tail
risk.
(ii) Incorporate assumptions,  risk  analysis  methods  and  financial
models  and  management  techniques  that  are  consistent with, but not
necessarily identical to, those utilized within  the  company's  overall
risk  assessment  process,  while  recognizing  potential differences in
financial  reporting  structures  and  any  prescribed  assumptions   or
methods.
(iii) Incorporate assumptions that are derived in one of the following
manners:
(I) The assumption is prescribed in the valuation manual.
(II) For assumptions that are not prescribed, the assumptions shall:
a. be established utilizing the company's available experience, to the
extent it is relevant and statistically credible; or
b.  to  the extent that company experience is not available, relevant,
or statistically credible,  be  established  utilizing  other  relevant,
statistically credible experience.
(iv)  Provide  margins for uncertainty including adverse deviation and
estimation error, such that the greater the uncertainty the  larger  the
margin and resulting reserve.
(B)  A  company  that  issues  policies  and contracts subject to this
subsection shall:
(i) Establish procedures for corporate governance and oversight of the
actuarial valuation function consistent  with  those  described  in  the
valuation manual.
(ii)  Provide  to  the superintendent, annually on or before a date as
determined by the superintendent, and the  board  of  directors  of  the
company  an  annual  certification  of the effectiveness of the internal
controls with respect to the principle-based  valuation.  Such  controls
shall  be  designed  to  assure  that all material risks inherent in the
liabilities and associated assets subject to such valuation are included
in the valuation, and that valuations are made in  accordance  with  the

valuation  manual.  The  certification shall be based on the controls in
place as of the end of the preceding calendar year.
(iii)  Develop,  and  file  with  the  superintendent  upon request, a
principle-based valuation report that complies with standards prescribed
in the valuation manual.
(C) A principle-based valuation shall include a  prescribed  formulaic
reserve component.
(12)  A  company  that  issues  policies and contracts subject to this
subsection shall submit mortality, morbidity, policyholder behavior,  or
expense  experience and other data as prescribed in the valuation manual
to the superintendent annually on or before a date as determined by  the
superintendent.
(13)  (A)  The  superintendent  may  exempt  specific product forms or
product lines of a domestic company that is licensed and doing  business
only in this state from the requirements of this subsection provided:
(i)  The  superintendent  has  issued  an  exemption in writing to the
company and has not subsequently revoked the exemption in writing; and
(ii) The company computes reserves using assumptions and methods  used
prior  to  the operative date of the valuation manual in addition to any
requirements  established  by  the  superintendent  and  promulgated  by
regulation.
(B)  For  any  company  granted  an  exemption  under  this paragraph,
subsections (c), (d), (e) and (f)  of  this  section  and  section  four
thousand  two hundred eighteen of this article shall be applicable. With
respect to any company applying for this  exemption,  any  reference  to
subsection  (g)  found  in  subsections  (c),  (d),  (e) and (f) of this
section and section four thousand two hundred eighteen of  this  article
shall not be applicable.
* NB Repealed December 7, 2028