Missouri Code of State Regulations › Title 20 - DEPARTMENT OF COMMERCE AND INSURANCE › Division 200 - Insurance Solvency and Company Regulation › Chapter 1 - Financial Solvency and Accounting Standards › Section 20 CSR 200-1.116 - Actuarial Opinion and Memorandum Regulation

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: This rule prescribes:
a)
requirements for statements of
				actuarial opinion which are to be submitted in accordance with sections
				376.370
				and
				376.380,
				RSMo, and 20 CSR 200-1.11 5 and for memoranda in support thereof; b) guidance
				as to the meaning of "adequacy of reserves"; and c) rules applicable to the
				appointment of an appointed actuary.
(1) Scope. This rule shall apply to all life
				insurance companies and fraternal benefit societies doing business in this
				state and to all life insurance companies and fraternal benefit societies which
				are authorized to reinsure life insurance, annuities, or accident and health
				insurance business in this state. This regulation shall be applied in a manner
				that allows the appointed actuary to utilize his or her professional judgment
				in performing the asset analysis and developing the actuarial opinion and
				supporting memoranda, consistent with relevant actuarial standards of practice.
				However, the director shall have the authority to specify methods of actuarial
				analysis and actuarial assumptions when, in the director's judgment, these
				specifications are necessary for an acceptable opinion to be rendered relative
				to the adequacy of reserves and related items. This rule shall be applicable to
				all annual statements filed with the director after the effective date of this
				rule. A statement of opinion on the adequacy of the reserves and related
				actuarial items based on an asset adequacy analysis in accordance with section
				(4) of this rule, and a memorandum in support thereof in accordance with
				section (5) of this rule, shall be required each year.
(2) Definitions.
(A) "Actuarial opinion" means the opinion of
				an appointed actuary regarding the adequacy of the reserves and related
				actuarial items based on an asset adequacy analysis in accordance with section
				(4) of this rule and with applicable Actuarial Standards of Practice.
(B) "Actuarial Standards Board" means the
				board established by the American Academy of Actuaries to develop and
				promulgate standards of actuarial practice.
(C) "Annual statement" means that statement
				required by sections
				375.041
				and
				376.350,
				RSMo, to be filed by the company with the director annually.
(D) "Appointed actuary" means an individual
				who is appointed or retained in accordance with the requirements set forth in
				subsection (3)(C) of this rule to provide the actuarial opinion and supporting
				memorandum as required by
				20 CSR
				200-1.115 and section
				376.380,
				RSMo.
(E) "Asset adequacy analysis"
				means an analysis that meets the standards and other requirements referred to
				in subsection (3)(D) of this rule.
(F) "Company" means a life insurance company,
				fraternal benefit society, or reinsurer subject to the provisions of this
				rule.
(G) "Director" means the
				director of the Missouri Department of Commerce and Insurance.
(H) "Qualified actuary" means an individual
				who meets the requirements set forth in subsection (3)(B) of this
				rule.
(3) General
				Requirements.
(A) Submission of Statement of
				Actuarial Opinion.
1. There is to be included
				on or attached to page 1 of the annual statement for each year beginning with
				the year in which this rule becomes effective the statement of an appointed
				actuary, entitled "Statement of Actuarial Opinion," setting forth an opinion
				relating to reserves and related actuarial items held in support of policies
				and contracts, in accordance with section (4) of this rule.
2. Upon written request by the company, the
				director may grant an extension of the date for submission of the statement of
				actuarial opinion.
(B)
				Qualified actuary. A "qualified actuary" is an individual who-
1. Is a member of the American Academy of
				Actuaries;
2. Is qualified to sign
				statements of actuarial opinion for life and health insurance company annual
				statements in accordance with the American Academy of Actuaries qualification
				standards for actuaries signing those statements;
3. Is familiar with the valuation
				requirements applicable to life and health insurance companies;
4. Has not been found by the director (or, if
				so found, has subsequently been reinstated as a qualified actuary), following
				appropriate notice and hearing to have:
A.
				Violated any provision of, or any obligation imposed by, the insurance law or
				other law in the course of his/her dealings as a qualified actuary;
B. Been found guilty of fraudulent or
				dishonest practices;
C.
				Demonstrated his/her incompetency, lack of cooperation, or untrustworthiness to
				act as a qualified actuary;
D.
				Submitted to the director during the past five (5) years, pursuant to this
				rule, an actuarial opinion or memorandum that the director rejected because it
				did not meet the provisions of this rule including standards set by the
				Actuarial Standards Board; or
E.
				Resigned or been removed as an actuary within the past five (5) years as a
				result of acts or omissions indicated in any adverse report on examination or
				as a result of failure to adhere to generally acceptable actuarial standards;
				and
5. Has not failed to
				notify the director of any action taken by any director of any other state
				similar to that under paragraph (3)(B)4.
(C) Appointed actuary. An appointed actuary
				is a qualified actuary who is appointed or retained to prepare the Statement of
				Actuarial Opinion required by this rule; either directly or by the authority of
				the board of directors through an executive officer of the company. The company
				shall give the director timely written notice of the name, title (and in the
				case of a consulting actuary, the name of the firm) and manner of appointment
				or retention of each person appointed or retained by the company as an
				appointed actuary and shall state in that notice that the person meets the
				requirements set forth in subsection (3)(B). Once notice is furnished, no
				further notice is required with respect to this person, provided that the
				company shall give the director timely written notice in the event the actuary
				ceases to be appointed or retained as an appointed actuary or to meet the
				requirements set forth in subsection (3)(B). If any person appointed or
				retained as an appointed actuary replaces a previously appointed actuary, the
				notice shall so state and give the reasons for replacement.
(D) Standards for Asset Adequacy Analysis.
				The asset adequacy analysis required by this rule:
1. Shall conform to the Standards of Practice
				as promulgated from time-to-time by the Actuarial Standards Board and on any
				additional standards under this rule, which standards are to form the basis of
				the statement of actuarial opinion in accordance with this rule; and
2. Shall be based on methods of analysis as
				are deemed appropriate for such purposes by the Actuarial Standards
				Board.
(E) Liabilities
				to Be Covered.
1. Under authority of
				20 CSR
				200-1.115 and sections
				376.370
				and
				376.380,
				RSMo, the statement of actuarial opinion shall apply to all in force business
				on the statement date, whether directly issued or assumed, regardless of when
				or where issued, for example, reserves of Exhibits 8, 9, and 10, and claim
				liabilities in Exhibit 11, Part 1 and equivalent items in the separate account
				statement(s).
2. If the appointed
				actuary determines as the result of asset adequacy analysis that a reserve
				should be held in addition to the aggregate reserve held by the company and
				calculated in accordance with methods set forth in sections
				376.370
				and
				376.380,
				RSMo, the company shall establish the additional reserve.
3. Additional reserves established under
				paragraph (3)(E)2. and deemed not necessary in subsequent years may be
				released. Any amounts released must be disclosed in the actuarial opinion for
				the applicable year. The release of these reserves would not be deemed an
				adoption of a lower standard of valuation.
(4) Statement of Actuarial Opinion Based On
				an Asset Adequacy Analysis.
(A) General
				Description. The statement of actuarial opinion submitted in accordance with
				this section shall consist of:
1. A paragraph
				identifying the appointed actuary and his/her qualifications (see paragraph
				(4)(B)1.);
2. A scope paragraph
				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 which have been analyzed for asset
				adequacy and the method of analysis, (see paragraph (4)(B)2.) and identifying
				the reserves and related actuarial items covered by the opinion which have not
				been so analyzed;
3. A reliance
				paragraph describing those areas, if any, where the appointed actuary has
				deferred to other experts in developing data, procedures, or assumptions (for
				example, anticipated cash flows from currently owned assets, including
				variation in cash flows according to economic scenarios (see paragraph
				(4)(B)3.) supported by a statement of each expert in the form prescribed by
				subsection (4)(E);
4. An opinion
				paragraph expressing the appointed actuary's opinion with respect to the
				adequacy of the supporting assets to mature the liabilities (see paragraph
				(4)(B)6.); and
5. One (1) 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 his/her 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 of the prior opinion date are released as of this
				opinion date and the extent of the release; and
D. If the appointed actuary chooses to add a
				paragraph briefly describing the assumptions which 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. Language is that which in typical circumstances
				should be included 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 which clearly expresses his/her
				professional judgment. However, in any event the opinion shall 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 his/her
				qualifications to sign the opinion. For a company actuary, the opening
				paragraph of the actuarial opinion should include a statement such as: "I,
				(name), am (title) of (insurance company name) and a member of the American
				Academy of Actuaries. I was appointed by, or by the authority of, the board of
				directors of said insurer to render this opinion as stated in the letter to the
				director dated (insert date). I meet the Academy qualification standards for
				rendering the opinion and am familiar with the valuation requirements
				applicable to life and health insurance companies." For a consulting actuary,
				the opening paragraph should contain a statement such as: "I, (name), a member
				of the American Academy of Actuaries, am associated with the firm of (name of
				consulting firm). I have been appointed by, or by the authority of, the board
				of directors of (name of company) to render this opinion as stated in the
				letter to the director dated (insert date). I meet the Academy qualification
				standards for rendering this opinion and am familiar with the valuation
				requirements, relating to life and health companies."
2. The scope paragraph should include a
				statement such as: "I have examined the actuarial assumptions and actuarial
				methods used in determining reserves and related actuarial items listed below,
				as shown in the annual statement of the company, as prepared for filing with
				state regulatory officials, as of December 31, 20(__). Tabulated as follows are
				those reserves and related actuarial items which have been subjected to asset
				adequacy analysis."
Reserves And Liabilities
Asset Adequacy Tested Amounts
Statement Item (c)
Formula Reserves
						  (1)
Additional Actuarial Reserves (a) (2)
Analysis Method (b)
Other Amount Amount (3)
Total Amount (1)+(2)+(3)+(4)
TOTAL RESERVES
___________
_____________
_____________
_____________
IMR (Page _____ Line _____)
___________
AVR (Page _____ Line _____)
___________
						  (d)
(a) The
				additional actuarial reserves are the reserves established under paragraph
				(3)(E)2.
(b) The appointed actuary
				should indicate the method of analysis, determined in accordance with the
				standards for asset adequacy analysis referred to in subsection (3)(D) of this
				regulation, by means of symbols which should be defined in footnotes to the
				table.
(c) Statement Items should
				describe lines of business subjected to asset adequacy analysis and contain
				appropriate references to the exhibits, pages, and lines of the insurer's
				annual statement filed with the director to which the amounts listed
				reconcile.
(d) Allocated amount of
				Asset Valuation Reserve (AVR).
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:
"I have relied on (name), (title) for (for example,
				  anticipated cash flows from currently owned assets, including variations in
				  cash flows according to economic scenarios) and, as certified in the attached
				  statement I have reviewed the information relied upon for
				  reasonableness."
A statement of reliance on other experts should be
				  accompanied by a statement by each of these experts in the form prescribed by
				  subsection (4)(E).
4. If
				the appointed actuary has examined the underlying asset and liability records,
				the reliance paragraph should include a statement such as: "My 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 I considered necessary. I also reconciled the underlying basic
				asset and liability records to (exhibits and schedules listed as applicable) of
				the company's current annual statement."
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 sentence such as: "In forming my opinion on (specify
				types of reserves), I relied upon data prepared by (name and title of company
				officer certifying in-force records or other data) as certified in the attached
				statements. I also reconciled that data to (exhibits and schedules to be listed
				as applicable) of the company's current annual statement. In other respects, my
				examination included review of the actuarial assumptions and actuarial methods
				and tests of the calculations I considered necessary." This section shall be
				accompanied by a statement by each person relied upon in the form prescribed by
				subsection (4)(E).
6. The opinion
				paragraph should include a statement such as: "In my opinion the reserves and
				related actuarial values concerning the statement items identified above:
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 which
				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 all other
				contract provisions;
C. "Meet the
				requirements of the insurance law and regulation of the state of (state of
				domicile) and are at least as great as the minimum aggregate amounts required
				by the state in which this statement is filed;
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 exceptions noted here);
E. "Include provision for all actuarial
				reserves and related statement items which ought to be established.
"The reserves and related 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 the
				  assets, and the considerations anticipated to be received and retained under
				  the 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.
				  (At the discretion of the director, this language may be omitted for an opinion
				  filed on behalf of a company doing business only in this state and in no other
				  state.)
"The actuarial methods, considerations, and analyses used in
				  forming my 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.
"This opinion is updated annually as required by statute. To
				  the best of my knowledge, there have been no material changes from the
				  applicable date of the annual statement to the date of the rendering of this
				  opinion which should be considered in reviewing this opinion"; or
"The following material change(s) which occurred between the
				  date of the statement for which this opinion is applicable and the date of this
				  opinion should be considered in reviewing this opinion: (Describe the
				  change(s).)" (Note: Choose one of the preceding two (2) paragraphs, whichever
				  is applicable.)
"The impact of unanticipated events subsequent to the date of
				  this opinion is beyond the scope of this opinion. The analysis of asset
				  adequacy portion of this opinion should be viewed recognizing that the
				  company's future experience may not follow all the assumptions used in the
				  analysis.
____________________________________
(Signature of Appointed Actuary)
				  ____________________________________
(Address of Appointed Actuary)
____________________________________
(Telephone Number of Appointed Actuary)
				  ____________________________________
(Date)"
(C) Assumptions for New Issues. The adoption
				for new issues or new claims or other new liabilities of an actuarial
				assumption which 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 she/he shall refuse to issue a
				statement of actuarial opinion. If the appointed actuary's opinion is adverse
				or qualified, then she/he shall issue an adverse or qualified actuarial opinion
				explicitly stating the reason(s) for that 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 shall 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 shall include the signature, title, company,
				address, and telephone number of the person rendering the certification, as
				well as the date on which it is signed.
(F) Alternate Option.
1. Section 376.380.4(4)(d), RSMo 2000, gives
				the director 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 subparagraph
				(4)(B)6.C., the director may make one (1) 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 director
				chooses to allow this alternative, a formal written list of standards and
				conditions shall be made available. If a company chooses to use this
				alternative, the standards and conditions in effect on July 1 of a calendar
				year shall apply to statements for that calendar year, and they shall 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 director for approval
				of that request have been met." If the director chooses to allow this
				alternative, a formal written statement of such allowance shall be issued no
				later than March 31 of the year it is first effective. It shall remain valid
				until rescinded or modified by the director. The rescission or modifications
				shall be issued no later than March 31 of the year they are first effective.
				Subsequent to that statement being issued, if a company chooses to use this
				alternative, the company shall 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 shall be deemed approved on October 1 of that year if the
				director has not denied the request by that date; and/or
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 director chooses to allow
				this alternative, a formal written list of products (to be added to the table
				in Part (II) below) for which the required comparison shall be provided will be
				published. If a company chooses to use this alternative, the list in effect on
				July 1 of a calendar year shall apply to statements for that calendar year, and
				it shall remain 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 shall provide a comparison of the gross
				nationwide reserves held to the gross nationwide reserves that would be held
				under National Association of Insurance Commissioners (NAIC) codification
				standards. 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 shall be at least:
(1) Product Type
(2) Death Benefit or Account
						  Value
(3) Reserves Held
(4) Codification Reserves
(5)
						  Codification Standard
(III)
				The information listed shall 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
				shall provide detailed disclosure of the specific method and assumptions used
				in determining the reserves held.
(V) The comparison provided by the company is
				to be kept confidential to the same extent and under the same conditions as the
				actuarial memorandum.
2. Notwithstanding the above, the director
				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 sixty (60) days of the request or such
				other period of time determined by the director after consultation with the
				company, the director may contract with an independent actuary at the company's
				expense to prepare and file the opinion.
(5) Description of Actuarial Memorandum
				Including an Asset Adequacy Analysis and Regulator Asset Adequacy Issues
				Summary.
(A) General.
1. In accordance with
				20 CSR
				200-1.115 and sections
				376.370
				and
				376.380,
				RSMo, the appointed actuary shall prepare a memorandum to the company
				describing the analysis done in support of his/her opinion regarding the
				reserves. The memorandum shall be made available for examination by the
				director upon his/her request but shall be returned to the company after such
				examination and shall not be considered a record of the insurance department or
				subject to automatic filing with the director.
2. In preparing the memorandum, the appointed
				actuary may rely on, and include as a part of his/her own memorandum, memoranda
				prepared and signed by other actuaries who are qualified within the meaning of
				subsection (3)(B) of this rule, with respect to the areas covered in such
				memoranda, and so state in their memoranda.
3. If the director requests a memorandum and
				no memorandum exists or if the director finds that the analysis described in
				the memorandum fails to meet the standards of the Actuarial Standards Board or
				the standards and requirements of this rule, the director may designate a
				qualified actuary to review the opinion and prepare the supporting memorandum
				as is required for review. The reasonable and necessary expense of the
				independent review shall be paid by the company but shall be directed and
				controlled by the director.
4. The
				reviewing actuary shall have the same status as an examiner for purposes of
				obtaining data from the company and the work papers and documentation of the
				reviewing actuary shall be retained by the director; provided, however, that
				any information provided by the company to the reviewing actuary and included
				in the work papers shall be considered as material provided by the company to
				the director and shall be kept confidential to the same extent as is prescribed
				by law with respect to other material provided by the company to the director
				pursuant to the statute governing this rule. The reviewing actuary shall not be
				an employee of a consulting firm involved with the preparation of any prior
				memorandum or opinion for the insurer pursuant to this rule for any one (1) of
				the current year or the preceding three (3) years.
5. In accordance with
				20 CSR
				200-1.115 and section
				376.380,
				RSMo, the appointed actuary shall prepare a regulatory asset adequacy issues
				summary, the contents of which are specified in subsection (5)(C). The
				regulatory asset adequacy issues summary will be submitted no later than March
				15 of the year following the year for which a statement of actuarial opinion
				based on asset adequacy is required. The regulatory asset adequacy issues
				summary is to be kept confidential to the same extent and under the same
				conditions as the actuarial memorandum.
(B) Details of the Memorandum Section
				Documenting Asset Adequacy Analysis. When an actuarial opinion is provided, the
				memorandum shall demonstrate that the analysis has been done in accordance with
				the standards for asset adequacy referred to in subsection (3)(D) of this rule
				and any additional standards under this rule. It shall specify-
1. For reserves-
A. Product descriptions including market
				description, underwriting, and other aspects of a risk profile and the specific
				risks the appointed actuary deems significant;
B. Source of liability in force;
C. Reserve method and basis;
D. Investment reserves;
E. Reinsurance arrangements;
F. Identification of any explicit or implied
				guarantees made by the general account in support of benefits provided through
				a separate account or under a separate account policy or contract and the
				methods used by the appointed actuary to provide for the guarantees in the
				asset adequacy analysis; and
G.
				Documentation of assumptions to test reserves for the following:
(I) Lapse rates (both base and
				excess);
(II) Interest crediting
				rate strategy;
(III)
				Mortality;
(IV) Policyholder
				dividend strategy;
(V) Competitor
				or market interest rate;
(VI)
				Annuitization rates;
(VII)
				Commissions and expenses; and
(VIII) Morbidity;
2. For assets-
A. Portfolio descriptions, including a risk
				profile disclosing the quality, distribution, and types of assets;
B. Investment and disinvestment
				assumptions;
C. Source of asset
				data;
D. Asset valuation bases;
				and
E. Documentation of assumptions
				made for:
(I) Default costs;
(II) Bond call function;
(III) Mortgage prepayment function;
(IV) Determining market value for assets sold
				due to disinvestment strategy; and
(V) Determining yield on assets acquired
				through the investment strategy. The documentation of the assumptions shall be
				such that an actuary reviewing the actuarial memorandum could form a conclusion
				as to the reasonableness of the assumptions;
3. For the analysis basis-
A. Methodology;
B. Rationale for inclusion/exclusion of
				different blocks of business and how pertinent risks were analyzed;
C. Rationale for degree of rigor in analyzing
				different blocks of business (include in the rationale the level of materiality
				that was used in determining how rigorously to analyze different blocks of
				business);
D. Criteria for
				determining asset adequacy (include in the criteria the precise basis for
				determining if assets are adequate to cover reserves under moderately adverse
				conditions or other conditions as specified in relevant actuarial standards of
				practice); and
E. Whether the
				impact of federal income taxes was considered, and the method of treating
				reinsurance in the asset adequacy analysis;
4. Summary of material changes in methods,
				procedures, or assumptions from prior year's asset adequacy analysis;
5. Summary of results; and
6. Conclusion(s).
(C) Details of the Regulatory Asset Adequacy
				Issues Summary.
1. The regulatory asset
				adequacy issues summary shall include:
A.
				Descriptions of the scenarios tested (including whether those scenarios are
				stochastic or deterministic) and the sensitivity testing done relative to those
				scenarios. If negative ending surplus results under certain tests in the
				aggregate, the actuary should describe those tests and the amount of additional
				reserve as of the valuation date which, if held, would eliminate the negative
				aggregate surplus values. Ending surplus values shall be determined by either
				extending the projection period until the in force and associated assets and
				liabilities at the end of the projection period are immaterial or by adjusting
				the surplus amount at the end of the projection period by an amount that
				appropriately estimates the value that can reasonably be expected to arise from
				the assets and liabilities remaining in force;
B. The extent to which the appointed actuary
				uses assumptions in the asset adequacy analysis that are materially different
				than the assumptions used in the previous asset adequacy analysis;
C. The amount of reserves and the identity of
				the product lines that had been subjected to asset adequacy analysis in the
				prior opinion but were not subject to analysis for the current
				opinion;
D. Comments on any interim
				results that may be of significant concern to the appointed actuary;
E. The methods used by the actuary to
				recognize the impact of reinsurance on the company's cash flows, including both
				assets and liabilities, under each of the scenarios tested; and F. Whether the
				actuary has been satisfied that all options whether explicit or embedded, in
				any asset or liability (including, but not limited to, those affecting cash
				flows embedded in fixed income securities) and equity-like features in any
				investments have been appropriately considered in the asset adequacy
				analysis.
2. The
				regulatory asset adequacy issues summary shall contain the name of the company
				for which the regulatory asset adequacy issues summary is being supplied and
				shall be signed and dated by the appointed actuary rendering the actuarial
				opinion.
(D) Conformity
				to Standards of Practice. The memorandum shall include a statement: "Actuarial
				methods, considerations and analyses used in the preparation of this memorandum
				conform to the appropriate Standards of Practice as promulgated by the
				Actuarial Standards Board, which standards form the basis for this
				memorandum."
(E) Use of Assets
				Supporting the Interest Maintenance Reserve and the Asset Valuation Reserve. An
				appropriate allocation of assets in the amount of the interest maintenance
				reserve (IMR), whether positive or negative, shall be used in any asset
				adequacy analysis. Analysis of risks regarding asset default may include an
				appropriate allocation of assets supporting the asset valuation reserve (AVR);
				these AVR assets may not be applied for any other risks with respect to reserve
				adequacy. Analysis of these and other risks may include assets supporting other
				mandatory or voluntary reserves available to the extent not used for risk
				analysis and reserve support. The amount of the assets used for the AVR must be
				disclosed in the Table of Reserves and Liabilities of the opinion and in the
				memorandum. The method used for selecting particular assets or allocated
				portions of assets must be disclosed in the memorandum.
(F) Documentation. The appointed actuary
				shall retain on file, for at least seven (7) years, sufficient documentation so
				that it will be possible to determine the procedures followed, the analyses
				performed, the bases for assumptions and the results obtained.