Indiana Administrative Code › Title 760 - DEPARTMENT OF INSURANCE › Article 1 - GENERAL PROVISIONS › Rule 57 - Actuarial Opinion and Memorandum › Section 57-9 - Description of actuarial memorandum including an asset adequacy analysis

Current through July 10, 2024
Authority: IC
				  27-1-12.8-21
Affected: IC 27-1-3.1
Sec. 9.
(a) In
				accordance with IC
				27-1-12-10.1
[IC
				27-1-12-10.1 was
				repealed by
				P.L.
				276-2013,
				SECTION
				6, effective July 1, 2013.]
, the
				appointed actuary shall prepare a memorandum to the company describing the
				analysis done in support of his or her opinion regarding the reserves under an
				opinion issued pursuant to section 8 of this rule. The memorandum shall be made
				available for examination by the commissioner upon his or 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
				commissioner.
(b) In preparing the
				memorandum, the appointed actuary may rely on, and include as a part of his or
				her own memorandum, memoranda prepared and signed by other actuaries who are
				qualified within the meaning of section 5(b) of this rule, with respect to the
				areas covered in such memoranda, and so state in their memoranda.
(c) If the commissioner requests a memorandum
				and no such memorandum exists or if the commissioner 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
				commissioner may designate a qualified actuary to review the opinion and
				prepare such 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 commissioner.
(d) The reviewing actuary shall have the same
				status as an examiner under IC 27-1-3.1 for purposes of obtaining data from the
				company. The work papers and documentation of the reviewing actuary shall be
				retained by the commissioner; 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 commissioner 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 commissioner pursuant to IC
				27-1-12-10
[IC
				27-1-12-10
				was repealed by
				P.L.
				276-2013,
				SECTION
				5, effective July 1, 2013.]
and IC
				27-1-12-10.1
[IC
				27-1-12-10.1 was
				repealed by
				P.L.
				276-2013,
				SECTION
				6, effective July 1, 2013.]
. 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 under this
				rule for the current year or any one (1) of the preceding three (3)
				years.
(e) The appointed actuary
				shall prepare a regulatory asset adequacy issues summary, the contents of which
				are specified in subsection (g). The regulatory asset adequacy issues summary
				shall be submitted no later than March 15 of the year following the year for
				which a statement of actuarial opinion based on 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.
(f) When an actuarial opinion is provided,
				the memorandum shall demonstrate that the analysis has been done in accordance
				with the standards for asset adequacy analysis referred to in section 5(d) of
				this rule and any additional standards under this rule. It shall specify the
				following:
(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:
(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.
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.