Kentucky Administrative Regulations › Title 806 - PUBLIC PROTECTION CABINET - DEPARTMENT OF INSURANCE › Chapter 6 - Assets and Liabilities › Section 806 KAR 6:072 - Valuation of life insurance and annuity reserves

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				304.1-050,
				304.2-290,
				304.3-240,
				304.6,
				304.15-410
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				304.2-110 authorizes the commissioner to
				promulgate reasonable administrative regulations necessary for or as an aid to
				the effectuation of the Kentucky Insurance Code as established in
				KRS
				304.1-010.
				KRS
				304.6-140 authorizes the commissioner to
				promulgate administrative regulations approving any mortality table "adopted by
				the National Association of Insurance Commissioners after 1980" for use in
				determining the minimum standard for valuation of policies. This administrative
				regulation establishes the framework for valuation standards acceptable to the
				department and establishes the conditions under which the department actuary
				will verify the valuation of a company's reserves without cost to the
				insurer.
Section 1. Definitions.
(1) "1983 GAM Table" means that mortality
			 table developed by the Society of Actuaries Committee on Annuities and adopted
			 as a recognized mortality table for annuities in December, 1983 by the National
			 Association of Insurance Commissioners.
(2) "1983 Table 'a'" means that mortality
			 table developed by the Society of Actuaries Committee to Recommend a New
			 Mortality Basis for Individual Annuity Valuation and adopted as a recognized
			 mortality table for annuities in June, 1982 by the National Association of
			 Insurance Commissioners.
(3) "1994
			 GAR Table" means that mortality table developed by the Society of Actuaries
			 Group Annuity Valuation Table Task Force, containing the projection scale AA,
			 using the methodology established in Section 4(3)(j) of this administrative
			 regulation.
(4) "2012 Individual
			 Annuity Mortality Period (2012 IAM Period) Table" means the period table,
			 developed by the Society of Actuaries Committee on Life Insurance Research,
			 containing loaded mortality rates for calendar year 2012 and containing rates,
			 qx2012.
(5) "2012 Individual
			 Annuity Reserve Table (2012 IAR Table)" means the generational mortality table
			 developed by the Society of Actuaries Committee on Life Insurance Research and
			 containing rates, qx2012-n, derived from a combination of the 2012 Individual
			 Annuity Mortality Period (2012 IAM Period) Table and Projection Scale G2 (Scale
			 G2), using the methodology established in Section 4(3)(i) of this
			 administrative regulation.
(6)
			 "Actuarial guidelines" mean a series of interpretive guidelines approved by the
			 National Association of Insurance Commissioners for inclusion in its Handbook
			 for Financial Examiners.
(7)
			 "Annual statement" means the annual statement required by
			 KRS
			 304.3-240.
(8) "Annuity 2000 Mortality Table" means that
			 mortality table developed by the Society of Actuaries Committee on Life
			 Insurance Research. The Annuity 2000 Mortality Table is included in the report
			 on pages 211-249 of Volume XLVII of the Transactions of the Society of
			 Actuaries (1995).
(9)
			 "Commissioner" is defined by
			 KRS
			 304.1-050(1).
(10) "Department" is defined by
			 KRS
			 304.1-050(2).
(11) "Department actuary" means the actuary
			 employed by or contracted with the department for the purpose of making or
			 verifying a valuation.
(12)
			 "Generational mortality table" means a mortality table containing a set of
			 mortality rates that decrease for a given age from one (1) year to the next
			 based on a combination of a period table and a projection scale containing
			 rates of mortality improvement.
(13) "Life insurances policies, annuities,
			 and pure endowment contracts":
(a) Means any
			 contracts, together with all riders or endorsements and all additional benefits
			 related thereto, whether these additional benefits are provided by policy
			 provision or supplementary contract; and
(b) Does not mean a provision through which
			 the insurer accepts deposits to provide future insurance, annuity, or pure
			 endowment benefits.
(14)
			 "Period table" means a table of mortality rates applicable to a given calendar
			 year.
(15) "Projection Scale AA
			 (Scale AA)" means a table developed by the Society of Actuaries Group Annuity
			 Valuation Table Task Force of annual rates, AAx, of mortality improvement by
			 age for projecting future mortality rates beyond calendar year 1994.
(16) "Projection Scale G2 (Scale G2)" means a
			 table developed by the Society of Actuaries Committee on Life Insurance
			 Research, of annual rates, G2x, of mortality improvement by age for projecting
			 future mortality rates beyond calendar year 2012.
(17) "Qualified actuary" means a member in
			 good standing of the American Academy of Actuaries who meets the requirements
			 of Section 6 of this administrative regulation.
(18) "Reserve comparison" means a
			 calculation:
(a) Setting out three (3) year
			 tabulations of extracts from a company's valuation; and
(b) Completed by plan, with subtotals by
			 mortality table, interest assumption, and valuation method that correspond to
			 the line entries in Exhibit 5 of the current annual statement.