Indiana Administrative Code › Title 760 - DEPARTMENT OF INSURANCE › Article 1 - GENERAL PROVISIONS › Rule 57 - Actuarial Opinion and Memorandum › Section 57-10 - Additional considerations for analysis

Current through July 10, 2024
Authority: IC
				  27-1-12.8-21
Affected: IC
				  27-1-12.8-21
Sec. 10.
(a) The
				appointed actuary shall analyze only those assets held in support of the
				reserves that are the subject for specific analysis, hereafter called
				"specified reserves". A particular asset or portion thereof supporting a group
				of specified reserves cannot support any other group of specified reserves. An
				asset may be allocated over several groups of specified reserves. The annual
				statement value of the assets held in support of the reserves shall not exceed
				the annual statement value of the specified reserves, except as provided in
				subsection (b). If the method of asset allocation is not consistent from year
				to year, the extent of its inconsistency should be described in the supporting
				memorandum.
(b) An appropriate
				allocation of assets in the amount of the Interest Maintenance Reserve (IMR),
				whether positive or negative, must 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 in risk analysis and
				reserve support.
(c) 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.
(d) Interest rate
				scenarios used in performing the asset adequacy analysis shall be as follows:
(1) For the purpose of performing the asset
				adequacy analysis required by this rule, the qualified actuary is expected to
				follow standards adopted by the Actuarial Standards Board; however, the
				appointed actuary must consider in the analysis the effect of at least the
				following interest rate scenarios:
(A) Level
				with no deviation.
(B) Uniformly
				increasing over ten (10) years at one-half percent (0.5%) per year and then
				level.
(C) Uniformly increasing at
				one percent (1%) per year over five (5) years and then uniformly decreasing at
				one percent (1%) per year to the original level at the end of ten (10) years
				and then level.
(D) An immediate
				increase of three percent (3%) and then level.
(E) Uniformly decreasing over ten (10) years
				at one-half percent (0.5%) per year and then level.
(F) Uniformly decreasing at one percent (1%)
				per year over five (5) years and then uniformly increasing at one percent (1%)
				per year to the original level at the end of ten (10) years and then
				level.
(G) An immediate decrease of
				three percent (3%) and then level.
For these and other scenarios that may be used, projected
				  interest rates for a five (5) year Treasury Note need not be reduced beyond the
				  point where the five (5) year Treasury Note yield would be at fifty percent
				  (50%) of its initial level.