New Jersey Administrative Code › Title 11 - INSURANCE › Chapter 1 - ADMINISTRATION › Subchapter 21A - ACTUARIAL OPINION AND MEMORANDUM FOR LIFE/HEALTH INSURERS › Section 11:1-21A.5 - Description of actuarial memorandum including an asset adequacy analysis and regulatory asset adequacy issues summary

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The appointed actuary shall prepare a memorandum to the company describing the analysis done in support of his or her opinion regarding the reserves. 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 Department subject to public inspection or copying pursuant to the Open Public Records Act, 47:1A-1 et seq., 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 11:1-21A.3(c), 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 subchapter, 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 pursuant to 17:23-20 et seq. for purposes of obtaining data from the company and the work papers and documentation of the reviewing actuary shall be retained by the Commissioner. 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 subchapter for any one of the current year or the preceding three years. 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 and shall not be subject to public inspection or copying pursuant to the Open Public Records Act, 47:1A-1 et seq. However, the memorandum or other material may otherwise be released by the Commissioner with the written consent of the company involved, or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the Commissioner for preserving the confidentiality of the memorandum or other material. Notwithstanding this subsection, once any portion of the confidential memorandum 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 the memorandum shall no longer be deemed confidential.
(e) The appointed actuary shall prepare a regulatory asset adequacy issues summary, the contents of which are specified in (g) and (h) below. 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 asset adequacy is required. The regulatory asset adequacy issues summary shall 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 referred to in 11:1-21A.3(e)  and any additional standards under this subchapter. The memorandum shall specify:
1. For reserves:
i. Product descriptions, including market description, underwriting and other aspects of a risk profile and the specific risks the appointed actuary deems significant;
ii. Source of liability in force;
iii. Reserve method and basis;
iv. Investment reserves;
v. Reinsurance arrangements;
vi. 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
vii. Documentation of assumptions to test reserves for (f)1vii(1) through (8) below. 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.
(1) Lapse rates (both base and excess);
(2) Interest crediting rate strategy;
(3) Mortality;
(4) Policyholder dividend strategy;
(5) Competitor or market interest rate;
(6) Annuitization rates;
(7) Commissions and expenses; and
(8) Morbidity.