New Mexico Administrative Code › Title 13 - INSURANCE › Chapter 9 - LIFE INSURANCE AND ANNUITIES › Part 13 - VALUATION OF LIFE INSURANCE POLICIES › Section 13.9.13.13 - GENERAL CALCULATION REQUIREMENTS FOR DEFICIENCY RESERVES

Current through Register Vol. 35, No. 13, July 16, 2024
Deficiency reserves, if any, are calculated for each policy
				  as the excess, if greater than zero, of the quantity z over the basic reserve.
				  The quantity z is obtained by recalculating the basic reserve for the policy
				  using guaranteed gross premiums instead of net premiums when the guaranteed
				  gross premiums are less than the corresponding net premiums. At the election of
				  the company for any one or more specified plans of insurance, the quantity z
				  and the corresponding net premiums used in the determination of quantity z may
				  be based upon the 1980 CSO valuation tables with select mortality factors (or
				  any other valuation mortality table adopted by the NAIC after the effective
				  date of this rule and promulgated by rule by the superintendent). If select
				  mortality factors are elected, they may be:
A. the ten-year select mortality factors
				incorporated into the 1980 amendments to the NAIC Standard Valuation
				Law;
B. the select mortality
				factors in 13 nmac 9.13.25 through 9.13.30 [now 13.9.13.25 through 13.9.13.30
				NMAC];
C. for durations in the
				first segment, x percent of the select mortality factors in 13 nmac 9.13.25
				through 9.13.30 [now 13.9.13.25 through 13.9.13.30 NMAC], subject to the
				following:
(1) x may vary by policy year,
				policy form, underwriting classification, issue age, or any other policy factor
				expected to affect mortality experience;
(2) x shall not be less than twenty percent
				(20%);
(3) x shall not decrease in
				any successive policy years;
(4) x
				is such that, when using the valuation interest rate used for basic reserves,
				item E is greater than or equal to item F;
(a)
Item E:
The actuarial present value of future death benefits,
				calculated using the mortality rates resulting from the application of
				x;
(b)
Item F:
The
				actuarial present value of future death benefits calculated using anticipated
				mortality experience without recognition of mortality improvement beyond the
				valuation date;
(5) x is
				such that the mortality rates resulting from the application of x are at least
				as great as the anticipated mortality experience, without recognition of
				mortality improvement beyond the valuation date, in each of the first five (5)
				years after the valuation date;
(6)
				the appointed actuary shall increase x at any valuation date where it is
				necessary to continue to meet all the requirements of this
				subsection;
(7) The appointed
				actuary may decrease x at any valuation date as long as x does not decrease in
				any successive policy years and as long as it continues to meet all the
				requirements of this subsection; and
(8) The appointed actuary shall specifically
				take into account the adverse effect on expected mortality and lapsation of any
				anticipated or actual increase in gross premiums.
(9) If x is less than 100 percent at any
				duration for any policy, the appointed actuary shall annually prepare an
				actuarial opinion and memorandum for the company in conformance with the
				requirements of 13 NMAC 2.6 [now 13.2.6 NMAC], actuarial opinions and
				memoranda, stating whether the mortality rates resulting from the application
				of x meet the requirements of this subsection for all policies subject to this
				rule. This opinion shall be supported by an actuarial report, subject to the
				appropriate actuarial standards of practice promulgated by the actuarial
				standards board of the American academy of actuaries. The x factors shall
				reflect anticipated future mortality, without recognition of mortality
				improvement beyond the valuation date, taking into account relevant emerging
				experience;