South Carolina Code of Regulations › Chapter 69 - DEPARTMENT OF INSURANCE › Section 69-57.1 - Recognition of the 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits

Current through Register Vol. 48, No. 6, June 28, 2024
Section
		  1. Authority
Section
		  2. Purpose
Section 3.
		  Definitions
Section 4. 2001 CSO
		  Mortality Table
Section 5.
		  Conditions
Section 6. Applicability
		  of the 2001 CSO Mortality Table to South Carolina Insurance Regulation
		  69-57
Section 7. Gender-Blended Tables
Section 8. Separability
Section 9. Effective Date
Section 1. Authority
This regulation is promulgated by the Director of Insurance
			 pursuant to South Carolina Code Sections
			 38-9-180
			 and
			 38-63-510
			 et seq. as well as Regulation Regulation
			 69-57,
			 Valuation of Life Insurance Policies.
Section 2. Purpose
The purpose of this regulation is to recognize, permit and
			 prescribe the use of the 2001 Commissioners Standard Ordinary (CSO) Mortality
			 Table in accordance with South Carolina Code Section
			 38-9-180
			 and Section
			 38-63-510
			 et seq. as well Regulation Regulation
			 69-57,
			 Valuation of Life Insurance Policies.
Section 3. Definitions
A. "2001 CSO Mortality Table" means that
		  mortality table, consisting of separate rates of mortality for male and female
		  lives, developed by the American Academy of Actuaries CSO Task Force from the
		  Valuation Basic Mortality Table developed by the Society of Actuaries
		  Individual Life Insurance Valuation Mortality Task Force, and adopted by the
		  NAIC in December 2002. The 2001 CSO Mortality Table is included in the
		  Proceedings of the NAIC (2nd Quarter 2002). Unless
		  the context indicates otherwise, the "2001 CSO Mortality Table" includes both
		  the ultimate form of that table and the select and ultimate form of that table
		  and includes both the smoker and nonsmoker mortality tables and the composite
		  mortality tables. It also includes both the age-nearest-birthday and
		  age-last-birthday bases of the mortality tables.
B. "2001 CSO Mortality Table (F)" means that
		  mortality table consisting of the rates of mortality for female lives from the
		  2001 CSO Mortality Table.
C. "2001
		  CSO Mortality Table (M)" means that mortality table consisting of the rates of
		  mortality for male lives from the 2001 CSO Mortality Table.
D. "Composite mortality tables" means
		  mortality tables with rates of mortality that do not distinguish between
		  smokers and nonsmokers.
E. "Smoker
		  and nonsmoker mortality tables" means mortality tables with separate rates of
		  mortality for smokers and nonsmokers.
Section 4. 2001 CSO Mortality Table
A. At the election of the company for any one
		  or more specified plans of insurance and subject to the conditions stated in
		  this regulation, the 2001 CSO Mortality Table may be used as the minimum
		  standard for policies issued on or after January 1, 2005 and before the date
		  specified in Subsection B to which South Carolina Code Sections
		  38-9-180
		  and
		  38-63-510
		  et seq. and South Carolina Insurance Regulation Regulation
		  69-57
		  are applicable. If the company elects to use the 2001 CSO Mortality Table, it
		  shall do so for both valuation and nonforfeiture purposes.
B. Subject to the conditions stated in this
		  regulation, the 2001 CSO Mortality Table shall be used in determining minimum
		  standards for policies issued on and after January 1, 2009, to which South
		  Carolina Code Sections
		  38-9-180
		  and
		  38-63-510
		  et seq. and Regulation Regulation
		  69-57
		  are applicable.
C. The new minimum
		  basis for the computation of values related to extended term benefits shall be
		  the 2001 CSO Mortality Table, subject to the transition dates for use of the
		  2001 CSO Mortality Tables set forth in this section.
Section 5. Conditions
A. For each plan of insurance with separate
		  rates for smokers and nonsmokers an insurer may use:
(1) Composite mortality tables to determine
		  minimum reserve liabilities and minimum cash surrender values and amounts of
		  paid-up nonforfeiture benefits;
(2)
		  Smoker and nonsmoker mortality tables to determine the valuation net premiums
		  and additional minimum reserves, if any, required by South Carolina Code
		  Section
		  38-9-180
		  and use composite mortality tables to determine the basic minimum reserves,
		  minimum cash surrender values and amounts of paid-up nonforfeiture benefits;
		  or
(3) Smoker and nonsmoker
		  mortality to determine minimum reserve liabilities and minimum cash surrender
		  values and amounts of paid-up nonforfeiture benefits.
B. For plans of insurance without separate
		  rates for smokers and nonsmokers the composite mortality tables shall be
		  used.
C. For the purpose of
		  determining minimum reserve liabilities and minimum cash surrender values and
		  amounts of paid-up nonforfeiture benefits, the 2001 CSO Mortality Table may, at the option of
		  the company for each plan of insurance, be used in its ultimate or select and
		  ultimate form, subject to the restrictions of Section 6 and South Carolina
		  Insurance Regulation Regulation
		  69-57
		  relative to use of the select and ultimate form.
D. When the 2001 CSO Mortality Table is the
		  minimum reserve standard for any plan for a company, the actuarial opinion in
		  the annual statement filed with the Director shall be based on an asset
		  adequacy analysis as specified in South Carolina Insurance Regulation
		  Regulation
		  69-52.
		  A Director may exempt a company from this requirement if it only does business
		  in this state and in no other state.
Section 6. Applicability of the 2001 CSO
		  Mortality Table to South Carolina Insurance Regulation Regulation 69-57
A. The 2001 CSO Mortality Table may be used
		  in applying South Carolina Insurance Regulation Regulation
		  69-57
		  in the following manner, subject to the transition dates for use of the 2001
		  CSO Mortality Table in Section
		  4 of this regulation unless otherwise
		  noted, the references in this section are to the South Carolina Insurance
		  Regulation Regulation
		  69-57:
(1) Section
		  3A(2)(b): The net level reserve premium is
		  based on the ultimate mortality rates in the 2001 CSO Mortality
		  Table.
(2) Section
		  4B: All calculations are made using the
		  2001 CSO Mortality Rate, and, if elected, the optional minimum mortality
		  standard for deficiency reserves stipulated in Section 6A(4) of this
		  regulation. The value of "qx+" k+" t-1" is the valuation mortality rate for
		  deficiency reserves in policy year k+" t, but using the unmodified select
		  mortality rates if modified select mortality rates are used in the computation
		  of deficiency reserves.
(3) Section
		  5A: The 2001 CSO Mortality Table is the
		  minimum standard for basic reserves.
(4) Section 5B: The 2001 CSO Mortality Table
		  is the minimum standard for deficiency reserves. If select mortality rates are
		  used, they may be multiplied by X percent for durations in the first segment,
		  subject to the conditions specified in Sections 5B(3)(a) to (i). In
		  demonstrating compliance with those conditions, the demonstrations may not
		  combine the results of tests that utilize the 1980 CSO Mortality Table with
		  those tests that utilize the 2001 CSO Mortality Table, unless the combination
		  is explicitly required by regulation or necessary to be in compliance with
		  relevant Actuarial Standards of Practice.
(5) Section
		  6C: The valuation mortality table used in
		  determining the tabular cost of insurance shall be the ultimate mortality rates
		  in the 2001 CSO Mortality Table.
(6) Section 6E(4): The calculations specified
		  in Section 6E shall use the ultimate mortality rates in the 2001 CSO Mortality
		  Table.
(7) Section 6F(4): The
		  calculations specified in Section 6F shall use the ultimate mortality rates in
		  the 2001 CSO Mortality Table.
(8)
		  Section 6G(2): The calculations specified in Section 6G shall use the ultimate
		  mortality rates in the 2001 CSO Mortality Table.
(9) Section 7A(1)(b): The one-year valuation
		  premium shall be calculated using the ultimate mortality rates in the 2001 CSO
		  Mortality Table.
B.
		  Nothing in this section shall be construed to expand the applicability of South
		  Carolina Insurance Regulation Regulation
		  69-57
		  to include life insurance policies exempted under Section 3A of South Carolina
		  Insurance Regulation Regulation 69-57.
Section 7. Gender-Blended Tables
A. For any ordinary life insurance policy
		  delivered or issued for delivery in this state on and after January 1, 2005,
		  that utilizes the same premium rates and charges for male and female lives or
		  is issued in circumstances where applicable law does not permit distinctions on
		  the basis of gender, a mortality table that is a blend of the 2001 CSO
		  Mortality Table (M) and the 2001 CSO Mortality Table (F) may, at the option of
		  the company for each plan of insurance, be substituted for the 2001 CSO
		  Mortality Table for use in determining minimum cash surrender values and
		  amounts of paid-up nonforfeiture benefits. No change in minimum valuation
		  standards is implied by this subsection of the regulation.
B. The company may choose from among the
		  blended tables developed by the American Academy of Actuaries CSO Task Force
		  and adopted by the NAIC in December 2002.
C. It shall not, in and of itself, be a
		  violation of South Carolina Code of Laws Chapter 57 of Title 38 for an insurer to issue the same kind of
		  policy of life insurance on both a sex-distinct and sex-neutral
		  basis.
Section 8.
		  Separability
If any provision of this regulation or its application to any
			 person or circumstance is for any reason held to be invalid, the remainder of
			 the regulation and the application of the provision to other persons or
			 circumstances shall not be affected.
Section 9. Effective Date
This regulation shall be effective January
			 1, 2005.