Opinion ID: 202671
Heading Depth: 3
Heading Rank: 1

Heading: The Actuarial Memorandum

Text: 38 Confronted with their ruinous pleading defect, appellants have scrambled — unsuccessfully — to recover some procedural footing. 7 When SunAmerica complied with the district court's order to produce the Actuarial Memorandum, it proved not to be the smoking gun appellants might have anticipated, but an irrelevancy. Section II.B of the Memorandum, entitled Cost of Insurance, deals only with how SunAmerica would calculate [t]he guaranteed maximum cost of insurance rates applied in the calculation of Cash Value under this policy, and noted that these guaranteed maximum COI rates were stated in the policy. (Emphasis added.) Section II.B thus pertains to how SunAmerica arrived at the cap COI rates of $9.47, $10.42, and $11.47 for years 1999, 2000, and 2001, and had no necessary application to how it calculated the actual COI rates of $6.52, $7.12, and $7.95. Exhibit I of the Actuarial Memorandum likewise includes the algebraic formula SunAmerica used to calculate the  guaranteed maximum monthly cost of insurance rate for each attained age, not the actual COI rate. (Emphasis added.) Appellants do not allege that SunAmerica miscalculated the maximum COI rates of $9.47, $10.42, and $11.47. 39 Section III of the Actuarial Memorandum, entitled Policy Value Formula, demonstrates the formula by which SunAmerica would calculate the policy's ACV. The COI rate concededly is one variable in that ACV calculation (along with, e.g., interest earned, the monthly expense charge and any cash withdrawals or loans to the policyholder) because the COI rate is one enumerated monthly deduction from the policy's ACV, but this cannot inform as to how the COI rate is calculated. In other words, although the formula X = Y — Z may tell us how to calculate the value of X ( viz., the ACV), it tells us nothing useful about how to calculate the value of Z ( viz., the COI rate) in the first instance. Instead, Section III provides only, in the most general terms, that the COI calculation  depends on the net amount at risk. (Emphasis added.) 40 In response, appellants simply advance the conclusory argument that COI, COI rates, annual COI rates, monthly COI rates ... are all algebraically related . . . . [so that] any changes to any of the COI-related variable ... will affect all of the other variables. Not surprisingly, however, they make no attempt to illustrate their theory. Appellants give one example: [T]he monthly cost of insurance is just the annual cost of insurance divided by 12 (months). This simplistic example proves nothing. In the formula X = Y — Z, the larger the value assigned to Z ( viz., the COI rate), the smaller the amount of X ( viz., ACV) will be (and vice versa), but that arithmetic truism still does not inform us how to calculate the value for Z. Thus, the arithmetic interrelationship appellants posit is real, but irrelevant. Thus, the district court properly found that the Actuarial Memorandum did not create a trial-worthy issue of fact.