Subject 120-2-74 ACTUARIAL OPINION AND MEMORANDUM REGULATION
The purpose of this regulation is to prescribe:
|(1)||requirements for statements of actuarial opinion that are to be submitted in accordance with O.C.G.A. § 33-10-13(b.1), and for memoranda in support thereof;|
|(2)||rules applicable to the appointment of an appointed actuary; and|
|(3)||guidance as to the meaning of "adequacy of reserves."|
This regulation is issued pursuant to the authority vested in the Commissioner of Insurance of the State of Georgia under O.C.G.A. §§ 33-2-9 and 33-10-13. This Regulation will take effect for annual statements for the year 2010.
|(1)||This regulation shall apply to all life insurance companies and fraternal benefit societies doing business in this State and to all life insurance companies and fraternal benefit societies that are authorized to reinsure life insurance, annuities or accident and health insurance business in this State. This regulation shall be applied in a manner that allows the appointed actuary to utilize his or her professional judgment in performing the asset analysis and developing the actuarial opinion and supporting memoranda, consistent with relevant actuarial standards of practice. However, the Commissioner shall have the authority to specify specific methods of actuarial analysis and actuarial assumptions when, in the Commissioner's judgment, these specifications are necessary for an acceptable opinion to be rendered relative to the adequacy of reserves and related items.|
|(2)||This regulation shall be applicable to all annual statements filed with the office of the Commissioner after the effective date of this regulation. A statement of opinion on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with 120-2-74-.06 of this regulation, and a memorandum in support thereof in accordance with 120-2-74-.07 of this regulation, shall be required each year.|
|(1)||"Actuarial Opinion" means the opinion of an appointed actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with 120-2-74-.06 of this regulation and with applicable Actuarial Standards of Practice.|
|(2)||"Actuarial Standards Board" means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.|
|(3)||"Annual statement" means that statement required by O.C.G.A. § 33-3-21 to be filed by the company with the office of the Commissioner annually.|
|(4)||"Appointed actuary" means an individual who is appointed or retained in accordance with the requirements set forth in 120-2-74-.05 (3) of this regulation to provide the actuarial opinion and supporting memorandum as required by O.C.G.A. § 33-10-13(b.1).|
|(5)||"Asset adequacy analysis" means an analysis that meets the standards and other requirements referred to in 120-2-74-.05 (4) of this regulation.|
|(6)||"Commissioner" means the Insurance Commissioner of this State.|
|(7)||"Company" means a life insurance company, fraternal benefit society or reinsurer subject to the provisions of this regulation.|
|(8)||"Qualified actuary" means an individual who meets the requirements set forth in 120-2-74-.05 B of this regulation.|
|(1)|| Submission of Statement of Actuarial
|(2)|| Qualified Actuary. A "qualified actuary"
is an individual who:
|(3)||Appointed Actuary. An "appointed actuary" is a qualified actuary who is appointed or retained to prepare the Statement of Actuarial Opinion required by this regulation, either directly by or by the authority of the board of directors through an executive officer of the company other than the qualified actuary. The company shall give the Commissioner timely written notice of the name, title (and, in the case of a consulting actuary, the name of the firm) and manner of appointment or retention of each person appointed or retained by the company as an appointed actuary and shall state in the notice that the person meets the requirements set forth in Subsection B. Once notice is furnished, no further notice is required with respect to this person, provided that the company shall give the Commissioner timely written notice in the event the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements set forth in Subsection B. If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall so state and give the reasons for replacement.|
Standards for Asset Adequacy Analysis. The asset adequacy analysis required by
to be Covered.
Description. The statement of actuarial opinion submitted in accordance with
this section shall consist of:
|(2)|| Recommended Language. The following
paragraphs are to be included in the statement of actuarial opinion in
accordance with this section. Language is that which in typical circumstances
should be included in a statement of actuarial opinion. The language may be
modified as needed to meet the circumstances of a particular case, but the
appointed actuary should use language that clearly expresses his or her
professional judgment. However, in any event the opinion shall retain all
pertinent aspects of the language provided in this section.
|(3)|| If the appointed actuary has relied on
other experts to develop certain portions of the analysis, the reliance
paragraph should include a statement such as:
"I have relied on [name], [title] for [e.g., "anticipated cash flows from currently owned assets, including variations in cash flows according to economic scenarios" or "certain critical aspects of the analysis performed in conjunction with forming my opinion"], as certified in the attached statement. I have reviewed the information relied upon for reasonableness." A statement of reliance on other experts should be accompanied by a statement by each of the experts in the form prescribed by Subsection 6E.
|(4)|| If the appointed
actuary has examined the underlying asset and liability records, the reliance
paragraph should include a statement such as:
"My examination included such review of the actuarial assumptions and actuarial methods and of the underlying basic asset and liability records and such tests of the actuarial calculations as I considered necessary. I also reconciled the underlying basic asset and liability records to [exhibits and schedules listed as applicable] of the company's current annual statement."
the appointed actuary has not examined the underlying records, but has relied
upon data (e.g., listings and summaries of policies in force or asset records)
prepared by the company, the reliance paragraph should include a statement such
"In forming my opinion on [specify types of reserves] I relied upon data prepared by [name and title of company officer certifying in force records or other data] as certified in the attached statements. I evaluated that data for reasonableness and consistency. I also reconciled that data to [exhibits and schedules to be listed as applicable] of the company's current annual statement. In other respects, my examination included review of the actuarial assumptions and actuarial methods used and tests of the calculations I considered necessary."
The section shall be accompanied by a statement by each person relied upon in the form prescribed by Subsection E.
|(6)|| The opinion paragraph should include a
statement such as:
"In my opinion the reserves and related actuarial values concerning the statement items identified above:
Rule 120-2-74-.07 Description of Actuarial Memorandum Including an Asset Adequacy and Regulatory Asset Adequacy Issues
of the Memorandum Section Documenting Asset Adequacy Analysis.
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 120-2-74-.05 (4) of this regulation and any additional standards under this regulation. It shall specify:
|(3)|| Details of the
Regulatory Asset Adequacy Issues Summary
to Standards of Practice. The memorandum shall include a statement:
"Actuarial methods, considerations and analyses used in the preparation of this memorandum conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis for this memorandum."
Use of Assets Supporting the Interest Maintenance Reserve and the Asset
|(6)||Documentation. The appointed actuary shall retain on file, for at least seven (7) years, sufficient documentation so that it will be possible to determine the procedures followed, the analyses performed, the bases for assumptions and the results obtained.|
If any provision of this Regulation Chapter or the application thereof to any person or particular circumstance is held invalid by a court of competent jurisdiction, the remainder of the Regulation Chapter or the applicability of such provisions to other persons, insurers or circumstances shall not be affected thereby.
Any insurer, or any agent, counselor, representative, officer, or employee of such insurer failing to comply with the requirements of this Regulation Chapter shall be subject to such penalties as may be appropriate under the insurance laws of this State.