(a) General.

1. (i) Except as exempted in this Part, a memorandum, in form and substance acceptable to the superintendent as specified in this Part shall be prepared to support each actuarial opinion submitted pursuant to section 95.8 of this Part.
2. (ii) Except as provided in subparagraph (iii) of this paragraph, each company required to prepare the memorandum shall submit the memorandum to the superintendent as part of the actuarial opinion.
3. (iii) If a foreign or alien company has submitted to the insurance regulator of a state accredited by the NAIC a memorandum in support of an opinion of an appointed actuary for the prior year, which was in form and substance acceptable to such insurance regulator as evidenced in writing and was in support of an opinion of an appointed actuary that was required by laws or regulations of that state to meet standards adopted from time to time by the Actuarial Standards Board and such additional standards as such insurance regulator has prescribed, such foreign or alien company need submit the memorandum required by this section only at the request of the superintendent.
4. (2) 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 actuaries within the meaning of section 95.5(d) of this Part, with respect to the areas covered in such memoranda, and so state in their memoranda.
5. (3) If the superintendent finds that the analysis described in any such memorandum fails to meet the standards of the Actuarial Standards Board or the standards and requirements of this Part, the superintendent may designate a qualified actuary (the “reviewing actuary”) to review the opinion and prepare such supporting memorandum as is required for review. The reasonable and necessary expenses of the independent review shall be paid by the company but the review shall be directed and controlled by the superintendent.

6. (4) The reviewing actuary shall have the same status as an examiner for the purposes of obtaining data from the company, and the work papers and documentation of the reviewing actuary shall be retained by the superintendent; provided, however, that 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 superintendent and shall be kept confidential to the same extent as is prescribed by law and in this Part with respect to other material provided by the company to the superintendent pursuant to the statute governing this Part. The reviewing actuary shall not be a current or past employee of the company or an employee of a consulting firm involved with the preparation of any prior memorandum or opinion for the company pursuant to this Part for any one of the current year or the preceding three years.

   (b) Details of the memorandum section documenting asset adequacy analysis.

   When an actuarial opinion under section 95.8 of this Part is provided, the memorandum shall demonstrate that the analysis has been done in accordance with the standards for asset adequacy referred to in section 95.5(f) of this Part and any additional standards under this Part. It shall specify:

7. (1) For reserves:

   1. (i) product descriptions, including market description, underwriting, expenses (underwriting, marketing, commissions, administration, etc.) lapses, loan provisions, loan utilization, mortality, and other aspects of a risk profile and the specific risks the appointed actuary deems significant;
   2. (ii) sources and liabilities in force;
   3. (iii) reserve methods and bases;
   4. (iv) investment reserves;
   5. (v) reinsurance arrangements;

   6. (vi) description of assumptions made for:

      1. (a) lapse rates (both base and excess), including a comparison of assumed lapse rates with actual lapse rates, provided lapse experience studies have been performed;
      2. (b) interest crediting rate methodology;
      3. (c) mortality bases, including a description of any base table used that is not published in any publication of the Society of Actuaries. Such a description should include a comparison of any significant deviations in mortality rates between the two;
      4. (d) policyholder and shareholder dividends;
      5. (e) competitor or market interest rate;
      6. (f) annuitization rates;
      7. (g) commissions and expenses, including a comparison of assumptions with recent actual commissions and expenses; and
      8. (h) the extent to which the appointed actuary uses assumptions in the asset adequacy analysis which are materially different than the assumptions used in the previous asset adequacy analysis.

8. (2) For assets:

   1. (i) portfolio descriptions, including a risk profile disclosing the quality, distribution and types of assets, call provisions, prepayment provisions, default, hedges, puts;
   2. (ii) investment and disinvestment assumptions;
   3. (iii) sources of asset data;
   4. (iv) asset valuation bases;

   5. (v) description of assumptions made for:

      1. (a) default costs;
      2. (b) bond call function;
      3. (c) mortgage prepayment function;
      4. (d) determining market value for assets sold due to disinvestment strategy;
      5. (e) anticipated yield on assets acquired through the investment strategy; and
      6. (f) the extent to which the appointed actuary uses assumptions in the asset adequacy analysis which are materially different than the assumptions used in the previous asset adequacy analysis.

9. (3) Analysis basis:

   1. (i) methodology, e.g., cash flow testing, duration analysis, gross premium reserve tests, loss ratio methods, development methods, follow-up studies, analysis of products where all significant risks have been transferred to policyholder;
   2. (ii) rationale for inclusion/exclusion of different blocks of business and how pertinent risks were analyzed;
   3. (iii) rationale for degree of rigor in analyzing different blocks of business;
   4. (iv) criteria for determining asset adequacy;
   5. (v) methodology to recognize the impact of reinsurance on the company's cash flows; including both assets and liabilities, under each of the scenarios tested;
   6. (vi) effect of Federal income taxes, and other relevant factors;
   7. (vii) the amount of reserves and the identity of the product lines which had been subjected to asset adequacy analysis in the prior opinion but were not subject to such analysis for the current opinion; and
   8. (viii) if sensitivity testing was performed, identify the assumptions tested and describe the variation in ending surplus values on a market value basis from the base case values.
10. (4) Impact of changes in assumptions used in asset adequacy analysis.
11. (5) Summary of results.

12. (6) Conclusions.

    (c) Conformity to standards of practice.

    The memorandum shall include a statement:

    “The 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 to the extent, not inconsistent with 11 NYCRR 95 (Insurance Regulation No. 126) and conform to the requirements of such regulation.”

    (d) Confidentiality.

    Nonpublic information (meaning information not otherwise available from public documents or records) contained in any memorandum in support of the opinion, or in any other material provided by the company to the superintendent in connection therewith, shall at the written request of the company be kept confidential by the superintendent as, and to the extent, prescribed by section 4217 of the Insurance Law or by this Part. The request for confidentiality may be satisfied by any reasonable method, including, but not limited to: by marking “confidentiality requested” any page for which confidentiality is claimed or by designating specific pages of the memorandum or other material as “confidentiality requested” within the letter to the superintendent requesting confidentiality, which shall accompany such memorandum or other material.

(1)