The commissioner may, at the commissioner's discretion, require the data specified in this section from any insurance companies which are subject to this subchapter. These requirements apply to individual annuities, group annuities, and any supplemental provisions of riders attached to an individual life insurance policy or a group life insurance policy whenever on any valuation date contracts of the nature described are in force which guarantee interest rates in excess of the applicable maximum reserve valuation interest rate as defined by the Standard Valuation Law for that type of annuity or pure endowment contract to future premiums or other deposits of unspecified amounts or timing for or at any period of time subsequent to the valuation date. (Foreign companies will be required to furnish this data only with respect to their Texas issues.) Required data:

1. (1) number of individuals covered under such contracts;
2. (2) the actual premium received under such contracts during the 12 months preceding the applicable valuation date;
3. (3) the reserves held on such contracts on the valuation date; and

4. (4) an evaluation of the potential liability with respect to premiums or other deposits which may be received subsequent to the valuation date calculated in the following manner. Potential liability is the excess, if any, of the present value of the future cash value generated by "assumed future premiums" at the end of the last period of interest guarantees higher than the maximum reserve valuation rate as defined by the Standard Valuation Law for that type of annuity or pure endowment contract over the present value of "assumed future premiums" all valued at the maximum reserve valuation rate as defined by the Standard Valuation Law for that type of annuity or pure endowment contract. (If interest rate guarantees higher than the applicable maximum reserve valuation interest rate as defined by the Standard Valuation Law for that type of annuity or pure endowment contract extend beyond attained age 70 of the applicable individual, then the present value of future cash values may be calculated at the 10th anniversary of the contract or on the anniversary nearest age 70, whichever is later.)

   1. (A) "Assumed annual future premiums" must be level and equal in amount to the average annual premium received over the duration of the contract, counting any contract which is less than one year old as being a full year old.

   2. (B) The assumed future payment period terminates on the earliest of the following:

      1. (i) the end of the period during which guarantees are made regarding future premiums or deposits;
      2. (ii) the end of the continuous period from date of valuation during which interest rates greater than the applicable maximum reserve valuation interest rate as defined in the Standard Valuation Law for that type of annuity or pure endowment contract;
      3. (iii) the maturity date or retirement date specified in the contract; or
      4. (iv) the later to occur of the 10th contract anniversary or the contract anniversary nearest age 65 of the prospective annuitant under the contract.

   3. (C) Premium payments may be assumed to occur, at the choice of the company:

      1. (i) annually on each July 1 succeeding the valuation date;
      2. (ii) annually on the contract anniversary; or
      3. (iii) monthly in the amount of 1/12th of the annual assumed premium, on a day of the month to be chosen by the company.
   4. (D) If the probability of death is introduced into the above calculation, a statement of methods of application, including any subsequent changes, must be filed with the Texas Department of Insurance along with a certification by a qualified actuary that introduction of such probability is appropriate to the contracts to which it is to be applied.
   5. (E) Group methods and approximations which yield substantially the same potential liability valuation may be used.
5. (5) The validity of all such data and methods as specified in paragraphs (1) - (4) of this section must be attested to by the actuary signing the annual convention blank.

Source Note:The provisions of this §3.1006 adopted to be effective January 1, 1976; amended to be effective December 10, 1982, 7 TexReg 4106; amended to be effective May 11, 2022, 47 TexReg 2758.