1. (1) General Description.

   1. (a) A statement of actuarial opinion based on an asset adequacy analysis shall include a paragraph identifying:

      1. (i) the appointed actuary and the appointed actuary's qualifications;

      2. (ii) the scope of the actuarial opinion, describing:

         1. (A) the appointed actuary's work, with a tabulation delineating the reserves and related actuarial items analyzed for asset adequacy and the method of analysis; and
         2. (B) the reserves and related actuarial items covered by the opinion that were not analyzed;
      3. (iii) the areas where the appointed actuary deferred to another expert in developing data, procedures, or assumptions, such as anticipated cash flows from currently owned assets including variation in cash flows according to economic scenarios, supported by a statement of each expert in the form prescribed by Subsection (5); and
      4. (iv) the appointed actuary's opinion of the adequacy of the supporting assets to mature the liabilities.

   2. (b) Additional paragraphs may be needed if the appointed actuary:

      1. (i) considers it necessary to state a qualification of the opinion;
      2. (ii) is required to disclose the method of aggregation for reserves of different products or lines of business for asset adequacy analysis;
      3. (iii) is required to disclose reliance upon a portion of the assets supporting the Asset Valuation Reserve (AVR), Interest Maintenance Reserve (IMR), or other mandatory or voluntary statement of reserves for asset adequacy analysis;
      4. (iv) is required to disclose an inconsistency in the method of analysis or basis of asset allocation used at the prior year opinion;
      5. (v) is required to disclose whether additional reserves of the prior year opinion are released as of the current year opinion, and the extent of the release; or
      6. (vi) chooses to add a paragraph briefly describing the assumptions that form the basis for the actuarial opinion.

2. (2) Required Language.

   1. (a)(i) The opening paragraph shall state the appointed actuary's relationship to the company and the appointed actuary's qualifications to sign the opinion.

      1. (ii) For a company actuary, the opening paragraph of the actuarial opinion shall read as follows:

         "I, (name), am (title) of (insurance company name) and a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of said insurer to render this opinion as stated in the letter to the commissioner dated (insert date). I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies."

      2. (iii) For a consulting actuary, the opening paragraph shall read as follows:

         "I, (name), a member of the American Academy of Actuaries, am associated with the firm of (name of consulting firm). I have been appointed by, or by the authority of, the Board of Directors of (name of company) to render this opinion as stated in the letter to the commissioner dated (insert date). I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies."

   2. (b) The scope paragraph shall include the following statement:

      "I have examined the actuarial assumptions and actuarial methods used in determining reserves and related actuarial items listed below, as shown in the annual statement of the company, as prepared for filing with state regulatory officials, as of

      December 31, 20__. Tabulated below are those reserves and related actuarial items which have been subjected to asset adequacy analysis."

   3. (c)(i) If an appointed actuary relies on another expert to develop certain portions of the analysis, a reliance paragraph shall include the following statement:

      1. (ii) A statement of reliance on another expert shall be accompanied by a statement from each expert in a form prescribed by Subsection (5).

      "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."

   4. (d) If an appointed actuary examined the underlying asset and liability records, the reliance paragraph shall include the following:

      "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."

   5. (e)(i) If an appointed actuary has not examined the underlying records, but has relied upon data prepared by the company or a third party, the reliance paragraph shall include the following statement:

      1. (ii) A statement of reliance shall be accompanied by a statement from each person relied upon in a form prescribed by Subsection (5).

      "In forming my opinion on (specify types of reserves) I have relied upon data prepared by (name and title of company officer certifying in-force records or other data) as certified in the attached statement. 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 such review of the actuarial assumptions and actuarial methods and such tests of the actuarial calculations as I considered necessary."

   6. (f) The opinion paragraph shall include:

      1. (i) "In my opinion the reserves and related actuarial values concerning the statement items identified above:

         1. (A) are computed in accordance with presently accepted actuarial standards consistently applied and are fairly stated, in accordance with sound actuarial principles;
         2. (B) are based on actuarial assumptions which produce reserves at least as great as those called for in any contract provision as to reserve basis and method, and are in accordance with all other contract provisions;
         3. (C) meet the requirements of the insurance laws and rules of the state of (state of domicile) and are at least as great as the minimum aggregate amounts required by the state in which this statement is filed;
         4. (D) are computed on the basis of assumptions consistent with those used in computing the corresponding items in the annual statement of the preceding year-end (with any exceptions noted below);
         5. (E) include provision for all actuarial reserves and related statement items which ought to be established";
      2. (ii) "The reserves and related items, when considered in light of the assets held by the company with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts, make adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the company";
      3. (iii) "The actuarial methods, considerations and analyses used in forming my opinion conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis of this statement of opinion';

      4. (iv)(A) "This opinion is updated annually as required by statute. To be best of my knowledge, there have been no material changes from the applicable date of the annual statement to the date of the rendering of this opinion which should be considered in reviewing this opinion"; or

         1. (B) "The following material change(s) which occurred between the date of the statement for which this opinion is applicable and the date of this opinion should be considered in reviewing this opinion (describe the change or changes)";
      5. (v) "The impact of unanticipated events subsequent to the date of this opinion is beyond the scope of this opinion. The analysis of asset adequacy portion of this opinion should be viewed recognizing that the company's future experience may not follow all the assumptions used in the analysis"; and

      6. (vi) a signature block including the:

         1. (A) signature of the appointed actuary;
         2. (B) address of the appointed actuary;
         3. (C) telephone number of the appointed actuary; and
         4. (D) date.

   The language in a statement of actuarial opinion may be modified as needed to meet the circumstances of a particular case, but the appointed actuary shall use language that clearly expresses the appointed actuary's professional judgment. The following paragraphs shall be included in the statement of actuarial opinion.

3. (3) Assumption for New Issue.

   The adoption for new issues or new claims or other new liabilities of an actuarial assumption that differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not a change in an actuarial assumption within the meaning of this section.

4. (4) Adverse Opinion.

   1. (a) If an appointed actuary cannot form an opinion, the actuary shall refuse to issue a statement of actuarial opinion.

   2. (b)(i) If an appointed actuary's opinion is adverse or qualified, the actuary shall issue an adverse or qualified actuarial opinion explicitly stating the reason for the opinion.

      1. (ii) The explicit statement required under Subsection (4)(b)(i) shall follow the scope paragraph and precede the opinion paragraph.

5. (5) Reliance on Data Furnished by Other Persons.

   1. (a) If an appointed actuary relies on the certification of others on matters concerning the accuracy or completeness of any data underlying the actuarial opinion, or the appropriateness of any other information used by the appointed actuary in forming the actuarial opinion, the actuarial opinion shall state the persons the actuary is relying on and identify the items the actuary is relying on.

   2. (b)(i) A person that the appointed actuary relies on shall provide a certification that identifies the items the person is providing information about and a statement as to the accuracy, completeness, or reasonableness of the items.

      1. (ii) The certification shall include the signature, date, title, company, address, and telephone number of the person providing the certification.

6. (6) Alternate Option.

   1. (a) As an alternative to the requirements of Subsection (2)(f)(i)(C), an appointed actuary may state that the reserves and related actuarial values "meet the requirements of the insurance laws and rules of the State of (state of domicile) and I have verified that the company's request to file an opinion based on the laws of the state of domicile has been approved by the commissioner and that any conditions required by the commissioner for approval of the request have been met."

   2. (b)(i) To use an alternative, the company shall file a request with the commissioner, along with justification for its use, no later than April 30 of the year the opinion is filed.

      1. (ii) The request is approved on October 1 of that year if the commissioner has not denied the request by that date.

   3. (c)(i) The commissioner may reject an opinion based on the laws of the state of domicile and require an opinion based on the laws of this state.

      1. (ii) If a company cannot provide the opinion within 60 days of the request or other period determined by the commissioner after consultation with the company, the commissioner may contract with an independent actuary at the company's expense to prepare and file the opinion.

KEY: insurance

Date of Last Change: August 8, 2022

Notice of Continuation: September 15, 2023

Authorizing, and Implemented or Interpreted Law: 31A-17-503