N.Y. Insurance Law § 4217: Valuation of insurance policies and contracts

§ 4217. Valuation of insurance policies and contracts. (a) (1) The

superintendent shall annually value, or cause to be valued, the reserve

liabilities (hereinafter called reserves) for all outstanding insurance

policies and contracts of every life insurance company doing business in

this state, except that, in the case of an alien company, such valuation

shall be limited to its United States business, and may certify the

amount of any such reserves, specifying the mortality table or tables,

rate or rates of interest and methods (net level premium method or

other) used in the calculation of such reserves. In calculating such

reserves, the superintendent may use group methods and approximate

averages for fractions of a year or otherwise.

(2) In lieu of the valuation of the reserves herein required of any

foreign or alien company, the superintendent may accept any valuation

made, or caused to be made, by the insurance supervisory official of any

state or other jurisdiction when such valuation complies with the

minimum standard herein provided and if the official of such state or

jurisdiction accepts as sufficient and valid for all legal purposes the

certificate of valuation of the superintendent when such certificate

states the valuation to have been made in a specified manner according

to which the aggregate reserves would be at least as large as if they

had been computed in the manner prescribed by the law of that state or

jurisdiction.

(3) (A) The superintendent may, in his discretion, vary the standards

of mortality applicable to policies of insurance on substandard lives

and other extra-hazardous lives issued by any life insurance company

doing business in this state.

(B) He may also, in his discretion, vary the standards of interest and

mortality applicable to contracts issued by an alien insurer in

countries other than the United States, if such alien insurer maintains

the trusteed surplus prescribed by section one thousand three hundred

twelve of this chapter.

(4) (A) Any life insurance company doing business in this state which

has adopted as a basis for the valuation of its insurance policies and

contracts standards producing greater reserves in the aggregate than the

minimum standards herein prescribed may continue to use such higher

standards as a basis of valuation.

(B) After January first, nineteen hundred forty, any life insurance

company doing business in this state may, subject to the provisions of

paragraph eight of subsection (c) of this section, adopt as the basis

for the valuation of its insurance policies and contracts standards

producing greater reserves in the aggregate than the minimum standards

herein prescribed; and any such company which shall have at any time

adopted such higher standards of valuation may, with the approval of the

superintendent, adopt lower standards of valuation, but in no case lower

than the minimum standards herein prescribed, provided, however, that,

for the purposes of this paragraph, the holding of additional reserves

determined by a qualified actuary to be necessary to render the opinion

required by subsection (e) of this section shall not be deemed to be the

adoption of a higher standard of valuation.

(C) The superintendent may approve any such change if he finds that

the proposed standards are for the best interests of the holders of the

policies and contracts and annuitants of such company.

(D) Nothing contained herein shall be deemed to affect the contractual

rights or obligations of the holder of any such policy or contract.

(b) (1) This subsection shall apply only to those policies and

contracts issued prior to the operative date of section four thousand

two hundred twenty-one of this article.

(2) Except as provided in paragraph six hereof the legal minimum

standards for the valuation of life insurance contracts shall be as

follows:

(A) For the valuation of all such contracts issued before the first

day of January, nineteen hundred one, it shall be the Actuaries' or

Combined Experience Table of Mortality with interest at four percent per

annum.

(B) For the valuation of such contracts issued on or after said day,

except as provided in subparagraphs (C) and (D) hereof, it shall be the

American Experience Table of Mortality with Craig's extension for ages

under ten years and with interest at three and one-half percent per

annum.

(C) For the valuation of group term insurance policies under which

premium rates are not guaranteed for a period in excess of five years,

it shall be the American Men Ultimate Table of Mortality with interest

at three and one-half percent per annum.

(D) Any life insurance company may, at its option, value its life

insurance contracts issued on or after the first day of January,

nineteen hundred thirty, in accordance with their terms on the basis of

the American Men Ultimate Table of Mortality, supplemented by such

extension and modification for ages under twenty years, as may be

approved by the superintendent, with interest at three and one-half

percent per annum by the level net premium method or by the modified

preliminary term method prescribed in paragraph four hereof.

(3) Life insurance policies issued on or after the first day of

January, nineteen hundred seven, may, at the option of the insurer, be

valued in accordance with their terms by the modified preliminary term

method prescribed in paragraph four hereof, or in accordance with the

select and ultimate method on the basis that the rate of mortality

during the first five years after the issuance of said contracts

respectively shall be calculated according to the following percentages

of the rates shown by the American Experience Table of Mortality:

For the first insurance year, fifty percent thereof; for the second

insurance year, sixty-five percent thereof; for the third insurance

year, seventy-five percent thereof; for the fourth insurance year,

eighty-five percent thereof; and for the fifth insurance year,

ninety-five percent thereof.

(4) (A) Life insurance policies may provide for not more than one year

of preliminary term insurance by incorporating in the provisions thereof

specifying the premium consideration to be received by the insurer, a

clause plainly showing that the first year's insurance under such

policies is term insurance, purchased by the whole or a part of the

premium to be received during the first policy year.

(B) Such policies may, in accordance with their terms, be valued on

the basis of the mortality tables and interest rates prescribed in

paragraph two hereof, by the modified preliminary term plan described as

follows: If the premium charged for term insurance under a limited

payment life preliminary term policy providing for the payment of all

premiums thereon in less than twenty years from the date of the policy,

or under an endowment preliminary term policy, exceeds that charged for

like insurance under twenty payment life preliminary term policies of

the same company, the reserve thereon at the end of any year, including

the first, shall be not less than the reserve on a twenty payment life

preliminary term policy issued in the same year and at the same age,

together with an amount which shall be equivalent to the accumulation of

a level net premium sufficient to provide for a pure endowment at the

end of the premium paying period equal to the difference between items

(i) and (ii) hereof as follows: (i) the value at the end of such period

of such a twenty payment life preliminary term policy and (ii) the full

level net premium reserve at such time of such a limited payment life or

endowment policy.

(C) The premium paying period referred to above is the period during

which premiums are concurrently payable under such twenty payment life

preliminary term policy and such limited payment life or endowment

policy.

(5) (A) The legal minimum standard for the valuation of all individual

annuity contracts issued on or after January first, nineteen hundred

forty (including life annuities provided or available under optional

modes of settlement in insurance contracts issued on or after such date)

shall be the Combined Annuity Tables with age set back one year, with

interest at three and one-half percent per annum.

(B) The legal minimum standard for the valuation of all individual

annuity contracts issued prior to January first, nineteen hundred forty

(including annuities provided or available under optional modes of

settlement in insurance contracts issued prior to such date) shall be in

accordance with the provisions of law applicable thereto as of the date

of issuance.

(C) Except as otherwise provided in paragraphs three and four of

subsection (c) hereof for group annuity and pure endowment contracts,

the legal minimum standard for the valuation of all group annuity

contracts shall be the 1971 Group Annuity Mortality Table, or any

modification of this table approved by the superintendent, and five

percent interest.

(D) Annuities, annuity benefits and guaranteed interest contracts to

which this subsection applies shall be subject to item (vi) of

subparagraph (B) of paragraph four of subsection (c) of this section.

(6) (A) The legal minimum standard for the valuation of all industrial

life insurance policies issued on or after January first, nineteen

hundred forty shall, at the option of the company, be either (i) the

1941 Standard Industrial Mortality Table or the 1941 Substandard

Industrial Mortality Table, with interest at three and one-half percent

per annum by the net level premium method, or (ii) either of the tables

specified in item (i) hereof, by the modified preliminary term method

prescribed in paragraph four hereof, in accordance with the terms of the

policy, or (iii) in the case of policies issued on the monthly premium

plan, the New York Standard Intermediate Table of Mortality (1907 Table)

with interest at three and one-half percent per annum. In lieu of such

tables, at the option of the company, the Standard Industrial Mortality

Table (1907) or the Substandard Industrial Mortality Table (1907) may be

used with respect to such policies issued prior to January first,

nineteen hundred forty-two.

(B) The legal minimum standard for the valuation of all industrial

life insurance policies issued prior to January first, nineteen hundred

forty shall be the minimum standard required by the law of this state in

force at the date of issuance.

(7) The legal minimum standard for the valuation of all accidental

death benefits and disability benefits, provided in connection with or

supplemental to life insurance policies or annuity contracts shall be

such tables as the superintendent may prescribe.

(c) (1) This subsection shall apply only to policies and contracts

issued on or after the operative date of section four thousand two

hundred twenty-one of this article, except as otherwise provided in

paragraphs three and four of this subsection for group annuity and pure

endowment contracts issued prior to such operative date.

(2) Except as otherwise provided in paragraphs three, four and ten of

this subsection, the minimum standard for the valuation of all such

policies and contracts shall be the commissioners reserve valuation

method defined in paragraph six of this subsection and in section four

thousand two hundred eighteen of this article, three percent interest

for all life insurance policies issued prior to January first, nineteen

hundred sixty-six and for all individual annuity and pure endowment

contracts issued prior to January first, nineteen hundred sixty, or

three and one-half percent interest for all life insurance policies

issued on or after January first, nineteen hundred sixty-six and prior

to June thirteenth, nineteen hundred seventy-four and for all individual

annuity and pure endowment contracts issued on or after January first,

nineteen hundred sixty, and prior to the operative date of paragraph

three of this subsection, or four percent interest for all life

insurance policies issued on or after June thirteenth, nineteen hundred

seventy-four and prior to January first, nineteen hundred seventy-nine,

or four and one-half percent interest for all life insurance policies,

issued on or after January first, nineteen hundred seventy-nine, or five

percent interest for all annuities purchased or to be purchased under

group annuity contracts, and the following tables:

(A) For all ordinary policies of life insurance issued on the standard

basis, excluding any disability and accidental death benefits in such

policies, the Commissioners 1941 Standard Ordinary Mortality Table for

such policies issued prior to the operative date of subsection (h) of

section four thousand two hundred twenty-one of this article, the

Commissioners 1958 Standard Ordinary Mortality Table for such policies

issued on or after such operative date and prior to the operative date

of subsection (k) of such section; provided that for any category of

such policies issued on female risks all modified net premiums and

present values may be calculated according to an age not more than six

years younger than the actual age of the insured, and for such policies

issued on or after the operative date of such subsection, and, at the

option of the company, for such policies not providing for nonforfeiture

benefits which are issued on or after nineteen hundred eighty-one and

prior to the operative date of such subsection, (i) the Commissioners

1980 Standard Ordinary Mortality Table, or (ii) at the election of the

company for any one or more specified plans of life insurance, the

Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year

Select Mortality Factors, or (iii) any ordinary mortality table, adopted

after nineteen hundred eighty by the National Association of Insurance

Commissioners, that is approved by the superintendent for use in

determining the minimum standard of valuation for such policies, or (iv)

any other ordinary mortality table, or any modification of any of the

foregoing tables, approved by the superintendent for any specified class

or classes of risks.

(B) For all industrial life insurance policies issued on the standard

basis, excluding any disability and accidental death benefits in such

policies, the 1941 Standard Industrial Mortality Table for such policies

issued prior to the operative date of subsection (i) of section four

thousand two hundred twenty-one of this article, and for such policies

issued on or after such operative date (i) the Commissioners 1961

Standard Industrial Mortality Table, or (ii) any industrial mortality

table, adopted after nineteen hundred eighty by the National Association

of Insurance Commissioners, that is approved by the superintendent for

use in determining the minimum standard of valuation for such policies,

or (iii) any other industrial mortality table, or any modification of

any of the foregoing tables, approved by the superintendent for any

specified class or classes of risks.

(C) For individual annuity and pure endowment contracts, excluding any

disability and accidental death benefits in such contracts,--the 1937

Standard Annuity Mortality Table or, at the option of the company, the

Annuity Mortality Table for 1949, Ultimate, or any modification of

either of these tables approved by the superintendent.

(D) For group annuity and pure endowment contracts, excluding any

disability and accidental death benefits in such contracts,--the 1971

Group Annuity Mortality Table or any modification of this table approved

by the superintendent.

(E) For total and permanent disability benefits in or supplementary to

ordinary policies or contracts--for policies or contracts issued on or

after January first, nineteen hundred sixty-six, the tables of Period 2

disablement rates and the 1930 to 1950 termination rates of the 1952

Disability Study of the Society of Actuaries, with due regard to the

type of benefits or any tables of disablement rates and termination

rates, adopted after nineteen hundred eighty by the National Association

of Insurance Commissioners, that are approved by the superintendent for

use in determining the minimum standard of valuation for such policies

or any other tables of disablement rates and termination rates, or any

modification of any of the foregoing tables, approved by the

superintendent for any specified class or classes of risks; for policies

or contracts issued prior to January first, nineteen hundred sixty-six,

either such tables or, at the option of the company, the Class (3)

Disability Table (1926). Any such table shall, for active lives, be

combined with a mortality table permitted for calculating the reserves

for life insurance policies.

(F) For accidental death benefits in or supplementary to policies--

for policies issued on or after January first, nineteen hundred

sixty-six, the 1959 Accidental Death Benefits Table or any accidental

death benefits table, adopted after nineteen hundred eighty by the

National Association of Insurance Commissioners, that is approved by the

superintendent for use in determining the minimum standard of valuation

for such policies or any other accidental death benefits table, or any

modification of any of the foregoing tables, approved by the

superintendent for any specified class or classes of risks; for policies

issued prior to January first, nineteen hundred sixty-six, either such

table or, at the option of the company, the Inter-Company Double

Indemnity Mortality Table. Any such table shall be combined with a

mortality table permitted for calculating the reserves for life

insurance policies.

(G) For group life insurance, life insurance issued on the substandard

basis, annuities involving life contingencies provided or available

under optional modes of settlement in life insurance policies or annuity

contracts and other special benefits--such tables as may be approved by

the superintendent.

(3) Except as provided in paragraph four hereof, the minimum standard

for the valuation of all individual annuity and pure endowment contracts

issued on or after the operative date of this paragraph, as defined

herein, and for all annuities and pure endowments purchased or to be

purchased on or after the operative date under group annuity and pure

endowment contracts, shall be the commissioners reserve valuation method

defined in paragraph six hereof and the following tables and interest

rates:

(A) For individual annuity and pure endowment contracts issued prior

to January first, nineteen hundred seventy-nine, excluding any

disability and accidental death benefits in such contracts and excluding

any annuities, purchased under individual deferred annuity contracts, to

which the company has elected to have subparagraph (B) hereof apply--the

1971 Individual Annuity Mortality Table, or any modification of this

table approved by the superintendent, and six percent interest for

single premium immediate annuity contracts, and four percent interest

for all other individual annuity and pure endowment contracts, or such

higher rate or rates of interest for any of such contracts as may be

approved from time to time by the superintendent.

(B) For individual annuity and pure endowment contracts issued on or

after January first, nineteen hundred seventy-nine, excluding any

disability and accidental death benefits in such contracts, and, at the

election of the company, for annuities purchased on or after such date

under individual deferred annuity contracts--the 1971 Individual Annuity

Mortality Table, or any individual annuity mortality table, adopted

after nineteen hundred eighty by the National Association of Insurance

Commissioners, that is approved by the superintendent for use in

determining the minimum standard of valuation for such contracts, or any

other individual annuity mortality table, or any modification of any of

the foregoing tables, approved by the superintendent, and seven and

one-half percent interest for all single premium individual immediate

annuity contracts and all annuities, purchased under individual deferred

annuity contracts, to which the company has elected to have this

subparagraph apply and five and one-half percent interest for all other

individual annuity and pure endowment contracts, excluding any

annuities, purchased under deferred annuity contracts, for which the

interest rate is seven and one-half percent or such higher rate or rates

of interest for any of such contracts or annuities purchased under

deferred annuity contracts as may be approved from time to time by the

superintendent.

(C) For all annuities and pure endowments purchased or to be purchased

prior to January first, nineteen hundred seventy-seven under group

annuity and pure endowment contracts, excluding any disability and

accidental death benefits purchased under such contracts,--the 1971

Group Annuity Mortality Table, or any modification of this table

approved by the superintendent, and six percent interest, or such higher

rate or rates of interest for any of such annuities and pure endowments

as may be approved from time to time by the superintendent.

(D) For all annuities and pure endowments purchased or to be purchased

on or after January first, nineteen hundred seventy-seven under group

annuity and pure endowment contracts, excluding any disability and

accidental death benefits purchased under such contracts--the 1971 Group

Annuity Mortality Table, or any group annuity mortality table, adopted

after nineteen hundred eighty by the National Association of Insurance

Commissioners, that is approved by the superintendent for use in

determining the minimum standard of valuation for such annuities and

pure endowments, or any other group annuity mortality table, or any

modification of any of the foregoing tables, approved by the

superintendent, and seven and one-half percent interest, or such higher

rate or rates of interest for any such annuities and pure endowments as

may be approved from time to time by the superintendent.

(E) After June thirteenth, nineteen hundred seventy-four, any company

may file with the superintendent a written notice of its election to

comply with the provisions of this paragraph after a specified date

before January first, nineteen hundred seventy-nine, which shall be the

operative date of this paragraph for such company, provided that an

insurer may elect a different operative date for individual annuity and

pure endowment contracts from that elected for group annuity and pure

endowment contracts. If a company makes no such election, the operative

date of this paragraph for such company shall be January first, nineteen

hundred seventy-nine.

(F) Annuities, annuity benefits and guaranteed interest contracts to

which this subsection applies shall be subject to item (vi) of

subparagraph (B) of paragraph four of this subsection.

(4) (A) The interest rates used in determining the minimum standard

for the valuation of:

(i) all life insurance policies issued in a particular calendar year,

on or after January first, nineteen hundred eighty-two,

(ii) all individual annuity and pure endowment contracts issued in a

particular calendar year on or after January first, nineteen hundred

eighty-two, and, at the option of the company, all annuities purchased

in a particular calendar year on or after such date under individual

deferred annuity contracts issued prior thereto,

(iii) all annuities and pure endowments purchased in a particular

calendar year on or after January first, nineteen hundred eighty-two

under group annuity and pure endowment contracts, and

(iv) the net increase, if any, in a particular calendar year after

January first, nineteen hundred eighty-two, in amounts held under

guaranteed interest contracts,

shall be the calendar year statutory valuation interest rates as defined

in this subsection, or such higher rate or rates of interest for any of

such policies, contracts or annuities as may be approved from time to

time by the superintendent.

(B) The calendar year statutory valuation interest rates ("I") shall

be determined in accordance with the following formulae (where R is the

reference interest rate, and W is the weighting factor, defined in this

paragraph) and the results rounded to the nearer one-quarter of one

percent:

(i) For life insurance, except as otherwise provided in this

subparagraph,

I = .03 + W(R1 - .03) + W/2 (R2 - .09);

where R1 is the lesser of R and .09,

R2 is the greater of R and .09,

(ii) For single premium immediate annuities and for annuity benefits

arising from life insurance policies and annuity and guaranteed interest

contracts with cash settlement options,

I = .03 + W(R - .03)

(iii) For other annuities with cash settlement options and guaranteed

interest contracts with cash settlement options, valued on an issue year

basis, except as stated in item (ii), the formula for life insurance

stated in item (i) shall apply to annuities and guaranteed interest

contracts with guarantee durations in excess of ten years and the

formula for single premium immediate annuities stated in item (ii) shall

apply to annuities and guaranteed interest contracts with guarantee

durations of ten years or less, and to single premium life insurance

policies of the kind referred to in item (vi) valued on a year of issue

basis with guarantee durations of ten years or less,

(iv) For other annuities with no cash settlement options and for

guaranteed interest contracts with no cash settlement options, the

formula for single premium immediate annuities stated in item (ii) shall

apply,

(v) For other annuities with cash settlement options and guaranteed

interest contracts with cash settlement options, and for single premium

life insurance policies of the kind referred to in item (vi), valued on

a change in fund basis, the formula for single premium immediate

annuities stated in item (ii) shall apply,

(vi) Single premium life insurance policies of the kind referred to in

this item are all single premium life insurance policies, issued on or

after January first, nineteen hundred eighty-two, which provide for the

crediting of additional amounts pursuant to subsection (b) of section

four thousand two hundred thirty-two of this article and under which

interest rates provided in, or declared pursuant to, the policy are, for

some period, guaranteed to exceed the greater of (I) six percent per

annum and (II) the calendar year statutory valuation interest rate for

other life insurance policies with guarantee durations in excess of

twenty years.

(C) If the calendar year statutory valuation interest rate for any

life insurance policies, other than single premium life insurance

policies of the kind referred to in item (vi) of subparagraph (B) of

this paragraph, issued in any calendar year determined without reference

to this sentence differs from the corresponding actual rate for similar

policies issued in the immediately preceding calendar year by less than

one-half of one percent the calendar year statutory valuation interest

rate for such life insurance policies shall be equal to the

corresponding actual rate for the immediately preceding calendar year.

For purposes of applying the immediately preceding sentence, the

calendar year statutory valuation interest rate for life insurance

policies issued in a calendar year shall be determined for nineteen

hundred eighty, (using the reference interest rate defined for nineteen

hundred seventy-nine) and shall be determined for each subsequent

calendar year regardless of when subsection (k) of section four thousand

two hundred twenty-one of this article becomes operative.

(D) The weighting factors referred to in the formulas stated above are

given in the following tables:

(i) Weighting factors for life insurance:

Guarantee Duration (Years) Weighting Factors

10 or less .50

More than 10, but not more than 20 .45

More than 20 .35

except that the factors shown above shall be increased for single

premium policies of the kind referred to in item (vi) of subparagraph

(B) of this paragraph valued on an issue year basis by .05 and for

single premium policies of such kind valued on a change in fund basis by

..10.

For life insurance, other than single premium policies of the kind

referred to in item (vi) of subparagraph (B) of this paragraph, the

guarantee duration is the maximum number of years the life insurance can

remain in force on a basis guaranteed in the policy or under options to

convert to plans of life insurance with premium rates or nonforfeiture

values or both which are guaranteed in the original policy; for such

single premium policies of the kind referred to in item (vi) of

subparagraph (B) of this paragraph, the guarantee duration is the number

of years for which interest rates provided in, or declared pursuant to,

the policy are guaranteed to exceed the greater of (I) six percent per

annum and (II) the calendar year statutory valuation interest rate for

life insurance policies, other than such single premium policies, with

guarantee durations in excess of twenty years;

(ii) Weighting factor for single premium immediate annuities, and for

annuity benefits arising from life insurance policies and annuity and

guaranteed interest contracts with cash settlement options: .80

(iii) Weighting factors for other annuities and for guaranteed

interest contracts, except as stated in item (ii), shall be as specified

in tables (I), (II), (III), according to the rules and definitions in

tables (IV) and (V):

Weighting Factor

for Plan Type

Guarantee Duration (Years) A B C

(I) For annuities and guaranteed interest contracts valued on an issue

year basis:

5 or less: .80 .60 .50

More than 5, but not more than 10: .75 .60 .50

More than 10, but not more than 20: .65 .50 .45

More than 20: .45 .35 .35

(II) For annuities and guaranteed

interest contracts valued on a change in

fund basis, the factor shown in table

(I) above increased by: .15 .25 .05

(III) For annuities and guaranteed

interest contracts valued on an issue

year basis (other than those with no

cash settlement options) which do not

guarantee interest on considerations

received more than one year after issue

or purchase and for annuities and

guaranteed interest contracts valued on

a change in fund basis which do not

guarantee interest rates on

considerations received more than twelve

months beyond the valuation date, the

factors shown in table (I) or derived in

table (II) increased by: .05 .05 .05

(IV) For other annuities with cash settlement options and guaranteed

interest contracts with cash settlement options, the guarantee duration

is the number of years for which the interest rates provided in, or

declared pursuant to, the contract are guaranteed to exceed the calendar

year statutory valuation interest rate for life insurance policies other

than single premium policies of the kind referred to in item (vi) of

subparagraph (B) of this paragraph, with guarantee durations in excess

of twenty years.

For other annuities with no cash settlement options and for guaranteed

interest contracts with no cash settlement options, the guarantee

duration is the number of years from the date of issue or date of

purchase to the date annuity benefits are scheduled to commence.

(V) Plan type as used in the above tables is defined as follows:

Plan Type A: The policyholder may withdraw funds only (i) with an

adjustment to reflect changes in interest rates or asset values since

receipt of the funds by the insurance company, or (ii) without such

adjustment but in installments over five years or more, or (iii) as an

immediate life annuity.

Plan Type B: The policyholder may not withdraw funds before the

expiration of the interest rate guarantee or, if withdrawals are

permitted before the expiration of such guarantee, may withdraw funds

only (i) with an adjustment to reflect changes in interest rates or

asset values since receipt of the funds by the insurance company, or

(ii) without such adjustment but in installments over five years or

more. At the end of the interest rate guarantee, funds may be withdrawn

without such adjustment in a single sum or installments over less than

five years.

Plan Type C: The policyholder may withdraw funds before the expiration

of the interest rate guarantee in a single sum or installments over less

than five years either (i) without adjustment to reflect changes in

interest rates or asset values since receipt of the funds by the

insurance company, or (ii) subject only to a fixed surrender charge

stipulated in the contract as a percentage of the fund.

(E) A company may elect to value single premium life insurance

policies of the kind referred to in item (vi) of subparagraph (B) of

this paragraph, guaranteed interest contracts with cash settlement

options or other annuities with cash settlement options on either an

issue year basis or on a change in fund basis. Guaranteed interest

contracts with no cash settlement options and other annuities with no

cash settlement options must be valued on an issue year basis. As used

in this paragraph, and except as otherwise permitted by the

superintendent, an issue year basis of valuation refers to a valuation

basis under which the interest rate used to determine the minimum

valuation standard for the entire duration of the life insurance policy,

annuity contract or guaranteed interest contract is the calendar year

valuation interest rate for the year of issue or year of purchase of the

policy or contract, and the change in fund basis of valuation refers to

a valuation basis under which the interest rate used to determine the

minimum valuation standard applicable to each change in the fund held

under the policy or contract is the calendar year valuation interest

rate for the year of the change in the fund.

(F) The reference interest rate referred to above shall be defined as

follows:

(i) For all life insurance, except single premium policies of the kind

referred to in item (vi) of subparagraph (B) of this paragraph, the

lesser of the average over a period of thirty-six months and the average

over a period of twelve months, ending on June thirtieth of the calendar

year next preceding the year of issue, of Moody's Corporate Bond Yield

Average - Monthly Average Corporates, as published by Moody's Investors

Service, Inc.

(ii) For single premium immediate annuities and for annuity benefits

arising from life insurance policies and annuity and guaranteed interest

contracts with cash settlement options, the average over a period of

twelve months, ending on June thirtieth of the calendar year of issue or

year of purchase, of Moody's Corporate Bond Yield Average - Monthly

Average Corporates, as published by Moody's Investors Service, Inc.

(iii) For other annuities with cash settlement options and guaranteed

interest contracts with cash settlement options, and for single premium

life insurance policies of the kind referred to in item (vi) of

subparagraph (B) of this paragraph, valued on a year of issue basis,

except as stated in item (ii) hereof, with guarantee durations in excess

of ten years, the lesser of the average over a period of thirty-six

months and the average over a period of twelve months ending on June

thirtieth of the calendar year of issue or purchase, of Moody's

Corporate Bond Yield Average - Monthly Corporates, as published by

Moody's Investors Service, Inc.

(iv) For other annuities with cash settlement options and guaranteed

interest contracts with cash settlement options, and for single premium

life insurance policies of the kind referred to in item (vi) of

subparagraph (B) of this paragraph, valued on a year of issue basis,

except as stated in item (ii) hereof, with guarantee durations of ten

years or less, the average over a period of twelve months, ending on

June thirtieth of the calendar year of issue or purchase, of Moody's

Corporate Bond Yield Average - Monthly Average Corporates, as published

by Moody's Investors Service, Inc.

(v) For other annuities with no cash settlement options and for

guaranteed interest contracts with no cash settlement options, the

average over a period of twelve months, ending on June thirtieth of the

calendar year of issue or purchase, of Moody's Corporate Bond Yield

Average - Monthly Average Corporates, as published by Moody's Investors

Service, Inc.

(vi) For other annuities with cash settlement options and guaranteed

interest contracts with cash settlement options, and for single premium

life insurance policies of the kind referred to in item (vi) of

subparagraph (B) of this paragraph, valued on a change in fund basis,

except as stated in item (ii) hereof, the average over a period of

twelve months, ending on June thirtieth of the calendar year of the

change in the fund, of Moody's Corporate Bond Yield Average - Monthly

Average Corporates, as published by Moody's Investors Service, Inc.

(G) In the event that Moody's Corporate Bond Yield Average - Monthly

Average Corporates is no longer published by Moody's Investors Service,

Inc., or in the event that the National Association of Insurance

Commissioners determines that Moody's Corporate Bond Yield Average -

Monthly Average Corporates as published by Moody's Investors Service,

Inc., is no longer appropriate for the determination of the reference

interest rate, then an alternative method for determination of the

reference interest rate, which is adopted by the National Association of

Insurance Commissioners and approved by the superintendent, may be

substituted.

(H) The provisions of this subparagraph shall apply to any life

insurance company which has life insurance policies or annuity or pure

endowment contracts in effect which were issued in a foreign country and

under which premiums and benefits, and the assets supporting reserves in

respect thereof, are denominated in the currency of a foreign country

which is rated in one of the two highest rating categories by an

independent, nationally recognized United States rating agency. For the

purpose of determining the reference interest rate to be used in valuing

such policies and contracts, the superintendent may permit any such

company, or may by regulation require all such companies (except as

exempted pursuant to such regulation), to adjust the yield average of

the applicable index published by Moody's Investors Service, Inc. (or

the yield average determined on the basis of any substitute method

applicable to such policies or contracts and approved by the

superintendent in accordance with subparagraph (G) of this paragraph) in

accordance with a method approved by the superintendent, or to

substitute an alternative method approved by the superintendent in place

of the applicable index published by Moody's Investors Service, provided

that any such substitute or alternative method shall produce

year-to-year consistency in reserving methods and shall appropriately

reflect the difference between the yield average on corporate bonds

issued in the United States and the yield average on corporate bonds

issued in such foreign country. Any company which adjusts yield averages

in accordance with a method approved by the superintendent pursuant to

this subparagraph shall continue to use such method with respect to the

valuation of such policies and contracts until the superintendent

permits or requires such company to cease using such method.

(6) (A) Except as otherwise provided in section four thousand two

hundred eighteen of this article, reserves according to the

commissioners reserve valuation method for the life insurance and

endowment benefits of policies providing for a uniform amount of

insurance and requiring the payment of uniform premiums shall be the

excess, if any, of the present value, at the date of valuation, of such

future guaranteed benefits provided for by such policies, over the then

present value of any future modified net premiums therefor. The modified

net premiums for any such policy shall be such uniform percentage of the

respective contract premiums for such benefits that the present value,

at the date of issue of the policy, of all such modified net premiums

shall be equal to the sum of the then present value of such benefits

provided for by the policy and the excess of item (i) over item (ii), as

follows:

(i) A net level annual premium equal to the present value, at the date

of issue, of such benefits provided for after the first policy year,

divided by the present value, at the date of issue, of an annuity of one

per annum payable on the first and each subsequent anniversary of such

policy on which a premium falls due; provided, however, that such net

level annual premium shall not exceed the net level annual premium on

the nineteen year premium whole life plan for insurance of the same

amount at an age one year higher than the age at issue of such policy.

(ii) A net one year term premium for such benefits provided for in the

first policy year.

(B) Provided that for any life insurance policy issued on or after

January first, nineteen hundred eighty-six for which the contract

premium in the first policy year exceeds that of the second year and for

which no comparable additional benefit is provided in the first year for

such excess and which provides an endowment benefit or a cash surrender

value or a combination thereof in an amount greater than such excess

premium, the reserve according to the commissioners reserve valuation

method as of any policy anniversary occurring on or before the assumed

ending date defined herein as the first policy anniversary on which the

sum of any endowment benefit and any cash surrender value then available

is greater than such excess premium shall, except as otherwise provided

in section four thousand two hundred eighteen of this article, be the

greater of the reserve as of such policy anniversary calculated as

described in the preceding paragraph and the reserve as of such policy

anniversary calculated as described in that paragraph, but with (i) the

value defined in item (i) of subparagraph (A) hereof being reduced by

fifteen percent of the amount of such excess first year premium, (ii)

all present values of benefits and premiums being determined without

reference to premiums or benefits provided for by the policy after the

assumed ending date, (iii) the policy being assumed to mature on such

date as an endowment, and (iv) the cash surrender value provided on such

date being considered as an endowment benefit. In making the above

comparison, the mortality and interest bases stated in paragraphs two

and four shall be used.

(C) Reserves according to the commissioners reserve valuation method

for (i) life insurance policies providing for a varying amount of

insurance or requiring the payment of varying premiums, (ii) disability

and accidental death benefits in all policies and contracts, and (iii)

all other benefits, except life insurance and endowment benefits in life

insurance policies and benefits in annuity, pure endowment and

guaranteed interest contracts, shall be calculated by a method

consistent with the principles of this paragraph, except that any extra

premiums charged because of impairments or special hazards shall be

disregarded in the determination of modified net premiums.

(D) The superintendent may, by regulation, issue guidelines for the

application of the reserve valuation provisions of this section to such

policies and contracts as the superintendent deems appropriate. Such

guidelines may provide that the minimum standard for the valuation of

single premium life insurance policies of the kind referred to in item

(vi) of subparagraph (B) of paragraph four of this subsection may be

based on interest rates determined in accordance with paragraph four of

subsection (c) of this section for the first ten years following the

date of valuation and thereafter on interest rates determined in

accordance with the formula stated in item (i) of subparagraph (B) of

paragraph four of this subsection. Such guidelines may permit

recognition of surrender charges in determining reserves to the extent

and under the conditions specified in the regulation. With respect to

annuity, pure endowment, or guaranteed interest contracts providing

allocation of assets to a separate account which qualifies under item

(iii) of paragraph five of subsection (a) of section four thousand two

hundred forty of this article and in which the assets are valued at

their market value in accordance with the terms of such contracts, such

guidelines may provide for the valuation of the reserves for such

contracts in a consistent manner.

(7) In no event shall a company's aggregate reserves for all life

insurance policies, excluding disability and accidental death benefits,

be less than the aggregate reserves calculated in accordance with the

methods set forth in paragraphs six and nine hereof and the mortality

table or tables and rate or rates of interest used in calculating

nonforfeiture benefits for such policies, nor less than the aggregate

reserves calculated in accordance with section four thousand two hundred

eighteen of this article. This paragraph shall not apply to single

premium life insurance policies of the kind referred to in item (vi) of

subparagraph (B) of paragraph four of this subsection nor to life

insurance policies that provide for the crediting of additional amounts

pursuant to subsection (b) of section four thousand two hundred

thirty-two of this article if the aggregate reserves for all such

policies are at least equal to the greatest of present values, at the

date of valuation, of the future guaranteed cash surrender values at any

time under all such policies, assuming no future premiums and the

mortality tables and interest rates prescribed under paragraphs two and

four of this subsection.

(8) Notwithstanding the provisions of subsection (a) hereof and

notwithstanding the provisions of subsection (g) of section four

thousand two hundred twenty-one of this article, after a life insurance

company has established reserves for participating life insurance

policies in accordance with a method consistent with the provisions of

this chapter, it may calculate such reserves according to a rate of

interest lower than the rate of interest previously used in calculating

reserves for the same policies only with the consent of the

superintendent, subject to such conditions, if any, as he may impose.

(9) In the case of any plan of life insurance which provides for

future premium determination, the amounts of which are to be determined

by the insurance company based on then estimates of future experience,

or in the case of any plan of life insurance or annuity which is of such

a nature that the minimum reserves cannot be determined by the methods

described in paragraph six hereof and section four thousand two hundred

eighteen of this article, the reserves which are held under any such

plan must:

(A) be appropriate in relation to the benefits and the pattern of

premiums for that plan, and

(B) be computed by a method which is consistent with the principles of

such paragraph and such section as determined by the superintendent.

(10) (A) The superintendent shall, by regulation, issue guidelines for

the determination of the minimum reserve value required by this section

for any plan or plans of life insurance policies under which cash

surrender values and policy loan values are adjusted in accordance with

a market-value adjustment formula.

(B) The regulation may require any company issuing or delivering such

policies in this state to submit to the superintendent with each annual

report an opinion, in form and substance satisfactory to the

superintendent, of a qualified actuary that the reserves for all such

policies in force at the end of the year, and the assets held by the

company in support of such reserves, make adequate provision for the

liabilities of the company with respect thereto, such opinion to be

accompanied by a memorandum, also in form and substance satisfactory to

the superintendent, of the qualified actuary describing the calculations

made in support of such opinion and the assumptions used in the

calculations. The regulation may prescribe the calculations required to

support such opinions and may provide that if the company has designated

particular assets primarily to support reserves for a class or classes

of policies, including reserves for policies determined in accordance

with the regulation, the opinion of the company's qualified actuary may

apply to the policies whose reserves are supported by such assets. For

purposes hereof, "qualified actuary" has the meaning ascribed to it by

subparagraph (E) of paragraph four of subsection (e) of this section.

(C) With respect to any policies covered by the regulation that

provide for the allocation of assets to a separate account which

qualifies under item (iii) of paragraph five of subsection (a) of

section four thousand two hundred forty of this article and in which

assets are valued at their market value in accordance with the terms of

such policies, the regulation may provide for the valuation of the

reserves for such policies in a consistent manner.

(d) The company shall maintain reserves for all individual and group

accident and health insurance policies which reserves shall reflect a

sound value placed on its liabilities under such policies and shall be

not less than the reserves required by regulations which the

superintendent shall promulgate.

(e) Actuarial opinion of reserves.

(1) General. Every life insurance company doing business in this state

shall annually submit the opinion of a qualified actuary as to whether

the reserves and related actuarial items held in support of the policies

and contracts specified by the superintendent by regulation are computed

appropriately, are based on assumptions which satisfy contractual

provisions, are consistent with prior reported amounts and comply with

applicable laws of this state. The superintendent by regulation shall

define the specifics of this opinion and add any other items deemed to

be necessary to its scope.

(2) (A) Actuarial analysis of reserves and assets supporting such

reserves. Every life insurance company, except as exempted by or

pursuant to regulation, shall also annually include in the opinion

required by paragraph one of this subsection, an opinion of the same

qualified actuary as to whether the reserves and related actuarial items

held in support of the policies and contracts specified by the

superintendent by regulation, when considered in light of the assets

held by the company with respect to the reserves and related actuarial

items, including but not limited to the investment earnings on the

assets and the considerations anticipated to be received and retained

under the policies and contracts, make adequate provision for the

company's obligations under the policies and contracts, including but

not limited to the benefits under and expenses associated with the

policies and contracts.

(B) The superintendent may provide by regulation for a transition

period for establishing any additional reserves which the qualified

actuary may deem necessary in order to render the opinion required by

this paragraph.

(3) Requirement for actuarial memorandum. (A) Except as exempted by or

pursuant to regulation, a memorandum, in form and substance acceptable

to the superintendent as specified by regulation, shall be prepared to

support each actuarial opinion submitted pursuant to subparagraph (A) of

paragraph two of this subsection. Each company required to prepare such

memorandum shall submit such memorandum to the superintendent as part of

its submission of the opinion of the qualified actuary pursuant to such

subparagraph (A), except as otherwise provided in subparagraph (B) of

this paragraph and except that if a foreign or alien company has

submitted a memorandum in support of an opinion of a qualified actuary

for the prior year to the commissioner of a state accredited by the

National Association of Insurance Commissioners and if that memorandum

was in form and substance acceptable to the commissioner and was in

support of an opinion of a qualified 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 the

superintendent has prescribed, the foreign or alien company need submit

the memorandum required by this subparagraph only at the request of the

superintendent or as the superintendent may by regulation require.

(B) In lieu of preparing a memorandum as required by subparagraph (A)

of this paragraph, a company may increase its reserves in the manner

provided by the superintendent by regulation. If a company that has not

so increased its reserves fails to file a supporting memorandum as

required by subparagraph (A) of this paragraph or fails to provide a

supporting memorandum at the request of the superintendent within a

period specified by regulation or the superintendent determines that the

supporting memorandum provided by the company fails to meet the

standards prescribed by the regulations or is otherwise unacceptable to

the superintendent, the superintendent may engage a qualified actuary at

the expense of the company to review the opinion and the basis for the

opinion and prepare such supporting memorandum as is required by the

superintendent.

(4) Requirement for all opinions. Every opinion shall be governed by

the following provisions:

(A) The opinion shall be submitted with the annual statement

reflecting the valuation of such reserve liabilities for each year

ending on or after December thirty-first, nineteen hundred ninety-four.

(B) The opinion shall apply to all business in force including

individual and group health insurance plans, in form and substance

acceptable to the superintendent as specified by regulation.

(C) The opinion shall be based on standards adopted from time to time

by the Actuarial Standards Board and on such additional standards as the

superintendent may by regulation prescribe.

(D) In the case of an opinion required to be submitted by a foreign or

alien company, the superintendent may accept the opinion submitted by

that company to the commissioner of a state accredited by the National

Association of Insurance Commissioners if the superintendent determines

that the opinion reasonably meets the requirements applicable to a

company domiciled in this state.

(E) For the purposes of this subsection, "qualified actuary" means a

member in good standing of the American Academy of Actuaries who meets

the requirements prescribed by the superintendent by regulation.

(F) Except in cases of fraud, willful misconduct or gross negligence,

the qualified actuary shall not be liable for damages to any person

(other than the insurance company or the superintendent) for any act,

error, omission, decision or conduct with respect to the actuary's

opinion and memorandum. The provisions of this subparagraph shall not

operate to remove, condition or limit any rights, remedies or actions at

law or equity which the insurance company or the superintendent may have

or take against or with respect to the qualified actuary.

(G) Disciplinary action by the superintendent against the company or

the qualified actuary shall be defined in regulations by the

superintendent.

(H) Non-public 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 and shall not be made public, other than for the purpose

of enabling any person to defend against an action seeking damages from

such person by reason of any action required by this section or by

regulations promulgated hereunder; provided, however, that such

non-public information may otherwise be released by the superintendent

(i) with the written consent of the company or (ii) for the purpose of

professional disciplinary proceedings conducted by the superintendent or

by any professional body, provided that steps deemed appropriate by the

superintendent are taken to preserve the confidentiality of such

non-public information. Notwithstanding the foregoing, the

superintendent shall release the non-public information to persons

making demand therefor in a criminal proceeding pursuant to lawful

subpoena, warrant or court order or in response to a subpoena from a

grand jury served upon the superintendent. Any such request by the

company for confidentiality shall designate with reasonable specificity

the portion of such memorandum or other material with respect to which

confidentiality is requested pursuant to this subparagraph. Once such

memorandum or other material, or any portion thereof containing matters

with respect to which confidentiality has been requested, is cited by

the company in its marketing or is cited before any governmental agency

(other than a state insurance department) or is released by the company

to the news media, all portions of such memorandum or other material

shall be no longer confidential.

(f) (1) An insurer shall be deemed to meet the minimum standard for

the valuation of life insurance, if the amount of its aggregate reserves

for group life insurance, for ordinary life insurance and for industrial

life insurance, whether or not held in separate accounts pursuant to

section four thousand two hundred forty of this article, is in each case

at least equal to the aggregate minimum standard required by this

section for the respective valuation thereof.

(2) An insurer shall be deemed to meet the minimum standard for the

valuation of annuities and guaranteed interest contracts if the amount

of its aggregate reserves therefor, whether or not held in separate

accounts pursuant to such section forty-two hundred forty of this

article, is at least equal to the aggregate minimum standard required by

this section for the valuation thereof.

(3) An insurer shall be deemed to meet the minimum standard for the

valuation of individual and group accident and health insurance policies

if the amount of its aggregate reserves therefor is at least equal to

the aggregate minimum standard required by this section for the

valuation thereof.

(4) Without the specific approval of the superintendent subject to

such conditions as he may prescribe and as provided by regulation, an

insurer shall not aggregate the reserves referred to in two or more of

paragraph one, two or three of this subsection. Such regulation may

prescribe the conditions under which the valuation of two or more

classes of business of insurance or the valuation of all of its

insurance business to which this section applies may be combined.

(5) For purposes of this subsection, the aggregate minimum standard

required by this section for the valuation of any insurance policies or

contracts shall be deemed to include such additional reserves as the

qualified actuary deems necessary, taking into account any transition

rules provided by regulation pursuant to subparagraph (B) of paragraph

two of subsection (e) of this section, in order to render the opinion

required by subsection (e) of this section and such additional reserves

as may be necessary to comply with regulations promulgated by the

superintendent pursuant to this section.

* (g)(1) This subsection shall apply only to individual and group life

insurance policies and annuity contracts issued on or after the

operative date of the valuation manual as prescribed by the

superintendent by regulation, provided that the operative date shall be

no sooner than January first, two thousand nineteen.

(2) For the purposes of this subsection, "NAIC" shall mean the

National Association of Insurance Commissioners.

(3) For purposes of this subsection, "principle-based valuation" shall

mean a reserve valuation that uses methods and assumptions required by

paragraph eleven of this subsection as specified in the valuation

manual.

(4) For purposes of this subsection, "qualified actuary" shall mean a

member in good standing of the American Academy of Actuaries who meets

the requirements prescribed by the superintendent by regulation.

(5) For purposes of this subsection, "valuation manual" shall mean the

valuation manual adopted by the NAIC on December second, two thousand

twelve, as subsequently amended, and as approved by the superintendent

upon a finding that such manual is for the best interests of the holders

of policies and contracts and annuitants of this state and which meets

the requirements as set forth in this subsection.

(6) Notwithstanding subsection (c) of this section and section four

thousand two hundred eighteen of this article, the minimum standard for

the valuation of all such policies and contracts shall be the standard

prescribed in the valuation manual.

(7) The valuation manual shall not become operative in this state

unless and until the superintendent has approved of such manual and has

adopted all necessary regulations to effectuate this subsection.

(8) (A) No amendment to the valuation manual shall take effect in this

state unless the superintendent finds that such amendment is for the

best interests of the holders of policies and contracts and annuitants

of this state.

(B) The superintendent may deviate, through regulations, from the

reserve standards, valuation methods, assumptions, and related

requirements in the valuation manual, including for individual

companies, provided, however, that such deviation shall not result in

reserve valuations that are lower than the minimum standards prescribed

in the valuation manual and may be based on a percentage of the reserves

being held for the policies and contracts subject to this subsection

prior to the operative date of such manual.

(9) The valuation manual shall specify all of the following:

(A) Minimum valuation standards for and definitions of the policies

and contracts subject to this subsection as determined by the

superintendent. Such minimum valuation standards shall be:

(i) The commissioners reserve valuation method for life insurance

policies subject to this subsection; and

(ii) The commissioners annuity reserve valuation method for annuity

contracts subject to this subsection.

(B) Requirements for the format of reports to the superintendent under

item (iii) of subparagraph (B) of paragraph eleven of this subsection

and which shall include information necessary to determine if the

valuation is appropriate and in compliance with this subsection;

(C) Assumptions for risks over which a company does not have

significant control or influence;

(D) Procedures for corporate governance and oversight of the actuarial

function, and a process for appropriate waiver or modification of such

procedures;

(E) Other requirements, including, but not limited to, those relating

to reserve methods, models for measuring risk, generation of economic

scenarios, assumptions, margins, use of company experience, risk

measurement, disclosure, certifications, reports, actuarial opinions and

memorandums, transition rules and internal controls; and

(F) The data and form of the data required under paragraph twelve of

this subsection, with whom the data shall be submitted, and other

requirements including data analyses and reporting of analyses.

(10) The superintendent may engage a qualified actuary, at the expense

of a company, to perform an actuarial examination of such company and

opine on the appropriateness of any reserve assumption or method used by

such company, or to review and opine on such company's compliance with

any requirement set forth in this subsection.

(11) (A) A company that issues policies and contracts subject to this

subsection shall establish reserves using a principle-based valuation

that meets the following conditions for such policies and contracts as

specified in the valuation manual:

(i) Quantify the benefits and guarantees, and the funding, associated

with the policies or contracts and their risks at a level of

conservatism that reflects conditions that include unfavorable events

that have a reasonable probability of occurring during the lifetime of

the policies and contracts. For policies and contracts with significant

tail risk, reflect conditions appropriately adverse to quantify the tail

risk.

(ii) Incorporate assumptions, risk analysis methods and financial

models and management techniques that are consistent with, but not

necessarily identical to, those utilized within the company's overall

risk assessment process, while recognizing potential differences in

financial reporting structures and any prescribed assumptions or

methods.

(iii) Incorporate assumptions that are derived in one of the following

manners:

(I) The assumption is prescribed in the valuation manual.

(II) For assumptions that are not prescribed, the assumptions shall:

a. be established utilizing the company's available experience, to the

extent it is relevant and statistically credible; or

b. to the extent that company experience is not available, relevant,

or statistically credible, be established utilizing other relevant,

statistically credible experience.

(iv) Provide margins for uncertainty including adverse deviation and

estimation error, such that the greater the uncertainty the larger the

margin and resulting reserve.

(B) A company that issues policies and contracts subject to this

subsection shall:

(i) Establish procedures for corporate governance and oversight of the

actuarial valuation function consistent with those described in the

valuation manual.

(ii) Provide to the superintendent, annually on or before a date as

determined by the superintendent, and the board of directors of the

company an annual certification of the effectiveness of the internal

controls with respect to the principle-based valuation. Such controls

shall be designed to assure that all material risks inherent in the

liabilities and associated assets subject to such valuation are included

in the valuation, and that valuations are made in accordance with the

valuation manual. The certification shall be based on the controls in

place as of the end of the preceding calendar year.

(iii) Develop, and file with the superintendent upon request, a

principle-based valuation report that complies with standards prescribed

in the valuation manual.

(C) A principle-based valuation shall include a prescribed formulaic

reserve component.

(12) A company that issues policies and contracts subject to this

subsection shall submit mortality, morbidity, policyholder behavior, or

expense experience and other data as prescribed in the valuation manual

to the superintendent annually on or before a date as determined by the

superintendent.

(13) (A) The superintendent may exempt specific product forms or

product lines of a domestic company that is licensed and doing business

only in this state from the requirements of this subsection provided:

(i) The superintendent has issued an exemption in writing to the

company and has not subsequently revoked the exemption in writing; and

(ii) The company computes reserves using assumptions and methods used

prior to the operative date of the valuation manual in addition to any

requirements established by the superintendent and promulgated by

regulation.

(B) For any company granted an exemption under this paragraph,

subsections (c), (d), (e) and (f) of this section and section four

thousand two hundred eighteen of this article shall be applicable. With

respect to any company applying for this exemption, any reference to

subsection (g) found in subsections (c), (d), (e) and (f) of this

section and section four thousand two hundred eighteen of this article

shall not be applicable.

* NB Repealed December 7, 2028