{"data":{"id":"us-ky/krs-304.6-151","jurisdiction":"us-ky","citation":"KRS 304.6-151","heading":"Principle-based valuation -- Required actions.","body":"(1) A company shall establish reserves using a principle -based valuation as specified in\nthe valuation manual that meets the following conditions for policies or contracts:\n(a) Quantification of the benefits and guarantees, and the funding associated with\nthe contracts and their risks, at a level of conservatism that reflects conditions\nthat include unfavorable events that have a reasonable probability of occurring\nduring the lifetime of the contracts. For policies or contracts with significant\ntail risk, the v aluation shall also reflect conditions appropriately adverse to\nquantify the tail risk;\n(b) Incorporation of assumptions, risk analysis methods, financial models, and\nmanagement techniques that are consistent with but not necessarily identical\nto those uti lized within the company's overall risk assessment process, while\nrecognizing potential differences in financial reporting structures and any\nprescribed assumptions or methods;\n(c) Incorporation of assumptions that are derived in one (1) of the following\nmanners:\n1. The assumption is prescribed in the valuation manual;\n2. For assumptions that are not prescribed, the assumptions shall:\na. Be established utilizing the company's available experience, to the\nextent it is relevant and statistically credible; or\nb. To the extent that company data is not available, relevant, or\nstatistically credible, be established utilizing other relevant,\nstatistically credible experience; and\n(d) Provision of margins for uncertainty, including adverse deviation and\nestimation e rror, to ensure that the greater the uncertainty the larger the\nmargin and resulting reserve.\n(2) A company using a principle -based valuation for one (1) or more policies or\ncontracts subject to this section, as specified in the valuation manual, shall:\n(a) Establish procedures for corporate governance and oversight of the actuarial\nvaluation function consistent with those described in the valuation manual;\n(b) Provide to the commissioner and the company's board of directors, an annual\ncertification of the effectiveness of the internal controls with respect to the\nprinciple-based valuation. The controls shall be designed to ensure that all\nmaterial risks inherent in the liabilities and associated assets, subject to the\nvaluation, are included in the valuatio n and that valuations are made in\naccordance with the valuation manual. The certification shall be based on the\ncontrols in place as of the end of the preceding calendar year; and\n(c) Develop and file with the commissioner, upon request, a principle -based\nvaluation report that complies with standards prescribed in the valuation\nmanual.\n(3) A principle-based valuation may include a prescribed formulaic reserve component.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=44430","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:38Z","sha256":"5b8b86b873888e9174ad9ea2e6bfb8282b52dfead917ddcb23a70c51b41f75d9","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.6-150","next":"us-ky/krs-304.6-155"},"notice":"GroundRules: Original legal text. Not legal advice."}