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Regular Session, 2013 ENROLLED
SENATE BILL NO. 101
BY SENATOR JOHNS
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
AN ACT1
To amend and reenact R.S. 22:752(A) and (D)(introductory paragraph), 753(B) and (C), and2
936(G)(8)(f) and (g) and (9), and R.S. 44:4.1(B)(11), and to enact R.S. 22:752(E)3
and (F), 753(D), (E), (F), (G), (H), (I), and (J), and 936(G)(8)(h) and (i) and (J)(7),4
relative to life insurance reserves; to provide with respect to policies under standard5
valuation law; to provide relative to standard nonforfeiture law for life insurance; to6
provide for an effective date; and to provide for related matters.7
Be it enacted by the Legislature of Louisiana:8
Section 1. R.S. 22:752(A) and (D)(introductory paragraph), 753(B) and (C), and9
936(G)(8)(f) and (g) and (9) are hereby amended and reenacted and R.S. 22:752(E) and (F),10
753(D), (E), (F), (G), (H), (I), and (J), and 936(G)(8)(h) and (i) and (J)(7) are hereby enacted11
to read as follows:12
§752. Actuarial opinion reserves13
A. Each Prior to the operative date of the valuation manual, each life14
insurance company doing business in this state shall annually submit the opinion of15
a qualified actuary as to whether the reserves and related actuarial items held in16
support of the policies and contracts specified by the commissioner by regulation are17
computed appropriately, are based on assumptions which satisfy contractual18
provisions, are consistent with prior reported amounts, and comply with applicable19
laws of this state. The commissioner by regulation shall define the specifics of this20
opinion and add any other items deemed to be necessary in its scope.21
* * *22
D. Each opinion required by Subsections A and B of this Section shall be23
governed by the following provisions:24
ACT No. 349 SB NO. 101 ENROLLED
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* * *1
E. On and after the operative date of the valuation manual, every2
company with outstanding life insurance contracts, accident and health3
insurance contracts, or deposit-type contracts in this state and subject to4
regulation by the commissioner shall annually:5
(1) Submit an opinion of the appointed actuary as to whether the6
reserves and related actuarial items held in support of the policies and contracts7
are computed appropriately, are based on assumptions that satisfy contractual8
provisions, are consistent with prior reported amounts, and comply with the9
laws of this state.10
(2) Include in the opinion required by Paragraph (1) of this Subsection,11
unless exempted in the valuation manual, an opinion of the same appointed12
actuary as to whether the reserves and related actuarial items held in support13
of the policies and contracts specified in the valuation manual, when considered14
in light of the assets held by the company in support of the reserves and related15
actuarial items, including but not limited to the investment earnings from the16
assets and the considerations anticipated to be received and retained under the17
policies and contracts, make adequate provision for the company's obligations18
under the policies and contracts, including but not limited to the benefits under19
and expenses associated with the policies and contracts.20
F. Each opinion required by Subsection E of this Section shall be21
governed by the following:22
(1) If the insurance company fails to provide a supporting memorandum23
at the request of the commissioner within a period specified in the valuation24
manual or the commissioner determines that the supporting memorandum25
provided by the insurance company fails to meet the standards prescribed by26
the valuation manual or is otherwise unacceptable to the commissioner, the27
commissioner may engage a qualified actuary at the expense of the company to28
review the opinion and the basis for the opinion and prepare the supporting29
memorandum required by the commissioner.30 SB NO. 101 ENROLLED
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(2) The opinion and memorandum shall be in accordance with the form1
and substance prescribed in the valuation manual and acceptable to the2
commissioner.3
(3) The opinion shall be submitted with the annual statement reflecting4
the valuation of such reserve liabilities for each year ending on or after the5
operative date of the valuation manual.6
(4) The opinion shall apply to all policies and contracts subject to7
Paragraph (E)(2) of this Section, plus other actuarial liabilities as may be8
specified in the valuation manual.9
(5) The opinion shall be based on standards adopted by the Actuarial10
Standards Board, or its successor, and on additional standards that may be11
prescribed in the valuation manual.12
(6) In the case of an opinion required to be submitted by a foreign or13
alien company, the commissioner may accept the opinion filed by that company14
with the insurance supervisory official of another state if the commissioner15
determines that the opinion reasonably meets the requirements applicable to a16
company domiciled in this state.17
(7) Except in cases of fraud or willful misconduct, the appointed actuary18
shall not be liable for damages to any person, other than the insurance company19
and the commissioner, for any act, error, omission, decision, or conduct with20
respect to the appointed actuary's opinion.21
(8) Disciplinary action by the commissioner against the company or the22
appointed actuary shall be in accordance with this Title and rules or regulations23
promulgated by the commissioner.24
§753. Policies under standard valuation law25
* * *26
B. For policies and contracts issued prior to the operative date of the27
valuation manual:28
(1) Except as otherwise provided in Paragraphs (2) and (3) of this29
Subsection, the minimum standard for the valuation of all other policies and30 SB NO. 101 ENROLLED
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contracts shall be the commissioner's reserve valuation methods Commissioner's1
Reserve Valuation Methods defined in Paragraphs (4), (5), and (8) of this2
Subsection, five percent interest for group annuity and pure endowment contracts,3
four percent interest for all other such policies and contracts, and four and one-half4
percent interest for policies and contracts, other than annuities and pure endowment5
contracts, issued on or after September 7, 1979, and the following tables:6
(a) For all ordinary policies of life insurance issued on the standard basis,7
excluding any disability and accidental death benefits in such policies: the8
Commissioners 1941 Standard Ordinary Mortality Table for such policies issued9
prior to September 7, 1979, the Commissioners 1958 Standard Ordinary Mortality10
Table for such policies issued on or after September 7, 1979, and prior to January 1,11
1989; provided that for any category of such policies issued on female risks, all12
modified net premiums and present values referred to in this Section may be13
calculated according to an age not more than six years younger than the actual age14
of the insured; and for such policies issued on or after January 1, 1989, the15
Commissioners 1980 Standard Ordinary Mortality Table, or, at the election of the16
insurer for any one or more specified plans of life insurance, the Commissioners17
1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors, or18
any ordinary mortality table adopted after 1980, by the National Association of19
Insurance Commissioners that is approved by the commissioner.20
(b) For all new industrial life insurance policies issued on the standard basis,21
excluding any disability and accidental death benefits in such policies: the 194122
Standard Industrial Mortality Table for such policies issued prior to September 7,23
1979, and for such policies issued on or after such effective date the Commissioners24
1961 Standard Industrial Mortality Table or any industrial mortality table adopted25
after 1980, by the National Association of Insurance Commissioners that is approved26
by the commissioner.27
(c) For individual annuity and pure endowment contracts, excluding any28
disability and accidental death benefits in such policies: the 1937 Standard Annuity29
Mortality Table or, at the option of the insurer, the Annuity Mortality Table for 1949,30 SB NO. 101 ENROLLED
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Ultimate, or any modification of either of these tables approved by the1
commissioner.2
(d) For group annuity and pure endowment contracts, excluding any3
disability and accidental death benefits in such policies: the Group Annuity Mortality4
Table for 1951, any modification of such table approved by the commissioner, or,5
at the option of the insurer, any of the tables or modifications of tables specified for6
individual annuity and pure endowment contracts.7
(e) For total and permanent disability benefits in or supplementary to8
ordinary policies or contracts: for policies or contracts issued on or after January 1,9
1966, the tables of Period 2 disablement rates and the 1930 to 1950 termination rates10
of the 1952 Disability Study of the Society of Actuaries, with due regard to the type11
of benefit or any tables of disablement rates and termination rates adopted on or after12
January 1, 1981, by the National Association of Insurance Commissioners that are13
approved by the commissioner; for policies or contracts issued on or after January14
1, 1961, and prior to January 1, 1966, either such tables or, at the option of the15
insurer, the Class (3) Disability Table (1926); and for policies issued prior to January16
1, 1961, the Class (3) Disability Table (1926). Any such table shall, for active lives,17
be combined with a mortality table authorized by this Subpart for calculating the18
reserves for life insurance policies.19
(f) For accidental death benefits in or supplementary to policies: for policies20
issued on or after January 1, 1966, the 1959 Accidental Death Benefits Table or any21
accidental death benefits table adopted on or after January 1, 1981, by the National22
Association of Insurance Commissioners that is approved by the commissioner; for23
policies issued on or after January 1, 1961, and prior to January 1, 1966, either such24
table or, at the option of the insurer, the Inter-Company Double Indemnity Mortality25
Table; and for policies issued prior to January 1, 1961, the Inter-Company Double26
Indemnity Mortality Table. Either table shall be combined with a mortality table27
authorized by this Subpart for calculating the reserves for life insurance policies.28
(g) For group life insurance, life insurance issued on the substandard basis29
and other special benefits: such tables as approved by the commissioner.30 SB NO. 101 ENROLLED
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(2)(a) Except as provided in Paragraph (3) of this Subsection, the minimum1
standard for the valuation of all individual annuity and pure endowment contracts2
issued on or after September 7, 1979, and for all annuities and pure endowments3
purchased on or after such effective date under group annuity and pure endowment4
contracts shall be the Commissioner's reserve valuation methods Reserve Valuation5
Methods defined in Paragraphs (4) and (5) of this Subsection and the following6
tables and interest rates:7
(i) For individual annuity and pure endowment contracts issued prior to8
September 7, 1979, excluding any disability and accidental death benefits in such9
contracts: the 1971 Individual Annuity Mortality Table, or any modification of this10
table approved by the commissioner, and six percent interest for single premium11
immediate annuity contracts, and four percent interest for all other individual annuity12
and pure endowment contracts.13
(ii) For individual single premium immediate annuity contracts issued on or14
after September 7, 1979, excluding any disability and accidental death benefits in15
such contracts: the 1971 Individual Annuity Mortality Table or any individual16
annuity mortality table adopted on or after January 1, 1981, by the National17
Association of Insurance Commissioners that is approved by the commissioner, or18
any modification of these tables approved by the commissioner, and seven and one-19
half percent interest.20
(iii) For individual annuity and pure endowment contracts issued on or after21
September 7, 1979, other than single premium immediate annuity contracts,22
excluding any disability and accidental death benefits in such contracts: the 197123
Individual Annuity Mortality Table or any individual annuity mortality table adopted24
on or after January 1, 1981, by the National Association of Insurance Commissioners25
that is approved by the commissioner, or any modification of these tables approved26
by the commissioner, and five and one-half percent interest for single premium27
deferred annuity and pure endowment contracts and four and one-half percent28
interest for all other such individual annuity and pure endowment contracts.29
(iv) For all annuities and pure endowments purchased prior to September 7,30 SB NO. 101 ENROLLED
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1979, under group annuity and pure endowment contracts, excluding any disability1
and accidental death benefits purchased under such contracts: the 1971 Group2
Annuity Mortality Table, or any modification of this table approved by the3
commissioner, and six percent interest.4
(v) For all annuities and pure endowments purchased on or after September5
7, 1979, under group annuity and pure endowment contracts, excluding any disability6
and accidental death benefits purchased under such contracts: the 1971 Group7
Annuity Mortality Table or any group annuity mortality table adopted on or after8
January 1, 1981, by the National Association of Insurance Commissioners that is9
approved by the commissioner, or any modification of these tables approved by the10
commissioner, and seven and one-half percent interest.11
(b) Any insurer may file with the commissioner a written notice of its12
election to comply with the provisions of this Paragraph after a specified date before13
January 1, 1981, which shall be the effective date of this Paragraph for such insurer;14
provided, an insurer may elect a different effective date for individual annuity and15
pure endowment contracts from that elected for group annuity and pure endowment16
contracts. If an insurer makes no such election, the effective date of this Paragraph17
for such insurer shall be January 1, 1981.18
(3)(a) The interest rates used in determining minimum standard for the19
valuation of the policies and contracts listed in Items (i), (ii), (iii), and (iv) of this20
Subparagraph shall be the calendar year statutory valuation interest rates, as defined21
in this Paragraph, or, at the option of the insurer, for any category of policies or22
contracts, the rate or rates of interest provided in Paragraph (1) or (2) of this23
Subsection.24
(i) All life insurance policies issued in a particular calendar year, on or after25
January 1, 1989.26
(ii) All individual annuity and pure endowment contracts issued on or after27
January 1, 1983.28
(iii) All group annuities and pure endowments on or after January 1, 1983.29
(iv) The net increase, if any, in a particular calendar year after January 1,30 SB NO. 101 ENROLLED
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1983, in the amounts held under guaranteed interest contracts.1
(b)(i) The calendar year statutory valuation interest rates shall be determined2
as follows, with the results rounded to the nearer one-quarter of one percent:3
(aa) For life insurance: I = .03 + W (R
1 - .03) +W (R
2 - .09).4
25
(bb) For single premium immediate annuities and for annuity benefits6
involving life contingencies arising from other annuities with cash settlement options7
and from guaranteed interest contracts with cash settlement options: I=.03 + W (R-8
.03) where R
1 is the lesser of R and .09; R
2 is the greater of R and .09; R is the9
reference interest rate defined in Subparagraph (d) of this Paragraph; and W is the10
weighting factor defined in Subparagraph (c) of this Paragraph.11
(cc) For other annuities with cash settlement options and guaranteed interest12
contracts with cash settlement options, valued on an issue year basis, except as stated13
in Subitem (bb) of this Item, the formula for life insurance stated in Subitem (aa) of14
this Item shall apply to annuities and guaranteed interest contracts with guarantee15
durations in excess of ten years , and the formula for single premium immediate16
annuities stated in Subitem (bb) of this Item shall apply to annuities and guaranteed17
interest contracts with guarantee duration of ten years or less.18
(dd) For other annuities with no cash settlement options and for guaranteed19
interest contracts with no cash settlement options, the formula for single premium20
immediate annuities stated in Subitem (bb) of this Item shall apply.21
(ee) For other annuities with cash settlement options and guaranteed interest22
contracts with cash settlement options, valued on a change in fund basis, the formula23
for single premium immediate annuities stated in Subitem (bb) of this Item shall24
apply.25
(ii) However, if the calendar year statutory valuation interest rate for any life26
insurance policies issued in any calendar year determined without reference to this27
Subparagraph differs from the corresponding actual rate for similar policies issued28
in the immediately preceding calendar year by less than one-half of one percent, the29
calendar year statutory valuation interest rate for such life insurance policies shall30 SB NO. 101 ENROLLED
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then be equal to the corresponding actual rate for the immediately preceding calendar1
year. For purposes of applying this Subparagraph, the calendar year statutory2
valuation interest rate for life insurance policies issued in a calendar year shall be3
determined for 1980, by using the reference interest rate defined for 1979, and shall4
be determined for each subsequent calendar year.5
(iii) At the option of the insurer, calculation for life insurance policies issued6
in a particular calendar year may be made on the basis of a rate of interest not7
exceeding the statutory interest rate, as defined in this Subsection, for life insurance8
policies issued in the immediately preceding calendar year.9
(c) The weighting factors referred to in the formulae stated in Subparagraph10
(b) of this Paragraph shall be as provided in the following tables:11
(i) Weighting factors for life insurance:12
Guarantee Duration in yearsWeighting13
Factors14
10 years or less .5015
More than 10, but not more than 20 years .4516
More than 20 years .3517
For life insurance, the guarantee duration is the maximum number of years18
the life insurance can remain in force on a basis guaranteed in the policy or under19
options to convert to plans of life insurance with premium rates or nonforfeiture20
values, or both, which are guaranteed in the original policy;21
(ii) The weighting factor for single premium immediate annuities and for22
annuity benefits involving life contingencies arising from other annuities with cash23
settlement options and guaranteed interest contracts with cash settlement options is24
.80.25
(iii) Weighting factors for other annuities and for guaranteed interest26
contracts, except as stated in Item (ii) of this Subparagraph, shall be as specified in27
Subitems (aa), (bb), and (cc) of this Item according to the provisions in Subitems28
(dd), (ee), and (ff) of this Item:29
(aa) For annuities and guaranteed interest contracts valued on an issue year30 SB NO. 101 ENROLLED
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basis:1
Weighting Factor2
Guarantee for Plan Type3
Duration in Years ABC4
5 years or less: .80.60.505
More than 5 years, but not more than 10 years: .75.60.506
More than 10 years, but not more than 20 years: .65.50.457
More than 20 years: .45.35.358
(bb) Plan Type9
ABC10
For annuities and guaranteed interest contracts valued11
on a change in fund basis, the factors shown in (a) above Subparagraph (a)12
of this Paragraph increased by: .15.25.0513
(cc) Plan Type14
ABC15
For annuities and guaranteed interest contracts valued on16
an issue year basis, other than those with no cash settlement17
options, which do not guarantee interest on considerations18
received more than one year after issue or purchase and for19
annuities and guaranteed interest contracts valued on a change20
in fund basis which do not guarantee interest rates on21
considerations received more than twelve months beyond22
the valuation date, the factors shown in Subitem (aa) or derived23
in Subitem (bb) increased by: .05.05.0524
(dd) For other annuities with cash settlement options and guaranteed interest25
contracts with cash settlement options, the guarantee duration is the number of years26
for which the contract guarantees interest rates in excess of the calendar year27
statutory valuation interest rate for life insurance policies with guarantee duration in28
excess of twenty years. For other annuities with no cash settlement options and for29
guaranteed interest contracts with no cash settlement options, the guarantee duration30 SB NO. 101 ENROLLED
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is the number of years from the date of issue or date of purchase to the date annuity1
benefits are scheduled to commence.2
(ee) The plan type as used in the above tables is defined as follows:3
Plan Type A: At any time the policyholder may withdraw funds only with4
an adjustment to reflect changes in interest rates or asset5
values since receipt of the funds by the insurer, or without6
such adjustment but in installments over five years or more,7
or as an immediate life annuity, or no withdrawal as8
permitted.9
Plan Type B: Before expiration of the interest rate guarantee, the10
policyholder may withdraw funds only with an adjustment to11
reflect changes in interest rates or asset values since receipt12
of the funds by the insurer, or without such adjustment but in13
installments over five years or more, or no withdrawal is14
permitted. At the end of the interest rate guarantee, funds may15
be withdrawn without such adjustment in a single sum or16
installments over less than five years.17
Plan Type C: The policyholder may withdraw funds before expiration of18
the interest rate guarantee in a single sum or installments over19
less than five years either without adjustment to reflect20
changes in the interest rates or asset values since receipt of21
the funds by the insurer, or subject only to a fixed surrender22
charge stipulated in the contract as a percentage of the fund.23
(ff) An insurer may elect to value guaranteed interest contracts with cash24
settlement options and annuities with cash settlement options on either an issue year25
basis or on a change in fund basis. Guaranteed interest contracts with no cash26
settlement options and other annuities with no cash settlement options shall be27
valued on an issue year basis. As used in this Paragraph, an issue year basis of28
valuation refers to a valuation basis under which the interest rate used to determine29
the minimum valuation standard for the entire duration of the annuity or guaranteed30 SB NO. 101 ENROLLED
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interest contract is the calendar year valuation interest rate for the year of issue or1
year of purchase of the annuity or guaranteed interest contract, and the change in2
fund basis of valuation refers to a valuation basis under which the interest rate used3
to determine the minimum valuation standard applicable to each change in the fund4
held under the annuity or guaranteed interest contract is the calendar year valuation5
interest rate for the year of the change in the fund.6
(d) The reference interest rate referred to in Subparagraph (b) of this7
Paragraph shall be defined as follows:8
(i) For all life insurance, the lesser of the average over a period of thirty-six9
months and the average over a period of twelve months, ending on June thirtieth of10
the calendar year next preceding the year of issue, of the Monthly Average of the11
Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors12
Service, Inc.13
(ii) For a single premium immediate annuity and for annuity benefits14
involving life contingencies arising from other annuities with cash settlement options15
and guaranteed interest contracts with cash settlement options, the average over a16
period of twelve months, ending on June thirtieth of the calendar year of issue or17
year of purchase, of the Monthly Average of the Composite Yield on Seasoned18
Corporate Bonds, as published by Moody's Investors Service, Inc.19
(iii) For other annuities with cash settlement options and guaranteed interest20
contracts with cash settlement options, valued on a year of issue basis, except as21
stated in Subitem (c)(iii)(bb) of this Paragraph with guarantee duration in excess of22
ten years, the lesser of the average over a period of twelve months, ending on June23
thirtieth of the calendar year of issue or purchase, of the Monthly Average of the24
Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors25
Service, Inc.26
(iv) For other annuities with cash settlement options and guaranteed interest27
contracts with cash settlement options valued on a year of issue basis, except as28
stated in Item (ii) of this Subparagraph, with guarantee duration of ten years or less,29
the average over a period of twelve months, ending on June thirtieth of the calendar30 SB NO. 101 ENROLLED
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year of issue or purchase, of the Monthly Average of the Composite Yield on1
Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc.2
(v) For other annuities with no cash settlement options and for guaranteed3
interest contracts with no cash settlement options, the average over a period of4
twelve months, ending on June thirtieth of the calendar year of issue or purchase, of5
the Monthly Average of the Composite Yield on Seasoned Corporate Bonds as6
published by Moody's Investors Service, Inc.7
(vi) For other annuities with cash settlement options and guaranteed interest8
contracts with cash settlement options, valued on a change in fund basis, except as9
stated in (ii) above, the average over a period of twelve months, ending on June10
thirtieth of the calendar year of the change in the fund, of the Monthly Average of11
the Composite Yield on Seasoned Corporate Bonds as published by Moody's12
Investors Service, Inc.13
(e) In the event that the Monthly Average of the Composite Yield on14
Seasoned Corporate Bonds is no longer published by Moody's Investors Service,15
Inc., or in the event that the National Association of Insurance Commissioners16
determines that the Monthly Average of the Composite Yield on Seasoned17
Corporate Bonds as published by Moody's Investors Service, Inc. is no longer18
appropriate for the determination of the reference interest rate, then an alternative19
method for determination of the reference interest rate, which is adopted by the20
National Association of Insurance Commissioners and approved by the21
commissioner, shall be substituted.22
(4)(a) Except as otherwise provided in Paragraphs (5), (6), and (8) of this23
Subsection, reserves according to the Commissioner's Reserve Valuation Method for24
the life insurance and endowment benefits of policies providing for a uniform25
amount of insurance and requiring the payment of uniform premiums, shall be the26
excess, if any, of the present value at the date of valuation of such future guaranteed27
benefits provided for by such policies, over the then present value of any future28
modified net premiums therefor. The modified net premiums for any such policy29
shall be the uniform percentage of the respective contract premiums, excluding extra30 SB NO. 101 ENROLLED
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premiums on substandard policies, for such benefits that, at the date of issue of the1
policy, the present value of all modified net premiums shall be equal to the sum of2
the then present value of such benefits provided for by the policy and the excess of3
Item (i) of this Subparagraph over Item (ii) of this Subparagraph as follows:4
(i) A net level annual premium equal to the present value at the date of issue5
of such benefits provided for after the first policy year, divided by the present value6
at the date of issue of an annuity of one per annum payable on the first and each7
subsequent anniversary of such policy on which a premium falls due; provided8
however, that such net level annual premium shall not exceed the net level annual9
premium on the nineteen year premium whole life plan for insurance of the same10
amount at an age one year higher than the age at issue of such policy.11
(ii) A net one year term premium for such benefits provided for in the first12
policy year.13
(b) Any life insurance policy issued on or after January 1, 1986, for which14
the contract premium in the first policy year exceeds that of the second year and for15
which no comparable additional benefit is provided in the first year for such excess16
and which provides an endowment benefit or a cash surrender value, or a17
combination thereof, in an amount greater than such excess premium, the reserve18
according to the Commissioner's Reserve Valuation Method as of any policy19
anniversary occurring on or before the assumed ending date defined herein as the20
first policy anniversary on which the sum of any endowment benefit and any cash21
surrender value then available is greater than such excess premium shall, except as22
otherwise provided in Paragraph (8) of this Subsection be the greater of the reserve23
as of such policy anniversary calculated as described in Subparagraph (a) of this24
Paragraph and the reserve as of such policy anniversary calculated as described in25
that Subparagraph, but with the value defined in that Subparagraph being reduced26
by fifteen percent of the amount of such excess first year premium, all present values27
of benefits and premiums being determined without reference to premiums or28
benefits provided for by the policy after the assumed ending date, the policy being29
assumed to mature on such date as an endowment, and the cash surrender value30 SB NO. 101 ENROLLED
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provided on such date being considered as an endowment benefit. In making the1
above comparison the mortality and interest bases stated in Paragraphs (1) and (3)2
of this Subsection shall be used.3
(c) Reserves according to the Commissioner's Reserve Valuation Method for4
life insurance policies providing for a varying amount of insurance or requiring the5
payment of varying premiums shall be calculated by a method consistent with the6
principles of this Paragraph. Reserves for group annuity and pure endowment7
contracts purchased under a retirement plan or plan of deferred compensation,8
established or maintained by an employer, including a partnership or sole9
proprietorship, or by an employee organization, or by both, other than a plan10
providing individual retirement accounts or individual retirement annuities under11
Section 408 of the Internal Revenue Code, as now or hereafter amended; disability12
and accidental death benefits in all policies and contracts; and all other benefits,13
except life insurance and endowment benefits in life insurance policies and benefits14
provided by all other annuity and pure endowment contracts, shall be calculated by15
a method consistent with the benefits granted and approved by the commissioner.16
(5)(a) This Section shall apply to all annuity and pure endowment contracts17
other than group annuity and pure endowment contracts purchased under a18
retirement plan or plan of deferred compensation, established or maintained by an19
employer (including a partnership or sole proprietorship) or by an employee20
organization, or by both, other than a plan providing individual retirement accounts21
or individual retirement annuities under Section 408 of the Internal Revenue Code,22
as now or hereafter amended.23
(b) Reserves according to the commissioner's annuity reserve method for24
benefits under annuity or pure endowment contracts, excluding any disability and25
accidental death benefits in such contracts shall be the greatest of the respective26
excesses of the present values, at the date of valuation, of the future guaranteed27
benefits, including guaranteed nonforfeiture benefits, provided for by such contracts28
at the end of each respective contract year, over the present value, at the date of29
valuation, of any future valuation considerations derived from future gross30 SB NO. 101 ENROLLED
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considerations, required by the terms of such contract, that become payable prior to1
the end of such respective contract year. The future guaranteed benefits shall be2
determined by using the mortality table, if any, and the interest rate, or rates,3
specified in such contracts for determining guaranteed benefits. The valuation4
considerations are the portions of the respective gross considerations applied under5
the terms of such contracts to determine nonforfeiture values.6
(6)(a) An insurer's aggregate reserves for all life insurance policies,7
excluding disability and accidental death benefits, shall in no event be less than the8
aggregate reserves calculated in accordance with the methods set forth in Paragraphs9
(4), (5), (8), and (10) of this Subsection and the mortality table or tables, and rate or10
rates of interest used in calculating nonforfeiture benefits for such policies.11
(b) In no event shall the aggregate reserves for all policies, contracts, and12
benefits be less than the aggregate reserves determined to be necessary to render the13
opinion required in R.S. 22:752.14
(c) The commissioner of insurance shall promulgate a regulation containing15
the minimum standards applicable to the valuation of health and accident plans.16
(7) Reserves for any category of policies, contracts, or benefits may be17
calculated at the option of the insurer according to any standards which produce18
greater aggregate reserves for such category than those calculated according to the19
minimum standard herein provided, but the rate or rates of interest used for policies20
and contracts, other than annuity and pure endowment contracts, shall not be higher21
but may be lower than the corresponding rate or rates of interest used in calculating22
any nonforfeiture benefits provided for therein.23
(8)(a) If in any contract year the gross premium charged by any life insurer24
on any policy or contract is less than the valuation net premium for the policy or25
contract calculated by the method used in calculating the reserve thereon but using26
the minimum valuation standards of mortality and rate of interest, the minimum27
reserve required for such policy or contract shall be the greater of either the reserve28
calculated according to the mortality table, rate of interest, and method actually used29
for such policy or contract, or the reserve calculated by the method actually used for30 SB NO. 101 ENROLLED
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such policy or contract but using the minimum valuation standards of mortality and1
rate of interest and replacing the valuation net premium by the actual gross premium2
in each contract year for which the valuation net premium exceeds the actual gross3
premium. The minimum valuation standards of mortality and rate of interest referred4
to in this Paragraph are those standards stated in Paragraphs (1) and (3) of this5
Subsection.6
(b) Any life insurance policy issued on or after January 1, 1986, for which7
the gross premium in the first policy year exceeds that of the second year and for8
which no comparable additional benefit is provided in the first year for such excess9
and which provides an endowment benefit or a cash surrender value or a10
combination thereof in an amount greater than such excess premium, the foregoing11
provisions of this Paragraph (8) of this Subsection shall be applied as if the method12
actually used in calculating the reserve for such policy were the method described13
in Paragraph (4) of this Subsection, ignoring Subparagraph (b) of that Paragraph. The14
minimum reserve at each policy anniversary of such a policy shall be the greater of15
the minimum reserve calculated in accordance with Paragraph (4) of this Subsection,16
including Subparagraph (b) of that Paragraph, and the minimum reserve calculated17
in accordance with this Paragraph (8) of this Subsection.18
(9) Nothing in this Subsection shall apply to any policy issued by any insurer19
subject to the provisions of Subparts D and E of Part I of this Chapter, R.S. 22:13120
et seq. and R.S. 22:141 et seq., unless such insurer elects to comply with the standard21
non-forfeiture law.22
(10) In the case of any plan of life insurance which provides for future23
premium determination, the amounts of which are to be determined by the insurer24
based on then estimates of future experience, or in the case of any plan of life25
insurance or annuity which is of such a nature that the minimum reserves cannot be26
determined by the methods described in Paragraphs (4), (5), and (8) of this27
Subsection, the reserves which are held under any such plan shall be appropriate in28
relation to the benefits and the pattern of premiums for that plan, and shall be29
computed by a method which is consistent with the principles of this Section as30 SB NO. 101 ENROLLED
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determined by the commissioner.1
C. For policies issued on or after the operative date of the valuation2
manual:3
(1) The standard prescribed in the valuation manual is the minimum4
standard of valuation required under R.S. 22:751(A), except as provided under5
Paragraph (5) or (7) of this Subsection.6
(2) The operative date of the valuation manual is January first of the7
first calendar year following the first July first as of which all of the following8
have occurred:9
(a) The valuation manual has been adopted by the NAIC by an10
affirmative vote of at least forty-two members, or three-fourths of the members11
voting, whichever is greater.12
(b) The Standard Valuation Law, as amended by the NAIC in 2009, or13
legislation including substantially similar terms and provisions, has been14
enacted by states representing greater than seventy-five percent of the direct15
premiums written as reported in the following annual statements submitted for16
2008: life, accident and health annual statements; health annual statements; or17
fraternal annual statements. 18
(c) The Standard Valuation Law, as amended by the NAIC in 2009, or19
legislation including substantially similar terms and provisions, has been20
enacted by at least forty-two of the fifty-five NAIC member jurisdictions.21
(3) Unless a change in the valuation manual specifies a later effective22
date, changes to the valuation manual shall be effective on January first23
following the date when the change to the valuation manual has been adopted24
by the NAIC by an affirmative vote representing:25
(a) At least three-fourths of the members of the NAIC voting, but not26
less than a majority of the total membership.27
(b) Members of the NAIC representing jurisdictions totaling greater28
than seventy-five percent of the direct premiums written as reported in the29
following annual statements most recently available prior to the vote in30 SB NO. 101 ENROLLED
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Subparagraph(a) of this Paragraph: life, accident and health annual statements,1
health annual statements, or fraternal annual statements.2
(4) For policies not subject to a principle-based valuation under3
Subsection D of this Section, the minimum valuation standard shall use one of4
the following:5
(a) The minimum valuation standard that was in effect prior to the6
operative date of the valuation manual.7
(b) A reserve standard that quantifies the benefits, guarantees, and8
funding associated with the contract risk and a level of conservatism that9
reflects all unfavorable events that have a reasonable probability of occurring.10
(5) In the absence of a specific valuation requirement, the company shall11
comply with minimum valuation standards prescribed by the commissioner by12
rule or regulation.13
(6) The commissioner may engage a qualified actuary, at the expense of14
the company, to perform an actuarial examination of the company and opine15
on the appropriateness of any reserve assumption or method used by the16
company, or to review and opine on a company's compliance with any valuation17
requirement. The commissioner may rely upon the opinion of a qualified18
actuary engaged by the commissioner of another state, district, or territory of19
the United States.20
(7) The commissioner may require a company to change any assumption21
or method that in the opinion of the commissioner is necessary to comply with22
the requirements of the valuation manual, and the company shall adjust the23
reserves as required by the commissioner.24
(8) Upon written application of a domestic insurer, the commissioner25
may exempt the insurer or specific product forms or lines from the26
requirements of this Subsection.27
D.(1) For policies or contracts specified in the valuation manual as being28
subject to principle-based valuation, a company shall establish reserves that:29
(a) Quantify the benefits, guarantees, and funding associated with the30 SB NO. 101 ENROLLED
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contracts and their risk at a level of conservatism that reflects conditions that1
include unfavorable events that have a reasonable probability of occurring2
during the lifetime of the contracts, including conditions appropriately adverse3
to quantify any significant tail risk.4
(b) Incorporate assumptions, risk analysis methods, financial models,5
and management techniques that are consistent with, but not necessarily6
identical to, those utilized within the company's overall risk assessment process,7
while recognizing potential differences in financial reporting structures and any8
prescribed assumptions or methods.9
(c) Incorporate assumptions that are derived from one of the following:10
(i) The valuation manual.11
(ii) When not prescribed in the valuation manual, one of the following:12
(aa) The company's available, relevant, and statistically credible13
experience.14
(bb) To the extent that company data are not available, relevant, or15
statistically credible, other available, relevant, and statistically credible16
experience.17
(d) Provide margins for uncertainty including adverse deviation and18
estimation error, such that the greater the uncertainty the larger the margin19
and resulting reserve.20
(2) As specified in the valuation manual, a company using a21
principle-based valuation for one or more policies or contracts shall:22
(a) Establish procedures for corporate governance and oversight of the23
actuarial valuation function consistent with those described in the valuation24
manual.25
(b) Provide to the commissioner and the board of directors an annual26
certification of the effectiveness of the principle-based valuation internal27
controls. The controls shall be designed to assure that all material risks are28
included in the valuation in accordance with the valuation manual. The29
certification shall be based on the controls in place as of the end of the30 SB NO. 101 ENROLLED
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preceding calendar year.1
(c) Develop a principle-based valuation report that complies with2
standards prescribed in the valuation manual and file it with the commissioner3
when requested.4
(3) A principle-based valuation may include a prescribed formulaic5
reserve component.6
E. For policies in force on or after the operative date of the valuation7
manual, a company shall submit mortality, morbidity, policyholder behavior,8
or expense experience and other data as prescribed in the valuation manual.9
F. Any such insurer which at any time shall have adopted any standard of10
valuation producing greater aggregate reserves than those calculated according to the11
minimum standard herein provided in this Section may, with the approval of the12
commissioner of insurance, adopt any lower standard of valuation, but not lower than13
the minimum herein provided in this Section. However, for the purposes of this14
Section, the holding of additional reserves previously determined by a qualified15
actuary to be necessary to render the opinion required by the this Subpart shall not16
be deemed to be the adoption of a higher standard of valuation.17
G. For purposes of this Subpart, "confidential information" shall mean:18
(1) A memorandum in support of an opinion submitted under this19
Section and any other documents, materials and other information, including20
but not limited to all working papers, and copies thereof, created, produced or21
obtained by or disclosed to the commissioner or any other person in connection22
with such memorandum.23
(2) All documents, materials and other information, including but not24
limited to all working papers, and copies thereof, created, produced or obtained25
by or disclosed to the commissioner or any other person in the course of an26
examination made under this Section provided, however, that if an examination27
report or other material prepared in connection with an examination made28
under Chapter 8 of this Title is not held as private and confidential information29
under Chapter 8 of this Title, an examination report or other material prepared30 SB NO. 101 ENROLLED
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in connection with an examination made under this Section shall not be1
confidential information to the same extent as if such examination report or2
other material had been prepared under Chapter 8 of this Title.3
(3) Any reports, documents, materials and other information developed4
by a company in support of, or in connection with, an annual certification by5
the company under this Section evaluating the effectiveness of the company’s6
internal controls with respect to a principle-based valuation and any other7
documents, materials, and other information, including but not limited to all8
working papers, and copies thereof, created, produced, or obtained by or9
disclosed to the commissioner or any other person in connection with such10
reports, documents, materials, and other information.11
(4) Any principle-based valuation report developed under this Section12
and any other documents, materials and other information, including but not13
limited to all working papers, and copies thereof, created, produced, or obtained14
by or disclosed to the commissioner or any other person in connection with such15
report.16
(5) Any documents, materials, data and other information submitted by17
a company under this Section, to be known collectively as "experience data"18
and any other documents, materials, data and other information, including but19
not limited to all working papers, and copies thereof, created or produced in20
connection with such experience data, in each case that include any potentially21
company-identifying or personally identifiable information, that is provided to22
or obtained by the commissioner together with any experience data, the23
experience materials, and any other documents, materials, data and other24
information, including but not limited to all working papers, and copies thereof,25
created, produced or obtained by or disclosed to the commissioner or any other26
person in connection with such experience materials.27
H. Privilege for, and confidentiality of, confidential information.28
(1) Except as provided in this Section, a company’s confidential29
information is confidential by law and privileged, and shall not be subject to the30 SB NO. 101 ENROLLED
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Public Records Law, R.S. 44:1.1 et seq., shall not be subject to subpoena, and1
shall not be subject to discovery or admissible in evidence in any private civil2
action; however, the commissioner is authorized to use the confidential3
information in the furtherance of any regulatory or legal action brought against4
the company as a part of the commissioner’s official duties.5
(2) Neither the commissioner nor any person who received confidential6
information while acting under the authority of the commissioner shall be7
permitted or required to testify in any private civil action concerning any8
confidential information.9
(3) In order to assist in the performance of the commissioner’s duties,10
the commissioner may share confidential information (a) with other state,11
federal, and international regulatory agencies and with the NAIC and its12
affiliates and subsidiaries and (b) in the case of confidential information13
specified in Paragraphs (G)(1) and (4) of this Section only, with the Actuarial14
Board for Counseling and Discipline, or its successor, upon request stating that15
the confidential information is required for the purpose of professional16
disciplinary proceedings and with state, federal, and international law17
enforcement officials; in the case of Subparagraphs (a) and (b) of this18
Paragraph, provided that such recipient agrees, and has the legal authority to19
agree, to maintain the confidentiality and privileged status of such documents,20
materials, data, and other information in the same manner and to the same21
extent as required for the commissioner.22
(4)(a) The commissioner may receive documents, materials, data and23
other information, including otherwise confidential and privileged documents,24
materials, data or information, from the NAIC and its affiliates and25
subsidiaries, from regulatory or law enforcement officials of other foreign or26
domestic jurisdictions, and from the Actuarial Board for Counseling and27
Discipline, or its successor, and shall maintain as confidential or privileged any28
document, material, data or other information received with notice or the29
understanding that it is confidential or privileged under the laws of the30 SB NO. 101 ENROLLED
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jurisdiction that is the source of the document, material or other information.1
(b) The commissioner may enter into agreements governing sharing and2
use of information consistent with this Subsection.3
(5) The commissioner shall have the authority to promulgate rules and4
regulations to register and regulate health insurance navigators that receive5
funding or certification from any state or federal governmental agency.6
Implementation of any rule or regulation relative to health insurance navigators7
shall be subject to legislative oversight by the House and Senate committees on8
insurance pursuant to the Administrative Procedure Act, R.S. 49:968 et seq.9
The House and Senate committees on insurance, meeting jointly, shall conduct10
a hearing to review any proposed rules and regulations and determine whether11
the rules or regulations are acceptable or unacceptable. No rule or regulation12
promulgated pursuant to this Paragraph shall become effective before the13
required hearing to determine acceptability has been conducted.14
(6) No waiver of any applicable privilege or claim of confidentiality in15
the confidential information shall occur as a result of disclosure to the16
commissioner under this Section or as a result of sharing as authorized in17
Paragraph (3) of this Subsection.18
(7) A privilege established under the law of any state or jurisdiction that19
is substantially similar to the privilege established under this Subsection shall20
be available and enforced in any proceeding in, and in any court of, this state.21
(8) In this Section "regulatory agency", "law enforcement agency" and22
the "NAIC" include but are not limited to their employees, agents, consultants23
and contractors.24
I. Notwithstanding Subsection H of this Section, any confidential25
information specified in Paragraphs (G)(1) and (4) of this Section:26
(1) May be subject to subpoena for the purpose of defending an action27
seeking damages from the appointed actuary submitting the related28
memorandum in support of an opinion submitted under R.S. 22:752 or29
principle-based valuation report developed under this Section by reason of an30 SB NO. 101 ENROLLED
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action required by this Subpart or by regulations promulgated hereunder.1
(2) May otherwise be released by the commissioner with the written2
consent of the company. 3
(3) Once any portion of a memorandum in support of an opinion4
submitted under R.S. 22:752 or a principle-based valuation report developed5
under this Section is cited by the company in its marketing or is publicly6
volunteered to or before a governmental agency other than a state insurance7
department or is released by the company to the news media, all portions of8
such memorandum or report shall no longer be confidential.9
J. For the purposes of this Subpart, the following definitions shall apply10
on and after the operative date of the valuation manual:11
(1) "Accident and health insurance" means contracts that incorporate12
morbidity risk and provide protection against economic loss resulting from13
accident, sickness, or medical conditions and as may be specified in the14
valuation manual.15
(2) "Appointed actuary" means a qualified actuary who is appointed in16
accordance with the valuation manual to prepare the actuarial opinion required17
by R.S. 22:752. 18
(3) "Company" means an entity that has written, issued, or reinsured19
life insurance contracts, accident and health insurance contracts, or deposit-20
type contracts and one of the following:21
(a) Has at least one such policy or contract in force or on claim in this22
state.23
(b) Meets the requirement to hold a certificate of authority to write such24
policies or contracts in this state and has written, issued, or reinsured such25
policies or contracts in any state.26
(4) "Deposit-type contract" means a contract that does not incorporate27
mortality or morbidity risks, and as may be specified in the valuation manual.28
(5) "Life insurance" means contracts that incorporate mortality risk,29
including annuity and pure endowment contracts, and as may be specified in the30 SB NO. 101 ENROLLED
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valuation manual. 1
(6) "Policyholder behavior" means any action a policyholder, contract2
holder, or any other person with the right to elect options, such as a certificate3
holder, may take under a policy or contract subject to this Subpart including4
but not limited to lapse, withdrawal, transfer, deposit, premium payment, loan,5
annuitization, or benefit elections prescribed by the policy or contract but6
excluding events of mortality or morbidity that result in benefits prescribed in7
their essential aspects by the terms of the policy or contract.8
(7) "Principle-based valuation" means a reserve valuation that uses one9
or more methods or one or more assumptions determined by the insurer and is10
required to comply with Subsection D of this Section as specified in the11
valuation manual.12
(8) "Qualified actuary" means an individual qualified to sign the13
applicable statement of actuarial opinion in accordance with the American14
Academy of Actuaries qualification standards for actuaries signing such15
statements and meets the requirements specified in the valuation manual.16
(9) "Tail risk" means risk that occurs either when the frequency of low17
probability events is higher than expected under a normal probability18
distribution or when there are observed events of very significant size or19
magnitude.20
(10) "Valuation manual" means the manual of valuation instructions21
adopted by the NAIC as specified in this Subpart including any subsequent22
amendments.23
* * *24
§936. Standard nonforfeiture law for life insurance25
* * *26
G.27
* * *28
(8) All adjusted premiums and present values referred to in this Section shall29
be calculated for all policies of ordinary insurance on the basis of the30 SB NO. 101 ENROLLED
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Commissioner's 1980 Standard Ordinary Mortality Table or at the election of the1
insurer for any one or more specified plans of life insurance, the Commissioner's2
1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors;3
shall be calculated for all policies of industrial insurance on the basis of the4
Commissioner's 1961 Standard Industrial Mortality Table; and shall be calculated5
for all policies issued in a particular calendar year on the basis of a rate of interest6
not exceeding the nonforfeiture interest rate as defined in this Subsection for policies7
issued in that calendar year; however,8
* * *9
(f) Any For policies issued prior to the operative date of the valuation10
manual, any ordinary life mortality tables, adopted after 1980, by the National11
Association of Insurance Commissioners that are approved by the commissioner for12
use in determining the minimum nonforfeiture standard may be substituted for the13
Commissioner's 1980 Standard Ordinary Mortality Table with or without Ten-Year14
Select Mortality Factors or for the Commissioner's 1980 Extended Term Insurance15
Table.16
(g) For policies issued on or after the operative date of the valuation17
manual, the valuation manual shall provide the commissioner's standard18
mortality table for use in determining the minimum nonforfeiture standard that19
may be substituted for the Commissioner's 1980 Standard Ordinary Mortality20
Table with or without Ten-Year Select Mortality Factors or for the21
Commissioner's 1980 Extended Term Insurance Table. If the commissioner22
approves by regulation any commissioner's standard ordinary mortality table23
adopted by the National Association of Insurance Commissioners for use in24
determining the minimum nonforfeiture standard for policies issued on or after25
the operative date of the valuation manual, then that minimum nonforfeiture26
standard shall supersede the minimum nonforfeiture standard provided by the27
valuation manual.28
(h) Any For policies issued prior to the operative date of the valuation29
manual, any industrial life mortality tables adopted after 1980, by the National30 SB NO. 101 ENROLLED
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Association of Insurance Commissioners that are approved by the commissioner for1
use in determining the minimum nonforfeiture standard may be substituted for the2
Commissioner's 1961 Standard Industrial Mortality Table or the Commissioner's3
1961 Industrial Extended Term Insurance Table.4
(i) For policies issued on or after the operative date of the valuation5
manual, the valuation manual shall provide the commissioner's standard6
mortality table for use in determining the minimum nonforfeiture standard that7
may be substituted for the Commissioner's 1961 Standard Industrial Mortality8
Table or the Commissioner's 1961 Industrial Extended Term Insurance Table.9
If the commissioner approves by regulation any commissioner's standard10
industrial mortality table adopted by the National Association of Insurance11
Commissioners for use in determining the minimum nonforfeiture standard for12
policies issued on or after operative date of the valuation manual, then that13
minimum nonforfeiture standard shall supersede the minimum nonforfeiture14
standard provided by the valuation manual.15
(9)(a) The For policies issued prior to the operative date of the valuation16
manual, the nonforfeiture interest rate per annum for any policy issued in a17
particular calendar year shall be equal to one hundred and twenty five percent of the18
interest rate used in determining the minimum standard for the valuation of such19
policy as defined in the R.S. 22:753, rounded to the nearer one quarter of one20
percent.21
(b) For policies issued on or after the operative date of the valuation22
manual, the nonforfeiture interest rate per annum for any policy issued in a23
particular calendar year shall be provided by the valuation manual.24
* * *25
J.26
* * *27
(7) The operative date of the valuation manual as used in this Section28
shall be the date determined according to R.S. 22:753(C)(2).29
* * *30 SB NO. 101 ENROLLED
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Section 2. R.S. 44:4.1(B)(11) is hereby amended and reenacted to read as follows:1
§4.1. Exceptions2
* * *3
B. The legislature further recognizes that there exist exceptions, exemptions,4
and limitations to the laws pertaining to public records throughout the revised5
statutes and codes of this state. Therefore, the following exceptions, exemptions, and6
limitations are hereby continued in effect by incorporation into this Chapter by7
citation:8
* * *9
(11) R.S. 22:2, 14, 42.1, 88, 244, 461, 572, 572.1, 574, 618, 706, 732, 752,10
753, 771, 1203, 1460, 1466, 1546, 1644, 1656, 1723, 1927, 1929, 1983, 1984, 2036,11
230312
* * *13
Section 3. This Act shall become effective on January 1, 2014; if vetoed by the14
governor and subsequently approved by the legislature, this Act shall become effective on15
January 1, 2014, or on the day following such approval by the legislature, whichever is later.16
PRESIDENT OF THE SENATE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: