NAIC Life Insurance and Annuities Committee Meeting Report: September 10

On Wednesday, September 10, 2008, the National Association of Insurance Commissioners (“NAIC”) held a Life Insurance and Annuities Committee (“Committee”) meeting. The agenda included the consideration and adoption of the Actuarial Guideline Commissioners Annuity Reserve Valuation Method for Variable Annuities (“AG VACARVM”) and Annuity Disclosure Working Group Model Law Development Request for Annuity Disclosure Model Regulation. To view the complete agenda, click here.

Chairman Eric Dinallo of New York called the meeting to order with a quorum of members in attendance.

Chairman Dinallo introduced the Model Law Development Request regarding the Annuity Disclosure Model Regulation (“Model #245”).

A representative from the American Council of Life Insurers (“ACLI”) expressed concern that by amending this Model Law, its adoption by the states would be halted. The ACLI representative urged Committee members to consider achieving the desired improvements without inviting further discussion.

Iowa’s Insurance Commissioner expressed concern about halting the states’ adoption of the Model Law, stating that the NAIC must move forward with it to demonstrate to the Securities and Exchange Commission (“SEC”) that a solution is being reached regarding annuity disclosure.

To view the Request for Model Law Development, click here.

The Committee voted unanimously to move forward on perfection of Model #245.

Chairman Dinallo gave an overview of the AG VACARVM, which included the most controversial aspects of the project to date. These are:

• The level of the Conditional Tail Expectation
• The inclusion of a Standard Scenario
• The inclusion of revenue sharing income in the projections of accumulated deficiencies
• The modeling of hedges

The Commissioner from Connecticut expressed concern that all of his state’s related issues had not been addressed by the current AG VACARVM version. Saying he would still vote to adopt the AG VACARVM, he reiterated his understanding that the NAIC Life and Health Actuarial Task Force will be examining these issues.

The Committee voted unanimously to adopt the AG VACARVM, which will become effective December 31, 2009, and will supersede Actuarial Guidelines (“AG”) 34 and 39.

AG 34 will be repealed as of December 30, 2009, and AG 39 will sunset on December 30, 2009. To view a copy of the August 20, 20088 version of the AG VACARVM, which was adopted by the Life and Health Actuarial Task Force, click here.

An update on indexed annuities issues was given. A representative from the National Association of Insurance and Financial Advisors stated his organization’s intent to file letters with the SEC regarding indexed annuities.

The meeting was then adjourned.

Should you have any questions or comments, please do not hesitate to contact Colodny Fass.

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