376.380. Legal minimum standards for valuation--procedures--reserves required--life insurance company to submit opinion of actuary, contents.
Legal minimum standards for valuation--procedures--reservesrequired--life insurance company to submit opinion of actuary,contents.
376.380. 1. The legal minimum standard for valuation ofpolicies and contracts and the reserves to be maintained thereonshall be as follows:
(1) For those policies and contracts issued prior to theoperative date provided in subsection 14 of section 376.670:
(a) Except as otherwise provided in subdivision (3) of thissubsection, the legal minimum standard for valuation of policiesof life insurance or annuity contracts issued prior to April 13,1934, shall be the Actuaries' or Combined Experience Table ofMortality, with interest at the rate of five percent per annumfor group annuity contracts and four percent per annum for allother policies and contracts; and for policies of life insuranceand annuity contracts issued on and after April 13, 1934, suchminimum standard shall be the American Experience Table ofMortality with interest at the rate of five percent per annum forgroup annuity contracts and three and one-half percent per annumfor all other policies and contracts;
(b) The director may vary the legal minimum standards ofinterest and mortality for annuity contracts and in particularcases of invalid or substandard lives and other extra hazards,and shall have the right and authority to designate the legalminimum standard for valuation of total and permanent disabilitybenefits and additional accidental death benefits;
(c) Policies issued by companies doing business in thisstate may provide for not more than one year preliminary terminsurance by incorporating in the provisions thereof, specifyingthe premium consideration to be received, a clause plainlyshowing that the first year's insurance under such policies isterm insurance, purchased by the whole or a part of the premiumto be received during the first policy year and shall be valuedaccordingly; provided, that if the premium charged for terminsurance under a limited payment life preliminary term policyproviding for the payment of all premiums thereon in less thantwenty years from the date of the policy, or under an endowmentpreliminary term policy, exceeds that charged for life insurancetwenty payment life preliminary term policies of the samecompany, the reserve thereon at the end of any year, includingthe first, shall not be less than the reserve on a twenty paymentlife preliminary term policy issued in the same year and at thesame age, together with an amount which shall be equivalent tothe accumulation of a net level premium sufficient to provide fora pure endowment at the end of the premium payment period equalto the difference between the value at the end of such period ofsuch twenty payment life preliminary term policy and the fullreserve at such time of such a limited payment life or endowmentpolicy. The premium payment period is the period during whichpremiums are concurrently payable under such twenty payment lifepreliminary term policy and such limited payment life orendowment policy;
(d) Reserves for all such policies and contracts may becalculated, at the option of the company, according to anystandards which produce greater aggregate reserves for all suchpolicies and contracts than the minimum reserves required bysubdivision (1) of this subsection. In the case of policyobligations of an insolvent life insurance company assumed orreinsured in bulk by an insurance company upon a basis requiringa separate accounting of the business and assets of suchinsolvent company and an application of any part of the earningstherefrom upon obligations which are not implicit in the originalterms of the policies or contracts assumed or reinsured, thedirector, in order to protect all policyholders of the reinsuringcompany, including the holders of all policies so assumed orreinsured, and to safeguard the future solvency of suchreinsuring company, shall have the right and authority todesignate standards of valuation for such reinsured policies andcontracts which will produce greater aggregate reserves for allsuch policies and contracts than the minimum reserves required bysubdivision (1) of this subsection or the terms and provisions ofthe policies and contracts so assumed or reinsured, and, in suchevent, such reinsuring company shall not, thereafter, adopt anylower standards of valuation without the approval of thedirector.
(2) For those policies and contracts issued on or after theoperative date provided in subsection 14 of section 376.670:
(a) Except as otherwise provided in subdivision (3) of thissubsection and subsection 2 of this section, the minimum standardfor the valuation of all such policies and contracts shall be thecommissioners reserve valuation methods defined in paragraphs(b), (c), (d), (e), and (h) of this subdivision, three andone-half percent interest on all such policies and contractsexcept those contracts specified in subparagraph c. of paragraph(a) of this subdivision which consist of single premium annuitycontracts and in subparagraph d. of paragraph (a) of thissubdivision which consists of group annuity contracts where theinterest rate shall be five percent, and except policies andcontracts, other than annuity and pure endowment contracts,issued on or after September 28, 1975, where the interest rateshall be four percent interest for such policies issued prior toSeptember 28, 1979, and four and one-half percent interest forsuch policies issued on or after September 28, 1979, and thefollowing tables:
a. For all ordinary policies of life insurance issued priorto the operative date provided in subsection 10 of section376.670 on the standard basis, excluding any disability andaccidental death benefits in such policies, the Commissioners1941 Standard Ordinary Mortality Table, and for such policiesissued on or after the operative date provided in subsection 10of section 376.670, and prior to the operative date of subsection10b of section 376.670, the Commissioners 1958 Standard OrdinaryMortality Table; provided that for any category of such policiesissued on or after September 28, 1979, on female risks allmodified net premiums and present values referred to in thissection may be calculated according to an age not more than sixyears younger than the actual age of the insured; and for suchpolicies issued on or after the operative date of subsection 10bof section 376.670:
i. The Commissioners 1980 Standard Ordinary MortalityTable; or
ii. At the election of the company for any one or morespecified plans of life insurance, the Commissioners 1980Standard Ordinary Mortality Table with Ten-Year Select MortalityFactors; or
iii. Any ordinary mortality table, adopted after 1980 bythe National Association of Insurance Commissioners, that isapproved by regulation promulgated by the director for use indetermining the minimum standard of valuation for such policies;
b. For all industrial life insurance policies issued on thestandard basis, excluding any disability and accidental deathbenefits in such policies, the 1941 Standard Industrial MortalityTable for such policies issued prior to the operative date ofsubsection 10a of section 376.670 and for such policies issued onor after such operative date, the Commissioners 1961 StandardIndustrial Mortality Table or any industrial mortality table,adopted after 1980 by the National Association of InsuranceCommissioners, that is approved by regulation promulgated by thedirector for use in determining the minimum standard of valuationfor such policies;
c. For individual annuity and pure endowment contracts,excluding any disability and accidental death benefits in suchpolicies, the 1937 Standard Annuity Mortality Table or, at theoption of the company, the Annuity Mortality Table for 1949,Ultimate, or any modification of either of these tables approvedby the director;
d. For group annuity and pure endowment contracts,excluding any disability and accidental death benefits in suchpolicies, the Group Annuity Mortality Table for 1951, anymodification of such table approved by the director, or, at theoption of the company, any of the tables or modifications oftables specified for individual annuity and pure endowmentcontracts;
e. For total and permanent disability benefits in orsupplementary to ordinary policies or contracts, for policies orcontracts issued on or after January 1, 1966, the tables ofperiod two disablement rates and the 1930 to 1950 terminationrates of the 1952 disability study of the Society of Actuaries,with due regard to the type of benefit or any tables ofdisablement rates and termination rates, adopted after 1980 bythe National Association of Insurance Commissioners, that areapproved by regulation promulgated by the director for use indetermining the minimum standard of valuation for such policies;for policies or contracts issued on or after January 1, 1961, andprior to January 1, 1966, either such tables or at the option ofthe company, the Class (3) Disability Table (1926); and forpolicies issued prior to January 1, 1961, the Class (3)Disability Table (1926). Any such table shall, for active lives,be combined with a mortality table permitted for calculating thereserves for life insurance policies;
f. For accidental death benefits in or supplementary topolicies issued on or after January 1, 1966, the 1959 AccidentalDeath Benefits Table or any accidental death benefits table,adopted after 1980 by the National Association of InsuranceCommissioners, that is approved by regulation promulgated by thedirector for use in determining the minimum standard of valuationfor such policies; for policies issued on or after January 1,1961, and prior to January 1, 1966, either such table or, at theoption of the company, the Inter-Company Double IndemnityMortality Table; and for policies issued prior to January 1,1961, the Inter-Company Double Indemnity Mortality Table. Eithertable shall be combined with a mortality table permitted forcalculating the reserves for life insurance policies;
g. For group life insurance, life insurance issued on thesubstandard basis and other special benefits, such tables as maybe approved by the director;
(b) Except as otherwise provided in paragraphs (d), (e),and (h) of this subdivision, reserves according to thecommissioners reserve valuation method, for the life insuranceand endowment benefits of policies providing for a uniform amountof insurance and requiring the payment of uniform premiums shallbe the excess, if any, of the present value, at the date ofvaluation, of such future guaranteed benefits provided for bysuch policies, over the then present value of any future modifiednet premiums therefor. The modified net premiums for any suchpolicy shall be such uniform percentage of the respectivecontract premiums for such benefits that the present value, atthe date of issue of the policy, of all such modified netpremiums shall be equal to the sum of the then present value ofsuch benefits provided for by the policy and the excess of a.over b., as follows:
a. A net level annual premium equal to the present value,at the date of issue, of such benefits provided for after thefirst policy year, divided by the present value, at the date ofissue, of an annuity of one per annum payable on the first andeach subsequent anniversary of such policy on which a premiumfalls due; provided, however, that such net level annual premiumshall not exceed the net level annual premium on the nineteenyear premium whole life plan for insurance of the same amount atan age one year higher than the age at issue of such policy;
b. A net one year term premium for such benefit providedfor in the first policy year; provided, that for any lifeinsurance policy issued on or after January 1, 1986, for whichthe contract premium in the first policy year exceeds that of thesecond year and for which no comparable additional benefit isprovided in the first year for such excess and which provides anendowment benefit or a cash surrender value or a combinationthereof in an amount greater than such excess premium, thereserve according to the commissioners reserve valuation methodas of any policy anniversary occurring on or before the assumedending date defined herein as the first policy anniversary onwhich the sum of any endowment benefit and any cash surrendervalue then available is greater than such excess premium shall,except as otherwise provided in paragraph (h) of thissubdivision, be the greater of the reserve as of such policyanniversary calculated as described in paragraph (b) of thissubdivision and the reserve as of such policy anniversarycalculated as described in paragraph (b) of this subdivision, butwith:
i. The value defined in subparagraph a. of paragraph (b)being reduced by fifteen percent of the amount of such excessfirst year premium;
ii. All present values of benefits and premiums beingdetermined without reference to premiums or benefits provided forby the policy after the assumed ending date;
iii. The policy being assumed to mature on such date as anendowment; and
iv. The cash surrender value provided on such date beingconsidered as an endowment benefit. In making the abovecomparison the mortality and interest bases stated in paragraph(a) of this subdivision and subsection 2 of this section shall beused;
(c) Reserves according to the commissioners reservevaluation method for:
a. Life insurance policies providing for a varying amountof insurance or requiring the payment of varying premiums;
b. Group annuity and pure endowment contracts purchasedunder a retirement plan or plan of deferred compensation,established or maintained by an employer (including a partnershipor sole proprietorship) or by an employee organization, or byboth, other than a plan providing individual retirement accountsor individual retirement annuities under section 408 of theInternal Revenue Code, as now or hereafter amended;
c. Disability and accidental death benefits in all policiesand contracts; and
d. All other benefits, except life insurance and endowmentbenefits in life insurance policies and benefits provided by allother annuity and pure endowment contracts, shall be calculatedby a method consistent with the principles of paragraph (b) ofthis subdivision;
(d) Paragraph (e) of this subdivision shall apply to allannuity and pure endowment contracts other than group annuity andpure endowment contracts purchased under a retirement plan orplan of deferred compensation, established or maintained by anemployer (including a partnership or sole proprietorship), or byan employee organization, or by both, other than a plan providingindividual retirement accounts or individual retirement annuitiesunder section 408 of the Internal Revenue Code, as now orhereafter amended;
(e) Reserves according to the commissioners annuity reservemethod for benefits under annuity or pure endowment contracts,excluding any disability and accidental death benefits in suchcontracts, shall be the greatest of the respective excesses ofthe present values, at the date of valuation, of the futureguaranteed benefits, including guaranteed nonforfeiture benefits,provided for by such contracts at the end of each respectivecontract year, over the present value, at the date of valuation,of any future valuation considerations derived from future grossconsiderations, required by the terms of such contract, thatbecome payable prior to the end of such respective contract year.The future guaranteed benefits shall be determined by using themortality table, if any, and the interest rate, or rates,specified in such contracts for determining guaranteed benefits.The valuation considerations are the portions of the respectivegross considerations applied under the terms of such contracts todetermine nonforfeiture values;
(f) In no event shall a company's aggregate reserves forall life insurance policies, excluding disability and accidentaldeath benefits, be less than the aggregate reserves calculated inaccordance with the method set forth in paragraphs (b), (c), (d),(e), (h) and (i) of this subdivision and the mortality table ortables and rate or rates of interest used in calculatingnonforfeiture benefits for such policies;
(g) In no event shall the aggregate reserves for allpolicies, contracts and benefits be less than the aggregatereserves determined by the qualified actuary to be necessary torender the opinion required by subsection 4 of this section;
(h) If in any contract year the gross premium charged byany life insurance company on any policy or contract is less thanthe valuation net premium for the policy or contract calculatedby the method used in calculating the reserve thereon but usingthe minimum valuation standards of mortality and rate ofinterest, the minimum reserve required for such policy orcontract shall be the greater of either the reserve calculatedaccording to the mortality table, rate of interest, and methodactually used for such policy or contract, or the reservecalculated by the method actually used for such policy orcontract but using the minimum valuation standards of mortalityand rate of interest and replacing the valuation net premium bythe actual gross premium in each contract year for which thevaluation net premium exceeds the actual gross premium. Theminimum valuation standards of mortality and rate of interestreferred to in this section are those standards stated inparagraph (a) of this subdivision and subsection 2 of thissection; provided, that for any life insurance policy issued onor after January 1, 1986, for which the gross premium in thefirst policy year exceeds that of the second year and for whichno comparable additional benefit is provided in the first yearfor such excess and which provides an endowment benefit or a cashsurrender value or a combination thereof in an amount greaterthan such excess premium, the foregoing provisions of thisparagraph shall be applied as if the method actually used incalculating the reserve for such policy were the method describedin paragraph (b) of this subdivision. The minimum reserve ateach policy anniversary of such a policy shall be the greater ofthe minimum reserve calculated in accordance with paragraphs (b)and (c) and the minimum reserve calculated in accordance withthis paragraph;
(i) In the case of any plan of life insurance whichprovides for future premium determination, the amounts of whichare to be determined by the insurance company based on thenestimates of future experience, or in the case of any plan oflife insurance or annuity which is of such a nature that theminimum reserves cannot be determined by the methods described inparagraphs (b) to (e) of this subdivision, and paragraph (h) ofthis subdivision, the reserves which are held under any such planmust:
a. Be appropriate in relation to the benefits and thepattern of premiums for that plan; and
b. Be computed by a method which is consistent with theprinciples of this section as determined by regulationspromulgated by the director.
(3) Except as provided in subsection 2 of this section, theminimum standard for the valuation of all individual annuity andpure endowment contracts issued on or after the operative date ofthis subdivision, as defined herein, and for all annuities andpure endowments purchased on or after such operative date undergroup annuity and pure endowment contracts, shall be thecommissioners reserve valuation methods defined in paragraphs(b), (c), (d), and (e) of subdivision (2) of this subsection, andthe following tables and interest rates:
(a) For individual annuity and pure endowment contractsissued prior to September 28, 1979, excluding any disability andaccidental death benefits in such contracts, the 1971 IndividualAnnuity Mortality Table, or any modification of this tableapproved by the director, and six percent interest for singlepremium immediate annuity contracts, and four percent interestfor all other individual annuity and pure endowment contracts;
(b) For individual single premium immediate annuitycontracts issued on or after September 28, 1979, excluding anydisability and accidental death benefits in such contracts, the1971 Individual Annuity Mortality Table, or any individualannuity mortality table adopted after 1980 by the NationalAssociation of Insurance Commissioners, that is approved byregulation promulgated by the director for use in determining theminimum standard of valuation for such contracts, or anymodification of these tables approved by the director, and sevenand one-half percent interest;
(c) For individual annuity and pure endowment contractsissued on or after September 28, 1979, other than single premiumimmediate annuity contracts, excluding any disability andaccidental death benefits in such contracts, the 1971 IndividualAnnuity Mortality Table, or any individual annuity mortalitytable adopted after 1980 by the National Association of InsuranceCommissioners, that is approved by regulation promulgated by thedirector for use in determining the minimum standard of valuationfor such contracts, or any modification of these tables approvedby the director, and five and one-half percent interest forsingle premium deferred annuity and pure endowment contracts andfour and one-half percent interest for all other such individualannuity and pure endowment contracts;
(d) For all annuities and pure endowments purchased priorto September 28, 1979, under group annuity and pure endowmentcontracts, excluding any disability and accidental death benefitspurchased under such contracts, the 1971 Group Annuity MortalityTable, or any modification of this table approved by thedirector, and six percent interest;
(e) For all annuities and pure endowments purchased on orafter September 28, 1979, under group annuity and pure endowmentcontracts, excluding any disability and accidental death benefitspurchased under such contracts, the 1971 Group Annuity MortalityTable, or any group annuity mortality table adopted after 1980 bythe National Association of Insurance Commissioners, that isapproved by regulation promulgated by the director for use indetermining the minimum standard of valuation for such annuitiesand pure endowments, or any modification of these tables approvedby the director, and seven and one-half percent interest;
(f) On and after September 28, 1975, any company may filewith the director a written notice of its election to comply withthe provisions of this subdivision after a specified date beforeJanuary 1, 1980, which shall be the operative date of thissubdivision for such company, provided a company may elect adifferent operative date for individual annuity and pureendowment contracts from that elected for group annuity and pureendowment contracts. If a company makes no such election, theoperative date of this subdivision for such company shall beJanuary 1, 1980.
2. (1) The calendar year statutory valuation interestrates as defined in this subsection shall be the interest ratesused in determining the minimum standard for the valuation of:
(a) All life insurance policies issued in a particularcalendar year, on or after the operative date of subsection 10bof section 376.670;
(b) All individual annuity and pure endowment contractsissued in a particular calendar year on or after January 1, 1983;
(c) All annuities and pure endowment contracts purchased ina particular calendar year on or after January 1, 1983, undergroup annuity and pure endowment contracts; and
(d) The net increase, if any, in a particular calendar yearafter January 1, 1983, in amounts held under guaranteed interestcontracts.
(2) The calendar year statutory valuation interest rates,I, shall be determined as follows and the results rounded to thenearer one-quarter of one percent:
(a) For life insurance:
I =.03 + W (R1 -.03) + W/2 (R2 -.09);
(b) For single premium immediate annuities and for annuitybenefits involving life contingencies arising from otherannuities with cash settlement options and from guaranteedinterest contracts with cash settlement options:
I =.03 + W (R -.03), where R1 is the lesser of R and .09; R2is the greater of R and .09; R is the reference interest ratedefined in this subsection; and W is the weighting factor definedin this subsection;
(c) For other annuities with cash settlement options andguaranteed interest contracts with cash settlement options,valued on an issue year basis, except as stated in paragraph (b)of this subdivision, the formula for life insurance stated inparagraph (a) of this subdivision shall apply to annuities andguaranteed interest contracts with guarantee durations in excessof ten years and the formula for single premium immediateannuities stated in paragraph (b) of this subdivision shall applyto annuities and guaranteed interest contracts with guaranteedurations of ten years or less;
(d) For other annuities with no cash settlement options andfor guaranteed interest contracts with no cash settlementoptions, the formula for single premium immediate annuitiesstated in paragraph (b) of this subdivision shall apply;
(e) For other annuities with cash settlement options andguaranteed interest contracts with cash settlement options,valued on a change in fund basis, the formula for single premiumimmediate annuities stated in paragraph (b) of this subdivisionshall apply. If the calendar year statutory valuation interestrate for any life insurance policies issued in any calendar yeardetermined without reference to this sentence differs from thecorresponding actual rate for similar policies issued in theimmediately preceding calendar year by less than one-half of onepercent, the calendar year statutory valuation interest rate forsuch life insurance policies shall be equal to the correspondingactual rate for the immediately preceding calendar year. Forpurposes of applying the immediately preceding sentence, thecalendar year statutory valuation interest rate for lifeinsurance policies issued in a calendar year shall be determinedfor 1980 (using the reference interest rate defined for 1979) andshall be determined for each subsequent calendar year regardlessof when subsection 10b of section 376.670 becomes operative.
(3) The weighting factors referred to in the formulasstated in subdivision (2) of this subsection are given in thefollowing tables:
(a) Weighting factors for life insurance:
Guarantee Weighting
Duration Factors
(Years)
10 or less .50
More than 10, but not more than 20 .45
More than 20 .35
For life insurance, the guarantee duration is the maximum numberof years the life insurance can remain in force on a basisguaranteed in the policy or under options to convert to plans oflife insurance with premium rates or nonforfeiture values or bothwhich are guaranteed in the original policy;
(b) Weighting factor for single premium immediate annuitiesand for annuity benefits involving life contingencies arisingfrom other annuities with cash settlement options and guaranteedinterest contracts with cash settlement options: .80;
(c) Weighting factors for other annuities and forguaranteed interest contracts, except as stated in paragraph (b)of this subdivision, shall be as specified in subparagraphs a.,b., and c. of this paragraph, according to the rules anddefinitions in subparagraphs d., e., and f. of this paragraph:
a. For annuities and guaranteed interest contracts valuedon an issue year basis:
Guarantee Weighting Factor
Duration for Plan Type
(Years) A B C
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;
b. For annuities and guaranteed interest contracts valuedon a change in fund basis, the factors shown in subparagraph a.of this paragraph increased by:
Plan Type
A B C
.15 .25 .05;
c. For annuities and guaranteed interest contracts valuedon an issue year basis (other than those with no cash settlementoptions) which do not guarantee interest on considerationsreceived more than one year after issue or purchase and forannuities and guaranteed interest contracts valued on a change infund basis which do not guarantee interest rates onconsiderations received more than twelve months beyond thevaluation date, the factors shown in subparagraph a. of thisparagraph or derived in subparagraph b. of this paragraphincreased by:
Plan Type
A B C
.05 .05 .05;
d. For other annuities with cash settlement options andguaranteed interest contracts with cash settlement options, theguarantee duration is the number of years for which the contractguarantees interest rates in excess of the calendar yearstatutory valuation interest rate for life insurance policieswith guarantee duration in excess of twenty years. For otherannuities with no cash settlement options and for guaranteedinterest contracts with no cash settlement options, the guaranteeduration is the number of years from the date of issue or date ofpurchase to the date annuity benefits are scheduled to commence;
e. Plan type as used in subparagraphs a., b., and c. ofthis paragraph is defined as follows:
Plan Type A: At any time policyholder may withdraw fundsonly with an adjustment to reflect changes in interest rates orasset values since receipt of the funds by the insurance company,or without such adjustment but in installments over five years ormore, or as an immediate life annuity, or no withdrawalpermitted;
Plan Type B: Before expiration of the interest rateguarantee, policyholder may withdraw funds only with anadjustment to reflect changes in interest rates or asset valuessince receipt of the funds by the insurance company, or withoutsuch adjustment but in installments over five years or more, orno withdrawal permitted. At the end of interest rate guarantee,funds may be withdrawn without such adjustment in a single sum orinstallments over fewer than five years;
Plan Type C: Policyholder may withdraw funds beforeexpiration of interest rate guarantee in a single sum orinstallments over fewer than five years either without adjustmentto reflect changes in interest rates or asset values sincereceipt of the funds by the insurance company, or subject only toa fixed surrender charge stipulated in the contract as apercentage of the fund;
f. A company may elect to value guaranteed interestcontracts with cash settlement options and annuities with cashsettlement options on either an issue year basis or on a changein fund basis. Guaranteed interest contracts with no cashsettlement options and other annuities with no cash settlementoptions must be valued on an issue year basis. As used in thissubsection an issue year basis of valuation refers to a valuationbasis under which the interest rate used to determine the minimumvaluation standard for the entire duration of the annuity orguaranteed interest contract is the calendar year valuationinterest rate for the year of issue or year of purchase of theannuity or guaranteed interest contract, and the change in fundbasis of valuation refers to a valuation basis under which theinterest rate used to determine the minimum valuation standardapplicable to each change in the fund held under the annuity orguaranteed interest contract is the calendar year valuationinterest rate for the year of the change in the fund.
(4) The "reference interest rate" referred to insubdivision (2) of this subsection shall be defined as follows:
(a) For all life insurance, the lesser of the average overa period of thirty-six months and the average over a period oftwelve months, ending on June thirtieth of the calendar year nextpreceding the year of issue, of the Monthly Average of theComposite Yield on Seasoned Corporate Bonds, as published byMoody's Investors Service, Inc.;
(b) For single premium immediate annuities and for annuitybenefits involving life contingencies arising from otherannuities with cash settlement options and guaranteed interestcontracts with cash settlement options, the average over a periodof twelve months, ending on June thirtieth of the calendar yearof issue or purchase, of the Monthly Average of the CompositeYield on Seasoned Corporate Bonds, as published by Moody'sInvestors Service, Inc.;
(c) For other annuities with cash settlement options andguaranteed interest contracts with cash settlement options,valued on a year of issue basis, except as stated in paragraph(b) of this subdivision, with guarantee duration in excess of tenyears, the lesser of the average over a period of thirty-sixmonths and the average over a period of twelve months, ending onJune thirtieth of the calendar year of issue or purchase, of theMonthly Average of the Composite Yield on Seasoned CorporateBonds, as published by Moody's Investors Service, Inc.;
(d) For other annuities with cash settlement options andguaranteed interest contracts with cash settlement options,valued on a year of issue basis, except as stated in paragraph(b) of this subdivision, with guarantee duration of ten years orless, the average over a period of twelve months, ending on Junethirtieth of the calendar year of issue or purchase, of theMonthly Average of the Composite Yield on Seasoned CorporateBonds, as published by Moody's Investors Service, Inc.;
(e) For other annuities with no cash settlement options andfor guaranteed interest contracts with no cash settlementoptions, the average over a period of twelve months, ending onJune thirtieth of the calendar year of issue or purchase, of theMonthly Average of the Composite Yield on Seasoned CorporateBonds, as published by Moody's Investors Service, Inc.;
(f) For other annuities with cash settlement options andguaranteed interest contracts with cash settlement options,valued on a change in fund basis, except as stated in paragraph(b) of this subdivision, the average over a period of twelvemonths, ending on June thirtieth of the calendar year of thechange in the fund, of the Monthly Average of the Composite Yieldon Seasoned Corporate Bonds, as published by Moody's InvestorsService, Inc.
(5) In the event that the Monthly Average of the CompositeYield on Seasoned Corporate Bonds is no longer published byMoody's Investors Service, Inc., or in the event that theNational Association of Insurance Commissioners determines thatthe Monthly Average of the Composite Yield on Seasoned CorporateBonds as published by Moody's Investors Service, Inc., is nolonger appropriate for the determination of the referenceinterest rate, then an alternative method for determination ofthe reference interest rate, which is adopted by the NationalAssociation of Insurance Commissioners and approved by regulationpromulgated by the director, may be substituted.
3. The director shall promulgate a regulation containingthe minimum standards applicable to the valuation of health,disability and sickness and accident plans.
4. (1) Every life insurance company doing business in thisstate shall annually submit the opinion of a qualified actuary asto whether the reserves and related actuarial items held insupport of the policies and contracts specified by the directorby regulation are computed appropriately, are based onassumptions which satisfy contractual provisions, are consistentwith prior reported amounts and comply with applicable laws ofthis state. The director by regulation shall define thespecifics of this opinion and add any other items deemed to benecessary to its scope.
(2) (a) Every life insurance company, except as exemptedby or pursuant to regulation, shall also annually include in theopinion required by subdivision (1) of this subsection, anopinion of the same qualified actuary as to whether the reservesand related actuarial items held in support of the policies andcontracts specified by the director by regulation, whenconsidered in light of the assets held by the company withrespect to the reserves and related actuarial items, includingbut not limited to the investment earnings on the assets and theconsiderations anticipated to be received and retained under thepolicies and contracts, make adequate provision for the company'sobligations under the policies and contracts, including but notlimited to the benefits under and expenses associated with thepolicies and contracts.
(b) The director may provide by regulation for a transitionperiod for establishing any higher reserves which the qualifiedactuary may deem necessary in order to render the opinionrequired by this subsection.
(3) Each opinion required by subdivision (2) of thissubsection shall be governed by the following provisions:
(a) A memorandum, in form and substance acceptable to thedirector as specified by regulation, shall be prepared to supporteach actuarial opinion; and
(b) If the insurance company fails to provide a supportingmemorandum at the request of the director within a periodspecified by regulation or the director determines that thesupporting memorandum provided by the insurance company fails tomeet the standards prescribed by the regulations or is otherwiseunacceptable to the director, the director may engage a qualifiedactuary at the expense of the company to review the opinion andthe basis for the opinion and prepare such supporting memorandumas is required by the director.
(4) Every opinion shall be governed by the followingprovisions:
(a) The opinion shall be submitted with the annualstatement reflecting the valuation of such reserve liabilitiesfor each year ending on or after December 31, 1993;
(b) The opinion shall apply to all business in forceincluding individual and group health insurance plans, in formand substance acceptable to the director as specified byregulation;
(c) The opinion shall be based on standards adopted fromtime to time by the Actuarial Standards Board and on suchadditional standards as the director may by regulation prescribe;
(d) In the case of an opinion required to be submitted by aforeign or alien company, the director may accept the opinionfiled by that company with the insurance supervisory official ofanother state if the director determines that the opinionreasonably meets the requirements applicable to a companydomiciled in this state;
(e) For the purposes of this section, "qualified actuary"means a member in good standing of the American Academy ofActuaries who meets the requirements set forth in suchregulations;
(f) Except in cases of fraud or willful misconduct, thequalified actuary shall not be liable for damages to any person,other than the insurance company and the director, for any act,error, omission, decision or conduct with respect to theactuary's opinion;
(g) Disciplinary action by the director against the companyor the qualified actuary shall be defined in regulations by thedirector; and
(h) Any memorandum in support of the opinion, and any othermaterial provided by the company to the director in connectiontherewith, shall be kept confidential by the director and shallnot be made public and shall not be subject to subpoena, otherthan for the purpose of defending an action seeking damages fromany person by reason of any action required by this section or byregulations promulgated hereunder; except that the memorandum orother material may otherwise be released by the director:
a. With the written consent of the company; or
b. To the American Academy of Actuaries upon requeststating that the memorandum or other material is required for thepurpose of professional disciplinary proceedings and settingforth procedures satisfactory to the director for preserving theconfidentiality of the memorandum or other material. Once anyportion of the confidential memorandum is cited by the company inits marketing or is cited before any governmental agency otherthan a state insurance department or is released by the companyto the news media, all portions of the confidential memorandumshall be no longer confidential.
(RSMo 1939 § 5831, A.L. 1943 p. 596, A.L. 1947 V. I p. 335, A.L. 1959 H.B. 268, A.L. 1961 p. 177, A.L. 1965 p. 577, A.L. 1971 H.B. 506, A.L. 1975 S.B. 116, A.L. 1979 S.B. 325, A.L. 1982 S.B. 469, A.L. 1993 H.B. 709)Prior revisions: 1929 § 5720; 1919 § 6131; 1909 § 6925
(1959) Where company intended to convert a term life insurance policy to ordinary life insurance and did accept premiums for fifteen weeks after expiration of the term, the contract would be treated as an ordinary life policy and its reserves accumulated accordingly. Richardson v. Life Ins. Co. of Missouri (A.), 330 S.W.2d 267.