NAIC Committee Adopts Revised Standard Valuation Law
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June 15, 2009 Monday 12:03 PM EST
270 words
NAIC Committee Adopts Revised Standard Valuation Law
Chad Hemenway
MINNEAPOLIS
The National Association of Insurance Commissioners' Life Insurance and Annuities Committee adopted a revised Standard Valuation Law, putting it out for a 30-day exposure period.
The matter was singled out for adoption by District of Columbia Insurance Commissioner Thomas Hampton during the NAIC's Summer Meeting in Minneapolis when it was clear there was some split among the committee about whether to accept a summary report of the Life and Health Actuarial Task Force.
According to the report form the Life and Health Actuarial Task Force, the revisions were made to "enable the principle-based approach to valuation and implement the framework of a valuation manual."
An A.M. Best Co. special report at the start of the year recognized that principal-based approaches to capital and reserves was picking up. A.M. Best anticipated that PBA could be implemented fully in the United States between 2012 and 2013, which could coincide with implementation of Solvency II, with the earliest effective date for PBA for life reserves expected to be Jan. 1, 2012. The timeline for life reserves depends on adoption of a new Standard Valuation Law and a new Valuation Manual by at least 42 states.
The report said A.M. Best expects PBA to yield more volatile financial results, especially for leading writers of variable annuity living benefits. It may take several years, however, for the impact of the new reserve requirements for life insurance products to be fully felt, because the new standards will only apply to new issues (BestWire, Jan. 26, 2009).
(By Chad Hemenway, associate editor, BestWeek: [email protected])
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