Mortgage Loan Industry Experience Factor

TO:	Interested Parties
FROM:	NAIC
DATE:	December 8, 2008
SUBJECT:	Mortgage Loan Industry Experience Factor Calculated for the December 31, 2008, Annual Statement

The Average Industry Experience Factor (AvIEF) for the December 31, 2008, annual statement was calculated to be 0.002 percent. The AvIEF is defined in the Asset Valuation Reserve section of the NAIC’s Quarterly and Annual Statement Instructions Life, Accident & Health for the year 2008.

Please note that for the risk-based capital calculation it is still under consideration by the NAIC Executive Committee an ACLI proposal to use a higher industry normalized loss ratio for the mortgage experience adjustment factor calculation. The ACLI proposal can be found on the Capital and Surplus Relief (EX) Working Group:

http://www.naic.org/committees_ex_capital_surplus_relief.htm

The IEF is an average of the mortgage data received at the NAIC for eight (8) previous quarters as follows:  

4th Quarter 2006	0.004%
1st Quarter 2007	0.003%
2nd Quarter 2007	0.002%
3rd Quarter 2007	0.001%
4th Quarter 2007	0.001%
1st Quarter 2008	0.001%
2nd Quarter 2008	0.002%
3rd Quarter 2008	0.003%

Average IEF

0.002%

Individual companies should utilize information from the same quarters in calculating their average Company’s Experience Factor (AvCEF).

Contact Dan Swanson of the NAIC by phone at (816) 783 - 8412 or by e-mail at dswanson@naic.org with any questions concerning this factor.