Principles-Based Reserving (EX) Working Group
September 30, 2007

The Principles-Based Reserving (EX) Working Group met on Sunday, September 30, 2007. During this meeting, the Working Group:

• Received a report from the Life & Health Actuarial Task Force (LHATF) regarding their work on the process of selecting a statistical agent and the format for data submission. The report included discussion on how their could be one statistical agent, or multiple agents, but the current focus is developing the process for selection and format for the data based upon input from multiple parties, including those with experience in statistical reporting.
• Discussed some of the substantive comments provided to the Working Group on the draft principles and action items which were previously exposed for comment by the Working Group at the Summer National Meeting. It was announced that the Working Group did not intend to get bogged down into the details of the document, but did agree to charge NAIC staff with modifying the document to incorporate or address the comments. The Working Group will review the revised document in the future, and consider any decisions that need to be made by the group as a result of the comments.
• Established a Corporate Governance Subgroup to develop specific requirements dealing with corporate governance in a principles-based reserving system. In developing these requirements, the Subgroup will specifically consider work products previously developed by the Capital Adequacy (E) Task Force as well as the American Academy of Actuaries (AAA).
• Discussed the need for a specific process of communication between the various technical task forces and working groups that are assigned action items. Possible ideas will be communicated to the Working Group members in the near future for their consideration.
• Requested that LHATF work with the NAIC staff to develop a summary timeline document, with focus on the immediate milestones, and provide to the Working Group prior to the Winter National Meeting.
• Received a report from LHATF on the status of the standard valuation law (SVL) and the valuation manual. The report indicated that LHATF intends to hold significant discussion on each during the next few months with the intent of having finalized and ready for adoption by at least the 2008 Spring National Meeting.

Action Items:

• Established a Corporate Governance Subgroup;
• Voted to recommend to the Executive (EX) Committee that LHATF be permitted to work on the SVL and the nonforfeiture model as requested.