Principles-Based Reserving (EX) Working Group
Principles-Based Reserving (EX) Working Group Page
Executive (EX) Committee Task Forces and Working Groups Summary Report
Summer 2009 Meeting Summaries Index

The Principles-Based Reserving (EX) Working Group of the Solvency Modernization Initiative (EX) Task Force met June 13, 2009. During this meeting, the Working Group:

1. Discussed a comment letter from the National Alliance of Life Companies (NALC) dated May 12, 2009. Much of the discussion focused on the need for a package of the revised Standard Valuation Law and any finalized guidance from the Valuation Manual to be available to legislators when they consider adoption of the law.

2. Announced that a 90-minute educational session-primarily designed for commissioners, legislators and senior insurance department staff-would be held at the Fall National Meeting. The Working Group stressed the importance of this session, and discussed some of the issues that needed to be included in the presentations.

3. Received status updates from the Life & Health Actuarial Task Force regarding:
a. Standard Valuation Law-The Task Force has adopted the Standard Valuation Law.
b. Valuation Manual-The Task Force has continued to make progress on outstanding issues since the Spring National Meeting. The report included discussion of the scope of the initial manual, noting that initially it was expected to cover all life insurance, but the Task Force is considering narrowing the scope to only include universal life with secondary guarantees and term insurance.
c. Statistical Agent-The New York request for proposal process on this topic is nearly wrapped up, and significant progress is expected to be made prior to the Fall National Meeting. The report indicated that New York and the NAIC Statistical Agent Subgroup would hold discussions with the industry and interested parties to work out the timing of the first submission. The Working Group discussed some of the details and implications associated with this work.

4. Received and discussed the revised Standard Valuation Law as adopted by the Life and Health Actuarial Task Force. The Working Group exposed the revised Standard Valuation Law with a 30-day comment period. The Working Group announced that it intended to hold a joint conference call with the Life Insurance (A) Committee and the Solvency Modernization Initiative (EX) Task Force to consider possible adoption of the revised law.

5. Discussed the need to develop a training program for regulators on principles-based reserving. The Working Group charged NAIC staff with developing a Fiscal Impact Statement that could be submitted to the Internal Administration (EX1) Subcommittee in 2010.

6. Adopted interim minutes from its May 21 conference call, and adopted minutes from the Corporate Governance Subgroup interim conference calls held May 8 and May 19.

7. Received an update from the Life Risk-Based Capital (E) Working Group regarding C3 Phase III. It was noted that there were enough outstanding issues with the proposal that adoption could not occur for a year-end 2009 effective date, but work would continue so the proposal could be adopted in 2009 with a year-end 2010 effective date.

Actions Items:

1. Exposed the revised Standard Valuation Law for a 30-day comment period.
2. Adopted interim conference call minutes.