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

The Principles-Based Reserving (EX) Working Group met Sept. 21, 2009. During this meeting, the Working Group:

• Received a status update from Larry Bruning (KS), chair of the Life and Health Actuarial Task Force, regarding the Valuation Manual. The update indicated that in connection with the adoption of the Standard Valuation Law by the Life Insurance (A) Committee, there was a desire for the Valuation Manual to be completed by the end of 2009. The requirements for variable annuities have already been completed, and the Task Force is waiting on a proposal from the American Council of Life Insurers in order to complete the manual for life insurance products. The Task Force was hopeful it could complete this section by the Winter National Meeting, but indicated that since many states require the legislative agenda for the subsequent year’s agenda to submitted by early fall, it may be appropriate for the NAIC to defer action on adopting the revised Standard Valuation Law at this national meeting.

• Adopted a revised corporate governance document that sets forth broad-based responsibilities for life insurers’ board of directors, senior management, and actuaries as it relates to principle-based reserving.

• Exposed for comment a draft memorandum to the Executive Committee from the Working Group related to the use of statistical agent(s) for principle-based reserving. The memorandum discusses the possible role of the NAIC as a statistical agent or as the data repository for regulators as it relates to this information. The purpose of the memorandum was simply to raise these issues in order to begin discussion on these topics at the Working Group level, since both issues have NAIC resource implications.

• Referred a draft fiscal impact study related to a proposed training program on principle-based reserving to the Life and Health Actuarial Task Force for their input. Once the Task Force determines what it believes is an appropriate training program for the topic, the document will be revised at the direction of the Working Group, and NAIC staff will be charged with determining the necessary resources to carry out such training. Then the revised fiscal impact study will be submitted to the Internal Administration (EX1) Subcommittee.

iscussed the need for the Solvency Modernization Initiative (EX) Task Force to discuss next steps regarding corporate governance. The subgroup will complete its remaining work on possible changes to the Financial Condition Examiners Handbook for principle-based reserving, but needs further direction from the Task Force on expectations regarding addressing the broader topic of corporate governance for other entities and functions.