Guideline AXXX

[Double High C]

Did anyone participate / hear what was discussed / decided in the Nov 6 conference call? Any comments about the current status?

(I missed that call, but listened in on some prior calls.)

Thanks

[CaptainCavy]

Most of it centered on item #8 (UL policies which allow prefunding of term guarantees) and on #7 (similar but allows catchup). The question was whether the regulation allowed recognition of prefunding/catchup or if it disallowed it. The feeling was it did neither, so they voted to include #7 and #8 as described in a memo by Sheldon Summers. There was also discussion about effective date and retroactivity; I don't recall if anything specific was decided there.

[JMO Fan]

Note that NAIC Actuarial Guidelines are now part of the codification (AP&P manual), which is adopted by statute in virtually every state. Most states seem to consider newly adopted guidelines to be automatically included in the AP&P, i.e., the law changes as soon as the NAIC adopts a guideline.
Remember, guidelines are clarifications of the law (usually SVL), making them retroactive (not "interpretations" which have an effective date). This is a much stronger legal position for guidelines than in the past, probably stronger than rules. (AXXX could take precedence over XXX. Ironic?)

[JMO]

Well, "virtually" every one. But there are some states, such as New York, that claim their rules are still in effect if there is a conflict with codification. This is particularly true where the states' legislatures already rejected the NAIC models that were subsequently included in the codification.

As for the "Reinsurance Q's and A's" which were never formally adopted by the NAIC, they came in through the back door of codification. Fortunately the ACLI committee managed to get some of the more onerous language changed during the codification process. I certainly wouldn't blame any state that wanted to reject even the "improved" version.

Note that I am not speaking for my employer nor the ACLI here.

[Double High C]

On 2001-11-08 17:21, CaptainCavy wrote:
Most of it centered on item #8 (UL policies which allow prefunding of term guarantees) and on #7 (similar but allows catchup). The question was whether the regulation allowed recognition of prefunding/catchup or if it disallowed it. The feeling was it did neither, so they voted to include #7 and #8 as described in a memo by Sheldon Summers. There was also discussion about effective date and retroactivity; I don't recall if anything specific was decided there.


Thanks for keeping me posted.

Did they make any change to #8 due to the anomaly with respect to the hypothetical policy with the shadow account with the secondary guarantee equal to 100% of 1980 CSO? (If I recall correctly, this anomaly was in a sense attributable to a problem with the expense allowance for policies with shadow accounts.)

OTOH, was it decided to leave #8 as it was, thereby leaving it to companies to correct the anomaly on the "design end"?

Thanks again for the info.