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Old 11-13-2017, 02:09 PM
House House is offline
SOA AAA
 
Join Date: Nov 2007
Posts: 4
Question AG 49 Question

In the following excerpt from AG 49, what are other companies assuming to be the definition of Assumed Earned Rate?

"If an insurer engages in a hedging program for index-based interest, the assumed earned interest rate underlying the disciplined current scale shall not exceed 145% of the annual net investment earnings rate (gross portfolio earnings less provisions for investment expenses and default costs) of the general account assets (excluding hedges for index-based credits) allocated to support the policy."

We initially used the maximum illustrated rate under our cap and had some testing issues, but then adjusted it to include our target spread but bumped into the limit. So are the only options to either pass testing with spread compression forced by the 145% limit or reduce the illustrated credited rate?
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