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Old 12-20-2017, 04:46 PM
sKansKi sKansKi is offline
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Default PBR - exemptions

I'm reading http://actuary.org/files/imce/NAIC_V...20Products.pdf

I need help figuring out if my company can be exempt from PBR.

We mostly sell health insurance, but a have a bit of life.

I believe we fail the company wide exemption because of (b)...
Quote:
2. Conditions for exemption:
a. The company has less than $300 million of ordinary life premiums1 and, if the company is a member of an NAIC
group of life insurers, the group has combined ordinary life premiums1 of less than $600 million,
And
b. The company reported Total Adjusted Capital of at least 450% of the authorized control level RBC in the most
recent RBC report, and the appointed actuary has provided an unqualified opinion on the reserves,
And
c. Any ULSG policies issued or assumed by the company with an issue date on or after the operative date of the
valuation manual meet the definition of a non-material secondary guarantee ULSG product.
We meet (a) & have no ULSG, but we're significantly away from meeting (b).


It looks like there's also the stochastic exclusion test and the deterministic exclusion test.

Wow, that stuff is not easy for me to read. Is there a dumbed down version?
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Old 12-20-2017, 05:00 PM
sKansKi sKansKi is offline
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Is the stochastic exclusion test going to save me?

Quote:
Stochastic Exclusion Test
1. Requirements to pass the stochastic exclusion test:

a. Groups of policies pass the stochastic exclusion test if:

i. Annually and within 12 months before the valuation date the company demonstrates that the groups of
policies pass the stochastic exclusion ratio test defined in Section 6.B.2;

ii. In the first year and at least once every three calendar years thereafter the company provides a
demonstration in the PBR Actuarial report as specified in Section 6.B.3; or

iii. For groups of policies other than variable life or universal life with a secondary guarantee, in the first
year and at least every third calendar year thereafter the company provides a certification by a qualified
actuary that the group of policies is not subject to material interest rate risk or asset return volatility
risk
(i.e., the risk on non-fixed-income investments having substantial volatility of returns such as
common stocks and real estate investments). The company shall provide the certification and
documentation supporting the certification to the commissioner upon request.
It's just a small bit of term life & critical illness (written as life) insurance.

Am I reading that "or" correctly? If I can satisfy "iii." can I ignore "i." & "ii."? ...or do I still need to calculate the Stochastic Exclusion Ratio Test?

Last edited by sKansKi; 12-20-2017 at 05:16 PM..
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  #3  
Old 12-20-2017, 05:27 PM
sndesai sndesai is offline
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i don't think the stochastic exclusion test exempts you from pbr, it only exempts you from calculating the stochastic reserve, which is one of 3 components of pbr:
npr - net premium reserve (formulaic reserve)
dr - deterministic reserve (padded gross premium reserve)
sr - stochastic reserve (i think this uses cte 70)
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Old 12-20-2017, 05:32 PM
sKansKi sKansKi is offline
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Quote:
Originally Posted by sndesai View Post
i don't think the stochastic exclusion test exempts you from pbr, it only exempts you from calculating the stochastic reserve, which is one of 3 components of pbr:
npr - net premium reserve (formulaic reserve)
dr - deterministic reserve (padded gross premium reserve)
sr - stochastic reserve (i think this uses cte 70)
okay, thank you. That's helpful.
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  #5  
Old 12-20-2017, 06:06 PM
sKansKi sKansKi is offline
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So, I may be able to get out of dr & sr and that just leaves me with npr...I think...
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