Description: Documents the error in the Smoker/Nonsmoker CSO Tables accepted by the NAIC, and the expected approval of the NAIC to accept use of both the erroneous and the correct mortality rates for all regulatory purposes.

Description: This article provides a formulaic method of comparing unit reserves on different valuation bases. This enables a duration-by-duration comparison of the components of the calculation on two different valuation bases. This can be done ignoring taxes or assuming taxes are recognized in calculating the expected return on capital in pricing.

Description: The article discusses recently-issued regulations under section 807 of the Internal Revenue Code, concerning the computation and reporting of reserves. The provisions addressed generally relate to the Tax Cuts and Jobs Act of 2017.

Description: In this article, we explore key insights from Oliver Wyman's 2020 Life PBR Emerging Practices Survey, which provides a broad industry perspective with more than 50 companies participating representing 95 percent of the individual life market (by written premium). Insights include the impact of PBR on reserves and profitability in addition to emerging practices related to product design, assumption development, and methodology decisions.

Description: Adjusting GAAP reinsurance reserves to account for reinsurance protection against the events that trigger direct reserve constraints (such as NPR capping or LFPB flooring) can be a challenge any time. Ceding a block of business that is already in force increases the challenge—especially if one of those constraints was already present at inception of the reinsurance. This article builds on previous work (published in the July 2022 and June 2023 issues) to show how to measure initial reinsurance reserves in a way that complies with AICPA guidance and prepares for effective measurement of subsequent changes in the effects of the constraints.

Description: Changes to AG 43 and what that might mean for tax purposes. Also, summary of IRS Notice 2016-63 (provides safe harbor tax guidance on use of 2017 CSO tables).

Description: The article describes changes to the computation of tax reserves as a result of the Tax Cuts and Jobs Act.

Description: Description of results from a survey of 35 insurance companies on the impact of proposed principle-based reserves for life insurance products.

Description: Mandatory implementation of life principle-based reserves (PBR) is just around the corner and there is no shortage of work to do, as most products have yet to be moved to PBR. Oliver Wyman recently completed its 2019 PBR survey, with more than 40 participants covering 85 percent of the individual life market, including 23 of the top 25 life writers and five reinsurers. This article will expand on the key survey findings, including implementation trends, analysis to date, model robustness and common simplifications.

Description: This article Provides a description of an IRS Directive that provides a safe harbor tax reporting position for computing tax reserves for pre-2018 tax years for annuity contracts subject to AG43 and VM-21 and life insurance contracts subject to VM-20 Principal Based Reserves methods. The safe harbor is required to be implemented on the 2017 tax return, with certain spread amounts in some cases to future tax years starting in 2018.