Description: VM-22 was first introduced into the Valuation Manual in 2018. A number of changes have been made since its introduction, with more expected on the way. This article compares valuation requirements for income annuities pre- and post-VM-22, discusses technical and implementation implications with regards to VM-22 (including comparison with New York Regulation 213), and considers future revisions.

Description: An overview of the NAIC Variable Annuity Reforms, including a discussion of perceived positives and challenges associated with the reforms.

Description: This article summarizes the key changes to VM-31 requirements in the 2020 version of the Valuation Manual for both life and variable annuities, and compares and contrasts the requirements for each. In addition, the article offers insights into common issues and recommendations for VM-31 reports from the viewpoints of a regulator, consultant, and company actuary.

Description: A discussion of, first, the three-year transition period for adopting principle-based reserves and how it might not apply to tax reserves, and second, the tax impact of adding investment options to in-force contracts.

Description: Update on a broad range of insurance and investment tax matters upon which ACLI is working, including: deficiency reserve guidance, IRS guidance on PBR/AG 43, Camp Financial Product Discussion Draft, FATCA and changes to non-forfeiture laws due to low interest rates

Description: This article examines the changes in U.S. regulatory reserve and risk-based capital requirements that will significantly impact the insurance industry and practicing actuaries. It summarizes activity related to principles-based reserves and risk-based capital initiatives during 2005.

Description: In this article, we collected data from the companies’ roll-forward disclosures related to calendar years 2021 and 2022 on Market Risk Benefit and shared a high-level summary of the Market Risk Benefit volatility that a focus group of companies incurred and summarized the most common ways to mitigate volatility.

Description: ASU 2018-12 introduced a new concept called “market risk benefits” (MRBs). MRBs are a new accounting classification for benefits within deposit contracts, offering protection from “other than nominal market risk.” This applies to products with account values, including variable and indexed annuities with guaranteed living or death benefits attached (aka GMxBs). ASU 2018-12 Section 944-40-30-19D mentions both a non-option and an option-based valuation approach to account for MRBs. This article considers the option-based approach. The purpose is to highlight weaknesses in the current application of the option approach to MRBs, propose an alternative method, and consider the benefits of the new approach. The intent of this article is to persuade practictioners / actuaries / accountants that this is a better approach for applying the fair value option method to market risk benefits.

Description: Updates on partial annuitization and exhanges, prevailing CSO valuation mortality tables, disclosure of offshore accounts through FATCA.

Description: Accounting Standards Update (ASU) 2018-12, commonly referred to as long duration targeted improvements (LDTI), is the most significant GAAP accounting change impacting the life insurance industry in the past 40 years. This article discusses the impact of LDTI on variable annuities (VA) and fixed indexed annuities (FIA) from a product development and in-force management angle. Detailed discussion topics include hedging and ALM, product strategy and development, and pricing. LDTI will cause many VA and FIA writers to re-evaluate their hedging and asset liability management (ALM) strategy following the move to fair value accounting under the new MRB requirement. Stakeholder appetite for accounting volatility and resulting changes to hedging and ALM may trigger changes in product mix and designs. In addition to updating pricing infrastructure to handle the new requirements, pricing actuaries will need to produce analyses to educate stakeholders on the risks and pricing implications of any changes to designs, hedging and ALM.