Description: On June 17, 2019, the Internal Revenue Service published Final Regulations implementing changes to loss reserve discounting under section 846 of the Internal Revenue Code made by the Tax Cuts and Jobs Act. This note addresses changes made in the Final Regulations, particularly modification of rules for determining the interest rate used for discounting, in response to comments from taxpayers on the proposed regulations.

Description: Read the October 2019 issue of Product Matters! published by the Product Development Section. Newsletters provide practical information for the working actuary, articles on trends that impact sections and news about section activities.

Description: This article summarizes the treatment of changes in the basis for determining life insurance tax reserves under prior law and describes the changes enacted by the Tax Cuts and Jobs Act. It further explains the procedures for changing the basis of computing reserves under the new rules as outlined in Revenue Procedure 2019-10, the IRS’s December 2018 guidance on the subject, and discusses the uncertainties that remain.

Description: Part 2 of the article continues providing data on why IUL income streams need to be managed and suggests techniques that insurance companies could provide to policyholders and advisors to do so. The author also offers his research data free of charge to any actuary who contacts him to request it.

Description: On January 19, 2005, the Treasury Department and the Internal Revenue Service the “Service” responded to a life insurance industry request for guidance on the treatment of qualified additional benefits “QABs” under sections 7702 and 7702A of the Internal Revenue Code through the release of Revenue Ruling 2005-6 the “Ruling”.

Description: COLI products continue to be the focus of litigation by the IRS over the deductibility of policy loan interest. This COLI Update consists of two articles concerning COLI cases and their most recent court decisions. The first concerns a District Court’s ruling on insurable interest, and the second provides an analysis of the Sixth Circuit reversal of a trial court decision in a case involving economic substance.

Description: Illustrates the lack of clarity about how the various grandfather clauses applicable to life insurance contracts should be applied in practice.

Description: To better understand the product development process and practices currently used at insurance companies, the Society of Actuaries Marketing and Distribution Section Council initiated a Product Development Survey in the summer of 2006. The goal of the survey was to identify company practices for product development by asking individuals with product implementation responsibilities about the process followed at their companies. For this survey, the “product development process” was viewed holistically – encompassing everything from how ideas are generated through to how products are monitored post-launch. Also, all aspects of the product development process were considered – marketing, actuarial, underwriting, finance, customer service, IT, legal/compliance, etc.

Description: S&P reissued a second Request for Comment (RFC) in May 2023 that proposed changes to their insurer capital adequacy methodology and assumptions, and suggested these proposed changes may become effective at the end of 2023. This paper is to highlight the notable changes between the current capital model criteria and the proposed model. We also discuss major changes from the first RFC and the second RFC, as well as several key items that still require enhanced guidance and clarification. Our analysis is based on information gathered from S&P's public comments, conversations with industry participants, and publications released by S&P Global as of July 2023 when this paper was written. Most U.S. life insurers are rated by S&P using their U.S. Life Statutory Capital model, while other insurers use the GAAP/IFRS Capital Model. Statutory financials will remain the starting point for U.S. life insurers under the proposed model, however there will be additional adjustments made to these numbers in an effort to create consistency and comparability with other accounting and solvency regimes.

Description: As the new VM-22 framework reshapes reserving for non-variable annuities, actuaries face both opportunities and challenges. Our latest insight and highlights what you need to know about assumption setting, model validation and asset optimization ahead of 2026.