Enrolled HB 401: Relating to insurance; relating to credit for reinsurance; relating to insurance standard valuation; and providing for an effective date.
00Enrolled HB 401 01 Relating to insurance; relating to credit for reinsurance; relating to insurance standard 02 valuation; and providing for an effective date. 03 _______________ 04 * Section 1. AS 21.12.020(a) is amended to read: 05 (a) Credit for reinsurance transactions is [SHALL BE] allowed a domestic 06 ceding insurer as either an asset or a deduction from liability because [ON 07 ACCOUNT] of reinsurance ceded only when the reinsurer meets the requirements 08 of (1) - (6) of this subsection. The director may, by regulation adopted under 09 (m)(2) of this section, specify additional requirements relating to, or setting out, 10 the valuation of assets or reserve credits, the amount and forms of security 11 supporting reinsurance arrangements described in (m)(2) of this section, and the 12 circumstances under which credit will be reduced or eliminated. Credit is 13 allowed under (1) - (3) of this subsection with respect to cessions of a kind or class 14 of business that the assuming insurer is licensed or permitted to write or assume in its
01 state of domicile or, in the case of a United States branch of an alien assuming insurer, 02 in the state through which it is entered and licensed to transact insurance or 03 reinsurance. Credit is allowed under (3) or (4) of this subsection only if the 04 applicable requirements in (b) of this section have been satisfied. Credit is 05 allowed when [AND ONLY IF] the reinsurance is ceded to an assuming insurer that 06 (1) [ASSUMING INSURER THAT] is licensed to transact insurance 07 or reinsurance in this state; 08 (2) [ASSUMING INSURER THAT] is accredited by the director as a 09 reinsurer in this state; an accredited reinsurer is one that 10 (A) files with the director evidence of submission to this 11 state's jurisdiction, submits to this state's authority to examine its books and 12 records [UNDER AS 21.06.120], is licensed to transact insurance or 13 reinsurance in at least one state that is accredited by the National Association 14 of Insurance Commissioners, or, in the case of a United States branch of an 15 alien admitted insurer, is entered through and licensed to transact insurance or 16 reinsurance in at least one state that is accredited by the National Association 17 of Insurance Commissioners; 18 (B) demonstrates to the satisfaction of the director that it 19 has adequate financial capacity to meet its reinsurance obligations and is 20 otherwise qualified to assume reinsurance from domestic insurers; an 21 assuming insurer is considered to meet the requirement at the time of 22 application if the assuming insurer maintains at least $20,000,000 in 23 policyholder surplus and the assuming insurer's [WHOSE] accreditation has 24 not been denied by the director within 90 days after application to the director 25 [, OR MAINTAINS LESS THAN $20,000,000 IN POLICYHOLDER 26 SURPLUS AND WHOSE APPLICATION FOR ACCREDITATION HAS 27 BEEN APPROVED BY THE DIRECTOR]; and 28 (C) files annually with the director a copy of the reinsurer's 29 annual [FINANCIAL] statement filed with the insurance supervisory official 30 [DEPARTMENT] of the reinsurer's state of domicile [OR STATE OF 31 ENTRY] and a copy of the reinsurer's most recent audited financial statement;
01 (3) [ASSUMING INSURER THAT] is domiciled in a state [,] or, in 02 the case of a United States branch of an alien assuming insurer, is entered through a 03 state accredited by the National Association of Insurance Commissioners that employs 04 standards regarding credit for reinsurance ceded substantially similar to those 05 applicable under (1) and (2) of this subsection, [THE ASSUMING INSURER] 06 maintains a policyholder surplus of at least $20,000,000, and [THE ASSUMING 07 INSURER] submits to the authority of this state to examine its books and records; the 08 surplus requirements in this paragraph do not apply to reinsurance ceded and assumed 09 under a pooling arrangement among insurers in the same holding company system; 10 (4) [ASSUMING ALIEN INSURER THAT 11 (A)] maintains a trust fund in a qualified United States financial 12 institution for the payment of the valid claims of the assuming insurer's [ITS] 13 United States domiciled ceding insurers, and their assigns and successors; 14 credit for reinsurance under this paragraph shall be granted only if the 15 following requirements are met [IN INTEREST, THAT CONFORMS TO 16 THE FOLLOWING REQUIREMENTS]: 17 (A) [(i)] the trust and each amendment to the trust is [SHALL 18 BE] established in a form approved by the insurance supervisory official of the 19 state where the trust is domiciled or the insurance supervisory official of 20 another state who, under the terms of the trust instrument, has accepted 21 responsibility for regulatory oversight of the trust; the form of the trust and 22 each trust amendment is [SHALL BE] filed with the insurance supervisory 23 official of every state in which the beneficiaries of the trust are domiciled; the 24 trust instrument provides [MUST PROVIDE] that contested claims are valid 25 and enforceable upon the final order of any court of competent jurisdiction in 26 the United States; the trust vests [SHALL VEST] legal title to its assets in the 27 trustees of the trust for its United States domiciled ceding insurers, their 28 assigns, and successors in interest; the trust and the assuming insurer are 29 subject to examination as determined by the director [, AND THE 30 ASSUMING INSURER SHALL SUBMIT TO EXAMINATION OF ITS 31 BOOKS AND RECORDS BY THE DIRECTOR AND BEAR THE
01 EXPENSE OF EXAMINATION]; the trust remains [MUST REMAIN] in 02 effect for so long as the assuming insurer has outstanding liabilities due under 03 the reinsurance agreements subject to the trust; 04 (B) [(ii)] on or before March 1 of each year, the trustees 05 [SHALL] report in writing to the director on the balance of the trust, [AND] 06 list the trust's investments at the end of the preceding year, and [SHALL] 07 certify the date of termination of the trust, if so planned, or certify that the trust 08 does not expire before the following December 31; 09 (C) [(iii)] in the case of a single assuming insurer, the trust 10 consists [SHALL CONSIST] of trust assets not less than the assuming 11 insurer's liabilities attributable to reinsurance ceded by the United States 12 domiciled ceding insurers and, in addition, except as provided in (D) of this 13 paragraph, the assuming insurer maintains [INCLUDE] a trust surplus of 14 not less than $20,000,000 for the benefit of the United States domiciled ceding 15 insurers as additional security for the liabilities covered by the trust; the single 16 assuming insurer shall make available to the director an annual certification of 17 the insurer's solvency by an independent certified public accountant or an 18 accountant holding a substantially equivalent designation as determined by the 19 director; at any time after the assuming insurer permanently discontinues 20 underwriting new business secured by a trust for not less than three years, 21 the insurance supervisory official with principal regulatory oversight of 22 the trust may authorize a reduction in the required trusteed surplus if, 23 based on an assessment of the risk, the insurance supervisory official finds 24 that the new required surplus level is adequate for the protection of 25 United States domiciled ceding insurers, policyholders, and claimants in 26 light of reasonably foreseeable adverse loss development; the risk 27 assessment may involve an actuarial review, including an independent 28 analysis of reserves and cash flows, and must consider all material risk 29 factors, including, when applicable, the lines of business involved, the 30 stability of the incurred loss estimates, and the effect of the surplus 31 requirements on the assuming insurer's liquidity or solvency; the
01 minimum required trusteed surplus may not be reduced to an amount less 02 than 30 percent of the assuming insurer's liabilities attributable to 03 reinsurance ceded by United States domiciled ceding insurers covered by 04 the trust; 05 (D) [(iv)] in the case of a group, including incorporated and 06 individual unincorporated insurers, 07 (i) the trust consists [SHALL CONSIST] of, for 08 reinsurance ceded under the reinsurance agreements with an 09 inception, amendment, or renewal date on or after January 1, 1993, 10 a trusteed account in an amount not less than the respective 11 insurers' several liabilities attributable to business ceded by United 12 States domiciled ceding insurers to any insurer of the group, for 13 reinsurance ceded under reinsurance agreements with an inception 14 date on or before December 31, 1992, and not amended or renewed 15 after that date, notwithstanding the other provisions of this section, 16 a trusteed account not less than the respective insurers' several 17 insurance and reinsurance liabilities attributable to business 18 written in the United States, and, in addition to an applicable trust 19 described in this sub-subparagraph, trust assets representing the 20 group's liabilities attributable to business ceded by United States 21 domiciled ceding insurers [AND, IN ADDITION,] include a trust 22 surplus not less than $100,000,000 held jointly for the benefit of the 23 United States domiciled ceding insurers of any member of the group for 24 all years of account as additional security for the group's liabilities 25 covered by the trust; and 26 (ii) the incorporated members of the group are [MAY] 27 not [BE] engaged in any business other than underwriting as a member 28 of the group and are subject to the same level of solvency regulation 29 and control by the group's domiciliary regulator as [ARE] the 30 unincorporated members; within 90 days after the group's [ITS] 31 financial statements are due to be filed with the group's domiciliary
01 regulator, the group shall make available to the director an annual 02 certification of the solvency of each insurer by the group's domiciliary 03 regulator or, if the certification is unavailable, financial statements, 04 prepared by an independent certified public accountant, or an 05 accountant holding a substantially equivalent designation as determined 06 by the director, for each underwriter member of the group; 07 (E) [(v)] in the case of a group of incorporated insurers under 08 common administration [THAT COMPLIES WITH THE REPORTING 09 REQUIREMENTS CONTAINED IN (ii) OF THIS SUBPARAGRAPH,] that 10 has continuously transacted an insurance business outside the United States for 11 at least three years immediately before making application for accreditation [, 12 THAT SUBMITS TO THIS STATE'S AUTHORITY TO EXAMINE ITS 13 BOOKS AND RECORDS AND BEARS THE EXPENSE OF THE 14 EXAMINATION,] and that has aggregate policyholders' surplus of 15 $10,000,000,000 or more, the trust consists [SHALL CONSIST] of trust 16 assets in an amount not less than the group's several liabilities attributable to 17 business ceded by United States domiciled ceding insurers to a member of the 18 group under reinsurance contracts issued in the name of the group, and the 19 group 20 (i) maintains [SHALL MAINTAIN] a joint trustee 21 surplus, of which $100,000,000 is [SHALL BE] held jointly for the 22 benefit of United States domiciled ceding insurers of a member of the 23 group as additional security for the group's liabilities covered by the 24 trust; 25 (ii) not later than [, AND, WITHIN] 90 days after the 26 group's [ITS] financial statements are due to be filed with the group's 27 domiciliary regulator, ensures each member of the group makes 28 [SHALL MAKE] available to the director an annual certification of the 29 underwriter member's solvency by the member's domiciliary regulator 30 and financial statement of each underwriter member prepared by the 31 member's [ITS] independent certified public accountant [,] or an
01 accountant holding a substantially equivalent designation as determined 02 by the director; and 03 (iii) submits to examination of its books and records 04 by the director and bears the expense of the examination; 05 (F) the assuming insurer [(B)] reports annually to the director 06 information substantially the same as that required to be reported on the 07 National Association of Insurance Commissioners' annual statement form by 08 licensed insurers [TO ENABLE THE DIRECTOR TO DETERMINE THE 09 SUFFICIENCY OF THE TRUST FUND]; 10 (5) is eligible for certification by the director as a reinsurer in this 11 state if the assuming insurer secures its obligations under the following 12 requirements: 13 (A) the assuming insurer must 14 (i) be domiciled and licensed to transact insurance 15 or reinsurance in a qualified jurisdiction; 16 (ii) maintain minimum capital and surplus, or its 17 equivalent, in an amount set out in regulations adopted by the 18 director; 19 (iii) maintain financial strength ratings from two or 20 more rating agencies as required under regulations adopted by the 21 director; 22 (iv) agree to submit to the jurisdiction of this state 23 and agree to provide security for 100 percent of the assuming 24 insurer's liabilities attributable to reinsurance ceded by United 25 States domiciled ceding insurers if the assuming insurer resists 26 enforcement of a final United States judgment; 27 (v) agree to meet applicable information filing 28 requirements as determined by the director, both with respect to 29 an initial application for certification and on an ongoing basis; and 30 (vi) satisfy other requirements for certification as 31 required by the director;
01 (B) in addition to satisfying the requirements under (A) of 02 this paragraph, an association, including an incorporated underwriter and 03 an individual unincorporated underwriter, 04 (i) shall satisfy the association's minimum capital 05 and surplus requirements through the capital and surplus 06 equivalents, net of liabilities, of the association and the association's 07 members, which must include a joint central fund that may be 08 applied to any unsatisfied obligation of the association or a member 09 of the association, in an amount determined by the director to 10 provide adequate protection; 11 (ii) may not engage in any business other than 12 underwriting as a member of the association and be subject to the 13 same level of regulation and solvency control by the association's 14 domiciliary regulator as are the unincorporated members; and 15 (iii) shall, not later than 90 days after the 16 association's financial statements are filed with the association's 17 domiciliary regulator, provide to the director an annual 18 certification by the association's domiciliary regulator of the 19 solvency of each underwriter member, or, if a certification is 20 unavailable, financial statements prepared by independent public 21 accountants of each underwriter member of the association; 22 (C) the director shall create and publish a list of qualified 23 jurisdictions under which an assuming insurer licensed and domiciled in a 24 qualifying jurisdiction is eligible to be considered for certification by the 25 director as a certified reinsurer, subject to the following provisions: 26 (i) to determine whether the domiciliary jurisdiction 27 of an alien assuming insurer is eligible to be recognized as a 28 qualified jurisdiction, the director shall evaluate the 29 appropriateness and effectiveness of the reinsurance supervisory 30 system of the jurisdiction, both initially and on an ongoing basis, 31 and consider the rights, benefits, and the extent of reciprocal
01 recognition afforded by the jurisdiction to reinsurers licensed and 02 domiciled in the United States; a qualified jurisdiction shall agree 03 to share information and cooperate with the director with respect 04 to all certified reinsurers domiciled within that jurisdiction; the 05 director may not recognize a jurisdiction as a qualified jurisdiction 06 if the director determines that the jurisdiction does not adequately 07 and promptly enforce final United States judgments and 08 arbitration awards; the director may consider additional factors 09 when making an eligibility determination under this 10 subparagraph; 11 (ii) the director shall consider the list of qualified 12 jurisdictions published through the committee process of the 13 National Association of Insurance Commissioners; if the director 14 approves as qualified a jurisdiction that does not appear on the list 15 of qualified jurisdictions, the director shall provide thoroughly 16 documented justification for the approval under criteria set out in 17 regulations adopted by the director; 18 (iii) the director shall recognize a United States 19 jurisdiction that meets the requirement for accreditation under the 20 National Association of Insurance Commissioners financial 21 standards and accreditation program as a qualified jurisdiction; 22 (iv) the director, in lieu of revocation, may suspend a 23 reinsurer's certification indefinitely if the certified reinsurer's 24 domiciliary jurisdiction ceases to be a qualified jurisdiction; 25 (D) the director shall assign a rating to each certified 26 reinsurer, giving due consideration to the financial strength ratings that 27 have been assigned by rating agencies considered acceptable under 28 regulations adopted by the director; 29 (E) a certified reinsurer shall secure obligations assumed 30 from United States domiciled ceding insurers under this subsection at a 31 level consistent with the reinsurer's rating, as specified under regulations
01 adopted by the director and subject to the following requirements: 02 (i) for a domestic ceding insurer to qualify for full 03 financial statement credit for reinsurance ceded to a certified 04 reinsurer, the certified reinsurer shall maintain security in a form 05 acceptable to the director and consistent with (c) of this section or 06 in a multibeneficiary trust under (4) of this subsection, except as 07 otherwise provided in this paragraph; 08 (ii) if a certified reinsurer maintains a trust to secure 09 fully the reinsurer's obligations subject to (4) of this subsection and 10 chooses to secure its obligations incurred as a certified reinsurer in 11 the form of a multibeneficiary trust, the certified reinsurer shall 12 maintain separate trust accounts for its obligations incurred under 13 reinsurance agreements issued or renewed as a certified reinsurer 14 with reduced security as permitted under this subsection or 15 comparable laws of other United States jurisdictions and for its 16 obligations subject to (4) of this subsection; a certified reinsurer 17 shall, as a condition of the grant of certification under this 18 paragraph, bind itself, by the language of the trust and agreement 19 with the insurance supervisory official with principal regulatory 20 oversight of the trust account, to use the remaining surplus of a 21 terminated trust account for a deficiency in any other trust account 22 of the certified reinsurer; 23 (iii) the minimum trusteed surplus requirements 24 under (4) of this subsection are not applicable to a multibeneficiary 25 trust maintained by a certified reinsurer for the purpose of 26 securing obligations incurred under this subsection, except that the 27 multibeneficiary trust shall maintain a minimum trusteed surplus 28 of $10,000,000; 29 (iv) if the obligations incurred by a certified 30 reinsurer under this subsection are insufficiently secured, the 31 director shall reduce the allowable credit by an amount
01 proportionate to the deficiency and may impose further reductions 02 in allowable credit if the director finds that there is a material risk 03 that the certified reinsurer's obligations will not be paid in full 04 when due; 05 (v) for purposes of this subparagraph, a certified 06 reinsurer whose certification is terminated for any reason is 07 considered to be a certified reinsurer that is required to secure 100 08 percent of the reinsurer's obligations; however, if the director 09 continues to assign a higher rating as permitted under other 10 provisions of this section, the requirement to secure 100 percent of 11 the reinsurer's obligations does not apply to a certified reinsurer in 12 inactive status or to a reinsurer whose certification has been 13 suspended; in this sub-subparagraph, "terminated" means 14 revoked, suspended, voluntarily surrendered, or in inactive status; 15 (F) if an applicant for certification is certified as a reinsurer 16 in a jurisdiction accredited by the National Association of Insurance 17 Commissioners, the director may defer to that jurisdiction's certification 18 and to the rating assigned to the applicant by the jurisdiction; the 19 assuming insurer shall be considered to be a certified reinsurer in this 20 state; 21 (G) a certified reinsurer that ceases to assume new business 22 in this state may request to maintain its certification in inactive status in 23 order to continue to qualify for a reduction in security for its in-force 24 business; an inactive certified reinsurer shall continue to comply with all 25 applicable requirements of this subsection, and the director shall assign a 26 rating that takes into account, if relevant, the reasons the reinsurer is not 27 assuming new business; 28 (6) [ASSUMING INSURER THAT] does not meet the requirements 29 of (1) - (5) [(1) - (4)] of this subsection, but only with respect to the insurance of risks 30 located in jurisdictions where the reinsurance is required by applicable law or 31 regulation of that jurisdiction.
01 * Sec. 2. AS 21.12.020(b) is amended to read: 02 (b) If the assuming insurer is not licensed, [OR] accredited, or certified to 03 transact insurance or reinsurance in this state, the credit permitted under (a)(4) and 04 (5) [BY (a)(1) - (4)] of this section is [MAY] not [BE] allowed unless the assuming 05 insurer agrees in the reinsurance agreements 06 (1) that, in the event of the failure of the assuming insurer to perform 07 its obligations under the terms of the reinsurance agreement, the assuming insurer, at 08 the request of the ceding insurer, shall submit to the jurisdiction of a court of 09 competent jurisdiction in a [ANY] state of the United States, will comply with all 10 requirements necessary to give the court jurisdiction and will abide by the final 11 decision of the court or of an appellate court in the event of an appeal; [THIS 12 PROVISION IS NOT INTENDED TO CONFLICT WITH OR OVERRIDE THE 13 OBLIGATION OF THE PARTIES TO A REINSURANCE AGREEMENT TO 14 ARBITRATE THEIR DISPUTES, IF SUCH AN OBLIGATION IS CREATED IN 15 THE REINSURANCE AGREEMENT;] and 16 (2) to designate the director or an attorney resident in the United States 17 as its true and lawful attorney upon whom may be served lawful process in an action, 18 suit, or proceeding instituted by or on behalf of the ceding insurer; nothing in this 19 subsection is intended to conflict with or override the obligation of the parties to 20 a reinsurance agreement to arbitrate their disputes if such an obligation is 21 created in the reinsurance agreement. 22 * Sec. 3. AS 21.12.020(c) is amended to read: 23 (c) An asset or a [A] reduction from liability, for reinsurance ceded by a 24 domestic insurer to an assuming insurer not meeting the requirements of (a), (b), and 25 (j) - (l) [(a)] of this section, shall be allowed in an amount not exceeding the liabilities 26 carried by the ceding insurer. In addition, the director may adopt by regulation 27 under (m)(2) of this section specific additional requirements relating to the 28 valuation of assets or reserve credits, the amount and forms of security 29 supporting reinsurance arrangements described in (m)(2) of this section, and the 30 circumstances under which credit will be reduced or eliminated. The reduction 31 shall be equal to the amount of money held by or on behalf of the ceding insurer,
01 including money held in trust for the ceding insurer, under a reinsurance contract with 02 the assuming insurer as security for the payment of obligations under it, if the security 03 is held in the United States subject to withdrawal solely by, and under the exclusive 04 control of, the ceding insurer, or, in the case of a trust, held in a qualified United States 05 financial institution. The security must be in the form of 06 (1) cash; 07 (2) securities listed by the Securities Valuation Office of the National 08 Association of Insurance Commissioners, including those exempted from filing as 09 defined by the purposes and procedures manual of the Securities Valuation 10 Office, and those that qualify as admitted assets under AS 21.21; 11 (3) clean, irrevocable, unconditional letters of credit that contain an 12 evergreen clause issued or confirmed by a qualified United States financial institution 13 not later than December 31 in the year for which filing is made, and in the possession 14 of, or in trust for, the ceding insurer on or before the filing date of the ceding insurer's 15 annual statement; letters of credit meeting applicable standards of issuer acceptability 16 as of the dates of their issuance or confirmation shall, notwithstanding the issuing or 17 confirming institution's subsequent failure to meet applicable standards of issuer 18 acceptability, continue to be acceptable as security until their expiration, extension, 19 renewal, modification, or amendment, whichever occurs first; in this paragraph, 20 "qualified United States financial institution" means an institution that 21 (A) is organized or, in the case of a United States office of a 22 foreign banking organization, is licensed under the laws of the United 23 States or a state of the United States; 24 (B) is regulated, supervised, and examined by United States 25 federal or state authorities having regulatory authority over banks and 26 trust companies; and 27 (C) has been determined by either the director or the 28 Securities Valuation Office of the National Association of Insurance 29 Commissioners to meet the standards of financial condition and standing 30 considered necessary and appropriate to regulate the quality of financial 31 institutions whose letters of credit are acceptable to the director; or
01 (4) other security acceptable to and approved in advance by the 02 director. 03 * Sec. 4. AS 21.12.020(i) is amended to read: 04 (i) In this section, unless otherwise indicated, 05 (1) "qualified United States financial institution" means an 06 institution that is 07 (A) organized or, in the case of a United States branch or 08 agency office of a foreign banking organization, licensed under the laws of 09 the United States or a state of the United States, and has been granted 10 authority to operate with fiduciary powers; and 11 (B) regulated, supervised, and examined by United States 12 federal or state authorities having regulatory authority over banks and 13 trust companies; 14 (2) [A] "reinsurance transaction" means a transaction stemming from a 15 contract by which the assuming insurer agrees to indemnify the ceding insurer in 16 whole or in part against liability or losses that the ceding insurer might incur under a 17 separate contract of insurance with its insured. 18 * Sec. 5. AS 21.12.020 is amended by adding new subsections to read: 19 (j) If an assuming insurer does not meet the requirements under this section, 20 the credit permitted under (a)(1), (2), or (3) of this section is not allowed unless the 21 assuming insurer agrees, in the trust agreements, to the following conditions: 22 (1) notwithstanding any other provision in the trust instrument, if the 23 trust fund is inadequate because it contains an amount less than the amount required 24 under (a)(4) or (5) of this section, or if the grantor of the trust is declared insolvent or 25 is placed into receivership, rehabilitation, liquidation, or similar proceedings under the 26 laws of the state or country of domicile, the trustee shall comply with an order of the 27 insurance supervisory official with regulatory oversight over the trust or with an order 28 of a court of competent jurisdiction directing the trustee to transfer to the insurance 29 supervisory official with regulatory oversight over the trust all of the assets of the trust 30 fund; 31 (2) the assets shall be distributed by, and all claims shall be filed with
01 and valued by, the insurance supervisory official with regulatory oversight over the 02 trust under the laws of the state in which the trust is domiciled that are applicable to 03 the liquidation of a domestic insurer; 04 (3) if the insurance supervisory official with regulatory oversight over 05 the trust determines that the assets or report of the assets of the trust fund are not 06 necessary to satisfy the claims of the United States domestic ceding insurers of the 07 grantor of the trust, the insurance supervisory official with regulatory oversight over 08 the trust shall return the assets or part of the assets to the trustee for distribution under 09 the trust agreement; 10 (4) the grantor of the trust shall waive any right otherwise available to 11 it under United States law that is inconsistent with this subsection. 12 (k) The director may suspend or revoke a reinsurer's accreditation or 13 certification under the following procedures if the accredited or certified reinsurer 14 ceases to meet the requirements for accreditation or certification: 15 (1) the director shall give the reinsurer notice and opportunity for a 16 hearing under AS 21.06.170 - 21.06.230; the suspension or revocation may not take 17 effect before the director issues an order on the hearing, unless the 18 (A) reinsurer waives the right to a hearing; 19 (B) director's order is based on a regulatory action by the 20 reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of 21 the reinsurer's eligibility to transact insurance or reinsurance business in its 22 domiciliary jurisdiction or in the primary certifying state of the reinsurer under 23 (a)(5)(F) of this section; or 24 (C) director finds that an emergency requires immediate action 25 and a court of competent jurisdiction has not stayed the director's action; 26 (2) while a reinsurer's accreditation or certification is suspended, a 27 reinsurance contract issued or renewed by the reinsurer on or after the effective date of 28 the suspension does not qualify for credit, except to the extent that the reinsurer's 29 obligations under the contract are secured under (c) of this section; if a reinsurer's 30 accreditation or certification is revoked, no credit for reinsurance may be granted after 31 the effective date of the revocation except to the extent that the reinsurer's obligations
01 under the contract are secured under (a)(5)(E) or (c) of this section. 02 (l) A ceding insurer shall take steps to 03 (1) manage its reinsurance recoverables proportionate to its own book 04 of business; a domestic ceding insurer shall notify the director not later than 30 days 05 after the reinsurance recoverables from any single assuming insurer or group of 06 affiliated assuming insurers exceeds 50 percent of the domestic ceding insurer's last 07 reported surplus to policyholders or the domestic ceding insurer determines that 08 reinsurance recoverables from any single assuming insurer or group of affiliated 09 assuming insurers is likely to exceed that limit; the notification must demonstrate that 10 the exposure is safely managed by the domestic ceding insurer; and 11 (2) diversify its reinsurance program; a domestic ceding insurer shall 12 notify the director not later than 30 days after ceding to any single assuming insurer or 13 group of affiliated assuming insurers more than 20 percent of the ceding insurer's 14 gross written premium in the preceding calendar year or the domestic ceding insurer 15 determines that the reinsurance ceded to any single assuming insurer or group of 16 affiliated assuming insurers is likely to exceed that limit; the notification must 17 demonstrate that the exposure is safely managed by the domestic ceding insurer. 18 (m) The director may adopt regulations 19 (1) to implement this section; and 20 (2) relating to reinsurance arrangements, subject to the following 21 provisions: 22 (A) a regulation adopted under this paragraph may apply only 23 to reinsurance relating to 24 (i) a life insurance policy with guaranteed nonlevel 25 gross premiums or guaranteed nonlevel benefits; 26 (ii) a universal life insurance policy with provisions 27 resulting in the ability of a policyholder to keep a policy in force over a 28 secondary guaranteed period; 29 (iii) a variable annuity with guaranteed death or living 30 benefits; 31 (iv) a long-term care insurance policy; or
01 (v) other life insurance, health insurance, and annuity 02 products for which the National Association of Insurance 03 Commissioners adopts model regulatory requirements with respect to 04 credit for reinsurance; 05 (B) a regulation adopted under (A)(i) or (ii) of this paragraph 06 applies to a treaty containing a policy issued (i) on or after January 1, 2015, 07 and (ii) before January 1, 2015, if the risk pertaining to the policy is ceded, in 08 whole or in part, in connection with the treaty on or after January 1, 2015; in 09 this subparagraph, "treaty" means a contract in which a reinsurance company 10 agrees to accept and an insurance company agrees to cede all of a particular 11 type of risk within a specific class of insurance policies; 12 (C) the director may adopt a regulation under this paragraph to 13 require a ceding insurer, in calculating the amounts or forms of security 14 required to be held under regulations adopted under the authority of this 15 paragraph, to use the edition of the valuation manual adopted by the National 16 Association of Insurance Commissioners in effect on the date on which the 17 calculation is made, to the extent applicable; 18 (D) a regulation adopted under this paragraph does not apply to 19 cessions to an assuming insurer that is certified in this state or meets the 20 following criteria: 21 (i) maintains at least $250,000,000 in capital and 22 surplus as determined under the most recent edition of the National 23 Association of Insurance Commissioners Accounting Practices and 24 Procedures Manual, including the effect of any permitted or prescribed 25 practices; and 26 (ii) is licensed in not fewer than 26 states, or licensed in 27 not fewer than 10 states and licensed or accredited in a total of not 28 fewer than 35 states; 29 (E) nothing in this paragraph limits the director's authority to 30 adopt regulations under (1) of this subsection. 31 * Sec. 6. AS 21.18.110(a) is amended to read:
01 (a) The director shall annually value, or cause to be valued, the reserve 02 liabilities (hereinafter called reserves) for all outstanding life insurance policies, 03 [AND] annuity and pure endowment contracts, and deposit-type contracts of every 04 life insurer doing business in this state issued before the operative date of the 05 valuation manual described in AS 21.18.112 [, AND MAY CERTIFY THE 06 AMOUNT OF THE RESERVES, SPECIFYING THE MORTALITY TABLE OR 07 TABLES, RATE OR RATES OF INTEREST, AND METHODS (NET LEVEL 08 PREMIUM METHOD OR OTHER) USED IN THE CALCULATION OF THE 09 RESERVES]. In calculating the reserves for policies and contracts issued before the 10 operative date of the valuation manual described in AS 21.18.112, the director may 11 use group methods and approximate averages for fractions of a year or otherwise. For 12 an alien insurer, the valuation shall be limited to the alien insurer's [ITS] insurance 13 transactions in the United States. For the purpose of making the valuation, the director 14 may employ a qualified [COMPETENT] actuary who shall be paid by the insurer for 15 which the service is rendered. For a foreign or alien insurer, the director may accept, 16 in lieu of the valuation of the reserves required of a foreign or alien insurer, a 17 valuation made, or caused to be made, by the insurance supervisory official of a state 18 or other jurisdiction if the valuation complies with the minimum standard provided in 19 this section. This subsection provides for the minimum standard for the valuation 20 of reserves for policies and contracts subject to this subsection and applies to a 21 policy and contract issued before the operative date of the valuation manual 22 described in AS 21.18.112 [AND IF THE OFFICIAL OF THE STATE OR 23 JURISDICTION ACCEPTS AS SUFFICIENT AND VALID FOR ALL LEGAL 24 PURPOSES THE CERTIFICATE OF VALUATION OF THE DIRECTOR WHEN 25 THE CERTIFICATE STATES THE VALUATION WAS MADE IN A SPECIFIED 26 MANNER IN WHICH THE AGGREGATE RESERVES WOULD BE AT LEAST 27 AS LARGE AS IF THEY HAD BEEN COMPUTED IN THE MANNER 28 PRESCRIBED BY THE LAW OF THAT STATE OR JURISDICTION]. An insurer 29 that has [AT ANY TIME] adopted a standard of valuation producing greater 30 aggregate reserves than those calculated according to the minimum standard provided 31 in this section may, with the approval of the director, adopt a lower standard of
01 valuation, but not lower than the minimum provided in this section. 02 * Sec. 7. AS 21.18.110(b) is amended to read: 03 (b) This subsection applies to only those policies and contracts issued on or 04 after the operative date of AS 21.45.300 except as [OTHERWISE] provided in (c) - 05 (k) [(c)] of this section, [AND] (5) and (6) of this subsection for group annuity and 06 pure endowment contracts issued before that operative date, and AS 21.18.112(b): 07 (1) Except as [OTHERWISE] provided in (c) - (k) [(c)] of this section, 08 [AND] (5) and (6) of this subsection, and AS 21.18.112(b), the minimum standard 09 for the valuation of all these policies and contracts shall be the commissioners 10 [COMMISSIONER'S] reserve evaluation methods defined in (2)(A) and (B) [(2)], (4), 11 and (7) of this subsection, and AS 21.18.112(b), three and one-half percent interest, or 12 in the case of policies and contracts, other than annuity and pure endowment contracts, 13 issued on or after July 1, 1978, five and one-half percent interest for single premium 14 life insurance policies and four and one-half percent interest for all other policies, and 15 the following tables: 16 (A) for all ordinary policies of life insurance issued on the 17 standard basis, excluding disability and accidental death benefits in the policies 18 - the Commissioners [COMMISSIONER'S] 1958 Standard Ordinary 19 Mortality Table, for policies issued before the operative date of 20 AS 21.45.300(w), of the Standard Nonforfeiture Law for Life Insurance as 21 amended, except that, for a category of policies issued on female risks, all 22 modified net premiums and present values, referred to in (2) of this subsection, 23 may be calculated according to an age not more than six years younger than 24 the actual age of the insured; and for policies issued on or after the operative 25 date of AS 21.45.300(w) of the Standard Nonforfeiture Law for Life Insurance 26 as amended 27 (i) the Commissioners [COMMISSIONER'S] 1980 28 Standard Ordinary Mortality Table; [, OR] 29 (ii) at the election of the insurer for any one or more 30 specified plans of life insurance, the Commissioners 31 [COMMISSIONER'S] 1980 Standard Ordinary Mortality Table with
01 10-year Select Mortality Factors; [,] or 02 (iii) any ordinary mortality table, adopted after 1980 by 03 the National Association of Insurance Commissioners, that is approved 04 by regulation adopted [PROMULGATED] by the director for use in 05 determining the minimum standard of valuation for the policies; 06 (B) for all industrial life insurance policies issued on the 07 standard basis, excluding disability and accidental death benefits in the policies 08 - the 1941 Standard Industrial Mortality Table for the policies issued before the 09 operative date of AS 21.45.300(l), of the Standard Nonforfeiture Law for Life 10 Insurance as amended, and for the policies issued on or after April 7, 1984, the 11 Commissioners [COMMISSIONER'S] 1961 Standard Industrial Mortality 12 Table or any industrial mortality table, adopted after 1980 by the National 13 Association of Insurance Commissioners that is approved by regulation 14 adopted [PROMULGATED] by the director for use in determining the 15 minimum standard of valuation for those [SUCH] policies; 16 (C) for individual annuity and pure endowment contracts, 17 excluding disability and accidental death benefits in the policies - the 1937 18 Standard Annuity Mortality Table, or, at the option of the insurer, the Annuity 19 Mortality Table for 1949, ultimate, or any modification of either of these tables 20 approved by the director; 21 (D) for group annuity and pure endowment contracts, 22 excluding disability and accidental death benefits in the policies - the Group 23 Annuity Mortality Table for 1951, any modification of the table approved by 24 the director, or, at the option of the insurer, any of the tables or modification of 25 tables specified for individual annuity and pure endowment contracts; 26 (E) for total and permanent disability benefits in or 27 supplementary to ordinary policies or contracts - the tables of period 2 28 disablement rates and the 1930 to 1950 termination rates of the 1952 disability 29 study of the society of actuaries, with due regard to the type of benefit or any 30 table of disablement and termination rates adopted after 1980 by the National 31 Association of Insurance Commissioners that are approved by regulation
01 adopted by the director for use in determining the minimum standard of 02 valuation for the policies; the table shall, for active lives, be combined with a 03 mortality table permitted for calculating the reserves for life insurance policies; 04 (F) for accidental death benefits in or supplementary to policies 05 - the 1959 Accidental Death Benefits Table or any accidental death benefits 06 table adopted after 1980 by the National Association of Insurance 07 Commissioners that is approved by regulation adopted by the director for use 08 in determining the minimum standard of valuation for the policies combined 09 with a mortality table permitted for calculating the reserves for life insurance 10 policies; 11 (G) for group life insurance, life insurance issued on the 12 substandard basis and other special benefits - tables approved by the director. 13 (2) Except as otherwise provided in (4) and (7) of this subsection, 14 reserves according to the commissioners [COMMISSIONER'S] reserve valuation 15 method, for the life insurance and endowment benefits of policies providing for a 16 uniform amount of insurance and requiring the payment of uniform premiums, shall be 17 the excess, if any, of the present value, at the date of valuation, of the future 18 guaranteed benefits provided for by the policies, over the then present value of any 19 future modified net premiums; the modified net premiums for the policy shall be the 20 uniform percentage of the respective contract premiums for the benefits that the 21 present value, at the date of issue of the policy, of all the modified net premiums shall 22 be equal to the sum of the then present value of the benefits provided for by the policy 23 and the excess of (A) over (B), as follows: 24 (A) a net level annual premium equal to the present value, at 25 the date of issue, of the benefits provided for after the first policy year, divided 26 by the present value, at the date of issue of an annuity of one a year payable on 27 the first and each subsequent anniversary of the policy on which a premium 28 falls due; however, the net level annual premium may not exceed the net level 29 annual premium on the 19-year premium whole life plan for insurance of the 30 same amount at an age one year higher than the age at issue of the policy; 31 (B) a net one-year term premium for the benefits provided for
01 in the first policy year; notwithstanding this paragraph, for a life insurance 02 policy issued on or after January 1, 1987, for which the contract premium in 03 the first policy year exceeds that of the second year and for which no 04 comparable additional benefit is provided in the first year for the excess 05 premium and that provides an endowment benefit or a cash surrender value or 06 a combination of these in an amount greater than the excess premium, the 07 reserve according to the commissioners [COMMISSIONER'S] reserve 08 valuation method as of a policy anniversary occurring on or before the 09 assumed ending date, except as otherwise provided in (4) of this subsection, 10 shall be the greater of the reserve as of the policy anniversary calculated as 11 described in (A) [(2)(A)] of this paragraph [SUBSECTION] and the reserve 12 as of the policy anniversary; the reserve shall be calculated as described in (A) 13 [(2)(A)] of this paragraph [SUBSECTION], except that 14 (i) the present value shall be reduced by 15 percent of 15 the amount of the excess first year premium; [,] 16 (ii) all present values of benefits and premiums shall be 17 determined without reference to premiums or benefits provided for by 18 the policy after the assumed ending date; [,] 19 (iii) the policy shall be assumed to mature on the 20 assumed ending date as an endowment; [,] and 21 (iv) the cash surrender value provided on the assumed 22 date shall be considered as an endowment benefit; in making the 23 comparison in this subparagraph, the mortality and interest bases stated 24 in [PARAGRAPHS] (4) and (6) of this subsection and 25 [SUBSECTION] (c) of this section shall be used; in this subparagraph, 26 the assumed ending date is the first policy anniversary on which the 27 sum of the endowment benefit and cash surrender value then available 28 is greater than the excess premium; 29 (C) reserves according to the commissioners 30 [COMMISSIONER'S] reserve valuation method for 31 (i) life insurance policies providing for a varying
01 amount of insurance or requiring the payment of varying premiums; [,] 02 (ii) group annuity and pure endowment contracts 03 purchased under a retirement plan or plan of deferred compensation, 04 established or maintained by an employer (including a partnership or 05 sole proprietorship) or by an employee organization, or by both, other 06 than a plan providing individual retirement accounts or individual 07 retirement annuities under 26 U.S.C. 408 (Internal Revenue Code), as 08 amended; [,] 09 (iii) disability and accidental death benefits in all 10 policies and contracts; [,] 11 (iv) all other benefits, except life insurance and 12 endowment benefits in life insurance policies and benefits provided by 13 all other annuity and pure endowment contracts, shall be calculated by 14 a method consistent with the principles of this paragraph [(2) OF 15 THIS SUBSECTION], except that any extra premiums charged 16 because of impairments or special hazards shall be disregarded in the 17 determination of modified net premiums. [;] 18 (3) Reserves for any category of policies, contracts, or benefits as 19 established by the director, may be calculated at the option of the insurer according to 20 standards that [WHICH] produce greater aggregate reserves for the category than 21 those calculated according to the minimum standard provided in this section, but the 22 rate or rates of interest used for policies and contracts, other than annuity and pure 23 endowment contracts, may not be higher than the corresponding rate or rates of 24 interest used in calculating nonforfeiture benefits provided for in the policy or 25 contract. 26 (4) If, in any contract year, the gross premium charged by a life insurer 27 on a policy or contract is less than the valuation net premium for the policy or contract 28 calculated by the method used in calculating the reserve on the policy or contract but 29 using the minimum valuation standards of mortality and rate of interest, the minimum 30 reserve required for that policy or contract shall be the greater of either the reserve 31 calculated according to the mortality table, rate of interest, and method actually used
01 for the policy or contract, or the reserve calculated by the method actually used for the 02 policy or contract but using the minimum valuation standards of mortality and rate of 03 interest and replacing the valuation net premium by the actual gross premium in each 04 contract year for which the valuation net premium exceeds the actual gross premium. 05 In this paragraph, the minimum valuation standards of mortality and rate of interest 06 are those standards referred to in (b) and (c) of this section. Notwithstanding this 07 paragraph, for a life insurance policy issued on or after January 1, 1987, for which the 08 gross premium in the first policy year exceeds that of the second year and for which 09 no comparable additional benefit is provided in the first year for the excess premium 10 and that provides an endowment benefit or a cash surrender value or a combination of 11 these in an amount greater than the excess premium, the provisions of this paragraph 12 shall be applied as if the method used in calculating the reserve for such a policy were 13 based on a net one-year term premium for the benefits provided for in the first policy 14 year. The minimum reserve at each policy anniversary of such a policy shall be the 15 greater of the minimum reserve calculated under (2)(B) of this subsection, and the 16 minimum reserve calculated under this paragraph. 17 (5) Except as provided in (c) - (k) of this section [(C) OF THIS 18 PARAGRAPH], the minimum standard for the valuation of all individual annuity and 19 pure endowment contracts issued on or after the operative date of this paragraph as set 20 out in (6) of this subsection and for all annuities and pure endowments purchased on 21 or after that date under group annuity and pure endowment contracts, shall be the 22 commissioners [COMMISSIONER'S] reserve valuation methods defined in (2) and 23 (7) of this subsection and the following tables and interest rates: 24 (A) for individual single premium immediate annuity contracts, 25 excluding any disability and accidental death benefits in those [SUCH] 26 contracts - the 1971 individual annuity mortality table or an individual annuity 27 mortality table, adopted after 1980 by the National Association of Insurance 28 Commissioners, that is approved by regulation adopted by the director for use 29 in determining the minimum standard of valuation for the contracts, or any 30 modification of these tables approved by the director and seven and one-half 31 percent interest;
01 (B) for individual annuity and pure endowment contracts, other 02 than single premium immediate annuity contracts, excluding any disability and 03 accidental death benefits in those [SUCH] contracts - the 1971 individual 04 annuity mortality table or an individual annuity mortality table, adopted after 05 1980 by the National Association of Insurance Commissioners, that is 06 approved by regulation adopted by the director for use in determining the 07 minimum standard of valuation for the contracts, or any modification of these 08 tables approved by the director and five and one-half percent interest for single 09 premium deferred annuity and pure endowment contracts and four and one- 10 half percent interest for all other comparable [SUCH] individual annuity and 11 pure endowment contracts; 12 (C) for all annuities and pure endowments purchased under 13 group annuity and pure endowment contracts, excluding any disability and 14 accidental death benefits purchased under such contracts - 1971 group annuity 15 mortality table or a group annuity mortality table, adopted after 1980 by the 16 National Association of Insurance Commissioners, that is approved by 17 regulation adopted by the director for use in determining the minimum 18 standard of valuation for the annuities and pure endowments, or any 19 modification of these tables approved by the director, and seven and one-half 20 percent interest. 21 (6) After July 1, 1978, an insurer may file with the director a written 22 notice of its election to comply with the provisions of (5) of this subsection after a 23 specified date before January 1, 1979, which shall be the operative date of that 24 requirement for the insurer; however, an insurer may elect a different operative date 25 for individual annuity and pure endowment contracts from that elected for group 26 annuity and pure endowment contracts. If an insurer makes no election, the operative 27 date of (5) of this subsection for the insurer is January 1, 1979. 28 (7) This paragraph applies to all annuity and pure endowment contracts 29 other than group annuity and pure endowment contracts purchased under a retirement 30 plan or plan of deferred compensation, established or maintained by an employer 31 (including a partnership or sole proprietorship) or by an employee organization, or by
01 both, other than a plan providing individual retirement annuities under 26 U.S.C. 408 02 (Internal Revenue Code), as amended. Reserves according to the commissioners 03 [COMMISSIONER'S] annuity reserve method for benefits under annuity or pure 04 endowment contracts, excluding any disability and accidental death benefits in those 05 contracts, shall be the greatest of the respective excesses of the present values, at the 06 date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture 07 benefits, provided for by those contracts at the end of each respective contract year, 08 over the present value, at the date of valuation, of any future valuation considerations 09 derived from future gross considerations, required by the terms of that [SUCH] 10 contract, that become payable before the end of that respective contract year. The 11 future guaranteed benefits shall be determined by using the mortality table, if any, and 12 the interest rate, or rates, specified in those [SUCH] contracts for determining 13 guaranteed benefits. The valuation considerations are the portions of the respective 14 gross considerations applied under the terms of those contracts to determine 15 nonforfeiture values. 16 * Sec. 8. AS 21.18.110(f) is amended to read: 17 (f) The weighting factors referred to in (c) of this section are as follows: 18 (1) weighting factors for life insurance: 19 Guarantee 20 Duration: Weighting 21 Years Factors 22 10 or less .50 23 more than 10, but not more than 20; .45 24 more than 20; .35 25 for life insurance, the guarantee duration is the maximum number of years the life 26 insurance can remain in force on a basis guarantee in the policy or under an option to 27 convert to a plan of life insurance with a premium rate or nonforfeiture value or both 28 that [WHICH] are guaranteed in the original policy; 29 (2) notwithstanding (3) of this subsection, the weighting factor for a 30 single premium immediate annuity and for an annuity benefit involving a [IN] life 31 contingency arising from another annuity with a cash settlement option and a
01 guaranteed interest contract with a cash settlement option - .80; 02 (3) for annuities and guaranteed interest contracts valued on an issue 03 year basis: 04 Guarantee Weighting Factor 05 Duration: for Plan Type 06 Years 07 A B C 08 5 or less; .80 .60 .50 09 more than 5, but not 10 more than 10; .75 .60 .50 11 more than 10, but not 12 more than 20; .65 .50 .45 13 more than 20; .45 .35 .35 14 (4) for annuities and guaranteed interest contracts valued on a change 15 in fund basis, the weighting factors shown in (3) of this subsection are increased by 16 .15 for plan type A, .25 for plan type B, and .05 for plan type C; 17 (5) for annuities and guaranteed interest contracts valued on an issue 18 year basis, other than those with no cash settlement options, that [WHICH] do not 19 guarantee interest on considerations received more than one year after issue or 20 purchase and for annuities and guaranteed interest contracts valued on a change in 21 fund basis that [WHICH] do not guarantee interest rates on considerations received 22 more than 12 months beyond the valuation date, the weighting factors shown in (3) of 23 this subsection or derived in (4) of this subsection are increased by .05. 24 * Sec. 9. AS 21.18.110(j) is amended to read: 25 (j) The reference interest rates referred to in (d) and (e) [(c)] of this section 26 are as follows: 27 (1) for life insurance, the lesser of the average interest rate for a period 28 of 36 months and the average interest rate for a period of 12 months, ending on 29 June 30 of the calendar year next preceding the year of issue, of Moody's Corporate 30 Bond Yield Average - Monthly Average Corporates, as published by Moody's 31 Investors Service, Inc.;
01 (2) for a single premium immediate annuity and for an annuity benefit 02 involving a life contingency arising from another annuity with a cash settlement 03 option and a guaranteed interest contract with a cash settlement option, the average 04 interest rate for a period of 12 months, ending on June 30 of the calendar year of issue 05 or year of purchase, of Moody's Corporate Bond Yield Average - Monthly Average 06 Corporates, as published by Moody's Investors Service, Inc.; 07 (3) for other annuities with cash settlement options and guaranteed 08 interest contracts with cash settlement options, valued on a year of issue basis, except 09 as provided in (2) of this subsection, with a guarantee duration in excess of 10 years, 10 the lesser of the average interest rate for a period of 36 months and the average interest 11 rate for a period of 12 months, ending on June 30 of the calendar year of issue or 12 purchase, of Moody's Corporate Bond Yield Average - Monthly Average Corporates, 13 as published by Moody's Investors Service, Inc.; 14 (4) for other annuities with cash settlement options and guaranteed 15 interest contracts with cash settlement options, valued on a year of issue basis, except 16 as provided in (2) of this subsection, with a guarantee duration of 10 years or less, the 17 average interest rate for a period of 12 months, ending on June 30 of the calendar year 18 of issue or purchase, of Moody's Corporate Bond Yield Average - Monthly Average 19 Corporates, as published by Moody's Investors Service, Inc.; 20 (5) for other annuities with no cash settlement options and for 21 guaranteed interest contracts with no cash settlement options, the average interest rate 22 for a period of 12 months, ending on June 30 of the calendar year of issue or purchase, 23 of Moody's Corporate Bond Yield Average - Monthly Average Corporates, as 24 published by Moody's Investors Service, Inc.; 25 (6) for other annuities with cash settlement options and guaranteed 26 interest contracts with cash settlement options, valued on a change in fund basis, 27 except as provided in (2) of this subsection, the average interest rate for a period of 12 28 months, ending on June 30 of the calendar year of the change in the fund, of Moody's 29 Corporate Bond Yield Average - Monthly Average Corporates, as published by 30 Moody's Investors Service, Inc. 31 * Sec. 10. AS 21.18.110(q) is amended to read:
01 (q) A qualified actuary who submits an opinion under (m) of this section 02 (1) is not liable for damages to a person, other than the insurer 03 [INSURANCE COMPANY] and the director, for an act, error, omission, decision, or 04 conduct with respect to the actuary's opinion except in a case of fraud or wilful 05 misconduct; 06 (2) is subject to disciplinary action by the director; and 07 (3) shall prepare a memorandum, in form and substance acceptable to 08 the director, to support the actuarial opinion. 09 * Sec. 11. AS 21.18.110(s) is amended to read: 10 (s) A memorandum in support of an actuarial opinion and other supporting 11 material provided by an insurer to the director is confidential and may not be made 12 public by the director or another person and is not subject to a civil subpoena, except 13 for the purpose of defending an action seeking damages from a person because [BY 14 REASON] of an action required by this section. The memorandum or other material 15 may be released by the director with the written consent of the insurer or to the 16 American Academy of Actuaries upon a request stating that the memorandum or other 17 material is required for the purpose of a disciplinary proceeding and setting out 18 procedures satisfactory to the director for preserving the confidentiality of the 19 memorandum or other material. Once a portion of the memorandum or other material 20 is cited by the insurer in its marketing, is cited before a governmental agency other 21 than a state insurance department, or is released by the insurer [COMPANY] to the 22 news media, the remainder of the confidential memorandum or other material is no 23 longer confidential. 24 * Sec. 12. AS 21.18.110(t) is amended to read: 25 (t) An insurer's aggregate reserves for 26 (1) all life insurance policies, excluding disability and accidental death 27 benefits, issued on or after July 1, 1992, may not be less than the aggregate reserves 28 calculated under (b)(2), (4), (7), and (l) of this section, and the mortality table and 29 rates of interest used in calculating nonforfeiture benefits for the policies; and 30 (2) all policies, contracts, and benefits may not be less than the 31 aggregate reserves determined by an appointed [A QUALIFIED] actuary to be
01 necessary to render the opinion required under (m) of this section. 02 * Sec. 13. AS 21.18.110 is amended by adding a new subsection to read: 03 (v) In this section, unless the context requires otherwise, "insurer" means an 04 entity that 05 (1) has written, issued, or reinsured life insurance contracts, accident 06 and health insurance contracts, or deposit-type contracts in this state and has at least 07 one of those policies in force or claim; or 08 (2) has written, issued, or reinsured life insurance contracts in any state 09 and is required to hold a certificate of authority to write life insurance, accident and 10 health insurance, or deposit-type contracts in this state. 11 * Sec. 14. AS 21.18 is amended by adding a new section to read: 12 Sec. 21.18.112. Standard valuation for policies and contracts issued on or 13 after the operative date of the valuation manual. (a) The director shall annually 14 value, or cause to be valued, the reserve liabilities, hereinafter called reserves, for all 15 outstanding life insurance contracts, annuity and pure endowment contracts, accident 16 and health contracts, and deposit-type contracts of every insurer issued on or after the 17 operative date of the valuation manual. In lieu of the valuation of the reserves required 18 of a foreign or alien insurer, the director may accept a valuation made, or caused to be 19 made, by the insurance supervisory official of any state or other jurisdiction when the 20 valuation complies with the minimum standard provided in this section. 21 (b) For accident and health insurance contracts issued on or after the operative 22 date of the valuation manual, the standard described in the valuation manual is the 23 minimum standard of valuation required under (a) of this section. For accident and 24 health insurance contracts issued before the operative date of the valuation manual, the 25 minimum standard of valuation is the standard required under AS 21.18.080 - 26 21.18.086. 27 (c) Every insurer with outstanding life insurance contracts, accident and health 28 insurance contracts, or deposit-type contracts in the state and subject to regulation by 29 the director shall annually submit to the director an opinion of the appointed actuary as 30 to whether the reserves and related actuarial items held in support of a policy or 31 contract are computed appropriately, are based on assumptions that satisfy contractual
01 provisions, are consistent with prior reported amounts, and comply with the applicable 02 laws of the state. The valuation manual must prescribe the specifics of this opinion, 03 including any items considered to be necessary to its scope, as follows: 04 (1) the actuarial opinion must 05 (A) be in form and substance as specified in the valuation 06 manual and acceptable to the director; 07 (B) be submitted with the annual statement reflecting the 08 valuation of the reserve liabilities on or after the operative date of the valuation 09 manual; 10 (C) apply to policies and contracts subject to this section, plus 11 other actuarial liabilities specified in the valuation manual; 12 (D) be based on standards adopted by the Actuarial Standards 13 Board or its successor and on additional standards prescribed in the valuation 14 manual; and 15 (E) include, unless exempted in the valuation manual, an 16 assessment of whether the reserves and related actuarial items held in support 17 of the policies and contracts specified in the valuation manual, when 18 considered in light of the assets held by an insurer with respect to the reserves 19 and related actuarial items, including investment earnings on the assets and 20 considerations anticipated to be received and retained under policies and 21 contracts, adequately provide for an insurer's obligations under policies or 22 contracts, including the benefits under and expenses associated with the 23 policies or contracts; 24 (2) in the case of an actuarial opinion submitted by a foreign or alien 25 insurer, the director may accept an opinion filed by the insurer with the insurance 26 supervisory official of another state that is accredited by the National Association of 27 Insurance Commissioners if the director determines that the opinion meets the 28 requirements applicable to an insurer domiciled in the state; 29 (3) an appointed actuary who submits an opinion under this subsection 30 (A) is not liable for damages to a person, other than the insurer 31 and the director, for an act, an error, an omission, a decision, or conduct with
01 respect to the appointed actuary's opinion, except in the case of fraud or wilful 02 misconduct; 03 (B) is subject to disciplinary action by the director against the 04 appointed actuary or the insurer; and 05 (C) shall prepare a memorandum, in form and substance 06 acceptable to the director, to support the actuarial opinion; 07 (4) if an insurer fails to provide a supporting memorandum as 08 requested by the director within a period specified in the valuation manual or the 09 director determines that the supporting memorandum fails to meet the standards 10 adopted by the valuation manual or is otherwise unacceptable to the director, the 11 director may engage a qualified actuary, at the expense of the insurer, to review the 12 opinion and the basis for the opinion and to prepare a supporting memorandum as 13 required under (3)(C) of this subsection. 14 (d) Except as provided under (4) or (6) of this subsection, for policies and 15 contracts issued on or after the operative date of the valuation manual, the standard 16 prescribed in the valuation manual is the minimum standard of valuation required 17 under (a) of this section, as follows: 18 (1) the operative date of the valuation manual is January 1 following 19 the effective date of this section; 20 (2) unless a change in the valuation manual specifies a later effective 21 date, changes to the valuation manual are effective on January 1 following the date 22 when the change to the valuation manual has been adopted by the National 23 Association of Insurance Commissioners by an affirmative vote representing 24 (A) at least three-fourths of the members of the National 25 Association of Insurance Commissioners voting, but not less than a majority of 26 the total membership; and 27 (B) members of the National Association of Insurance 28 Commissioners representing jurisdictions totaling greater than 75 percent of 29 the direct premiums written as reported in the following annual statements 30 most recently available before the vote in this paragraph: life, accident and 31 health annual statements, health annual statements, or fraternal annual
01 statements; 02 (3) the valuation manual must specify all of the following: 03 (A) minimum valuation standards for and definitions of the 04 policies or contracts subject to (a) of this section; the minimum valuation 05 standards are 06 (i) the commissioners reserve valuation method for life 07 insurance policies and contracts, other than annuity contracts, subject to 08 (a) of this section; 09 (ii) the commissioners annuity reserve valuation method 10 for annuity contracts subject to (a) of this section; and 11 (iii) minimum reserves for all other policies or contracts 12 subject to (a) of this section; 13 (B) which policies or contracts or types of policies or contracts 14 that are subject to the requirements of a principle-based valuation in (e) of this 15 section and the minimum valuation standards consistent with those 16 requirements; 17 (C) for policies and contracts subject to a principle-based 18 valuation under (e) of this section, 19 (i) requirements for the format of reports to the director 20 under (e)(5)(C) of this section that include information necessary to 21 determine whether the valuation is appropriate and in compliance with 22 this section; 23 (ii) assumptions for risks over which the insurer does 24 not have significant control or influence; 25 (iii) procedures for corporate governance and oversight 26 of the actuarial function and a process for appropriate waiver or 27 modification of the procedures; 28 (D) for policies and contracts not subject to a principle-based 29 valuation under (e) of this section, the minimum valuation standard 30 (i) must be consistent with the minimum standard of 31 valuation in AS 21.18.110; or
01 (ii) if there is no applicable minimum standard in 02 AS 21.18.110, must develop reserves that quantify the benefits, 03 guarantees, and funding associated with the contracts and their risks at 04 a level of conservatism that reflects conditions that include unfavorable 05 events that have a reasonable probability of occurring; 06 (E) other requirements, including those relating to reserve 07 methods, models for measuring risk, generation of economic scenarios, 08 assumptions, margins, use of insurer experience, risk measurement, disclosure, 09 certifications, reports, actuarial opinions and memorandums, transition rules 10 and internal controls; and 11 (F) the data and form of the data required under (f) of this 12 section, directions for submitting the data, and other requirements, including 13 data analyses and reporting of analyses; 14 (4) in the absence of a specific valuation requirement or if the director 15 determines that a specific valuation requirement in the valuation manual is not in 16 compliance with this section, the insurer shall, with respect to those requirements, 17 comply with minimum valuation standards in AS 21.18.110; 18 (5) the director may engage a qualified actuary, at the expense of the 19 insurer, to perform an actuarial examination of the insurer, to determine the 20 appropriateness of a reserve assumption or method used by the insurer, or to review 21 and determine an insurer's compliance with a requirement of this section; the director 22 may rely on the opinion of a qualified actuary engaged by the director of another state, 23 district, or territory of the United States regarding provisions contained in this section; 24 in this paragraph, "engage" includes employ and contract; 25 (6) the director may require an insurer to change an assumption or 26 method if the director determines the change is necessary to comply with the 27 requirements of the valuation manual or this section, and the insurer shall adjust the 28 reserves as required by the director. 29 (e) An insurer shall establish reserves using a principle-based valuation that 30 meets the following conditions for policies or contracts as specified in the valuation 31 manual:
01 (1) quantify the benefits, guarantees, and funding associated with the 02 contracts and their risks at a level of conservatism that reflects conditions that include 03 unfavorable events that have a reasonable probability of occurring during the lifetime 04 of the contracts and, for policies or contracts with significant tail risk, that reflect 05 conditions appropriately adverse to quantify the tail risk; 06 (2) incorporate assumptions, risk analysis methods, and financial 07 models and management techniques that are consistent with, but not necessarily 08 identical to, those used in the insurer's overall risk assessment process while 09 recognizing potential differences in financial reporting structures and prescribed 10 assumptions or methods; 11 (3) incorporate assumptions that are derived in one of the following 12 manners: 13 (A) the assumptions are prescribed in the valuation manual; 14 (B) for assumptions that are not prescribed, the assumptions 15 shall be established using the insurer's available experience, to the extent it is 16 relevant and statistically credible; to the extent that data is not available, 17 relevant, or statistically credible, the assumptions shall be established using 18 other relevant or statistically credible experience; 19 (4) provide margins for uncertainty, including adverse deviation and 20 estimation error, so that the greater the uncertainty the larger the margin and resulting 21 reserve; 22 (5) for an insurer using a principle-based valuation for one or more 23 policies or contracts subject to this subsection as specified in the valuation manual, 24 (A) establish procedures for corporate governance and 25 oversight of the actuarial valuation function consistent with those described in 26 the valuation manual; 27 (B) provide to the director an annual certification of the 28 effectiveness of the internal controls with respect to the principle-based 29 valuation; the controls shall be designed to ensure that all material risks 30 inherent in the liabilities and associated assets subject to the valuation are 31 included in the valuation and that valuations are made in accordance with the
01 valuation manual; the certification shall be based on the controls in place as of 02 the end of the preceding calendar year; 03 (C) develop and file with the director upon request a principle- 04 based valuation report that complies with standards prescribed in the valuation 05 manual; 06 (6) a principle-based valuation may include a prescribed formulaic 07 reserve component. 08 (f) An insurer shall submit mortality, morbidity, policyholder behavior, or 09 expense experience and other data as prescribed in the valuation manual. 10 (g) The use of information in this section is subject to the following 11 provisions: 12 (1) except as provided in this subsection, an insurer's confidential 13 information is not a public record under AS 40.25.100 - 40.25.295, except that, the 14 director may use the confidential information in any regulatory or legal action brought 15 against the insurer as a part of the director's official duties; 16 (2) the director or another person who received confidential 17 information while acting under the authority of the director is not permitted or 18 required to testify in any private civil action concerning the confidential information; 19 (3) to assist in the performance of the director's duties, the director 20 may share confidential information 21 (A) with other state, federal, and international regulatory 22 agencies and with the National Association of Insurance Commissioners and 23 its affiliates and subsidiaries; 24 (B) in the case of confidential information specified in (i)(1)(A) 25 and (D) of this section, with the Actuarial Board for Counseling and Discipline 26 or its successor upon request stating that the confidential information is 27 required for the purpose of professional disciplinary proceedings and with 28 state, federal, and international law enforcement officials; 29 (C) under (A) and (B) of this paragraph only if the recipient 30 agrees and has the legal authority to agree to maintain the confidentiality and 31 privileged status of the documents, materials, data, and other information in the
01 same manner and to the same extent required for the director; 02 (4) the director may receive documents, materials, data, and other 03 information, including otherwise confidential and privileged documents, materials, 04 data, or information from the National Association of Insurance Commissioners and 05 its affiliates and subsidiaries, from regulatory or law enforcement officials of other 06 foreign or domestic jurisdictions, and from the Actuarial Board for Counseling and 07 Discipline or its successor and shall maintain as confidential or privileged any 08 document, material, data, or other information received with notice or the 09 understanding that the document material, data, or information is confidential or 10 privileged under the laws of the jurisdiction that is the source of the document, 11 material, data, or other information; 12 (5) the director may enter into agreements governing the sharing and 13 use of information consistent with this section; 14 (6) a disclosure to the director under this section or sharing 15 confidential information as authorized in (3) of this subsection does not constitute a 16 waiver of a claim of confidentiality. 17 (h) Notwithstanding (g) of this section, confidential information specified in 18 (i)(1)(A) and (D) of this section 19 (1) may be subject to subpoena for the purpose of defending an action 20 seeking damages from the appointed actuary submitting the related memorandum in 21 support of an opinion submitted under (c) of this section or principle-based valuation 22 report developed under (e)(5)(C) of this section because of an action required by this 23 section or by regulations adopted under this section; 24 (2) may otherwise be released by the director with the written consent 25 of the insurer; and 26 (3) is not confidential after any portion of a memorandum in support of 27 an opinion submitted under (c) of this section or a principle-based valuation report 28 developed under (e)(5)(C) of this section is cited by the insurer in its marketing or is 29 publicly volunteered to or before a governmental agency other than a state insurance 30 department or is released by the insurer to the news media. 31 (i) In this section,
01 (1) "confidential information" means 02 (A) a memorandum in support of an opinion submitted under 03 (c) of this section and documents, materials, and other information, including 04 working papers and copies of them, created, produced, or obtained by or 05 disclosed to the director or another person in connection with the 06 memorandum; 07 (B) documents, materials, and other information, including 08 working papers and copies of them, created, produced, or obtained by or 09 disclosed to the director or another person in the course of an examination 10 made under (d)(5) of this section; however, if an examination report or other 11 material prepared in connection with an examination made under 12 AS 21.06.120 - 21.06.150 is not held as private and confidential information 13 under AS 21.06.120 - 21.06.150, an examination report or other material 14 prepared in connection with an examination made under (d)(5) of this section 15 is not confidential information to the same extent as if the examination report 16 or other material had been prepared under AS 21.06.120 - 21.06.150; 17 (C) reports, documents, materials, and other information 18 developed by an insurer in support of or in connection with an annual 19 certification by the insurer under (e)(5)(B) of this section evaluating the 20 effectiveness of the insurer's internal controls with respect to a principle-based 21 valuation and other documents, materials, and other information, including 22 working papers and copies of them, created, produced, or obtained by or 23 disclosed to the director or another person in connection with the reports, 24 documents, materials, and other information; 25 (D) a principle-based valuation report developed under 26 (e)(5)(C) of this section and other documents, materials, and other information, 27 including working papers and copies of them, created, produced, or obtained 28 by or disclosed to the director or another person in connection with the report; 29 and 30 (E) documents, materials, data, and other information 31 submitted by an insurer under (f) of this section, known as experience data and
01 experience materials, other documents, materials, data, and other information, 02 including working papers and copies of them, created or produced in 03 connection with the experience data, or documents, materials, data, or other 04 information that includes any potentially insurer-identifying or personally 05 identifiable information that is provided to or obtained by the director together 06 with experience data, experience materials, and other documents, materials, 07 data, and other information, including working papers and copies of them, 08 created, produced, or obtained by or disclosed to the director or another person 09 in connection with the experience materials; 10 (2) "law enforcement agency," "National Association of Insurance 11 Commissioners," and "regulatory agency," includes an employee, agent, consultant, or 12 contractor of the law enforcement agency, National Association of Insurance 13 Commissioners, or regulatory agency. 14 * Sec. 15. AS 21.18.900 is amended by adding new paragraphs to read: 15 (8) "accident and health insurance" means a contract that incorporates 16 morbidity risk and provides protection against economic loss resulting from accident, 17 sickness, or a medical condition or a contract as may be specified in the valuation 18 manual; 19 (9) "appointed actuary" means a qualified actuary who is appointed in 20 accordance with the valuation manual to prepare the actuarial opinion required in 21 AS 21.18.112; 22 (10) "deposit-type contract" means a contract that does not incorporate 23 mortality or morbidity risks or a contract specified in the valuation manual; 24 (11) "insurer" means an entity that has written, issued, or reinsured life 25 insurance contracts, accident and health insurance contracts, or deposit-type contracts 26 in 27 (A) this state and has at least one of those policies in force or 28 on claim; or 29 (B) another state and is required to hold a certificate of 30 authority to write life insurance, accident and health insurance, or deposit-type 31 contracts in this state;
01 (12) "life insurance" means a contract that incorporates mortality risk, 02 including an annuity and pure endowment contract, or a contract specified in the 03 valuation manual; 04 (13) "policyholder behavior" means an action of a policyholder, 05 contract holder, or another person with the right to elect options; 06 (14) "principle-based valuation" means a reserve valuation that uses 07 one or more methods or one or more assumptions determined by the insurer under 08 AS 21.18.112(e), as specified in the valuation manual; 09 (15) "qualified actuary" means an individual who is qualified to sign 10 the applicable statement of actuarial opinion in accordance with the qualification 11 standards of the American Academy of Actuaries and who meets the requirements 12 specified in the valuation manual; 13 (16) "tail risk" means a risk that occurs either where the frequency of 14 low probability events is higher than expected under a normal probability distribution 15 or when there are observed events of very significant size or magnitude; 16 (17) "valuation manual" means the manual of valuation instructions 17 adopted by the National Association of Insurance Commissioners as specified in 18 AS 21.18.112(d). 19 * Sec. 16. AS 21.45.300(t) is amended to read: 20 (t) The adjusted premiums and present values for a policy of ordinary 21 insurance referred to in this section shall be calculated on the basis of the 22 Commissioners [COMMISSIONER'S] 1980 Standard Ordinary Mortality Table or, at 23 the election of the insurer for any one or more specified plans of life insurance, the 24 Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select 25 Mortality Factors. The adjusted premiums and present values for a policy of industrial 26 insurance shall be calculated on the basis of the Commissioners 27 [COMMISSIONER'S] 1961 Standard Industrial Mortality Table. The adjusted 28 premiums and present values for a policy issued in a particular calendar year shall be 29 calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate 30 as defined in this subsection for policies issued in that calendar year. However, 31 [PROVIDED, HOWEVER, THAT]
01 (1) at the option of the insurer, calculations for all policies issued in a 02 particular calendar year may be made on the basis of a rate of interest not exceeding 03 the nonforfeiture interest rate, as defined in this subsection, for policies issued in the 04 immediately preceding calendar year; 05 (2) under a paid-up nonforfeiture benefit, including a paid-up dividend 06 addition, a cash surrender value available, shall be calculated on the basis of the 07 mortality table and rate of interest used in determining the amount of the paid-up 08 nonforfeiture benefit and paid-up dividend additions, if any; 09 (3) an insurer may calculate the amount of a guaranteed paid-up 10 nonforfeiture benefit, including any paid-up addition under the policy, on the basis of 11 an interest rate not [NO] less than that specified in the policy for calculating cash 12 surrender values; 13 (4) in calculating the present value of paid-up term insurance with 14 accompanying pure endowment, if any, offered as nonforfeiture benefit, the rates of 15 mortality assumed may be not more than those shown in the Commissioners 16 [COMMISSIONER'S] Extended Term Insurance Table for policies of ordinary 17 insurance and not more than the Commissioners [COMMISSIONER'S] 1961 18 Industrial Extended Term Insurance Table for policies of industrial insurance; 19 (5) for insurance issued on a substandard basis, the calculations of 20 adjusted premiums and present values may be based on appropriate modifications 21 mentioned above; 22 (6) for policies issued before the operative date of the valuation 23 manual, a Commissioners Standard Ordinary Mortality Table [AN ORDINARY 24 MORTALITY TABLE], adopted after 1980 by the National Association of Insurance 25 Commissioners, that is approved by regulation adopted by the director for use in 26 determining the minimum nonforfeiture standard may be substituted for the 27 Commissioners [COMMISSIONER'S] 1980 Standard Ordinary Mortality Table with 28 or without Ten-Year Select Mortality Factors or for the Commissioners 29 [COMMISSIONER'S] 1980 Extended Term Insurance Table; for policies issued on 30 or after the operative date of the valuation manual, the valuation manual must 31 provide the Commissioners Standard Ordinary Mortality Table for use in
01 determining the minimum nonforfeiture standard that may be substituted for the 02 Commissioners 1980 Standard Ordinary Mortality Table with or without the 03 Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended 04 Term Insurance Table; if the director approves by regulation a Commissioners 05 Standard Ordinary Mortality Table adopted by the National Association of 06 Insurance Commissioners for use in determining the minimum nonforfeiture 07 standard for policies issued on or after the operative date of the valuation 08 manual, that minimum nonforfeiture standard supersedes the minimum 09 nonforfeiture provided by the valuation manual; 10 (7) for policies issued before the operative date of the valuation 11 manual, a Commissioners Standard Industrial Mortality Table [AN 12 INDUSTRIAL MORTALITY TABLE], adopted after 1980 by the National 13 Association of Insurance Commissioners, that is approved by regulation adopted by 14 the director for use in determining the minimum nonforfeiture standard may be 15 substituted for the Commissioners [COMMISSIONER'S] 1961 Standard Industrial 16 Mortality Table or the Commissioners [COMMISSIONER'S] 1961 Industrial 17 Extended Term Insurance Table; for policies issued on or after the operative date of 18 the valuation manual, the valuation manual must provide the Commissioners 19 Standard Ordinary Mortality Table for use in determining the minimum 20 nonforfeiture standard that may be substituted for the Commissioners 1961 21 Standard Industrial Mortality Table or the Commissioners 1961 Extended Term 22 Insurance Table; if the director approves by regulation a Commissioners 23 Standard Industrial Mortality Table adopted by the National Association of 24 Insurance Commissioners for use in determining the minimum nonforfeiture 25 standard for policies issued on or after the operative date of the valuation 26 manual, that minimum nonforfeiture standard supersedes the minimum 27 nonforfeiture provided by the valuation manual. [THIS SUBSECTION APPLIES 28 TO ALL POLICIES ISSUED AFTER THE OPERATIVE DATE OF (w) OF THIS 29 SECTION.] 30 * Sec. 17. AS 21.45.300(u) is amended to read: 31 (u) For a policy issued before the operative date of the valuation manual,
01 the [THE] nonforfeiture annual interest rate [A YEAR] for a policy issued in a 02 particular calendar year shall be equal to 125 percent of the calendar year statutory 03 valuation interest rate for the policy as defined in the Standard Valuation Law, 04 rounded to the nearer one quarter of one percent, if the nonforfeiture interest rate is 05 not less than four percent; for a policy issued on or after the operative date of the 06 valuation manual, the nonforfeiture annual interest rate for a policy issued in a 07 particular calendar year is provided by the valuation manual. [THIS 08 SUBSECTION APPLIES TO ALL POLICIES ISSUED AFTER THE OPERATIVE 09 DATE OF (w) OF THIS SECTION.] 10 * Sec. 18. AS 21.45.300 is amended by adding a new subsection to read: 11 (dd) In this section, "operative date of the valuation manual" means January 1 12 of the first calendar year that the valuation manual described in AS 21.18.112 is 13 effective. 14 * Sec. 19. AS 21.12.020(d), 21.12.020(e), 21.12.020(f), 21.12.020(g), and 21.12.020(h) are 15 repealed. 16 * Sec. 20. The uncodified law of the State of Alaska is amended by adding a new section to 17 read: 18 TRANSITION: REGULATIONS. The director of insurance in the Department of 19 Commerce, Community, and Economic Development may adopt regulations necessary to 20 implement the changes made by this Act. The regulations take effect under AS 44.62 21 (Administrative Procedure Act), but not before the effective date of the law implemented by 22 the regulation. 23 * Sec. 21. This Act takes effect immediately under AS 01.10.070(c).