This page is no longer used please use www.akleg.gov
30th Legislature(2017-2018)

Bill Text 30th Legislature


00 Enrolled 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).                                                  
New Text Underlined     [DELETED TEXT BRACKETED]