Section 681B.220 - Supporting memorandum: Contents1. A supporting memorandum provided pursuant to NRS 681B.230 must conform to the "Actuarial Standards of Practice" adopted from time to time by the Actuarial Standards Board and any additional standards set forth in NAC 681B.100 to 681B.245, inclusive, and demonstrate that the asset adequacy analysis has been performed in accordance with the provisions of NAC 681B.175. The memorandum must specify: (a) For reserves: (1) The product descriptions, including market description, underwriting and other aspects of a risk profile, and the specific risks the appointed actuary deems significant;(2) The source of liability in force;(3) The reserve method and basis;(4) The investment reserves;(5) The reinsurance arrangements;(6) Each guarantee, whether express or implied, made by the general account in support of benefits provided through a separate account or under a separate account policy or contract and the methods used by the appointed actuary to provide for the guarantee in the asset adequacy analysis; and(7) The documentation of the assumptions used by the qualified actuary to test reserves for: (I) Lapse rates, including both base and excess rates;(II) Interest crediting rate strategy;(IV) Policyholder dividend strategy;(V) Competitor or market interest rate;(VI) Annuitization rates;(VII) Commissions and expenses; and(VIII) Morbidity. The documentation of the assumptions must be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions.
(b) For assets: (1) The portfolio descriptions, including a risk profile disclosing the quality, distribution and types of assets;(2) The investment and disinvestment assumptions;(3) The source of asset data;(4) The asset valuation bases; and(5) The documentation of the assumptions made for: (III) Mortgage prepayment function;(IV) Determination of market value for assets sold pursuant to a disinvestment strategy; and(V) Determination of yield on assets acquired through an investment strategy. The documentation of the assumptions must be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions.
(c) The analysis basis, including: (2) The rationale for inclusion or exclusion of different blocks of business and the manner in which pertinent risks were analyzed;(3) The rationale for degree of rigor in analyzing different blocks of business, including, without limitation, the level of materiality used to determine how rigorously to analyze different blocks of business;(4) The criteria for determining asset adequacy, including, without limitation, the precise basis for determining if assets are adequate to cover reserves under moderately adverse conditions or other conditions as specified in the applicable standards of actuarial practice; and(5) Whether the effect of federal income taxes was considered and the method of treating reinsurance in the asset adequacy analysis.(d) A summary of any material change in method, procedure or assumptions from the immediately preceding asset adequacy analysis.(e) A summary of results.(f) A conclusion or conclusions.2. The memorandum must include the following statement: Actuarial methods, considerations and analyses used in the preparation of this memorandum conform to the appropriate "Actuarial Standards of Practice" adopted by the Actuarial Standards Board, which standards form the basis for this memorandum.
Nev. Admin. Code § 681B.220
Added to NAC by Comm'r of Insurance, eff. 5-23-96; A by R146-12, 10-4-2013