N.M. Admin. Code § 13.9.13.19

Current through Register Vol. 35, No. 24, December 23, 2024

Section 13.9.13.19 - OPTIONAL EXEMPTION FOR YEARLY RENEWABLE TERM REINSURANCE

At the option of the company, the following approach for reserves on YRT reinsurance may be used:

A. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

B. Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in 13 nmac 9.13.17 [now 13.9.13.17 NMAC].

C. For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium.

D. Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with 13 NMAC 9.13.19.3.1 [now Paragraph (1) of Subsection C of 13.9.13.19 NMAC].

E. For purposes of this section, calculations shall be based on the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, (or any other table adopted after the effective date of this rule by the NAIC and promulgated by rule by the superintendent for this purpose).

F. A reinsurance agreement shall be considered YRT reinsurance for purposes of this section if only the mortality risk is insured.

G. If the assuming company chooses this optional exemption, the ceding company's reinsurance reserve credit shall be limited to the amount of reserve held by the assuming company for the affected policies.

N.M. Admin. Code § 13.9.13.19

1/1/00; Recompiled 11/30/01