What is the CARVM methodology?
Greatest present value of guaranteed benefits over guaranteed premiums (gross considerations). “Greatest” indicates multiple possible outcomes.
What is the DET Certification Method?
- One of two methods to pass DET.
- For a group of converted policies (to products other than Term/VL/ULSG)…provide a certification by a qualified actuary that, total reserve for the policy reflects the additional anticipated mortality associated with the conversion.
- Prudent provision for additional mortality associated with conversion.
- Total reserve exceeds value of Deterministic Reserve that otherwise would have been calculated.
What is the Deterministic Net Premium Test?
- One of two methods to pass DET.
- The company demonstrates that the sum of the valuation net premiums for all future years for the group of policies […] is less than or equal to the sum of the corresponding guaranteed gross premiums for such policies. The test shall be performed on a direct or assumed basis.
Life Reserves: when determining the NYS floor, is the NYS reduced by the NYS DPA?
NYS reserve is not reduced by NYS DPA. Therefore report only NAIC DPA in VM-20 Supplement
Which aspect of JH reserves changed in 2020?
- CSV excess over reserves not calculated correctly in Section G.
- Calculated as excess of admin CSV over modeled reserves, which were already floored at modeled CSV, which can be less than admin CSV.
- Therefore, full excess may not be captured in some cases.
- New calculation is max(admin CSV, modeled CSV) over unfloored reserves
- Increases section G reserve.
What is VM-22?
Statutory maximum valuation rate for income annuities.
What is the implied certain period?
Duration needed for owner to recoup premium paid into policy.
= refund amount / (modal amount * mode)
Can change if payment options are either life with installment refund or life with cash refund
Effect of dividend payments on LwIR/LwCR products
Dividends paid in cash and income payments reduce refund amount.
Dividends used to purchase PUIs increase modal payments
= refund amount / (modal amount & mode)
What is One Year Term insurance?
Discontinued dividend option where dividends are used to purchase one-year term insurance.
How is Prophet calculating One Year Term insurance?
1/2 Cx
2020 NYLIAC VM-20 Supplement
Why were SA reserves added to the supplement?
- Non-SG VUL statutory reserves in GA were being shown as negative
- GA only takes GA portion of pre-reinsurance gross reserves (COLI VUL), but allocates 100% of reserve credit
- Looks better to show both GA and SA portions
What is the small amount of term reserves reported in NYLIAC VM-20 Supplement?
- First-to-die and survivorship term riders offered on UL policies
- Policy count is shown as “0” (counted in UL rows)
Regulation 33
- Allocation of investment income to SMA and LOBs
- Using Statutory accounting
Regulation 138
- Establishment/reporting/treatment of SMA account
- Calculation of shares of ownership of SMA - by maintaining notional account for each LOB
Variable Life Insurance
vs.
Variable Universal Life Insurance
Variable universal life insurance policies have the cash value structure of variable life insurance, but you can use the cash value to pay premiums. You can also pay a larger amount in premiums if you choose to do so.
Variable Life
- May not have guaranteed rate of return, or low guarantee
- Typically offers guaranteed death benefit
- No premium flexibility
Variable Universal Life
- Flexible premium payments (amount/frequency)
- Can make lump sum payments, or use CV for payments
- Can change death benefit depending on CV performance
https://www.guardianlife.com/life-insurance/variable-universal-life-insurance
What is the interest expense for Individual Life reported in the Exhibit of NII?
Borrowing cost on leverage that we have on real estate equity investments.
Variable Life Insurance features
DB/CV/Premium
If the cash value performs well, it can be used to increase the death benefit, withdrawn as cash or used as collateral for a loan.
Schedule BA Assets
Wide range of long-term assets:
Private equity
Hedge funds
Mineral rights
Transportation equipment
Surplus notes
Secured and unsecured loans
Housing tax credits
Deferred Premium Asset
- Adjust for the fact that mean reserves overstate reserves in the case of more frequent modes of premium payment
- Deferred Premium: premium due after valuation date but before next anniversary
Unearned Premium Reserve
- Adjust for the fact that mid-terminal reserves understate reserves unless premium is paid monthly
- Unearned Premium: premium that is paid past valuation date
Why do banks purchase BOLI?
What is their objective?
- To informally fund employee benefits
- Maximize value of BOLI through cash accumulation
- Hold as strong balance sheet asset
Why is BOLI an attractive investment option?
- Tax efficiency
- CV growth is tax-deferred
- DB proceed tax-free
Why do corporations purchase COLI?
- To informally finance employee benefits
- Non-Qualified Deferred Compensation
- Supplemental Executive Retirement Plans
Why is COLI useful for companies?
Acts as an efficient asset/liability management tool for matching liabilities of retirement offerings
