Filed Under:Your Practice, Regulatory

AG 38: Still In-Force Reserve Concerns and New Business Process Issues

AG 38 isn't winning any actuarial beauty contests, but it may ensure reserve level adequacy yet. Image,  AP
AG 38 isn't winning any actuarial beauty contests, but it may ensure reserve level adequacy yet. Image, AP

Work being done by the NAIC on resolving the thorny Actuarial Guideline 38 for universal life products with secondary guarantees (USLG) is focused now on reserving methodologies for business written before or after Jan 1, 2013. 

However, some parties are still concerned about capturing the right reserve levels, and those that may have to cough up more reserves for prior years are worried about the impact on their financial statements.

Asset adequacy tests of in-force business that could lead to some companies increasing reserves and additional reserves set up pursuant to that analysis are generally not tax deductible. Treasury is said to be looking into the issue, along with the Internal Revenues Service.

Graham, among other concerns, also voiced the need for an appeals process for insurers subject to the proposed panel of actuaries who check up on companies’ reserving work -- so companies could dispute the panel’s findings, if it came to that.

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Nichole Morford

Nichole Morford
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