Valuation and Non-forfeiture

  • EXHIBIT ONE - History of the Standard Valuation and Nonforfeiture Laws Since NAIC Adoption in 1942, by Dan Case and Grace Dillingham, ALIA

1975-1, NAIC Proceedings

  • SOA - Trowbridge Committee on Valuation and Related Matters
  • 1980 - SOA - New and Proposed Valuation and Nonforfeiture Standards for Individual Insurance, Society of Actuaries - 16p
  • 1981 - SOA - Effective Use of Capital, Society of Actuaries - 24p
    • .. referred to the Report of the Committee on Valuation and Related Problems.
    • In that report, the Trowbridge Committee identified three categories of hazards which may impair the financial health of the insurance enterprise. [C1, C2, C3]
    • The report of the committee can be read by the members in Volume 5, Number 1 of the Record of the Society of Actuaries.
  • 14.4 Universal Life Insurance Model Regulation
    • Flexible premium products introduce special valuation problems using traditional methods in that some assumption as to future premiums is required.
    • The typical "present value of future benefits less the present value of future net premiums" formula is challenging to apply to flexible premium universal life policies, since neither "future premiums" nor "future benefits" are known for any particular policy.  (p323)

2018 - Book - Statutory Valuation of Individual Life and Annuity Contracts | 5th Edition -- Claire, Lombardi and Summers

  • APPENDIX B - AN ARGUMENT AGAINST REGULATION OF NONFORFEITURE VALUES
    • The opinion that nonforfeiture benefits should be mandated was not completely unanimous among the Task Force.
    • Following is a presentation by Shane Chalke to a group of economists at The Institute For Humane Studies at George Mason University on June 29, which presents the opposing view.

1989-1, NAIC Proceedings

  • 10.3.1.2.2 U.S. GAAP Example - Valuation of life and other long-term insurance liabilities
    • 234. For insurance liabilities that are measured under U.S. GAAP as the net present value of cash flows using current or updated assumptions, the valuation of these items should be based on the Volunteer IAIG’s reported U.S. GAAP valuations.
    • 235. For insurance liabilities that are valued using historical, locked-in assumptions (e.g. long-term insurance contracts measured according to ASC 944-30-7, formerly SFAS 60) or valued under a retrospective deposit method approach (e.g. universal life insurance contracts measured according to ASC 944-30-16, formerly SFAS 97) it will be necessary to adjust the liability utilizing the Gross Premium Valuation (GPV) approach as defined in loss recognition (premium deficiency) testing under U.S. GAAP ASC Topic 944-60.
    • 236. The GPV is calculated by estimating the present value of future payments for benefits and related settlement and maintenance expenses less the present value of future gross premiums based on actual and anticipated experience.
      • Projections may be based on a single best estimate scenario and may also include the impact of management actions, e.g., the current estimate of future premium rate increases (see section 6.3.12 on management actions).
      • Any overhead expenses would be excluded.
      • The discount rate applied would be based on a current portfolio yield and expected reinvestment asset yields and cash flows. Gross rates would be reduced for expected defaults and investment expenses.

2015 - IAIS -  Field Testing - Public Technical Specifications Page 54 of 230

  • ... referred to the Report of the Committee on Valuation and Related Problems. In that report, the Trowbridge Committee identified three categories of hazards which may impair the financial health of the insurance enterprise. [C1, C2, C3]
    • The report of the committee can be read by the members in Volume 5, Number 1 of the Record of the Society of Actuaries.

1981 - SOA - Effective Use of Capital, Society of Actuaries - 24p