TERM AND UNIVERSAL LIFE INSURANCE RESERVE FINANCING

STATE OF NEW MEXICO OFFICE OF SUPERINTENDENT OF INSURANCE SUPERINTENDENT OF INSURANCE Russell Toal DEPUTY SUPERINTENDENT Jennifer A. Catechis Main Office: 1120 Paseo de Peralta, Room 428, Santa Fe, NM 87501 Satellite Office: 6200 Uptown Blvd NE, Suite 400, Albuquerque, NM 87110 Main Phone: (505) 827-4601 | Satellite Phone: (505) 322-2186 | Toll Free: (855) 4 - ASK - OSI www.osi.state.nm.us BULLETIN 2022-015 AUGUST 29, 2022 TO: ALL AUTHORIZED INSURERS RE: TERM AND UNIVERSAL LIFE INSURANCE RESERVE FINANCING The purpose of this Bulletin is to clarify the reporting of certain reserve financing transactions specific to term and universal life insurance reserve financing and the applicability of Actuarial Guideline 48 as set forth in the Accounting Practices and Procedures Manual and Valuation Manual of the National Association of Insurance Commissioners (NAIC), and as more specifically described below. This Bulletin is issued in accordance with Sections 59A-2-8 and 59A-2-10 NMSA 1978, and with 13.1.2.9 NMAC. Effective January 1, 2015, and amended January 1, 2017, the NAIC’s Accounting Practices and Procedures Manual has included, in Appendix C to that Manual, an actuarial guideline titled Actuarial Guideline XLVIII – Actuarial Opinion and Memorandum Requirements for the Reinsurance of Policies Required to be Valued under Sections 6 and 7 of the NAIC Valuation of Life Insurance Policies Model Regulation (Model #830). That guideline is referenced in this Bulletin as “Actuarial Guideline 48” or as “AG48.” The New Mexico Office of Superintendent of Insurance (OSI) has previously adopted AG48, and OSI will continue to use AG48 in reviewing reserve financing transactions associated with term and universal life insurance reserve financing. As an accreditation standard effective January 1, 2023, the NAIC has adopted NAIC Model Regulation #787, the Term and Universal Life Insurance Reserve Financing Model Regulation. That model regulation “establishes uniform, national standards governing reserve financing arrangements pertaining to life insurance policies containing guaranteed nonlevel gross premiums, guaranteed nonlevel benefits and universal life insurance policies with secondary guarantees.” B U L L E T I N 2 0 2 2 - 0 1 5 P a g e | 2 Main Office: 1120 Paseo de Peralta, Room 428, Santa Fe, NM 87501 Satellite Office: 6200 Uptown Blvd NE, Suite 100, Albuquerque, NM 87110 Main Phone: (505) 827-4601 | Satellite Phone: (505) 322-2186 | Toll Free: (855) 4 - ASK - OSI www.osi.state.nm.us NAIC Model Laws, Regulations, Guidelines and Other Resources—Summer 2022, Table of Contents, p. 17. The OSI expects all authorized insurers to report all reserve financing arrangements pertaining to life insurance policies containing guaranteed nonlevel gross premiums, guaranteed nonlevel benefits and universal life insurance policies with secondary guarantees in a manner consistent with AG48 and NAIC Model Regulation #787. Reporting must be consistent with the Credit for Reinsurance Act, Sections 59A-12E-1 to 59A-12E-18 NMSA 1978 (2022); the New Mexico Administrative Code (NMAC), Title 13, Ch. 2, Part 8, CREDIT FOR REINSURANCE; and Title 13, Ch. 9, Part 13 NMAC, VALUATION OF LIFE INSURANCE POLICIES, and all other applicable laws and rules. The reporting required in accordance with this Bulletin applies to all financial reporting on term and universal life insurance reserve financing, whether submitted pursuant to NMSA 1978, § 59A-5-29 (annual statements) or for any other purpose. Current links to AG48 and NAIC MO787 are provided below. AG48 https://content.naic.org/sites/default/files/inlinefiles/committees_ex_pbr_implementation_tf_related_actuarial_guideline_ag48.pdf NAIC MO787 https://content.naic.org/sites/default/files/MO787.pdf Please direct any questions regarding this bulletin to Patrick Zeller, NMOSI Chief Examiner, at (505) 396-1510, or via e-mail at Patrick1.Zeller@state.nm.us. ISSUED this 29th day of August, 2022. __________________________________ RUSSELL TOAL Superintendent of Insurance