S.C. Code Regs. 69-37. Annuity Mortality Tables For Use In Determining Reserve Liabilities For Annuities

Table of Contents Section 1. Authority Section 2. Purpose Section 3. Definitions Section 4. Individual Annuity or Pure Endowment Contracts Section 5. Application of the 2012 IAR Table Section 6. Group Annuity or Pure Endowment Contracts Section 7 Application of the 1994 GAR Table Section 8. Separability Appendix I. 2012 IAM Period Table, Female, Age Nearest Birthday Appendix II. 2012 IAM Period Table, Male, Age Nearest Birthday Appendix III. Projection Scale G2, Female, Age Nearest Birthday Appendix IV. Projection Scale G2, Male, Age Nearest Birthday Section 1. Authority This regulation is promulgated by the Director of Insurance pursuant to Section 38-9-180 of the South Carolina Code. Section 2. Purpose The purpose of this regulation is to recognize the following mortality tables for use in determining the minimum standard of valuation for annuity and pure endowment contracts: the 1983 Table “a,” the 1983 Group Annuity Mortality (1983 GAM) Table, the Annuity 2000 Mortality Table, the 2012 Individual Annuity Reserving (2012 IAR) Table and the 1994 Group Annuity Reserving (1994 GAR) Table. Section 3. Definitions A. As used in this regulation “1983 Table “a,” means that mortality table developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation and adopted as a recognized mortality table for annuities in June 1982 by the National Association of Insurance Commissioners. B. As used in this regulation “1983 GAM Table” means that mortality table developed by the Society of Actuaries Committee on Annuities and adopted as a recognized mortality table for annuities in December 1983 by the National Association of Insurance Commissioners. C. As used in this regulation “1994 GAR Table” means that mortality table developed by the Society of Actuaries Group Annuity Valuation Table Task Force. The 1994 GAR Table is included in the report on pages 865-919 of Volume XLVII of the Transactions of the Society of Actuaries (1995). D. As used in this regulation “Annuity 2000 Mortality Table” means that mortality table developed by the Society of Actuaries Committee on Life Insurance Research. The Annuity 2000 Table is included in the report on pages 211-249 of Volume XLVII of the Transactions of the Society of Actuaries (1995). E. As used in this regulation, “Period table” means a table of mortality rates applicable to a given calendar year (the Period). F. As used in this regulation, “Generational mortality table” means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a Period table and a projection scale containing rates of mortality improvement. G. As used in this regulation “2012 IAR Table” means that Generational mortality table developed by the Society of Actuaries Committee on Life Insurance Research and containing rates, qx2012+n, derived from a combination of the 2012 IAM Period Table and Projection Scale G2, using the methodology stated in Section 5. H. As used in this regulation, “2012 Individual Annuity Mortality Period Life (2012 IAM Period) Table” means the Period table containing loaded mortality rates for calendar year 2012. This table contains rates, qx2012, developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices 1-2. I. As used in this regulation, “Projection Scale G2 (Scale G2)” is a table of annual rates, G2x, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012. This table was developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices 3-4. Section 4. Individual Annuity or Pure Endowment Contracts A. Except as provided in Subsections B and C of this section, the 1983 Table “a” is recognized and approved as an individual annuity mortality table for valuation and, at the option of the company, may be used for purposes of determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 1979. B. Except as provided in Subsection C of this section, either the 1983 Table “a” or the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 1986. C. Except as provided in Subsection D of this section, the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2001. D. Except as provided in Subsection E of this section, the 2012 IAR Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2015. E. The 1983 Table “a” without projection is to be used for determining the minimum standards of valuation for an individual annuity or pure endowment contract issued on or after January 1, 2001, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from: (1) Settlements of various forms of claims pertaining to court settlements or out of court settlements from tort actions; (2) Settlements involving similar actions such as workers’ compensation claims; or (3) Settlements of long term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments. Section 5. Application of the 2012 IAR Mortality Table In using the 2012 IAR Mortality Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows: qx2012+n= qx2012(1- G2x)n The resulting qx2012+n shall be rounded to three decimal places per 1,000, e.g., 0.741 deaths per 1,000. Also, the rounding shall occur according to the formula above, starting at the 2012 period table rate. For example, for a male age 30, qx2012= 0.741. qx2013= 0.741 * (1 - 0.010) &TLRtcirc; 1 = 0.73359, which is rounded to 0.734. qx2014= 0.741 * (1 - 0.010) &TLRtcirc; 2 = 0.7262541, which is rounded to 0.726. A method leading to incorrect rounding would be to calculate qx2014 as qx2013 * (1 - 0.010), or 0.734 * 0.99 = 0.727. It is incorrect to use the already rounded qx2013 to calculate qx2014. Section 6. Group Annuity or Pure Endowment Contracts A. Except as provided in Subsections B and C of this section, the 1983 GAM Table, the 1983 Table “a” and the 1994 GAR Table are recognized and approved as group annuity mortality tables for valuation and, at the option of the company, any one of these tables may be used for purposes of valuation for an annuity or pure endowment purchased on or after January 1, 1979 under a group annuity or pure endowment contract. B. Except as provided in Subsection C of this section, either the 1983 GAM Table or the 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after January 1, 1986 under a group annuity or pure endowment contract. C. The 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after January 1, 2001 under a group annuity or pure endowment contract. Section 7. Application of the 1994 GAR Table In using the 1994 GAR Table, the mortality rate for a person age x in year (1994 +” n) is calculated as follows: qx1994+” n = qx1994 (l - AAx)n where the qx1994 and AAxs are as specified in the 1994 GAR Table. Section 8. Separability If any provision of this regulation or its application to any person or circumstances is for any reason held to be invalid, the remainder of the regulation and the application of its provisions to other persons or circumstances shall not be affected. APPENDIX I 2012 IAM Period Table Female, Age Nearest Birthday APPENDIX II 2012 IAM Period Table Male, Age Nearest Birthday APPENDIX III Projection Scale G2 Female, Age Nearest Birthday APPENDIX IV Projection Scale G2 Male, Age Nearest Birthday