The commissioner may, at the commissioner's discretion, require
the data specified in this section from any insurance companies which
are subject to this subchapter. These requirements apply to individual
annuities, group annuities, and any supplemental provisions of riders
attached to an individual life insurance policy or a group life insurance
policy whenever on any valuation date contracts of the nature described
are in force which guarantee interest rates in excess of the applicable
maximum reserve valuation interest rate as defined by the Standard
Valuation Law for that type of annuity or pure endowment contract
to future premiums or other deposits of unspecified amounts or timing
for or at any period of time subsequent to the valuation date. (Foreign
companies will be required to furnish this data only with respect
to their Texas issues.) Required data:
(1) number of individuals covered under such contracts;
(2) the actual premium received under such contracts
during the 12 months preceding the applicable valuation date;
(3) the reserves held on such contracts on the valuation
date; and
(4) an evaluation of the potential liability with respect
to premiums or other deposits which may be received subsequent to
the valuation date calculated in the following manner. Potential liability
is the excess, if any, of the present value of the future cash value
generated by "assumed future premiums" at the end of the last period
of interest guarantees higher than the maximum reserve valuation rate
as defined by the Standard Valuation Law for that type of annuity
or pure endowment contract over the present value of "assumed future
premiums" all valued at the maximum reserve valuation rate as defined
by the Standard Valuation Law for that type of annuity or pure endowment
contract. (If interest rate guarantees higher than the applicable
maximum reserve valuation interest rate as defined by the Standard
Valuation Law for that type of annuity or pure endowment contract
extend beyond attained age 70 of the applicable individual, then the
present value of future cash values may be calculated at the 10th
anniversary of the contract or on the anniversary nearest age 70,
whichever is later.)
(A) "Assumed annual future premiums" must be level
and equal in amount to the average annual premium received over the
duration of the contract, counting any contract which is less than
one year old as being a full year old.
(B) The assumed future payment period terminates on
the earliest of the following:
(i) the end of the period during which guarantees are
made regarding future premiums or deposits;
(ii) the end of the continuous period from date of
valuation during which interest rates greater than the applicable
maximum reserve valuation interest rate as defined in the Standard
Valuation Law for that type of annuity or pure endowment contract;
(iii) the maturity date or retirement date specified
in the contract; or
(iv) the later to occur of the 10th contract anniversary
or the contract anniversary nearest age 65 of the prospective annuitant
under the contract.
(C) Premium payments may be assumed to occur, at the
choice of the company:
(i) annually on each July 1 succeeding the valuation
date;
(ii) annually on the contract anniversary; or
(iii) monthly in the amount of 1/12th of the annual
assumed premium, on a day of the month to be chosen by the company.
(D) If the probability of death is introduced into
the above calculation, a statement of methods of application, including
any subsequent changes, must be filed with the Texas Department of
Insurance along with a certification by a qualified actuary that introduction
of such probability is appropriate to the contracts to which it is
to be applied.
(E) Group methods and approximations which yield substantially
the same potential liability valuation may be used.
(5) The validity of all such data and methods as specified
in paragraphs (1) - (4) of this section must be attested to by the
actuary signing the annual convention blank.
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