20-696.02. General requirements; statement of actuarial opinion; qualified actuary; appointed actuary; analysis

A. The following apply to the submission of statements of actuarial opinion:

1. Pursuant to section 20-696.03, a company shall include with or attach to page one of its annual statement the statement of actuarial opinion that is made by an appointed actuary and that states an opinion relating to reserves and related actuarial items held in support of policies and contracts.

2. On written request by the company, the director may grant an extension of the date for submission of the statement of actuarial opinion.

B. A qualified actuary is an individual who meets the following requirements:

1. Is a member in good standing of the American academy of actuaries.

2. Is qualified to sign statements of actuarial opinion for life and health insurance company annual statements pursuant to the American academy of actuaries qualification standards for actuaries signing these statements.

3. Is familiar with the valuation requirements that are applicable to life and health insurance companies.

4. Has not been found by the director, after appropriate notice and hearing and without subsequent reinstatement as a qualified actuary, to have done any of the following:

(a) Violated any provision of or any obligation imposed by this title or other law in the course of the person's conduct as a qualified actuary.

(b) Been convicted of a fraudulent or dishonest practice.

(c) Demonstrated incompetence, lack of cooperation or untrustworthiness to act as a qualified actuary.

(d) Pursuant to this article, submitted to the director during the past five years an actuarial opinion or memorandum that the director rejected because it did not meet the requirements prescribed by this article, including standards prescribed by the actuarial standards board.

(e) Resigned or been removed as an actuary within the past five years as a result of acts or omissions that are indicated in any adverse report on examination or as a result of failure to adhere to generally acceptable actuarial standards.

5. Has notified the director of any action taken against the actuary by the director or commissioner of another state for an act that is prohibited under paragraph 4 of this subsection.

C. Notwithstanding subsection B, paragraph 4 of this section, for good cause shown the director may classify an individual as a qualified actuary.

D. An appointed actuary is a qualified actuary who is appointed or retained to prepare the statement of actuarial opinion that is required by this article, either directly by or by the authority of the board of directors through an executive officer of the company who shall not be the qualified actuary. The company shall give the director timely written notice of the name and title of the appointed actuary, the name of the firm if the actuary is a consulting actuary, and the manner of appointment or retention of each person who is appointed or retained by the company as an appointed actuary, and shall state that the person meets the requirements of subsection B of this section. After the company furnishes this notice, no further notice is required with respect to this person, except that the company shall give the director timely written notice if the actuary ceases to be appointed or retained as an appointed actuary or fails to meet the requirements prescribed in subsection B of this section. If a person who is appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall state this and shall give the reasons for the replacement.

E. The asset adequacy analysis required by this article shall:

1. Conform to the actuarial standards of practice as promulgated by the actuarial standards board in effect on the effective date of this article and to any additional standards pursuant to this article that form the basis of the statement of actuarial opinion pursuant to this article.

2. Be based on methods of analysis as are deemed appropriate for these purposes by the actuarial standards board.

F. Liabilities shall be covered in the actuarial opinion as follows:

1. Pursuant to section 20-510, subsection E or F, the statement of actuarial opinion applies to all in force business on the statement date, whether directly issued or assumed and regardless of when or where issued.

2. If the appointed actuary determines as the result of an asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated pursuant to the methods prescribed in section 20-510, the company shall establish the additional reserve.

3. Additional reserves that are established under paragraph 2 of this subsection and that are deemed unnecessary in subsequent years may be released. Any amounts released shall be disclosed in the actuarial opinion for the applicable year. The release of these reserves is not deemed an adoption of a lower standard of valuation.