American Council of Life Insurers (ACLI) President and CEO Frank Keating issued the following statement today in response to the National Association of Insurance Commissioners’ approval of Actuarial Guideline VACARVM – CARVM for Variable Annuities:
Washington, D.C. (Sept. 24, 2008) — The American Council of Life Insurers (ACLI) applauds the National Association of Insurance Commissioners (NAIC) for approving a modern, principles-based reserve methodology for variable annuities with guarantees.
The Actuarial Guideline VACARVM - Commissioners Annuity Reserve Valuation Method (CARVM) for Variable Annuities allows companies to set reserves that more accurately and appropriately reflect the risks of variable annuities with guarantees. It allows insurers to calculate their reserve requirements in a way that is more in line with calculations for risk based capital reserves and capital requirements from the NAIC. The Guideline also retains a minimum formulaic value so that optimistic assumptions cannot inappropriately lower reserves.
ACLI thanks the Life and Health Actuarial Task Force (LHATF), the Life Insurance and Annuities (A) Committee, and the Academy of Actuaries for their hard work in developing VACARVM. We also greatly appreciate the efforts of New York Superintendent of Insurance Eric Dinallo and his staff for their leadership in development of the final model.
VACARVM is a key step in modernizing insurance reserve methodology. We look forward to working with LHATF and the A Committee on efforts to develop a principles-based reserve methodology for term life insurance and universal life insurance products with secondary guarantees.
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The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association whose 353 member companies account for 93 percent of the life insurance industry’s total assets in the United States, 93 percent of life insurance premiums and 94 percent of annuity considerations. In addition to life insurance and annuities, ACLI member companies offer pensions, including 401(k)s, long-term care insurance, disability income insurance and other retirement and financial protection products, as well as reinsurance. ACLI's public Web site can be accessed at www.acli.com.