Incorporation of Principle Based Reserving (PBR) Standards into the NAIC Accounting Practices and Procedures Manual (AP&P)

Proposal Prepared By:

Dave Christensen, USAA Milum Livesay, Genworth

Project Overview
How do we incorporate the PBR Valuation Manual into the AP&P?
DRAFT
4-26-2007

VALUATION MANUAL
This document is only for use by the American Academy of Actuaries Valuation Law & Manual Team. This document is a working draft in progress and is incomplete. Flow and structure may be changed with sections added or altered. Many of the sections are also drafts in progress.

Objectives of the Project

Keep it simple! Maintain the current connection between accounting and reserve standards Minimize ongoing Statutory Accounting Principles WG maintenance Provide a historical record

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Current and Future States

Current
All pronouncements currently contained with the AP&P

Appendix A Excerpts of Model Laws

Multiple SSAPs Appendix C Actuarial Guidelines

Future
Maintained outside the AP&P

Single SSAP

PBR Valuation Manual

Contains specific sections for all contract types

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Modifications to the AP&P

SSAPs which include reserve standards will need to be reviewed and superseded by a new SSAP with a unique effect date

Life contracts (including annuities) A&H contracts Deposit-Type contracts Separate accounts Life reinsurance

SSAPs 51, 52, 54, 56, 59, 61, 80, 88 9f

Example of new SSAP Modeled after SSAP 7

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Modifications to the AP&P

Example of new SSAP modeled after SSAP 80

New SSAP will contain its own effective date allowing for prospective accounting

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Modifications to the AP&P

Example of superseded SSAP modeled after SSAP 51

All Appendix A and C documents which are superseded by the new SSAP will shaded and remain in the AP&P for the foreseeable future

Enables the Valuation Manual to focus on Prospective Contracts

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