New York State seal

December 11, 1981

SUBJECT: INSURANCE

WITHDRAWN

Circular Letter No. 26

Addendum to Circular Letter No. 17

December 10, 1980

TO: ALL AUTHORIZED LIFE INSURANCE COMPANIES

RE: RESERVE REQUIREMENTS CONCERNING INTEREST RATE GUARANTEES ON ACTIVE LIFE FUNDS HELD RELATIVE TO GROUP ANNUITY CONTRACTS

The minimum reserve requirements for the December 31, 1981 and later valuation years concerning interest rate guarantees on contributions received in the 1979 calendar year and prior calendar years under deposits and funds received relative to group annuity contracts are those specified in Circular Letter No. 17 (1980) dated December 10, 1980.

For interest rate guarantees on such contributions received in 1980 and 1981, the procedures for contributions received in 1980 will apply, except that the reduction in average gross new money rate prescribed in paragraph ((b)) on page 3 of Appendix 3 of Circular Letter 17 (1980) may be waived, provided that an actuary who meets qualifications determined by the Superintendent certifies that he or she has performed satisfactory tests to demonstrate that there is a reasonable matching of assets and liabilities relative to such group annuity contracts. Such tests should include demonstrations that the expected cash flow, including scheduled investment earnings and maturities of the invested assets, is adequate to provide for the guarantees under the contracts and that there is appropriate protection against loss to the company in case of (1) premature prepayments of loans or investments (in case of falling interest rates) and (2) premature withdrawal by the policyholder (in case of rising interest rates).

The appropriate values of <i>my to be used with such procedures are shown in the attached table.

Kindly acknowledge receipt of this letter to:

Mr. Robert J. Callahan, Chief

Actuarial Valuation Bureau

New York State Insurance Department

Empire State Plaza

Albany, NY 12257

Very truly yours,

[SIGNATURE]

ALBERT B. LEWIS

Superintendent of Insurance

ATTACHMENT

TABLE OF VALUES OF <i>my

Effective for the December 31, 1981 Valuation

(Note that contract types (a) and (b) are described in Circular Letter No. 17 (1980))

 

Value of <i>my for

 

Calendar Years y *

 

1 Through y * 10

Calendar Year y in Which

Type (a)

Type (b)

Contributions were Received

Contracts

Contracts

1976

.089

.084

1977

.087

.082

1978

.081

.076

1979

.084

.079

1980

.095

.090

1980 *

.100

.095

     

1981

.107

.102

1981 *

.124

.119

     

* These values of <i>my are applicable only

for a company that meets the conditions

described in the attached circular letter

regarding actuarial certification of a

reasonable matching of assets and liabilities

relative to such contracts.