New York State seal

August 28, 1987

SUBJECT: INSURANCE

WITHDRAWN

Circular Letter No. 14 (1987)

TO: ALL AUTHORIZED LIFE INSURANCE COMPANIES, ACCREDITED LIFE REINSURERS, FRATERNAL BENEFIT SOCIETIES AND CHARITABLE ANNUITY SOCIETIES

ATTN: CHIEF ACTUARY OR CONSULTING ACTUARY AND CHIEF FINANCIAL OFFICER

SUBJECT: MAXIMUM RESERVE VALUATION AND MAXIMUM LIFE POLICY NONFORFEITURE INTEREST RATES UNDER SECTIONS 4217, 4218 AND 4221 OF THE NEW YORK INSURANCE LAWS, AS AMENDED IN 1982, 1983, 1985, 1986 and 1987

Attached hereto is an outline, providing maximum reserve valuation and maximum life policy nonforfeiture interest rates for new issues, new purchases or changes in fund (as defined) for years 1982, 1983, 1984, 1985, 1986 and 1987 (and other years where shown), under Sections 4217, 4218 and 4221 of the New York Insurance Laws, as amended in 1982, 1983, 1985, 1986 and 1987.'

Should any person have any question or comment, in regard to this matter, please contact Mr. Robert J. Callahan, Chief of the Actuarial Valuation Bureau (518-474-7929) or Mr. William R. Burns (518-474-6605).

Very truly yours,

[SIGNATURE]

James P. Corcoran

Superitendent of Insurance

MAXIMUM VALUATION AND NONFORFEITURE INTEREST RATES UNDERSECTIONS 4217, 4218 and 4221 OF THE NEW YORK INSURANCE LAWS

The maximum valuation and nonforfeiture interest rates, prescribed by Sections 4217 and 4221 of the New York Insurance Laws for future years, will vary from year to year depending on Moody's corporate bond yield averages.

The maximum valuation interest rates for issues, purchases and changes-in-fund of 1982, 1983, 1984, 1985, 1986 and 1987 (and other years where shown) are outlined below. The maximum valuation and nonforfeiture interest rates for Ordinary Life Insurance are shown in A on page 2, except for Single Premium Life Insurance (of the kind referred to in Section 4217(c)(4)(B)(vi) as amended by Chapter 302 of the laws of 1987) which are shown in B on page 3.

A. ORDINARY LIFE INSURANCE (Except Single Premium Life Insurance covered in B on page 3)

***Maximum

Maximum

*Issue

Reserve Valuation

Nonforfeiture

Year

**Guarantee Duration

Interest Rate

Interest Rate

# 1980

1958

CSO

CSO

1979-81

10 Years or Less

4.50%

5.50%

More than 10 Years, up to 20

4.50

5.50

More than 20 Years

4.50

5.50

1982

10 Years or Less

6.75%

8.50%

5.50%

More than 10 Years, up to 20

6.25

7.75

5.50

More than 20 Years

5.50

7.00

5.50

1983

10 Years or Less

7.25%

9.00%

5.50%

More than 10 Years, up to 20

6.75

8.50

5.50

More than 20 Years

6.00

7.50

5.50

1984

10 Years or Less

7.25%

9.00%

5.50%

More than 10 Years, up to 20

6.75

8.50

5.50

More than 20 Years

6.00

7.50

5.50

1985

10 Years or Less

7.25%

9.00%

5.50%

More than 10 Years, up to 20

6.75

8.50

5.50

More than 20 Years

6.00

7.50

5.50

1986

10 Years or Less

7.25%

9.00%

5.50%

More than 10 Years, up to 20

6.75

8.50

5.50

More than 20 Years

6.00

7.50

5.50

1987

10 Years or less

6.50%

## 8.25%

5.50%

More than 10 Years, up to 20

5.50

## 7.00

5.50

More than 20 Years

6.00

## 7.50

5.50

1988

10 Years or less

6.00%

## 7.50%

5.50%

More than 10 years, up to 20

6.00

## 7.50

5.50

More than 20 years

5.50

## 7.00

5.50

*See the first paragraph under the table on page 9.

**The guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy.

***The maximum reserve valuation interest rate will be the lesser of the rate as determined from the above table and the rate actually used in determining cash values. This applies to basic reserves under Section 4217, not to the minimum reserve test under Section 4218.

# Applicable on or after the operative date elected under Section 4221(k)(12). (See the last paragraph at the bottom of page 9).

## In accordance with Section 4221(k)(9)(B)(i)of the New York Insurance Laws, the nonforfeiture interest rate used for a particular issue year may not exceed the higher of the applicable maximum nonforfeiture interest rate for such particular issue year and that for the immediately preceding issue year (e.g. 1987 issues may use the rate for 1986, 1988 issues may use the rate for 1987).

B. Single Premium Life Insurance of the kind referred to in Section 4217(c)(4)(B)(vi) of the New York Insurance Laws (as amended by Chapter 302 of the laws of 1987). #

### Maximum

Reserve Valuation

*Year

**Guarantee Duration

Interest Rate

Issue Year

Change-in-fund

Basis

Basis

Without

With

Without

With

AO&M

AO&M

AO&M

AO&M

 ***

 ****

 ***

 ****

1982

10 years or less

8.25%

10.00%

8.50%

10.50%

More than 10 yrs,

7.25

7.25

8.25

10.00

up to 20

More than 20 years

6.25

6.25

7.25

8.75

1983

10 years or less

7.50

8.75

8.00

9.25

More than 10 yrs,

7.00

7.00

7.50

8.75

up to 20

More than 20 years

6.25

6.25

6.75

7.75

1984

10 years or less

7.50

8.50

7.75

9.25

More than 10 yrs,

7.00

7.00

7.50

8.50

up to 20

More than 20 years

6.25

6.25

6.75

7.50

1985

10 years or less

7.50

8.50

7.75.

9.00

More-than 10 yrs,

7.00

7.00

7.50

8.50

up to 20

More than 20 years

6.25

6.25

6.50

7.50

1986

10 years or less

6.75

7.25

7.00

7.75

More than 10 yrs,

6.50

6.50

6.75

7.25

up to 20

More than 20 years

5.75

5.75

6.00

6.50

1987

10 years or less

6.50

6.50

6.75

6.75

More than 10 yrs,

6.00

6.00

6.50

6.50

up to 20

More than 20 years

5.50

5.50

5.75

6.00

1988

10 years or less

More than 10 yrs,

up to 20

Maximum

Nonforfeiture

Interest Rate

*Year

**Guarantee Duration

(Issue Year Basis)

## 111980

CS0

1982

10 years or less

More than 10 yrs,

up to 20

More than 20 years

1983

10 years or less

More than 10 yrs,

up to 20

More than 20 years

1984

10 years or less

More than 10 yrs,

up to 20

More than 20 years

1985

10 years or less

More-than 10 yrs,

up to 20

More than 20 years

1986

10 years or less

More than 10 yrs,

up to 20

More than 20 years

1987

10 years or less

9.00%

More than 10 yrs,

8.25

up to 20

More than 20 years

7.25

1988

10 years or less

8.25

More than 10 yrs,

7.50

up to 20

More than 20-years

7.00

*See the first paragraph under the table on page 9.

**The guarantee duration is the number of years for which interest rates provided in, or declared pursuant to, a single premium life insurance policy of the kind referred to in Section 4217(c)(4)(8)(vi) are guaranteed to exceed the greater of (1) 6% and (2) the calendar year statutory valuation interest rate for life insurance policies (other than such single premium policy) with guarantee durations in excess of 20 years.

***Without actuarial opinion and memorandum (using life insurance formula). Additional restrictions may apply by Regulation.

****With actuarial opinion and memorandum (using annuity formula).

# Said Chapter 302 amendment will become effective, on a mandatory basis, on January 1, 1989. Any company may file a written notice of prior election.

## These interest rates do not apply to contracts issued after the election of Section 4221(n-1).

### See paragraph on reserves for these special single premium life insurance policies at bottom of page 10.

C. Single Premium Immediate Annuities and annuity benefits arising from life insurance policies and annuity and guaranteed interest contracts with cash settlement options.

Maximum Reserve Valuation Interest Rate

Issues of or

Purchases

Without Actuarial Opinion

With Actuarial

During

and Memorandum #

Opinion and Memorandum #

(Using Life Insurance Formula)

(Using Annuity

Formula)

1982

10.50%

13.25%

1983

9.50

11.25

1984

9.50

11.25

1985

9.50

11.00

1986

8.50

9.25

1987

8.00

840

# The actuarial opinion and memorandum, referred to in C, D, E, F, G and H herein, are as required by Section 4217(c)(4)(B)(vi) of the New York Insurance Laws. Additional restrictions apply by Regulation.

Section 95.8(d) of Regulation 126 requires, for 1987 year-end, that an actuarial opinion and memorandum be filed, with respect to all 1986 and 1987 issues and all 1986 and 1987 changes-in-fund of annuities, annuity benefits and guaranteed interest contracts. Regulation 126 specifies the minimum reserves to be held where an acceptable actuarial opinion and memorandum are not filed for such 1986. and 1987 business.

Also under Section 95.8(d) of Regulation 126, with respect to issues and changes-in-fund of 1982 through 1985 of annuities, annuity benefits and guaranteed interest contracts, a Company has the option of (1) using the lower set of valuation interest rates (based on the life insurance formula) and not filing an actuarial opinion and memorandum, or (2) using the higher set of valuation interest rates (based on the annuity formula) and filing an acceptable actuarial opinion and memorandum.

D. Other Annuities and Guaranteed Interest Contracts, with cash settlement options and with interest rate guarantees on future considerations, valued on the "Issue Year". basis.

Maximum Reserve Valuation Interest Rate

Without Actuarial Opinion

With Actuarial Opinion

and Memorandum #

and Memorandum #

(Using Life Insurance Formula)

(Using Annuity Formula)

Issue

*Plan Type

*Plan Type

Year

Guarantee

A

B

C

A

B

C

Duration ##

1982

5 years or less

10.50%

8.50%

7.75%

13.25%

10.50%

9.25%

More than 5 yrs,

10.00

8.50

7.75

12.50

10.50

9.25

up to 10

More than 10 yrs,

8.50

7.25

6.75

8.50

7.25

6.75

up to 20

More than 20 years

6.75

6.00

6.00

6.75

6.00

6.00

1983

5 years or less

9.50%

8.00%

7.00%

11.25%

9.25%

8.25%

More than 5 yrs,

9.25

8.00

7.00

10.75

9.25

8.25

up to 10

More than 10 yrs,

8.25

7.00

6.75

8.25

7.00

6.75

up to 20

More than 20 years

6.75

5.75

5.75

6.75

5.75

5.75

1984

5 years or less

9.50%

7.75%

7.00%

11.25%

9.25%

8.00%

More than 5 yrs,

9.00

7.75

7.00

10.75

9.25

8.00

up to 10

More than 10 yrs,

8.25

7.00

6.75

8.25

7.00

6.75

up to 20

More than 20 years

6.75

5.75

5.75

6.75

5.75

5.75

1985

5 years or less

9.50%

7.75%

7.00%

11.00%

9.00%

8.00%

More than 5 yrs,

9.00

7.75

7.00.

10.50

9.00

8.00

up to 10

More than 10 yrs,

8.25

7.00

6.50

8.25

7.00

6.50

up to 20

More than 20 years

6.50

5.75

5.75

6.50

5.75

5.75

1986

5 years or less

8.50%

7.00%

6.50%

9.25%

7.75%

6.75%

More than 5 yrs,

8.25

7.00

6.50

8.75

7.75

6.75

up to 10

More than 10 yrs,

7.50

6.50

6.00

7.50

6.50

6.00

up to 20

More than 20 years

6.00

5.50

5.50

6.00

5.50

5.50

1987

5 years or less

8.00

6.75

6.00

8.00

6.75

6.25

More than 5 yrs,

7.75

6.75

6.00

7.75

6.75

6.25

up to 10

More than 10 yrs,

7.00

6.00

5.75

7.00

6.00

5.75

up to 20

More than 20 years

5.75

5.25

5.25

5.75

5.25

5.25

# See requirements for actuarial opinion and memorandum in footnote on page 4. Additional restrictions apply by Regulation.

## See definition of guarantee duration for Categories D, E, G and H on page 10.

*See descriptions of plan types on page 10.

E. Other Annuities and Guaranteed Interest future considerations, valued on the but without interest rate guarantees on "Issue Year" basis.

Maximum Reserve Valuation Interest Rate

Without Actuarial Opinion

and Memorandum

(Using Life Insurance Formula)

Issue

*Plan Type

Year

Guarantee Duration ##

A

B

C

1982

5 years or less

11.00%

9.00%

8.25%

More than 5 yrs, up to 10

10.50

9.00

8.25

More than 10 yrs, up to 20

8.75

7.50

7.25

More than 20 years

7.25

6.25

6.25

1983

5 years or less

10.00%

8.25%

7.50%

More than 5 yrs, up to 10

9.50

8.25

7.50

More than 10 yrs, up to 20

8.75

7.50

7.00

More than 20 years

7.00

6.25

6.25

1984

5 years or less

10.00%

8.25%

7.50%

More than 5 yrs, up to 10

9.50

8.25

7.50

More than 10 yrs, up to 20

8.75

7.50

7.00

More than 20 years

7.00

6.25

6.25

1985

5 years or less

9.75%

8.25%

7.50%

More than 5 yrs, up to 10

9.50

8.25

7.50

More than 10 yrs, up to 20

8.50

7.50

7.00

More than 20 years

7.00

6.25

6.25

1986

5 years or less

8.75%

7.50%

6.75%

More than 5 yrs, up to 10

8.50

7.50

6.75

More than 10 yrs, up to 20

7.75

6.75

6.50

More than 20 years

6.50

5.75

5.75

1987

5 years or less

8.25

7.00

6.50

More than 5 yrs, up to 10

8.00

7.00

6.50

More than 10 yrs, up to 20

7.25

6.50

6.00

More than 20 years

6.00

5.50

5.50

Maximum Reserve Valuation Interest Rate

With Actuarial Opinion

and Memorandum #

(Using Annuity Formula)

Issue

*Plan Type

Year

Guarantee Duration ##

A

B

C

1982

5 years or less

13.75%

11.25%

10.00%

More than 5 yrs, up to 10

13.25

11.25

10.00

More than 10 yrs, up to 20

8.75

7.50

7.25

More than 20 years

7.25

6.25

6.25

1983

5 years or less

11.75%

9.75%

8.75%

More than 5 yrs, up to 10

11.25

9.75

8.75

More than 10 yrs, up to 20

8.75

7.50

7.00

More than 20 years

7.00

6.25

6.25

1984

5 years or less

11.75%

9.75%

8.50%

More than 5 yrs, up to 10

11.25

9.75

8.50

More than 10 yrs, up to 20

8.75

7.50

7.00

More than 20 years

7.00

6.25

6.25

1985

5 years or less

11.50%

9.50%

8.50%

More than 5 yrs, up to 10

11.00

9.50

8.50

More than 10 yrs, up to 20

8.50

7.50

7.00

More than 20 years

7.00

6.25

6.25

1986

5 years or less

9.50%

8.00%

7.25%

More than 5 yrs, up to 10

9.25

8.00

7.25

More than 10 yrs, up to 20

7.75

6.75

6.50

More than 20 years

6.50

5.75

5.75

1987

5 years or less

8.25

7.00

6.50

More than 5 yrs, up to 10

8.00

7.25

6.50

More than 10 yrs, up to 20

7.25

6.50

6.00

More than 20 years

6.00

5.50

5.50

# See requirements for actuarial opinion and memorandum in footnote on Additional restrictions apply by Regulation.

## See definition of guarantee duration for Categories D, E, G and H on page 10.

*See descriptions of plan types on page 10.

F. Other Annuities and Guaranteed Interest Contracts, without cash settlement options, valued on the "Issue Year" basis.

Maximum Reserve Valuation Interest Rate

Without Actuarial

With Actuarial

Opinion

Opinion and

and Memorandum #

Memorandum #

(Using Life Insurance

(Using Annuity

Formula)

Formula)

Issue

*Plan Type

*Plan Type

Year

Guarantee Duration**

A

A

1982

5 years or less

10.50%

13.25%

More than 5 yrs, up to 10

10.00

12.50

More than 10 yrs, up to 20

9.00

11.25

More than 20 years

7.25

8.75

1983

5 years or less

9.50%

11.25%

More than 5 yrs, up to 10

9.25

10.75

More than 10 yrs, up to 20

8.25

9.75

More than 20 years

6.75

7.75

1984

5 years or less

9.50%

11.25%

More than 5 yrs, up to 10

9.00

10.75

More than 10 yrs, up to 20

8.25

9.75

More than 20 years

6.75

7.50

1985

5 years or less

9.50%

11.00%

More than 5 yrs, up to 10

9.00

10.50

More than 10 yrs, up to 20

8.25

9.50

More than 20 years

6.50

7.50

1986

5 years or less

8.50%

9.25%

More than 5 yrs, up to 10

8.25

8.75

More than 10 yrs, up to 20

7.50

8.00

More than 20 years

6.00

6.50

1987

5 years or less

8.00

8.00

More than S yrs, up to 10

7.75

7.75

More than 10 yrs, up to 20

7.00

7.25

More than 20 years

5.75

6.00

# See requirements for actuarial opinion and memorandum in footnote on page 4. Additional restrictions apply by Regulation.

* See descriptions of plan types on page 10.

** The guarantee duration, for other annuities and guaranteed interest contracts without cash settlement options, is the number of years from the date of issue or date of purchase to t date annuity benefits are scheduled to commence.

G. Other Annuities and Guaranteed Interest Contracts, with cash settlement. options and with interest rate guarantees on future considerations, valued on the "Change in Fund" basis.

Maximum Reserve Valuation Interest Rate

Without Actuarial Opinion

and Memorandum #

(Using Life Insurance Formula)

Change

in Fund

*Plan Type

During

Year

Guarantee Duration ##

A

B

C

1982

5 years or less

12.00%

11.00%

8.25%

More than. 5 yrs, up. to 10

11.50

11.00

8.25

More than 10 yrs, up to 20

10.50

10.00

7.75

More than 20 years

8.50

8.50

6.75

1983

5 years or less

10.75%

10.00%

7.50%

More than 5 yrs, up to 10

10.50

10.00

7.50

More than 10 yrs, up to 20

9.50

9.25

7.00

More than 20 years

8.00

8.00

6.25

1984

5 years or less

10.75%

10.00%

7.50%

More than 5 yrs, up to 10

10.25

10.00

7.50

More than 10 yrs, up to 20

9.50

9.00

7.00

More than 20 years

7.75

7.75

6.25

1985

5 years or less

10.50%

9.75%

7.50%

More than 5 yrs, up to 10

10.25

9.75

7.50

More than 10 yrs, up to 20

9.50

9.00

7.00

More than 20 years

7.75

7.75

6.25

1986

5 years Or less

9.50%

8.75%

6.75%

More than 5 yrs, up to 10

9.25

8.75

6.75

More than 10 yrs, up to 20

8.50

8.25

6.50

More than 20 years

7.00

7.00

5.75

1987

5 years of less

9.00

8.25

6.50

More than 5 yrs, up to 10

8.50

8.25

6.50

More than 10 yrs, up to 20

8.00

7.75

6.00

More than 20 years

6.75

6.75

5.50

Maximum Reserve Valuation Interest Rate

With Actuarial Opinion

and Memorandum #

(Using Annuity Formula)

Change

in Fund

*Plan Type

During

Year

Guarantee Duration ##

A

B

C

1982

15.00%

13.75%

10.00%

14.50

13.75

10.00

13.25

12.50

9.25

10.50

10.50

8.00

12.75%

11.75%

8.75%

1983

12.25

11.75

8.75

11.25

10.75

8.25

9.25

9.25

7.25

1984

12.75%

11.75%

8.50%

12.25

11.75

8.50

11.25

10.75

8.00

9.25

9.25

7.00

1985

12.50%

11.50%

8.50%

12.00

11.50

8.50

11.00

10.50

8.00

9.00

9.00

7.00

1986

10.25%

9.50%

7.25%

10.00

9.50

7.25

9.25

8.75

6.75

7.75

7.75

6.00

1987

9.00

8.50

6.50

8.75

8.50

6.50

8.00

7.75

6.25

6.75

6.75

5.50

# See requirements for actuarial opinion and memorandum in footnote on page 4. Additional restrictions apply by Regulation.

See definition of guarantee duration for Categories D, E, G and H on page 10.

*See descriptions of plan types on page 10.

H. Other Annuities and guaranteed interest contracts, with cash settlement options future considerations, valued on the but without interest rate guarantees on "Change in Fund" basis.

Maximum Reserve Valuation Interest Rate

Without Actuarial Opinion

and Memorandum #

(Using Life Insurance Formula)

Change

in Fund

*Plan Type

During

Year

Guarantee Duration ##

A

B

C

1982

5 years or less

12.25%

11.50%

8.50%

More than. 5 yrs, up. to 10

12.00

11.50

8.50

More than 10 yrs, up to 20

11.00

10.50

8.25

More than 20 years

9.00

9.00

7.25

1983

5 years or less

11.25%

10.50%

8.00%

More than 5 yrs, up to 10

10.70

10.50

8.00

More than 10 yrs, up to 20

10.00

9.50

7.50

More than 20 years

8.25

8.25

6.75

1984

5 years or less

11.00%

10.25%

7.75%

More than 5 yrs, up to 10

10.75

10.25

7.75

More than 10 yrs, up to 20

10.00

9.50

7.50

More than 20 years

8.25

8.25

6.75

1985

5 years or less

11.00%

10.25%

7.75%

More than 5 yrs, up to 10

10.50

10.25

7.75

More than 10 yrs, up to 20

9.75

9.00

7.00

More than 20 years

8.25

8.25

6.50

1986

5 years Or less

9.75%

9.25%

7.00%

More than 5 yrs, up to 10

9.50

9.25

7.00

More than 10 yrs, up to 20

8.75

8.50

6.75

More than 20 years

7.50

7.50

6.00

1987

5 years of less

9.25

8.50

6.75

More than 5 yrs, up to 10

9.25

8.50

6.75

More than 10 yrs, up to 20

8.25

8.00

6.50

More than 20 years

7.00

7.00

5.75

Maximum Reserve Valuation Interest Rate

With Actuarial Opinion

and Memorandum #

(Using Annuity Formula)

Change

in Fund

*Plan Type

During

Year

Guarantee Duration ##

A

B

C

1982

15.75%

14.50%

10.50%

15.00

14.50

10.50

13.75

13.25

10.00

11.25

11.25

8.75

13.50%

12.25%

9.25%

1983

12.75

12.25

9.25

11.75

11.25

8.75

9.75

9.75

7.75

1984

13.25%

12.25%

9.25%

12.75

11.25

9.25

11.75

11.25

8.50

9.75

9.75

7.50

1985

13.00%

12.00%

9.00%

12.50

12.00

9.00

11.50

11.00

8.00

9.50

9.50

7.50

1986

10.75%

10.00%

7.75%

10.25

10.00

7.75

9.50

9.25

7.25

8.00

8.00

6.50

1987

9.50

8.75

6.75

9.00

8.75

6.75

8.50

8.00

6.50

7.25

7.25

6.00

# See requirements for actuarial opinion and memorandum in footnote on page 4.

Additional restrictions apply by Regulation.

## See definition of guarantee duration for Categories D, E, G and H on page 10.

*See descriptions of plan types on page 10.

Section 4217, as amended by Chapter 749 of the Laws of 1983, permits the dynamic interest rates (under the 1982 amendments) to be used for issues of January 1, 1982 and later, irrespective of a company's election or non-election under Section 4221 (k)(12). Thus, the new dynamic interest rates may be used either with 1958 CSO or with 1980 CSO issues of January 1, 1982 and later, for valuation purposes.

Said Section 4221(k)(12) was amended by Chapter 81 of the Laws of 1983 to permit a company to elect to comply with the new provisions of Section 4221 on a plan-by-plan basis, will the proviso that the entire portfolio must. e converted to the new provisions on or before January 1 of the third calendar year following the calendar year of compliance for the first plan so converted, but not, in any event, later than January 1, 1989.

Plan types, as used in the above tables, are defined as follows:

Plan Type A: The policyholder may withdraw funds only (1) with an adjustment' to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without such adjustment but in installments over five years or more, or (3) as an immediate life annuity.

Plan Type B: The policyholder may not withdraw funds before the expiration of the interest rate guarantee or, if withdrawals are permitted before the expiration of such guarantee, may withdraw funds, only (1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without such adjustment but in installments over five years or more. At the end of the interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than five years.

Plan Type C: The policy holder may withdraw funds before the expiration of the interest rate guarantee in a single sum or installments over less than five years either (1) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.

The most popular plan type, in the group annuity area, for current issues, is plan type B; while, the most popular plan type, in the individual annuity area, for current issues, is plan type C.

The guarantee duration, for other annuities and guaranteed interest contracts without cash settlement options, is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.

G. Other annuities and guaranteed interest contracts, without cash settlement options, may be valued only on an "Issue Year" basis.

The maximum reserve valuation interest rates, for annuities and guaranteed interest contracts and for single premium life insurance policies of the kind referred to in Section 4217(c)(4)(B)(vi), are based on Moody's Corporate Bond Yield Averages for a one or three year period ending in June of the year of issue, purchase or change in fund. Consequently, we are not able to compute rates applicable to 1988 at this time.

The attached Appendix describes the method of calculating the maximum 'reserve valuation interest rates, in accordance with the specifications of Section 4217 of the New York Insurance Laws, as amended.

The reserve for a Single Premium Life Insurance policy, of the kind referred to in Section 4217(c)(4)(B)(vi) of the New York Insurance Laws (as amended by Chapter 302 of the laws 'of 1987), must not he less than its cash value to be promulgated pursuant to such Chapter 302 may limit the app applicable duration of a maximum reserve valuation interest rate specified in B on page 3. 4709d

APPENDIX

To Circular Letter Number 14 (1987)

The maximum reserve valuation interest rates are based on reference interest rates, which averages of corporate bond earnings published by Moody's Investors Service, Inc., and weighting factors prescribed by Section 4217.

The weighting factors do not vary from year to year. None of the weighting factors given in Table 1 below will change unless Section 4217 is revised by new legislation. The following formulas are used to compute the maximum reserve valuation interest rates:

I = 3.00% + W(R1-3.00)% + W/2(R2-9.00)%, (Formula 1, called "Life Insurance Formula")

or

I = 3.00% + W(R-3.00)%, (Formula 2, called "Annuity Formula")

Where:

I = Maximum calendar year statutory valuation interest rate, rounded to the nearer 1/4%.

R = Reference interest rate, derived from Moody's corporate bond monthly yield averages, rounded to the nearer basis point (.01 of 1%).

R1= Lesser of R and 9.00%.

R2= Greater of R and 9.00%.

W = Weighting factor.

The third term of Formula 1 is dropped whenever the reference interest rate falls below 9.00%. The weighting factors vary by type of benefit, guarantee duration, and valuation basis (i.e. 'issue year' basis or 'change-in-fund' basis). An asterisk (*), where shown with the weighting factor in Table 1, indicates that Formula 2 may optionally be used with a given factor if an acceptable actuarial opinion and memorandum are provided, as required by Section 4217(c)(4)(B)(vi).

TABLE 1

Valuation

Reference

Weighting

Benefit

Guarantee Duration

Basis

Interest Rate

Factor

(Category in

(Where duration t,

(Column from

Circular Letter)

in years, is)

Table 2)

A

= or < 10

Issue

(3)

.50

> 10, = or < 20

Year

.45

> 20

.35

B

= or < 10

Issue Year

(1)

.55*

> 10, = or < 20

Issue Year

(3)

.50

> 20

Issue Year

(3)

.40

B

= or < 10

Change-in-Fund

(1).60*

> 10, = or < 20

Change-in-Fund

(1)

.55*

> 20

Change-in-Fund

(1)

.45*

C

All durations

Issue or

(1)

Purchase Year

.80*

Valuation

Reference

Benefit

Guarantee Duration

Basis

Interest Rate

(Category in

(Where duration t,

(Column from

Circular Letter))

in years, is)

Table 2)

D

= or < 5

Issue

(1)

> 5, = or < 10

Year

(1)

> 10, = or < 20

(3)

> 20

(3)

E

= or < 5

Issue

(1)

> 5, = or < 10

Year

(1)

> 10, = or < 20

(3)

> 20

(3)

F

= or < 5

Issue

(1)

> 5, = or;< 10

Year

(1)

> 10, = or < 20

(1)

> 20

(1)

G

= or < 5

Change

(1)

> 5, = or < 10

in

(1)

> 10, = or < 20

Fund

(1)

> 20

(1)

H

= or < 5

Change

(1)

> 5, = or < 10

in

(1)

> 10, = or < 20

Fund

(1)

> 20

(1)

Weighting

Benefit

Factor

(Category in

Circular Letter))

Varies By Plan Type

A

B

C

D

.80*

.60*

.50*

.75*

.60*

.50*

.65

.50

.45

.45

.35

.35

E

A

B

C

.85*

.65*

.55*

.80*

.65*

.55*

.70.

.55

.50

.50

.40

.40

A

F

.80*

.75*

.65*

.45*

A

B

C

G

.95*

.85*

.55*

.90*

.85*

.55*

.80*

.75*

.50*

.60*

.60*

.40*

A

B

C

H

1.00*

.90*

.60*

.95*

.90*

.60*

.85*

.80*

.55*

.65*

.65*

.45*

The reference interest rates are based on the average corporate bond earnings published by Moody's Investors Service, Inc.

Section 4217 defines running averages of the published monthly yield rates for 12-month and 36-month periods.

The year of issue, of purchase or of change-in-fund applicable to the running yield average ending in the current year is the next following year for Life Insurance other than single premium life insurance of the kind referred to in Section 4217(c)(4)(B)(vi) (i.e. Category A in the Circular Letter) and the current year for all other business (i.e. Categories B through H in the Circular Letter).

The following table shows Moody's yield averages for recent years:

TABLE 2

For Period

Ending

12-Month

36-Month

June 30

Running

Running

Lesser of

of Year

Average

Average

Two Averages

(1)

(2)

(3)

1981

13.71%

11.57%

11.57%

1982

15.70

13.64

13.64

1983

13.39.

14,26

13.39

1984

13.22

14.10

13.22

1985

13.01

13.21.

13.01

1986

10.75

12.33

10.75

1987

9.40

11.05

9.40

The maximum nonforfeiture interest rate for Life Insurance (other than Single Premium Life Insurance covered in Category B on page 3 of the Circular Letter), for a particular issue year, is equal to 125% of the maximum reserve valuation interest rate for the same issue year, rounded to the nearer 1/4%.

The maximum nonforfeiture interest rate for Single Premium Life Insurance (covered in Category B on page 3 of the Circular Letter), for a particular issue year, is equal to 125% of the maximum reserve valuation interest rate, on an issue year basis, with an actuarial opinion and memorandum, for the next previous issue year, rounded to the nearer 1/4%.

Should the computed maximum reserve valuation interest rate for Life Insurance (other than Single Premium Life. Insurance covered in Category B on page 3 of the Circular Letter) for a particular issue year be different from the actual maximum reserve valuation interest rate for the next previous issue year by less than 1/2%, the maximum reserve valuation interest rate for such particular issue year will be the same as that for such next previous issue year.