§ 84b.5. General requirements.

 (a)  Submission of statement of actuarial opinion.

   (1)  A company shall include on or attach to Page 1 of the annual statement for each year beginning with 1994, the statement of an appointed actuary, entitled ‘‘Statement of Actuarial Opinion,’’ setting forth an opinion relating to reserves and related actuarial items held in support of policies and contracts, in accordance with §  84b.8 (relating to statement of actuarial opinion based on asset adequacy analysis). A company exempted under §  84b.6 (relating to required opinions) from submitting a statement of actuarial opinion in accordance with §  84b.8 shall include on or attach to Page 1 of the annual statement a statement of actuarial opinion rendered by an appointed actuary in accordance with §  84b.7 (relating to statement of actuarial opinion not including an asset adequacy analysis).

   (2)  If in the previous year a company provided a statement of actuarial opinion in accordance with §  84b.7, and in the current year fails to meet the exemption criteria of §  84b.6(c)(1), (2) or (5), the statement of actuarial opinion in accordance with §  84b.8 is not required until August 1 following the date of the annual statement. In this instance, the company shall provide a statement of actuarial opinion in accordance with §  84b.7 with appropriate qualification noting the intent to subsequently provide a statement of actuarial opinion in accordance with §  84b.8.

   (3)  In the case of a statement of actuarial opinion required to be submitted by a foreign or alien company, the Commissioner may accept the statement of actuarial opinion filed by the company with the insurance supervisory regulator of another state if the Commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this Commonwealth.

   (4)  Upon written request by the company, the Commissioner may grant an extension of the date for submission of the statement of actuarial opinion.

 (b)  Qualified actuary requirements. A ‘‘qualified actuary’’ is an individual who:

   (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 in accordance with the American Academy of Actuaries qualification standards for actuaries signing these statements.

   (3)  Is familiar with the valuation requirements applicable to life and health insurance companies.

   (4)  Has not been found by the Commissioner (or if so found has subsequently been reinstated as a qualified actuary), following appropriate notice and hearing, to have done one or more of the following:

     (i)   Violated any provision of, or any obligation imposed by, the insurance laws or other law in the course of the individual’s dealings as a qualified actuary.

     (ii)   Been found guilty of fraudulent or dishonest practices.

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

     (iv)   Submitted to the Commissioner during the past 5 years, under this chapter, an actuarial opinion or memorandum that the Commissioner rejected because it did not meet the provisions of this chapter including standards set by the Actuarial Standards Board.

     (v)   Resigned or been removed as an actuary within the past 5 years as a result of acts or omissions indicated in an adverse report on examination or as a result of failure to adhere to generally acceptable actuarial standards.

   (5)  Has not failed to notify the Commissioner of any action taken by a commissioner of another state similar to that under paragraph (4).

 (c)  Appointed actuary notification. The company shall give the Commissioner written notice of the name, title—and, in the case of a consulting actuary, the name of the firm—and the manner of appointment or retention of each person appointed or retained by the company as an appointed actuary and shall state in the notice that the person meets the requirements in subsection (b). Once notice is furnished, no further notice is required with respect to this person, but the company shall give the Commissioner written notice if the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements in subsection (b). The notice of the appointment or termination of the appointment shall be provided to the Commissioner by January 30, 1995, or the date of the appointment or termination of the appointment unless previously provided to the Commissioner. The notice of termination shall disclose the reasons for termination. Additionally, the terminated actuary shall furnish to the Commissioner and to the company a description of valuation reserve issues that the actuary considered as material at the time of termination or a statement that no material issues exist. The description shall include issues concerning valuation requirements, reserve adequacy, asset adequacy analysis assumptions or methodology and internal controls on the valuation system.

 (d)  Standards for asset adequacy analysis. The asset adequacy analysis required by this chapter shall:

   (1)  Conform to the Standards of Practice as promulgated from time to time by the Actuarial Standards Board and to additional standards under this chapter, which standards are to form the basis of the statement of actuarial opinion in accordance with §  84b.8.

   (2)  Be based on methods of analysis deemed appropriate for these purposes by the Actuarial Standards Board.

 (e)  Liabilities to be covered.

   (1)  Under the authority of section 301(f)(4)(B) of the act (40 P. S. §  71(f)(4)(B)), the statement of actuarial opinion shall apply to all in force business on the statement date regardless of when or where issued (for example, reserves of Exhibits 8, 9 and 10, and claim liabilities of Exhibit 11, Part I of the annual statement and equivalent items of the separate account annual statement or statements).

   (2)  If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods in sections 301(b), (c) and (e), 301.1(a) and 303 of the act (40 P. S. § §  71(b), (c), (e), 71.1(a) and 73), the company shall establish such additional reserve.

   (3)  Additional reserves established under paragraph (2) and deemed not necessary in subsequent years may be released. Amounts released shall be disclosed in the actuarial opinion for the applicable year. The rationale for the release of reserves shall be described in the memorandum. The release of these reserves would not be deemed an adoption of a lower standard of valuation.

   This section cited in 31 Pa. Code §  84b.4 (relating to definitions); 31 Pa. Code §  84b.9 (relating to description of actuarial memorandum including an asset adequacy analysis).