Chapter 623

623.06(1m)(f)1. 1. The commissioner shall keep confidential any memorandum in support of, and any other material provided by an insurance company to the commissioner in connection with, an opinion required under this subsection. Any such memorandum or other material may not be made public and may not be subject to subpoena except for the purpose of defending an action seeking damages from any person on account of an act required under this subsection or required by a rule authorized or required under this subsection.

623.06(1m)(f)2. 2. The commissioner may release any such memorandum or other material with the written consent of the insurance company, or to the American academy of actuaries upon its request if the memorandum or other material is required for professional disciplinary proceedings and if the request sets forth procedures that are satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material.

623.06(1m)(f)3. 3. A memorandum loses its confidentiality if the insurance company cites any portion of the memorandum for marketing purposes or before any governmental agency other than a state insurance department or if the insurance company releases any portion of the memorandum to the news media.

623.06(1r) (1r) Beginning on the operative date of the valuation manual, all of the following apply:

623.06(1r)(a) (a) Every insurance company that has outstanding life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this state and that is subject to regulation by the commissioner shall submit to the commissioner, as prescribed in par. (c), the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of those outstanding contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this state. The valuation manual shall prescribe the specifics of this opinion, including any items that are necessary to its scope.

623.06(1r)(b) (b) Every insurance company that has outstanding life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this state and that is subject to regulation by the commissioner, except as exempted in the valuation manual, shall also annually include in the opinion required under par. (a) an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company’s obligations under the policies and contracts, including the benefits under and expenses associated with the policies and contracts. The opinion required under this paragraph shall be governed by the following:

623.06(1r)(b)1. 1. A memorandum, in form and substance as specified in the valuation manual and acceptable to the commissioner, shall be prepared to support each actuarial opinion.

623.06(1r)(b)2. 2. If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified in the valuation manual, or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner.

623.06(1r)(c) (c) All opinions required under this subsection shall be governed by the following:

623.06(1r)(c)1. 1. The opinion shall be in form and substance as specified in the valuation manual and acceptable to the commissioner.

623.06(1r)(c)2. 2. The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending after the operative date of the valuation manual.

623.06(1r)(c)3. 3. The opinion shall apply to all policies and contracts described in pars. (a) and (b), plus other actuarial liabilities as may be specified in the valuation manual.

623.06(1r)(c)4. 4. The opinion shall be based on standards adopted from time to time by the actuarial standards board or its successor and on any additional standards prescribed in the valuation manual.

623.06(1r)(c)5. 5. With respect to an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state.

623.06(1r)(c)6. 6. Except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision, or conduct with respect to the appointed actuary’s opinion.

623.06(2) (2) Except as provided in subs. (2a) and (2m), the minimum standard for the valuation of all policies and contracts specified by the commissioner under sub. (1m) (a) 1. issued prior to the effective date of this section [see sub. (13) and s. 632.43 (9)] shall be that provided by the laws in effect immediately prior to such date. Except as provided in subs. (2a) and (2m), the minimum standard for the valuation of all such policies and contracts issued on or after the effective date of this section shall be the commissioners reserve valuation methods defined in subs. (3) to (4m) and (7), with 3.5 percent interest, or in the case of policies and contracts, other than annuity and pure endowment contracts, issued on or after June 19, 1974, and prior to November 8, 1977, 4 percent interest, and for policies issued on or after November 8, 1977, 4.5 percent interest and the following tables:

623.06(2)(a) (a) For all ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in those policies, the commissioners 1941 standard ordinary mortality table for those policies issued before the operative date of s. 632.43 (6) (b), and the commissioners 1958 standard ordinary mortality table for those policies issued on or after the operative date of s. 632.43 (6) (b) and before the operative date of s. 632.43 (6m). For any category of those policies issued on female risks all modified net premiums and present values referred to in this section may be calculated according to an age not more than 6 years younger than the actual age of the insured.

623.06(2)(am) (am) For policies under par. (a) issued on or after the operative date of s. 632.43 (6m):

623.06(2)(am)1. 1. The commissioners 1980 standard ordinary mortality table;

623.06(2)(am)2. 2. At the election of the company for any one or more specified plans of life insurance, the commissioners 1980 standard ordinary mortality table with 10-year select mortality factors; or

623.06(2)(am)3. 3. Any ordinary mortality table adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for those policies.

623.06(2)(b) (b) For all industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in those policies, the 1941 standard industrial mortality table for those policies issued before the operative date of s. 632.43 (6) (c), and for those policies issued on or after the operative date of s. 632.43 (6) (c) the commissioners 1961 standard industrial mortality table or any industrial mortality table adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for those policies.

623.06(2)(c) (c) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies — the 1937 standard annuity mortality table or, at the option of the company, the annuity mortality table for 1949, ultimate, or any modification of either of these tables approved by the commissioner.

623.06(2)(d) (d) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies — the group annuity mortality table for 1951, any modification of such table approved by the commissioner, or, at the option of the company, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts.

623.06(2)(e) (e) For total and permanent disability benefits in or supplementary to ordinary policies or contracts issued on or after January 1, 1966, the tables of Period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 disability study of the society of actuaries, with regard to the type of benefit, or any tables of disablement rates and termination rates adopted after 1980 by the National Association of Insurance Commissioners, that are approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for those policies; for policies or contracts issued on or after January 1, 1961 and before January 1, 1966, either those tables or, at the option of the company, the Class (3) disability table (1926); and for policies issued before January 1, 1961, the Class (3) disability table (1926). Any such table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies.

623.06(2)(f) (f) For accidental death benefits in or supplementary to policies issued on or after January 1, 1966, the 1959 accidental death benefits table or any accidental death benefits table adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for those policies; for policies issued on or after January 1, 1961 and before January 1, 1966, either that table or, at the option of the company, the intercompany double indemnity mortality table; and for policies issued before January 1, 1961, the intercompany double indemnity mortality table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies.

623.06(2)(g) (g) For group life insurance, life insurance issued on the substandard basis and other special benefits, such tables as may be approved by the commissioner.

623.06(2a) (2a) Except as provided in sub. (2m), the minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the operative date of this subsection, as defined in sub. (2b), and for all annuities and pure endowments purchased on or after that operative date under group annuity and pure endowment contracts, shall be the commissioners reserve valuation methods defined in subs. (3) to (4m) and the following tables and interest rates:

623.06(2a)(a) (a) For individual annuity and pure endowment contracts issued prior to November 8, 1977, excluding any disability and accidental death benefits in such contracts — the 1971 individual annuity mortality table, or any modification of this table approved by the commissioner, and 6 percent interest for single premium immediate annuity contracts, and 4 percent interest for all other individual annuity and pure endowment contracts.

623.06(2a)(b) (b) For individual single premium immediate annuity contracts issued on or after November 8, 1977, excluding any disability and accidental death benefits in those contracts, the 1971 individual annuity mortality table or any individual annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for those contracts or any modification of either table approved by the commissioner, and 7.5 percent interest. For other individual annuity and pure endowment contracts issued on or after November 8, 1977, excluding any disability and accidental death benefits in those contracts, the 1971 individual annuity mortality table or any individual annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for those contracts, or any modification of either table approved by the commissioner, and 5.5 percent interest for single premium deferred annuity and pure endowment contracts and 4.5 percent interest for all other individual annuity and pure endowment contracts.

623.06(2a)(c) (c) For all annuities and pure endowments purchased prior to November 8, 1977, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts — the 1971 group annuity mortality table, or any modification of this table approved by the commissioner, and 6 percent interest.

623.06(2a)(d) (d) For all annuities and pure endowments purchased on or after November 8, 1977, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits in those contracts, the 1971 group annuity mortality table or any group annuity mortality table adopted after 1980 by the National Association of Insurance Commissioners, that is approved by rule adopted by the commissioner for use in determining the minimum standard of valuation for those annuities and pure endowments, or any modification of either table approved by the commissioner, and 7.5 percent interest.

623.06(2b) (2b) After June 19, 1974, any company may file with the commissioner a written notice of its election to comply with sub. (2a) after a specified date before January 1, 1979, which shall be the operative date of sub. (2a) for such company, but a company may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If a company makes no such election, the operative date of sub. (2a) for such company shall be January 1, 1979.

623.06(2m) (2m) 

623.06(2m)(a) (a) In this subsection:

623.06(2m)(a)1. 1. “Change in fund basis” means a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under an annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.

623.06(2m)(a)2. 2. “Guarantee duration” means:

623.06(2m)(a)2.a. a. For life insurance, the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates, nonforfeiture values or both which are guaranteed in the original policy.

623.06(2m)(a)2.b. b. For annuities and guaranteed interest contracts with cash settlement options, the number of years for which the contract guarantees interest rates in excess of the calendar year valuation interest rate for life insurance policies with a guarantee duration of more than 20 years.

623.06(2m)(a)2.c. c. For annuities and guaranteed interest contracts without cash settlement options, the number of years from the date of issue or date of purchase to the date annuity or guaranteed interest benefits are scheduled to begin.

623.06(2m)(a)3. 3. “I” means the applicable calendar year valuation interest rate determined under par. (c), rounded to the nearest 0.25 percent.

623.06(2m)(a)4. 4. “Issue year basis” means a valuation basis under which the interest rate used to determine the minimum valuation standard for the full duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract.

623.06(2m)(a)5. 5. “Moody’s monthly average” means the corporate bond yield monthly average, as published by Moody’s Investors Service, Inc.

623.06(2m)(a)6. 6. “Plan type A” means a policyholder may:

623.06(2m)(a)6.a. a. Withdraw funds with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company;

623.06(2m)(a)6.b. b. Withdraw funds without adjustment in installments over 5 years or more;

623.06(2m)(a)6.c. c. Withdraw funds as an immediate life annuity; or

623.06(2m)(a)6.d. d. Not withdraw funds.

623.06(2m)(a)7. 7. “Plan type B” means that a policyholder is subject to any of subd. 6. a., b. or d. At the end of the interest rate guarantee, funds may be withdrawn without the adjustment under subd. 6. a. in a single sum or installments over less than 5 years.

623.06(2m)(a)8. 8. “Plan type C” means a policyholder may withdraw funds before the end of the interest rate guarantee in a single sum or installments over less than 5 years without the adjustment under subd. 6. a. or subject to a fixed surrender charge stipulated in the contract as a percentage of the fund.

623.06(2m)(a)9. 9. “R” means the applicable reference interest rate determined under par. (f).

623.06(2m)(a)10. 10. “R1” means the lesser of R and 0.09.

623.06(2m)(a)11. 11. “R2” means the greater of R and 0.09.

623.06(2m)(a)12. 12. “W” means the applicable weighting factor determined under par. (e).

623.06(2m)(b) (b) Except as provided in par. (d), the formulas under par. (c) shall be used in determining the minimum standard for the valuation of all of the following:

623.06(2m)(b)1. 1. Life insurance policies issued in a calendar year on or after the operative date of s. 632.43 (6m).

623.06(2m)(b)2. 2. Individual annuity and pure endowment contracts issued in a calendar year after 1982.

623.06(2m)(b)3. 3. Annuities and pure endowments purchased in a calendar year after 1982 under group annuity and pure endowment contracts.

623.06(2m)(b)4. 4. The net increase in a calendar year after 1982, in amounts held under guaranteed interest contracts.

623.06(2m)(c) (c)

623.06(2m)(c)1. 1. For life insurance, I = 0.03 + W (R1 - 0.03) + W/2 (R2 - 0.09).

623.06(2m)(c)2. 2. For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options, I = 0.03 + W (R - 0.03).

623.06(2m)(c)3. 3. Except as provided under subd. 2., for annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis and having guarantee durations greater than 10 years, I = 0.03 + W (R1 - 0.03) W/2 (R2 - 0.09).

623.06(2m)(c)4. 4. Except as provided under subd. 2., for annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis and having guarantee durations not exceeding 10 years, I = 0.03 + W (R - 0.03).

623.06(2m)(c)5. 5. For annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, I = 0.03 + W (R - 0.03).

623.06(2m)(c)6. 6. For annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, I = 0.03 + W (R - 0.03).

623.06(2m)(d) (d) Notwithstanding par. (c) 1., if the calendar year valuation interest rate determined under par. (c) 1. differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than 0.5 percent, the calendar year valuation interest rate for those policies is the corresponding actual rate for the immediately preceding calendar year. For purposes of this paragraph, the calendar year valuation interest rate for policies issued in 1980 shall be determined using the reference interest rate for 1979 and shall be determined under this paragraph for subsequent calendar years notwithstanding s. 632.43 (6m).

623.06(2m)(e) (e)

623.06(2m)(e)1. 1. For life insurance having a guarantee duration of:

623.06(2m)(e)1.a. a. Not more than 10 years, the weighting factor is 0.50.

623.06(2m)(e)1.b. b. More than 10 years and not more than 20 years, the weighting factor is 0.45.

623.06(2m)(e)1.c. c. More than 20 years, the weighting factor is 0.35.

623.06(2m)(e)2. 2. For single premium immediate annuities and annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the weighting factor is 0.80.

623.06(2m)(e)3. 3. Except as provided in subd. 2., for annuities and guaranteed interest contracts valued on an issue year basis and having a guarantee duration of:

623.06(2m)(e)3.a. a. Not more than 5 years, the weighting factor is 0.80 for plan type A, 0.60 for plan type B and 0.50 for plan type C.

623.06(2m)(e)3.b. b. More than 5 years and not more than 10 years, the weighting factor is 0.75 for plan type A, 0.60 for plan type B and 0.50 for plan type C.

623.06(2m)(e)3.c. c. More than 10 years and not more than 20 years, the weighting factor is 0.65 for plan type A, 0.50 for plan type B and 0.45 for plan type C.

623.06(2m)(e)3.d. d. More than 20 years, the weighting factor is 0.45 for plan type A and 0.35 for plan types B and C.

623.06(2m)(e)4. 4. Except as provided in subd. 2., for annuities and guaranteed interest contracts valued on a change in fund basis, the weighting factor is that specified under subd. 3. increased by 0.15 for plan type A, 0.25 for plan type B and 0.05 for plan type C.

623.06(2m)(e)5. 5. Except as provided under subd. 2., for annuities and guaranteed interest contracts valued on an issue year basis, other than those with no cash settlement options, which do not guarantee interest on considerations received more than one year after issue or purchase and for annuities and guaranteed interest contracts valued on a change in fund basis which do not guarantee interest rates on considerations received more than 12 months beyond the valuation date, the weighting factor is that specified under subd. 3. or 4. increased by 0.05 for plan types A, B and C.

623.06(2m)(f) (f)

623.06(2m)(f)1. 1. For life insurance, the reference interest rate is the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year next preceding the year of issue, of Moody’s monthly average.

623.06(2m)(f)2. 2. For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the reference interest rate is the average over a period of 12 months, ending on June 30 of the calendar year of issue or year of purchase, of Moody’s monthly average.

623.06(2m)(f)3. 3. Except as provided under subd. 2., for annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis and having a guarantee duration in excess of 10 years, the reference interest is the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody’s monthly average.

623.06(2m)(f)4. 4. Except as provided under subd. 2., for annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis and having a guarantee duration of 10 years or less, the reference interest rate is the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody’s monthly average.

623.06(2m)(f)5. 5. For annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the reference interest rate is the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody’s monthly average.

623.06(2m)(f)6. 6. Except as provided under subd. 2., for annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the reference interest rate is the average over a period of 12 months, ending on June 30 of the calendar year of the change in the fund, of Moody’s monthly average.

623.06(2m)(g) (g) If Moody’s monthly average is no longer published, or if the national association of insurance commissioners determines that Moody’s monthly average is no longer appropriate for the determination of the reference interest rate, an alternative method for determination of the reference interest rate, which is adopted by the National Association of Insurance Commissioners and approved by rule adopted by the commissioner, may be substituted.

623.06(2m)(h) (h) A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on an issue year basis or a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue year basis.