HF 3384

3rd Engrossment - 89th Legislature (2015 - 2016) Posted on 06/02/2016 10:53am

A bill for an act
relating to insurance; making changes to the life insurance reserves; amending
Minnesota Statutes 2014, sections 61A.24, subdivision 12, by adding a
subdivision; 61A.25.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 61A.24, is amended by adding a
subdivision to read:

new text begin Subd. 1a. new text end

new text begin Definitions. new text end

new text begin "Operative date of the valuation manual" means January 1 of
the first calendar year that the valuation manual, as defined in section 61A.25, subdivision
1a, is effective.
new text end

Sec. 2.

Minnesota Statutes 2014, section 61A.24, subdivision 12, is amended to read:

Subd. 12.

Calculation of adjusted premiums by the nonforfeiture net level
premium method.

(a) This subdivision applies to all policies issued on or after its
operative date. Except as provided in paragraph (g), the adjusted premiums for a policy
shall be calculated on an annual basis and shall be the uniform percentage of the respective
premiums specified in the policy for each policy year, excluding amounts payable as extra
premiums to cover impairments or special hazards and also excluding any uniform annual
contract charge or policy fee specified in the policy in a statement of the method to be
used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the
present value, at the date of issue of the policy, of all adjusted premiums shall be equal to
the sum of (1) the then present value of the future guaranteed benefits provided for by the
policy; (2) one percent of either the amount of insurance, if the insurance is uniform in
amount, or the average amount of insurance at the beginning of each of the first ten policy
years; and (3) 125 percent of the nonforfeiture net level premium as hereinafter defined. In
applying the percentage specified in clause (3), no nonforfeiture net level premium shall
be deemed to exceed four percent of either the amount of insurance, if the insurance is
uniform in amount, or the average amount of insurance at the beginning of each of the
first ten policy years. The date of issue of a policy for the purpose of this section is the
date as of which the rated age of the insured is determined.

(b) The nonforfeiture net level premium shall be equal to the present value, at the
date of issue of the policy, of the guaranteed benefits provided for by the policy divided
by the present value, at the date of issue of the policy, of an annuity of one per annum
payable on the date of issue of the policy and on each anniversary of the policy on which a
premium falls due.

(c) In the case of a policy which causes, on a basis guaranteed in the policy,
unscheduled changes in benefits or premiums, or which provides an option for changes
in benefits or premiums other than a change to a new policy, the adjusted premiums and
present values shall initially be calculated on the assumption that future benefits and
premiums do not change from those stipulated at the date of issue of the policy. At the
time of the change in the benefits or premiums the future adjusted premiums, nonforfeiture
net level premiums, and present values shall be recalculated on the assumption that future
benefits and premiums do not change from those stipulated by the policy immediately
after the change.

(d) Except as otherwise provided in paragraph (g), the recalculated future adjusted
premiums for a policy shall be the uniform percentage of the respective future premiums
specified in the policy for each policy year, excluding amounts payable as extra premiums
to cover impairments and special hazards, and also excluding any uniform annual contract
charge or policy fee specified in the policy in a statement of the method to be used in
calculating the cash surrender values and paid-up nonforfeiture benefits, that the present
value, at the time of change to the newly defined benefits or premiums, of all future
adjusted premiums shall be equal to the excess of: (1) the sum of the then present value of
the then future guaranteed benefits provided for by the policy, and the additional expense
allowance, if any, over; (2) the then cash surrender value, if any, or present value of any
paid-up nonforfeiture benefit under the policy.

(e) The additional expense allowance, at the time of the change to the newly defined
benefits or premiums, shall be the sum of: (1) one percent of the excess, if positive, of
the average amount of insurance at the beginning of each of the first ten policy years
subsequent to the change over the average amount of insurance prior to the change at the
beginning of each of the first ten policy years subsequent to the time of the most recent
previous change, or, if there has been no previous change, the date of issue of the policy;
and (2) 125 percent of the increase, if positive, in the nonforfeiture net level premium.

(f) The recalculated nonforfeiture net level premium shall be equal to the result
obtained by dividing clause (1) by clause (2) where clause (1) equals the sum of the
nonforfeiture net level premium applicable prior to the change times the present value of
an annuity of one per annum payable on each anniversary of the policy on or subsequent
to the date of the change on which a premium would have fallen due had the change not
occurred, and the present value of the increase in future guaranteed benefits provided for
by the policy; and clause (2) equals the present value of an annuity of one per annum
payable on each anniversary of the policy on or subsequent to the date of change on
which a premium falls due.

(g) Notwithstanding any other provisions of this subdivision to the contrary, in the
case of a policy issued on a substandard basis which provides reduced graded amounts of
insurance so that, in each policy year, the policy has the same tabular mortality cost as
an otherwise similar policy issued on the standard basis which provides higher uniform
amounts of insurance, adjusted premiums and present values for the substandard policy
may be calculated as if it were issued to provide the higher uniform amounts of insurance
on the standard basis.

(h) All adjusted premiums and present values referred to in this subdivision shall:
for all policies of ordinary insurance be calculated on the basis of the Commissioners 1980
Standard Ordinary Mortality Table, or at the election of the company for any one or more
specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality
Table with Ten-Year Select Mortality Factors; for all policies of industrial insurance be
calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table;
and for all policies issued in a particular calendar year be calculated on the basis of a
rate of interest not exceeding the nonforfeiture interest rate as defined in this section for
policies issued in that calendar year. However:

(1) at the option of the company, calculations for all policies issued in a particular
calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture
interest rate, as defined in this subdivision, for policies issued in the immediately
preceding calendar year;

(2) under a paid-up nonforfeiture benefit, including any paid-up dividend additions,
any cash surrender value available, whether or not required by subdivision 2, shall be
calculated on the basis of the mortality table and rate of interest used in determining the
amount of the paid-up nonforfeiture benefit and paid-up dividend additions, if any;

(3) a company may calculate the amount of a guaranteed paid-up nonforfeiture
benefit including any paid-up additions under the policy on the basis of an interest rate no
lower than that specified in the policy for calculating cash surrender values;

(4) in calculating the present value of paid-up term insurance with accompanying
pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed
may be not more than those shown in the commissioners 1980 Extended Term Insurance
Table for policies of ordinary insurance and not more than the Commissioners 1961
Industrial Extended Term Insurance Table for policies of industrial insurance;

(5) for insurance issued on a substandard basis, the calculation of any adjusted
premiums and present values may be based on appropriate modifications of these tables;

(6) new text begin (i) for policies issued prior to the operative date of the valuation manual, new text end any new text begin
commissioner's standard new text end ordinary mortality tables, including any 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 nonforfeiture standard may
be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or
without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended
Term Insurance Table; and

new text begin (ii) for policies issued on or after the operative date of the valuation manual,
the valuation manual shall provide the commissioner's standard mortality table for use
in determining the minimum nonforfeiture standard that may be substituted for the
Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select
Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table. If the
commissioner approves by rule any commissioner's standard ordinary mortality table
adopted by the National Association of Insurance Commissioners for use in determining
the minimum nonforfeiture standard for policies issued on or after the operative date of
the valuation manual, then that minimum nonforfeiture standard supersedes the minimum
nonforfeiture standard provided by the valuation manual;
new text end

(7) new text begin (i) for policies issued prior to the operative date of the valuation manual, new text end any new text begin
commissioner's standard new text end industrial mortality tables, including any 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 nonforfeiture standard may
be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the
Commissioners 1961 Industrial Extended Term Insurance Table deleted text begin . deleted text end new text begin ; and
new text end

new text begin (ii) for policies issued on or after the operative date of the valuation manual,
the valuation manual shall provide the commissioner's standard mortality table for use
in determining the minimum nonforfeiture standard that may be substituted for the
Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961
Industrial Extended Term Insurance Table. If the commissioner approves by rule any
commissioner's standard industrial mortality table adopted by the National Association of
Insurance Commissioners for use in determining the minimum nonforfeiture standard for
policies issued on or after the operative date of the valuation manual, then that minimum
nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the
valuation manual.
new text end

(i) new text begin The nonforfeiture interest rate is defined in clauses (1) and (2):
new text end

new text begin (1) for policies issued prior to the operative date of the valuation manual, new text end the
nonforfeiture interest rate per annum for a policy issued in a particular calendar year shall
be equal to 125 percent of the calendar year statutory valuation interest rate for the policy
as defined in section 61A.25, rounded to the nearer one-quarter of one percent deleted text begin . deleted text end new text begin provided,
however, that the nonforfeiture interest rate shall not be less than four percent; and
new text end

new text begin (2) for policies issued on and after the operative date of the valuation manual, the
nonforfeiture interest rate per annum for any policy issued in a particular calendar year
shall be provided by the valuation manual.
new text end

(j) Notwithstanding any other provision in this chapter to the contrary, a refiling of
nonforfeiture values or their methods of computation for any previously approved policy
form which involves only a change in the interest rate or mortality table used to compute
nonforfeiture values shall not require refiling of any other provisions of that policy form.

(k) After August 1, 1982, a company may file with the commissioner a written notice
of its election to comply with the provision of this section after a specified date before
January 1, 1989, which shall be the operative date of this subdivision for the company.
If a company makes no election, the operative date of this subdivision for the company
shall be January 1, 1989.

Sec. 3.

Minnesota Statutes 2014, section 61A.25, is amended to read:

61A.25 STANDARD VALUATION LAW.

Subdivision 1.

Citation.

This section shall be known as the "Standard Valuation
Law."

new text begin Subd. 1a. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the terms defined in this
subdivision have the meanings given them.
new text end

new text begin (b) "Accident and health insurance" means contracts that incorporate morbidity risk
and provide protection against economic loss resulting from accident, sickness, or medical
conditions and as may be specified in the valuation manual.
new text end

new text begin (c) "Appointed actuary" means a qualified actuary who is appointed in accordance
with the valuation manual to prepare the actuarial opinion required in subdivision 2d.
new text end

new text begin (d) "Company" means an entity that (1) has written, issued, or reinsured life
insurance contracts, accident and health insurance contracts, or deposit-type contracts
in this state and has at least one such policy in force or on claim, or (2) has written,
issued, or reinsured life insurance contracts, accident and health insurance contracts, or
deposit-type contracts in any state and is required to hold a certificate of authority to write
life insurance, accident and health insurance, or deposit-type contracts in this state.
new text end

new text begin (e) "Deposit-type contract" means contracts that do not incorporate mortality or
morbidity risks and as may be specified in the valuation manual.
new text end

new text begin (f) "Life insurance" means contracts that incorporate mortality risk, including
annuity and pure endowment contracts, and as may be specified in the valuation manual.
new text end

new text begin (g) "NAIC" means the National Association of Insurance Commissioners.
new text end

new text begin (h) "Operative date of the valuation manual" means January 1 of the first calendar
year that the valuation manual is effective.
new text end

new text begin (i) "Policyholder behavior" means an action a policyholder, contract holder, or any
other person with the right to elect options, such as a certificate holder, may take under a
policy or contract subject to this section including, but not limited to, lapse, withdrawal,
transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by
the policy or contract, but excluding events of mortality or morbidity that result in benefits
prescribed in their essential aspects by the terms of the policy or contract.
new text end

new text begin (j) "Principle-based valuation" means a reserve valuation that uses one or more
methods or one or more assumptions determined by the insurer and is required to comply
with subdivision 11, as specified in the valuation manual.
new text end

new text begin (k) "Qualified actuary" means an individual who is qualified to sign the applicable
statement of actuarial opinion in accordance with the American Academy of Actuaries
qualification standards for actuaries signing such statements and who meets the
requirements specified in the valuation manual.
new text end

new text begin (l) "Tail risk" means a risk that occurs either where the frequency of low probability
events is higher than expected under a normal probability distribution or where there are
observed events of significant size or magnitude.
new text end

new text begin (m) "Valuation manual" means the manual of valuation instructions adopted by the
NAIC as specified in this section or as subsequently amended.
new text end

Subd. 2.

Valuation of reserves new text begin ; policies and contracts issued prior to the
operative date of the valuation manual new text end .

new text begin (a) new text end The commissioner shall cause to be valued
annually the reserve liabilities, hereinafter called reserves, for all outstanding life insurance
policies and annuity and pure endowment contracts of every life insurance company doing
business in this state, except that in the case of a foreign or alien insurer such valuation shall
be limited to its insurance transactions in the United States, deleted text begin and may certify the amount
of any such reserves, specifying the mortality table or tables, rate or rates of interest and
methods (net level premium method or other) used in calculation of such reserves deleted text end new text begin issued on
or after the operative date of Laws 1947, chapter 182, and prior to the operative date of the
valuation manual new text end . In calculating such reserves, the commissioner may use group methods
and approximate averages for fractions of a year or otherwise. In lieu of the valuation
of the reserves herein required of any foreign or alien company, the commissioner may
accept any valuation made, or caused to be made, by the insurance supervisory official of
any state or other jurisdiction when such valuation complies with the minimum standard
deleted text begin herein deleted text end provided deleted text begin and if the official of such state or jurisdiction accepts as sufficient and
valid for all legal purposes the certificate of valuation of the commissioner when such
certificate states the valuation to have been made in a specified manner according to which
the aggregate reserves would be at least as large as if they had been computed in the
manner prescribed by the law of that state or jurisdiction deleted text end new text begin in this section new text end . In the case of
insurance issued by a domestic insurer upon the lives of residents of a foreign country, the
commissioner may vary the mortality standard to a standard applicable to that country.

new text begin (b) The provisions in subdivisions 3, 3a, 3b, 4, 4a, 5, 6, 7, 8, and 9 shall apply to all
policies and contracts, as appropriate, subject to this section issued on or after the operative
date of Laws 1947, chapter 182, and, prior to the operative date of the valuation manual and
the provisions in subdivisions 10 and 11, shall not apply to any such policies and contracts.
new text end

new text begin (c) The minimum standard for the valuation of policies and contracts issued prior
to the operative date of Laws 1947, chapter 182, shall be that provided by the laws in
effect immediately prior to that date.
new text end

Subd. 2a.

Actuarial opinion of reserves new text begin prior to the operative date of the
valuation manual new text end ; general.

(a) Every life insurance company doing business in this
state shall annually submit the opinion of a qualified actuary as to whether the reserves
and related actuarial items held in support of the policies and contracts specified by the
commissioner by rule are computed appropriately, are based on assumptions which satisfy
contractual provisions, are consistent with prior reported amounts, and comply with
applicable laws of this state. The commissioner may by rule define the specifics of this
opinion and add any other items considered to be necessary to its scope. The opinion must
be included in the company's annual statement.

(b) The requirement to annually submit the opinion of a qualified actuary applies
to service plan corporations licensed under chapter 62C, to legal service plans licensed
under chapter 62G, and to all fraternal benefit societies except those societies paying
only sick benefits not exceeding $250 in any one year, or paying funeral benefits of not
more than $350, or aiding those dependent on a member not more than $350, nor any
subordinate lodge or council which is, or whose members are, assessed for benefits which
are payable by a grand body.

(c) The opinion applies to all business in force, including individual and group
health insurance plans, and must be based on standards adopted by the Actuarial Standards
Board. The opinion must be acceptable to the commissioner in both form and substance.

(d) In the case of 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.

(e) For the purposes of this section, "qualified actuary" means a member in good
standing of the American Academy of Actuaries who meets the requirements specified
in the regulations.

(f) The board of directors of every insurer subject to this section shall appoint a
qualified actuary to sign its actuarial opinion. The appointment of the qualified actuary
shall be approved by the commissioner. The qualified actuary so appointed may be an
employee of the insurer. Notice of the appointment, including a copy of the board of
directors' resolution, and the date of appointment shall be filed with the commissioner.
The notice may be filed before or at the time the actuarial opinion is submitted. The
notice shall state the qualifications of the actuary. If the board appoints a new actuary to
sign actuarial opinions during the year, the commissioner shall be notified of the new
appointment and the reason for change.

(g) Except in cases of fraud or willful misconduct, the qualified actuary is not 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 actuary's opinion.

(h) A memorandum, in form and substance acceptable to the commissioner based on
standards adopted by the Actuarial Standards Board and on additional standards as the
commissioner may by rule prescribe, must be prepared to support each actuarial opinion.

(i) If the insurance company fails to provide a supporting memorandum at the request
of the commissioner within a period specified by the commissioner, or the commissioner
determines that the supporting memorandum provided by the insurance company fails
to meet the standards based on standards adopted by the Actuarial Standards Board
and on additional standards as the commissioner may by rule prescribe 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 required supporting memorandum. new text begin The commissioner may only seek reimbursement
from a company for the actual expenses incurred by an actuary in reviewing or preparing a
supporting memorandum for that company.
new text end

(j) Any memorandum in support of the opinion, and any other material provided
by the company to the commissioner in connection with the memorandum, must be
kept confidential by the commissioner and must not be made public and is not subject
to subpoena, other than for the purpose of defending an action seeking damages from
any person by reason of any action required by this section or by rules promulgated
under this section. The memorandum or other material may otherwise be released by
the commissioner (1) with the written consent of the company or (2) to the American
Academy of Actuaries upon request stating that the memorandum or other material
is required for the purpose of professional disciplinary proceedings and setting forth
procedures satisfactory to the commissioner for preserving the confidentiality of the
memorandum or other material. Once any portion of the confidential memorandum is
cited by the company in its marketing or is cited before any governmental agency other
than a state insurance department or is released by the company to the news media, all
portions of the confidential memorandum are no longer confidential.

Subd. 2b.

Actuarial analysis new text begin prior to the operative date of the valuation manual new text end .

(a) Every life insurance company, except as exempted by or pursuant to regulation, shall
also annually include in the opinion required under subdivision 2a, paragraph (a), an
opinion of the same qualified actuary as to whether the reserves and related actuarial
items, including page 3, line 10, of the annual statement, held in support of the policies
and contracts specified by the commissioner, when considered in light of the assets held
by the company with respect to the reserves and related actuarial items, including but not
limited to 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 but not limited to the
benefits under and expenses associated with the policies and contracts.

(b) The commissioner may provide by rule for a transition period for establishing
any higher reserves which the qualified actuary may consider necessary in order to give
the opinion required under subdivision 2a.

new text begin Subd. 2c. new text end

new text begin Valuation of reserves; policies and contracts issued on or after the
operative date of the valuation manual. new text end

new text begin (a) The commissioner shall annually value,
or cause to be valued, the reserve liabilities referred to in this section as reserves for all
outstanding life insurance contracts, annuity and pure endowment contracts, accident
and health contracts, and deposit-type contracts of every company issued on or after the
operative date of the valuation manual. In lieu of the valuation of the reserves required of
a foreign or alien company, the commissioner may accept a valuation made, or caused to
be made, by the insurance supervisory official of any state or other jurisdiction when the
valuation complies with the minimum standard provided in this section.
new text end

new text begin (b) The provisions in subdivisions 10 and 11 shall apply to all policies and contracts
issued on or after the operative date of the valuation manual.
new text end

new text begin Subd. 2d. new text end

new text begin Actuarial opinion of reserves after the operative date of the valuation
manual; general and actuarial analysis. new text end

new text begin (a) Every company with outstanding life
insurance contracts, accident and health insurance contracts, or deposit-type contracts in
this state and subject to regulation by the commissioner shall annually submit the opinion
of the appointed actuary as to whether the reserves and related actuarial items held in
support of the policies and 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 will prescribe the specifics of this
opinion, including any items deemed to be necessary to its scope.
new text end

new text begin (b) Every company with outstanding life insurance contracts, accident and health
insurance contracts, or deposit-type contracts in this state and subject to regulation by
the commissioner, except as exempted in the valuation manual, shall annually include
in the opinion required by paragraph (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 but not
limited to 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 but not limited to the
benefits under and expenses associated with the policies and contracts.
new text end

new text begin (c) Each opinion required by paragraph (b) shall be governed by the following
provisions:
new text end

new text begin (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; and
new text end

new text begin (2) if the 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 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. The commissioner may only
seek reimbursement from a company for the actual expenses incurred by an actuary in
reviewing or preparing a supporting memorandum for that company.
new text end

new text begin (d) Every opinion subject to this subdivision shall be governed by the following
provisions:
new text end

new text begin (1) the opinion shall be in form and substance as specified in the valuation manual
and acceptable to the commissioner;
new text end

new text begin (2) the opinion shall be submitted with the annual statement reflecting the valuation
of such reserve liabilities for each year ending on or after the operative date of the
valuation manual;
new text end

new text begin (3) the opinion shall apply to all policies and contracts subject to paragraph (b), plus
other actuarial liabilities as may be specified in the valuation manual;
new text end

new text begin (4) the opinion shall be based on standards adopted from time to time by the
Actuarial Standards Board or its successor and on such additional standards as may be
prescribed in the valuation manual;
new text end

new text begin (5) in the case of 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;
new text end

new text begin (6) except in cases of fraud or willful misconduct, the appointed actuary shall not be
liable for damages to any person, other than the company and the commissioner for any act,
error, omission, decision, or conduct with respect to the appointed actuary's opinion; and
new text end

new text begin (7) the commissioner may take disciplinary action against a company or an
appointed actuary for failure to satisfy the requirements of this subdivision.
new text end

Subd. 3.

Minimum standards of valuation generally.

Except as otherwise
provided in subdivisions 3a and 3b, the minimum standard for the valuation of the policies
and contracts issued prior to the operative date of Laws 1947, chapter 182, shall be
that provided by the laws in effect immediately prior to that date. Except as deleted text begin otherwise deleted text end
provided in subdivisions 3a and 3b, the minimum standard for the valuation of the policies
and contracts issued on or after the operative date of Laws 1947, chapter 182, shall be the
commissioners reserve valuation methods described in subdivisions 4, 4a and 7, 3-1/2
percent interest, or in the case of policies and contracts, other than annuity and pure
endowment contracts, issued on or after April 11, 1974, four percent interest for policies
issued prior to August 1, 1978, 5-1/2 percent interest for single premium life insurance
policies and 4-1/2 percent interest for other policies issued on or after August 1, 1978,
and the following tables:

(a) For deleted text begin all deleted text end ordinary policies of life insurance issued on the standard basis, excluding
any disability and accidental death benefits in the policies, the Commissioners 1941
Standard Ordinary Mortality Table for the policies issued prior to the operative date of
section 61A.24, subdivision 9 and the Commissioners 1958 Standard Ordinary Mortality
Table for the policies issued on or after the operative date of section 61A.24, subdivision
9, and prior to the operative date of section 61A.24, subdivision 12; provided, that for
any category of the policies issued on female risks all modified net premiums and present
values referred to in Laws 1959, chapter 26, may be calculated according to an age not
more than six years younger than the actual age of the insured; and for policies issued on
or after the operative date of section 61A.24, subdivision 12:

(1) the Commissioners 1980 Standard Ordinary Mortality Table;

(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 Ten-Year
Select Mortality Factors; or

(3) any ordinary mortality table, including any adopted after 1980 by the National
Association of Insurance Commissioners, deleted text begin that deleted text end new text begin which new text end is approved by rule adopted by the
commissioner for use in determining the minimum standard of valuation for the policies.

(b) For deleted text begin all deleted text end industrial life insurance policies issued on the standard basis, excluding
any disability and accidental death benefits in the policies, the 1941 Standard Industrial
Mortality Table for the policies issued prior to the operative date of section 61A.24,
subdivision 11, and for the policies issued on or after the operative date, the Commissioners
1961 Standard Industrial Mortality Table or any industrial mortality table, including
any 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 the policies.

(c) For individual annuity and pure endowment contracts, excluding any disability
and accidental death benefits in the 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.

(d) For group annuity and pure endowment contracts, excluding any disability and
accidental death benefits in the policies, the Group Annuity Mortality Table for 1951, any
modification of the 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.

(e) For total and permanent disability benefits in or supplemental to ordinary policies
or contracts, for 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 due regard to the type of benefit or any tables of
disablement rates and termination rates, including any 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 the policies;
for policies or contracts issued on or after January 1, 1963, and prior to January 1, 1966,
either the tables or, at the option of the company, the class (3) disability table (1926); and
for policies issued prior to January 1, 1963, the class (3) disability table (1926). The table
shall, for active lives, be combined with a mortality table permitted for calculating the
reserves for life insurance policies.

(f) For accidental death benefits in or supplementary to policies, for policies issued
on or after January 1, 1966, the 1959 Accidental Death Benefits Table or any accidental
death benefits table, including any 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 the policies; for policies issued on
or after January 1, 1963, and prior to January 1, 1966, either table or, at the option of the
company, the Intercompany Double Indemnity Mortality Table; and for policies issued
prior to January 1, 1963, the Intercompany Double Indemnity Mortality Table. Either
table shall be combined with a mortality table permitted for calculating the reserves for
life insurance policies.

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

Subd. 3a.

Minimum standard of valuation for annuities and pure endowment
contracts.

Except as provided in subdivision 3b, the minimum standard deleted text begin for the deleted text end new text begin of new text end
valuation deleted text begin of all deleted text end new text begin for new text end individual annuity and pure endowment contracts issued on or after the
operative date of this subdivision and for deleted text begin all deleted text end annuities and pure endowments purchased on
or after this operative date under group annuity and pure endowment contracts, shall be
the commissioner's reserve valuation methods defined in subdivisions 4 and 4a, and the
following tables and interest rates:

(a) For individual annuity and pure endowment contracts issued prior to August 1,
1978, excluding any disability and accidental death benefits in the contracts, the 1971
individual annuity mortality table, or any modification of this table approved by the
commissioner, and six percent interest for single premium immediate annuity contracts,
and four percent interest for all other individual annuity and pure endowment contracts.

(b) For individual single premium immediate annuity contracts issued on or after
August 1, 1978, excluding any disability and accidental death benefits in the contracts, the
1971 individual annuity mortality table, any individual annuity mortality table, including
any 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 the contracts, or any modification of these tables approved by the
commissioner, and 7-1/2 percent interest.

(c) For individual annuity and pure endowment contracts issued on or after August
1, 1978, other than single premium immediate annuity contracts, excluding any disability
and accidental death benefits in the contracts, the 1971 individual annuity mortality
table, any individual annuity mortality table, including any 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 the contracts,
or any modification of these tables approved by the commissioner, and 5-1/2 percent
interest for single premium deferred annuity and pure endowment contracts and 4-1/2
percent interest for all other individual annuity and pure endowment contracts.

(d) For deleted text begin all deleted text end annuities and pure endowments purchased prior to August 1, 1978, under
group annuity and pure endowment contracts, excluding any disability and accidental
death benefits purchased under the contracts, the 1971 group annuity mortality table, or
any modification of this table approved by the commissioner, and six percent interest.

(e) For deleted text begin all deleted text end annuities and pure endowments purchased on or after August 1,
1978, under group annuity and pure endowment contracts, excluding any disability
and accidental death benefits purchased under the contracts, the 1971 group annuity
mortality table, any group annuity mortality table, including any 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 the
annuities and pure endowments, or any modification of these tables approved by the
commissioner, and 7-1/2 percent interest.

After April 11, 1974, a company may file with the commissioner a written notice
of its election to comply with the provisions of this subdivision after a specified date
before January 1, 1979, which shall be the operative date of this subdivision for the
company. 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 election, the operative date of this subdivision for the company
shall be January 1, 1979.

Subd. 3b.

Computation of minimum standard by calendar year of issue.

(a) The
interest rates used in determining the minimum standard for the valuation of the following
shall be the calendar year statutory valuation interest rates as defined in this subdivision:

(1) deleted text begin all deleted text end life insurance policies issued in a particular calendar year, on or after the
operative date of section 61A.24, subdivision 12;

(2) deleted text begin all deleted text end individual annuity and pure endowment contracts issued in a particular
calendar year on or after January 1, 1982;

(3) deleted text begin all deleted text end annuities and pure endowments purchased in a particular calendar year on or
after January 1, 1982, under group annuity and pure endowment contracts; and

(4) the net increase, if any, in a particular calendar year after January 1, 1982, in
amounts held under guaranteed interest contracts.

(b) The calendar year statutory valuation interest rates, I, shall be determined as
follows and the results rounded to the nearer one-quarter of one percent:

(1) for life insurance, I = .03 + W (R1 - .03) + (W/2) (R2 - .09);

(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 = .03 + W (R - .03) where R1
is the lesser of R and .09, R2 is the greater of R and .09, R is the reference interest rate
defined in this subdivision, and W is the weighting factor defined in this subdivision;

(3) for other annuities with cash settlement options and guaranteed interest contracts
with cash settlement options, valued on an issue year basis, except as stated in clause (2),
the formula for life insurance stated in clause (1) shall apply to annuities and guaranteed
interest contracts with guarantee durations in excess of ten years and the formula for single
premium immediate annuities stated in clause (2) shall apply to annuities and guaranteed
interest contracts with guarantee duration of ten years or less;

(4) for other annuities with no cash settlement options and for guaranteed interest
contracts with no cash settlement options, the formula for single premium immediate
annuities stated in clause (2) shall apply;

(5) for other annuities with cash settlement options and guaranteed interest contracts
with cash settlement options, valued on a change in fund basis, the formula for single
premium immediate annuities stated in clause (2) shall apply.

However, if the calendar year statutory valuation interest rate for life insurance
policies issued in a calendar year determined without reference to this sentence differs
from the corresponding actual rate for similar policies issued in the immediately preceding
calendar year by less than one-half of one percent, the calendar year statutory valuation
interest rate for the life insurance policies shall be equal to the corresponding actual rate
for the immediately preceding calendar year.

For purposes of applying the immediately preceding sentence, the calendar year
statutory valuation interest rate for life insurance policies issued in a calendar year shall
be determined for 1980 using the reference interest rate defined for 1979 and shall
be determined for each subsequent calendar year regardless of when section 61A.24,
subdivision 12, becomes operative.

(c) The weighting factors referred to in the formulas stated above are as follows:

(1) The weighting factors for life insurance are:

	Guarantee Duration (Years)		Weighting Factors
	ten or less			.50
	more than ten, but not more than 20			.45
	more than 20			.35

For life insurance, the guarantee duration is 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 or nonforfeiture values or both
which are guaranteed in the original policy;

(2) The weighting factor 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 is .80; and

(3) The weighting factors for other annuities and for guaranteed interest contracts,
except as stated in clause (2), shall be as specified in tables (i), (ii), and (iii), according to
the rules and definitions in (iv), (v), and (vi):

	(i) For annuities and guaranteed interest contracts valued on an issue year basis:
		Guarantee Duration (Years)		Weighting Factor for Plan Type
				A	B	C
		five or less:		.80	.60	.50
		more than five, but not more than ten:		.75	.60	.50
		more than ten, but not more than 20:		.65	.50	.45
		more than 20:		.45	.35	.35
	(ii)				Plan Type
				A	B	C
		For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in (i) increased by:		.15	.25	.05
	(iii)				Plan Type
				A	B	C
		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 factors shown in (i) or derived in (ii) increased by:		.05	.05	.05

(iv) For other annuities with cash settlement options and guaranteed interest contracts
with cash settlement options, the guarantee duration is the number of years for which the
contract guarantees interest rates in excess of the calendar year statutory valuation interest
rate for life insurance policies with guarantee duration in excess of 20 years. For other
annuities with no cash settlement options and for guaranteed interest contracts with no
cash settlement options, the guarantee duration is the number of years from the date of
issue or date of purchase to the date annuity benefits are scheduled to commence.

(v) Plan type as used in the above tables is defined as follows:

Plan Type A: At any time policyholders 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, (2) without the adjustment but in installments over five years or
more, or (3) as an immediate life annuity.

Plan Type B: Before expiration of the interest rate guarantee, policyholders 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 the adjustment
but in installments over five years or more. At the end of interest rate guarantee, funds
may be withdrawn without the adjustment in a single sum or installments over less than
five years.

Plan Type C: Policyholders may withdraw funds before expiration of 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.

(vi) A company may elect to value guaranteed interest contracts with cash settlement
options and annuities with cash settlement options on either an issue year basis or on 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.
As used in this subdivision, an issue year basis of valuation refers to a valuation basis
under which the interest rate used to determine the minimum valuation standard for the
entire 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, and the change in fund basis of valuation refers to a valuation basis under which
the interest rate used to determine the minimum valuation standard applicable to each
change in the fund held under the annuity or guaranteed interest contract is the calendar
year valuation interest rate for the year of the change in the fund.

(d) The reference interest rate referred to in paragraph (b) shall be defined as follows:

(1) for all life insurance, 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 Corporate Bond Yield Average-Monthly Average
Corporates, as published by Moody's Investors Service, Inc.;

(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 average over a period of 12 months,
ending on June 30 of the calendar year of issue or year of purchase, of Moody's Corporate
Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors
Service, Inc.;

(3) for other annuities with cash settlement options and guaranteed interest contracts
with cash settlement options, valued on a year of issue basis, except as stated in clause (2),
with guarantee duration in excess of ten years, 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 Corporate Bond Yield Average-Monthly Average
Corporates, as published by Moody's Investors Service, Inc.;

(4) for other annuities with cash settlement options and guaranteed interest contracts
with cash settlement options, valued on a year of issue basis, except as stated in clause (2),
with guarantee duration of ten years or less, the average over a period of 12 months, ending
on June 30 of the calendar year of issue or purchase, of Moody's Corporate Bond Yield
Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.;

(5) for other annuities with no cash settlement options and for guaranteed interest
contracts with no cash settlement options, the average over a period of 12 months, ending
on June 30 of the calendar year of issue or purchase, of Moody's Corporate Bond Yield
Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.;
and

(6) for other annuities with cash settlement options and guaranteed interest contracts
with cash settlement options, valued on a change in fund basis, except as stated in clause
(2), 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 Corporate Bond Yield Average-Monthly Average
Corporates, as published by Moody's Investors Service, Inc.

(e) In the event that Moody's Corporate Bond Yield Average-Monthly Average
Corporates is no longer published by Moody's Investors Service, Inc., or in the event
that the commissioner determines that Moody's Corporate Bond Yield Average-Monthly
Average Corporates as published by Moody's Investors Service, Inc. is no longer
appropriate for the determination of the reference interest rate, then an alternative method
for determination of the reference interest rate, which has been approved by rule adopted
by the commissioner, may be substituted.

Subd. 4.

Reserve valuation of life insurance and endowment benefits; modified
premiums.

(a) Except as otherwise provided in paragraph (b) and subdivisions 4a and 7,
reserves according to the commissioners reserve valuation method, for the life insurance
and endowment benefits of policies providing for a uniform amount of insurance and
requiring the payment of uniform premiums shall be the excess, if any, of the present
value at the date of valuation of future guaranteed benefits provided for by the policies
over the then present value of any future modified net premiums therefor. The modified
net premiums for a policy shall be the uniform percentage of the respective contract
premiums for the benefits new text begin such new text end that the present value, at the date of issue of the policy, of
all the modified net premiums shall be equal to the sum of the then present value of the
benefits provided for by the policy and the excess of clause (1) over clause (2) as follows:

(1) a net level annual premium equal to the present value, at the date of issue, of the
benefits provided for after the first policy year, divided by the present value at the date of
issue of an annuity of one per annum payable on the first and each subsequent anniversary
of the policy on which a premium falls due; but the net level annual premium shall not
exceed the net level annual premium on the 19 year premium whole life plan for insurance
of the same amount at an age one year higher than the age at issue of the policy;

(2) a net one year term premium for the benefits provided for in the first policy year.

(b) For a life insurance policy issued on or after January 1, 1985, for which the
contract premium in the first policy year exceeds that of the second year and for which no
comparable additional benefit is provided in the first year for the excess and which provides
an endowment benefit or a cash surrender value or a combination thereof in an amount
greater than the excess premium, the reserve according to the commissioners reserve
valuation method as of a policy anniversary occurring on or before the assumed ending
date defined herein as the first policy anniversary on which the sum of any endowment
benefit and any cash surrender value then available is greater than the excess premium
shall, except as otherwise provided in subdivision 7, be the greater of the reserve as of the
policy anniversary calculated as described in paragraph (a) and the reserve as of the policy
anniversary calculated as described in that paragraph, but with the value defined in clause
(1) of that paragraph being reduced by 15 percent of the amount of the excess first year
premium; all present values of benefits and premiums being determined without reference
to premiums or benefits provided for by the policy after the assumed ending date; the
policy being assumed to mature on that date as an endowment; and the cash surrender value
provided on that date being considered as an endowment benefit. In making the above
comparison the mortality and interest bases stated in subdivisions 3 and 3b shall be used.

(c) Reserves according to the commissioners reserve valuation method for (1) life
insurance policies providing for a varying amount of insurance or requiring the payment
of varying premiums, (2) group annuity and pure endowment contracts purchased under
a retirement plan or plan of deferred compensation, established or maintained by an
employer, including but not limited to a partnership or sole proprietorship, or by an
employee organization, or by both, other than a plan providing individual retirement
accounts or individual retirement annuities under Section 408 of the Internal Revenue
Code, as amended, (3) disability and accidental death benefits in all policies and contracts,
and (4) all other benefits, except life insurance and endowment benefits in life insurance
policies and benefits provided by all other annuity and pure endowment contracts, shall be
calculated by a method consistent with the principles of paragraphs (a) and (b), except
that any extra premiums charged because of impairments or special hazards shall be
disregarded in the determination of modified net premiums.

(d) For a universal life insurance policy that guarantees coverage to remain in
force as long as the accumulation of premiums paid satisfies a secondary guarantee
requirement, reserves according to the commissioners reserve valuation method may be
calculated using a lapse assumption only in accordance with and in the circumstances
described in the National Association of Insurance Commissioners' accounting practices
and procedures manual.

Subd. 4a.

Annuity and pure endowment contracts.

This subdivision shall
apply to all annuity and pure endowment contracts other than group annuity and pure
endowment contracts purchased under a retirement plan or plan of deferred compensation,
established or maintained by an employer, including but not limited to a partnership
or sole proprietorship, or by an employee organization, or by both, other than a plan
providing individual retirement accounts or individual retirement annuities under Section
408 of the Internal Revenue Code, as amended.

Reserves according to the commissioner's annuity reserve method for benefits under
annuity or pure endowment contracts, excluding any disability and accidental death
benefits in the contracts, shall be the greatest of the respective excesses of the present
values, at the date of valuation, of the future guaranteed benefits, including guaranteed
nonforfeiture benefits, provided for by the contracts at the end of each respective contract
year, over the present value, at the date of valuation, of any future valuation considerations
derived from future gross considerations, required by the terms of the contract, that
become payable prior to the end of the respective contract year. The future guaranteed
benefits shall be determined by using the mortality table, if any, and the interest rate,
or rates, specified in the contracts for determining guaranteed benefits. The valuation
considerations are the portions of the respective gross considerations applied under the
terms of the contracts to determine nonforfeiture values.

Subd. 5.

Minimum aggregate reserves.

A company's aggregate reserves for all life
insurance policies, excluding disability and accidental death benefits, issued on or after the
operative date of Laws 1947, chapter 182, shall not be less than the aggregate reserves
calculated in accordance with the methods set forth in subdivisions 4, 4a, 7, and 8, and
the mortality table or tables and rate or rates of interest used in calculating nonforfeiture
benefits for the policies.

In no event shall the aggregate reserves for all policies, contracts, and benefits
be less than the aggregate reserves determined by the deleted text begin qualified deleted text end new text begin appointed new text end actuary to be
necessary to render the opinion required under deleted text begin subdivision deleted text end new text begin subdivisions new text end 2a new text begin and 2b new text end .

Subd. 6.

Calculation of reserves.

deleted text begin (1) deleted text end new text begin (a) new text end Reserves for deleted text begin all deleted text end policies and contracts
issued prior to the operative date of Laws 1947, chapter 182, may be calculated, at the
option of the company, according to any standards which produce greater aggregate
reserves for all such policies and contracts than the minimum reserves required by the
laws in effect immediately prior to such date.

deleted text begin (2) deleted text end new text begin (b) new text end Reserves for any category of policies, contracts or benefits as established by
the commissioner, issued on or after the operative date of Laws 1947, chapter 182, may
be calculated, at the option of the company, according to any standards which produce
greater aggregate reserves for such category than those calculated according to the
minimum standard herein provided, but the rate or rates of interest used for policies and
contracts, other than annuity and pure endowment contracts, shall not be deleted text begin higher deleted text end new text begin greater new text end
than the corresponding rate or rates of interest used in calculating any nonforfeiture
benefits provided for deleted text begin therein deleted text end new text begin in the policies or contracts new text end .

deleted text begin (3) deleted text end new text begin (c) new text end Any such company which new text begin adopts new text end at any time deleted text begin shall have adopted deleted text end any standard
of valuation producing greater aggregate reserves than those calculated according to
the minimum standard deleted text begin herein deleted text end provided new text begin under this section new text end may, with the approval of the
commissioner, adopt any lower standard of valuation, but not lower than the minimum
herein provided. For purposes of this section, the holding of additional reserves previously
determined by deleted text begin a qualified deleted text end new text begin the appointed new text end actuary to be necessary to give the opinion
required under deleted text begin subdivision deleted text end new text begin subdivisions new text end 2a new text begin and 2d new text end shall not be considered the adoption of
a higher standard of valuation.

Subd. 7.

Reserve calculation; valuation net premium exceeding the gross
premium charged.

If in a contract year the gross premium charged by a deleted text begin life insurance deleted text end
company on a policy or contract is less than the valuation net premium for the policy or
contract calculated by the method used in calculating the reserve thereon, but using the
minimum valuation standards of mortality and rate of interest, the minimum reserve
required for the policy or contract shall be the greater of either the reserve calculated
according to the mortality table, rate of interest, and method actually used for the policy or
contract, or the reserve calculated by the method actually used for the policy or contract
but using the minimum valuation standards of mortality and rate of interest and replacing
the valuation net premium by the actual gross premium in each contract year for which
the valuation net premium exceeds the actual gross premium. The minimum valuation
standards of mortality and rate of interest referred to in this subdivision are those standards
stated in subdivisions 3 and 3b. However, for a life insurance policy issued on or after
January 1, 1985, for which the gross premium in the first policy year exceeds that of
the second year and for which no comparable additional benefit is provided in the first
year for the excess and which provides an endowment benefit or a cash surrender value
or a combination thereof in an amount greater than the excess premium, the foregoing
provisions of this subdivision shall be applied as if the method actually used in calculating
the reserve for the policy was the method described in subdivision 4, ignoring subdivision
4, paragraph (b). The minimum reserve at each policy anniversary of the policy shall be
the greater of the minimum reserve calculated in accordance with subdivision 4, including
subdivision 4, paragraph (b), and the minimum reserve calculated in accordance with
this subdivision.

Subd. 8.

Reserve calculation; plans not covered by other subdivisions.

In the
case of a plan of life insurance or annuity for which the minimum reserves cannot be
determined by the methods described in subdivisions 4, 4a, and 7, the reserves which are
held under any plan must:

(a) be appropriate in relation to the benefits and the pattern of premiums for that
plan, and

(b) be computed by a method which is consistent with the principles of this section
as determined by rules adopted by the commissioner.

Subd. 9.

Minimum standards for deleted text begin health, disability, accident, and sickness plans deleted text end new text begin
accident and health insurance contracts new text end .

deleted text begin The commissioner may adopt a rule containing
the minimum standards applicable to the valuation of health, disability, accident, and
sickness plans. deleted text end new text begin For health, disability, accident, and sickness plans issued on or after the
operative date of Laws 1947, chapter 182, and prior to the operative date of the valuation
manual, the minimum standard of valuation is the standard adopted by the commissioner
by rule. For accident and health insurance contracts issued on or after the operative date of
the valuation manual, the standard prescribed in the valuation manual is the minimum
standard of valuation required under subdivision 2c.
new text end

new text begin Subd. 10. new text end

new text begin Valuation manual for policies issued on or after the operative date
of the valuation manual. new text end

new text begin (a) For policies issued on or after the operative date of the
valuation manual, the standard prescribed in the valuation manual is the minimum standard
of valuation required under subdivision 2c, except as provided under paragraph (e) or (g).
new text end

new text begin (b) The operative date of the valuation manual is January 1 of the first calendar year
following the first July 1 as of which all of the following have occurred:
new text end

new text begin (1) the valuation manual has been adopted by the National Association of Insurance
Commissioners by an affirmative vote of at least 42 members, or three-fourths of the
members voting, whichever is greater;
new text end

new text begin (2) the Standard Valuation Law, as amended by the National Association of Insurance
Commissioners in 2009, or legislation including substantially similar terms and provisions,
has been enacted by states representing greater than 75 percent of the direct premiums
written as reported in the following annual statements submitted for 2008: life, accident
and health annual statements; health annual statements; or fraternal annual statements; and
new text end

new text begin (3) the Standard Valuation Law, as amended by the National Association of
Insurance Commissioners in 2009, or legislation including substantially similar terms
and provisions, has been enacted by at least 42 of the following 55 jurisdictions: the 50
states of the United States, American Samoa, the American Virgin Islands, the District of
Columbia, Guam, and Puerto Rico.
new text end

new text begin (c) Unless a change in the valuation manual specifies a later effective date, changes
to the valuation manual shall be effective on January 1 following the date when the change
to the valuation manual has been adopted by the National Association of Insurance
Commissioners by an affirmative vote representing:
new text end

new text begin (1) at least three-fourths of the members of the National Association of Insurance
Commissioners voting, but not less than a majority of the total membership; and
new text end

new text begin (2) members of the National Association of Insurance Commissioners representing
jurisdictions totaling greater than 75 percent of the direct premiums written as reported
in the following annual statements most recently available prior to the vote in clause
(1): life, accident and health annual statements, health annual statements, or fraternal
annual statements.
new text end

new text begin (d) The valuation manual must specify all of the following:
new text end

new text begin (1) minimum valuation standards for and definitions of the policies or contracts
subject to subdivision 2c. Such minimum valuation standards shall be:
new text end

new text begin (i) the commissioner's reserve valuation method for life insurance contracts, other
than annuity contracts, subject to subdivision 2c;
new text end

new text begin (ii) the commissioner's annuity reserve valuation method for annuity contracts
subject to subdivision 2c; and
new text end

new text begin (iii) minimum reserves for all other policies or contracts subject to subdivision 2c;
new text end

new text begin (2) the policies or contracts or types of policies or contracts that are subject to the
requirements of a principle-based valuation in subdivision 11, paragraph (a), and the
minimum valuation standards consistent with those requirements;
new text end

new text begin (3) for policies and contracts subject to a principle-based valuation under subdivision
11:
new text end

new text begin (i) requirements for the format of reports to the commissioner under subdivision 11,
paragraph (b), clause (3), which shall include information necessary to determine if the
valuation is appropriate and in compliance with this section;
new text end

new text begin (ii) assumptions shall be prescribed for risks over which the company does not
have significant control or influence; and
new text end

new text begin (iii) procedures for corporate governance and oversight of the actuarial function and
a process for appropriate waiver or modification of such procedures;
new text end

new text begin (4) for policies not subject to a principle-based valuation under subdivision 11 the
minimum valuation standard shall either:
new text end

new text begin (i) be consistent with the minimum standard of valuation prior to the operative
date of the valuation manual; or
new text end

new text begin (ii) develop reserves that quantify the benefits and guarantees and the funding
associated with the contracts and their risks at a level of conservatism that reflects
conditions that include unfavorable events that have a reasonable probability of occurring;
new text end

new text begin (5) other requirements, including but not limited to those relating to reserve methods,
models for measuring risk, generation of economic scenarios, assumptions, margins, use
of company experience, risk measurement, disclosure, certifications, reports, actuarial
opinions and memorandums, and transition rules and internal controls; and
new text end

new text begin (6) the data and form of the data required under subdivision 12, with whom the
data must be submitted, and may specify other requirements including data analyses
and reporting of analyses.
new text end

new text begin (e) In the absence of a specific valuation requirement or if a specific valuation
requirement in the valuation manual is not, in the opinion of the commissioner, in
compliance with this section, then the company shall, with respect to such requirements,
comply with minimum valuation standards prescribed by the commissioner by rule.
new text end

new text begin (f) The commissioner may engage a qualified actuary, at the expense of the company,
to perform an actuarial examination of the company and opine on the appropriateness of
any reserve assumption or method used by the company, or to review and opine on a
company's compliance with any requirement in this section. The commissioner may
rely upon the opinion, regarding provisions contained within this section, of a qualified
actuary engaged by the commissioner of another state, district, or territory of the United
States. The commissioner may only seek reimbursement from a company for the actual
expenses incurred by an actuary in performing the actuarial examination and opining
on the reserves of that company.
new text end

new text begin (g) The commissioner may require a company to change an assumption or method
that in the opinion of the commissioner is necessary in order to comply with the
requirements of the valuation manual or this section, and the company shall adjust the
reserves as required by the commissioner. The commissioner may take other disciplinary
action to enforce this section.
new text end

new text begin Subd. 11. new text end

new text begin Requirements of a principle-based valuation. new text end

new text begin (a) A company must
establish reserves using a principle-based valuation that meets the following conditions
for policies or contracts as specified in the valuation manual:
new text end

new text begin (1) quantify the benefits and guarantees and the funding associated with the contracts
and their risks at a level of conservatism that reflects conditions that include unfavorable
events that have a reasonable probability of occurring during the lifetime of the contracts.
For polices or contracts with significant tail risk, reflects conditions appropriately adverse
to quantify the tail risk;
new text end

new text begin (2) incorporate assumptions, risk analysis methods, and financial models and
management techniques that are consistent with, but not necessarily identical to, those
utilized within the company's overall risk assessment process, while recognizing potential
differences in financial reporting structures and any prescribed assumptions or methods;
new text end

new text begin (3) incorporate assumptions that are derived in one of the following manners:
new text end

new text begin (i) the assumption is prescribed in the valuation manual; or
new text end

new text begin (ii) for assumptions that are not prescribed, the assumptions shall:
new text end

new text begin (A) be established utilizing the company's available experience, to the extent it is
relevant and statistically credible; or
new text end

new text begin (B) to the extent that company data is not available, relevant, or statistically credible,
be established utilizing other relevant, statistically credible experience; and
new text end

new text begin (4) provide margins for uncertainty including adverse deviation and estimation error,
such that the greater the uncertainty the larger the margin and resulting reserve.
new text end

new text begin (b) A company using a principle-based valuation for one or more policies or
contracts subject to this subdivision as specified in the valuation manual shall:
new text end

new text begin (1) establish procedures for corporate governance and oversight of the actuarial
valuation function consistent with those described in the valuation manual;
new text end

new text begin (2) provide to the commissioner and the board of directors an annual certification
of the effectiveness of the internal controls with respect to the principle-based valuation.
Such controls shall be designed to ensure that all material risks inherent in the liabilities
and associated assets subject to such valuation are included in the valuation and that
valuations are made in accordance with the valuation manual. The certification shall be
based on the controls in place as of the end of the preceding calendar year; and
new text end

new text begin (3) develop and file with the commissioner upon request a principle-based valuation
report that complies with standards prescribed in the valuation manual.
new text end

new text begin (c) A principle-based valuation may include a prescribed formulaic reserve
component.
new text end

new text begin Subd. 12. new text end

new text begin Experience reporting for policies in force on or after the operative
date of the valuation manual. new text end

new text begin A company shall submit mortality, morbidity, policyholder
behavior, or expense experience, and other data as prescribed in the valuation manual.
new text end

new text begin Subd. 13. new text end

new text begin Data practices. new text end

new text begin (a) The following data are confidential or protected
nonpublic data, as defined in section 13.02, subdivision 3 or 13:
new text end

new text begin (1) a memorandum in support of an opinion submitted under subdivision 2a or 2d
and any other documents, materials, and other information, including but not limited to all
working papers, and copies thereof, created, produced, or obtained by or disclosed to the
commissioner or any other person in connection with such memorandum;
new text end

new text begin (2) all documents, materials, and other information, including but not limited to all
working papers, and copies thereof, created, produced, or obtained by or disclosed to the
commissioner or any other person in the course of an examination made under subdivision
10, paragraph (f), provided that if an examination report or other material prepared in
connection with an examination under section 60A.031, subdivision 4, paragraph (f), is
not given confidential treatment under that provision, an examination report or other
material prepared in connection with an examination under subdivision 10, paragraph (f),
is not given confidential treatment to the same extent as if the examination report or other
material had been prepared under section 60A.031, subdivision 4, paragraph (f);
new text end

new text begin (3) any reports, documents, materials, and other information developed by a
company in support of, or in connection with, an annual certification by the company under
subdivision 11, paragraph (b), clause (2), evaluating the effectiveness of the company's
internal controls with respect to a principle-based valuation and any other documents,
materials, and other information, including but not limited to all working papers, and
copies thereof, created, produced, or obtained by or disclosed to the commissioner or any
other person in connection with such reports, documents, materials, and other information;
new text end

new text begin (4) any principle-based valuation report developed under subdivision 11, paragraph
(b), clause (3), and any other documents, materials, and other information, including but
not limited to all working papers, and copies thereof, created, produced, or obtained by or
disclosed to the commissioner or any other person in connection with such report; and
new text end

new text begin (5) any documents, materials, data, and other information submitted by a company
under subdivision 12 (collectively, "experience data") and any other documents, materials,
data, and other information, including but not limited to all working papers, and copies
thereof, created or produced in connection with such experience data, in each case that
includes any potentially company-identifying or personally identifiable information that
is provided to or obtained by the commissioner together with any experience data, the
experience materials, and any other documents, materials, data, and other information,
including but not limited to all working papers, and copies thereof, created, produced,
or obtained by or disclosed to the commissioner or any other person in connection with
such experience materials.
new text end

new text begin (b) Except as provided in this subdivision, the documents, materials, or other
information described in paragraph (a) are not subject to subpoena and shall not be
subject to discovery or admissible in evidence in any private civil action, provided that
the commissioner is authorized to use the documents, materials, or other information
described in paragraph (a) in the furtherance of any regulatory or legal action brought
against the company as a part of the commissioner's official duties.
new text end

new text begin (c) Neither the commissioner nor any person who received the documents, materials,
or other information described in paragraph (a) while acting under the authority of
the commissioner shall be permitted or required to testify in any private civil action
concerning documents, materials, or other information classified by this subdivision.
new text end

new text begin (d) In order to assist in the performance of the commissioner's duties, the
commissioner may share documents, materials, data, and other information, including
information that is confidential and privileged (i) with other state, federal, and international
regulatory agencies and with the National Association of Insurance Commissioners and
its affiliates and subsidiaries and (ii) in the case of the documents, materials, or other
information specified in paragraph (a), clauses (1) and (4), only, with the Actuarial Board
for Counseling and Discipline or its successor upon request stating that the documents,
materials, or other information is required for the purpose of professional disciplinary
proceedings and with state, federal, and international law enforcement officials; provided
that the recipient agrees, and has the legal authority to agree, to maintain the confidential
and privileged status of the documents, materials, data, and other information in the same
manner and to the same extent as required for the commissioner.
new text end

new text begin (e) The commissioner may receive documents, materials, data, and other
information, including otherwise confidential and privileged documents, materials, data,
or information, from the National Association of Insurance Commissioners and its
affiliates and subsidiaries, from regulatory or law enforcement officials of other foreign
or domestic jurisdictions and from the Actuarial Board for Counseling and Discipline or
its successor and shall maintain the confidential and privileged status of any document,
material, data, or other information received with notice or the understanding that it is
confidential and privileged under the laws of the jurisdiction that is the source of the
document, material, or other information.
new text end

new text begin (f) The commissioner may enter into agreements governing sharing and use of
information consistent with this subdivision.
new text end

new text begin (g) No waiver of any applicable privilege or claim of confidentiality in documents,
materials, or other information described in paragraph (a) shall occur as a result of
disclosure to the commissioner under this subdivision or as a result of sharing as
authorized in paragraph (d).
new text end

new text begin (h) A privilege established under the law of a state or jurisdiction that is substantially
similar to the privilege established under this subdivision shall be available and enforced
in any proceeding in, and in any court of, this state.
new text end

new text begin (i) Notwithstanding this subdivision, any documents, materials, or information
specified in paragraph (a), clauses (1) and (4):
new text end

new text begin (1) may be subject to subpoena for the purpose of defending an action seeking
damages from the appointed actuary submitting the related memorandum in support
of an opinion submitted under subdivision 2a or 2d or principle-based valuation report
developed under subdivision 11, paragraph (b), clause (3), by reason of an action required
by this section or by rules adopted hereunder;
new text end

new text begin (2) may otherwise be released by the commissioner with the written consent of
the company; and
new text end

new text begin (3) once any portion of a memorandum in support of an opinion submitted under
subdivision 2a or 2d or a principle-based valuation report developed under subdivision
11, paragraph (b), clause (3), is cited by the company in its marketing or is publicly
volunteered to or before a governmental agency other than a state insurance department
or is released by the company to the news media, all portions of such memorandum or
report shall no longer be classified under this subdivision.
new text end

new text begin Subd. 14. new text end

new text begin Single state exemption. new text end

new text begin (a) The commissioner may exempt specific
product forms or product lines of a domestic company that is licensed and doing business
only in Minnesota from the requirements of subdivision 10 provided:
new text end

new text begin (1) the commissioner has issued an exemption in writing to the company and has
not subsequently revoked the exemption in writing; and
new text end

new text begin (2) the company computes reserves using assumptions and methods used prior to
the operative date of the valuation manual in addition to any requirements established by
the commissioner and adopted by rules.
new text end

new text begin (b) For any company granted an exemption under this subdivision, subdivisions 2a,
2b, 2d, 3, 3a, 3b, 4, 4a, 5, 6, 7, 8, and 9 shall be applicable. With respect to any company
applying this exemption, any reference to subdivision 10 found in subdivisions 2a, 2b, 2d,
3, 3a, 3b, 4, 4a, 5, 6, 7, 8, and 9 shall not be applicable.
new text end