Materials - Life Insurance and Annuities (A) Committee

Date: 8/3/19

2019 Summer National Meeting New York, New York

LIFE INSURANCE AND ANNUITIES (A) COMMITTEE

Sunday, August 4, 2019 2:00 ? 3:30 p.m.

New York Hilton Midtown--Trianon Ballroom--3rd Level

ROLL CALL

Doug Ommen, Chair Stephen C. Taylor, Vice Chair Jim L. Ridling Keith Schraad Trinidad Navarro Dean L. Cameron James J. Donelon Bruce R. Ramge

Iowa District of Columbia Alabama Arizona Delaware Idaho Louisiana Nebraska

Barbara D. Richardson Linda A. Lacewell Jon Godfread Jillian Froment Javier Rivera Rios Carter Lawrence Mark Afable

Nevada New York North Dakota Ohio Puerto Rico Tennessee Wisconsin

NAIC Support Staff: Jennifer R. Cook/Jolie H. Matthews

AGENDA

1. Consider Adoption of its July 10 Minutes--Commissioner Doug Ommen (IA)

2. Consider Adoption of its Task Force and Working Group Reports--Commissioner Doug Ommen (IA) a. Annuity Disclosure (A) Working Group--Mike Yanacheak (IA) b. Annuity Suitability (A) Working Group--Director Jillian Froment (OH) c. Life Insurance Illustration Issues (A) Working Group--Richard Wicka (WI) d. Life Insurance Online Guide (A) Working Group--Mary Mealer (MO) e. Life Actuarial (A) Task Force--Mike Boerner (TX)

3. Discuss its Charge to "Explore Ways to Promote Retirement Security Consistent with the NAIC's Continuing `Retirement Security Initiative'"--Commissioner Stephen C. Taylor (DC) a. Discuss a New Working Group and Work Plan--Commissioner Stephen C. Taylor (DC) b. Hear a Presentation from the Insured Retirement Institute (IRI)--Jason Berkowitz

4. Discuss Referral from the Big Data (EX) Working Group--Commissioner Doug Ommen (IA)

5. Discuss Any Other Matters Brought Before the Committee--Commissioner Doug Ommen (IA)

6. Adjournment

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Attachment One Life Insurance and Annuities (A) Committee

8/4/19

Draft: 7/30/19

Life Insurance and Annuities (A) Committee Conference Call July 10, 2019

The Life Insurance and Annuities (A) Committee met via conference call July 10, 2019. The following Committee members participated: Doug Ommen, Chair, Lindsay Bates and Mike Yanacheak (IA); Stephen C. Taylor, Vice Chair, and Philip Barlow (DC); Jim L. Ridling (AL); Keith Schraad represented by Vincent Gosz (AZ); Dean L. Cameron (ID); Bruce R. Ramge represented by Matt Holman (NE); Barbara D. Richardson (NV); Linda A. Lacewell represented by Bill Carmello and James Regalbuto (NY); Jillian Froment and Peter Weber (OH); Carter Lawrence represented by Brian Hoffmeister and Michael Humphreys (TN); and Mark Afable, Jerry DeArmond and Eric Holz (WI). Also participating were: Rachel Hemphill and Perry Kupferman (CA); David Altmaier and Chris Struk (FL); Julie Holmes (KS); Fred Andersen (MN); Mary Mealer (MO); Denise Lamy (NH); Bogdanka Kurahovic (NM); Elizabeth Kelleher Dwyer, Matt Gendron and Sarah Neil (RI); Mike Boerner (TX); Tomasz Serbinowski (UT); and David Hippen (WA).

1. Adopted its Spring National Meeting Minutes

Director Froment made a motion, seconded by Commissioner Afable, to adopt the Committee's April 7 minutes (see NAIC Proceedings ? Spring 2019, Life Insurance and Annuities (A) Committee). The motion passed unanimously.

2. Adopted Valuation Manual Amendments

Commissioner Ommen explained that there are 65 separate Valuation Manual amendments for consideration by the Committee representing the significant work of several subgroups under the Life Actuarial (A) Task Force. Mr. Boerner gave a brief overview of the summary of the amendments. He explained that several of the amendments provide the reserve details for the Variable Annuities Framework. He said many other amendments come out of the Valuation Analysis (E) Working Group analysis of principle-based reserving (PBR) reports and improve the reporting and clarity of PBR requirements in the Valuation Manual. Another significant portion of the amendments helps prepare the Valuation Manual for 2020, which is the required start of PBR for companies that have not yet elected to implement PBR. He said that will be approximately 270 companies compared to the 30 that have implemented so far.

Ms. Ahrens said Nebraska, while supportive of the package of amendments, did raise concerns during deliberations with the Life Actuarial (A) Task Force. She said Nebraska considers one amendment in the package to be a non-PBR interim solution. She said that as PBR goes forward, it needs to be responsive to innovation and the ongoing competitiveness of the insurance environment, which can stimulate availability of products, as well as fair and reasonable pricing to the insureds. She said Nebraska prefers PBR solutions in the Valuation Manual, but to the extent that amendments are adopted that provide a more conservative temporary solution, they need to be addressed going forward to ensure that a long-term solution is developed in the spirt of PBR.

Mr. Carmello said New York also voted against one of amendments at the Task Force level because it prefers a more conservative approach, which New York will likely take. However, he confirmed that New York will vote in favor of the package as a whole.

Commissioner Ridling made a motion, seconded by Director Froment, to adopt the Valuation Manual amendments (see NAIC Proceedings ? Summer 2019, Executive and Plenary Committee ? Attachment ?). The motion passed unanimously.

3. Adopted an Amendment to AG 43

Mr. Boerner said this amendment to Actuarial Guideline XLIII--CARVM for Variable Annuities (AG 43) applies to the Variable Annuities Framework reserve requirements to products issued prior to Jan. 1, 2017. He said the Valuation Manual amendments just adopted by the Committee handle the reserve requirements for the Variable Annuities Framework for products issued on and after Jan. 1, 2017. This amendment will synchronize the reserve requirements with in-force business.

Mr. Holman made a motion, seconded by Commissioner Ridling, to adopt the amendment to AG 43. Alabama, Arizona, the District of Columbia, Idaho, Nebraska, Ohio, Tennessee and Wisconsin voted in favor of the motion. New York opposed the motion. The motion passed.

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Attachment One Life Insurance and Annuities (A) Committee

8/4/19 4. Discussed Upcoming Life Actuarial (A) Task Force Issues Mr. Boerner apprised the Committee of two additional items. He said there is another actuarial guideline that the Life Actuarial (A) Task Force will be considering at the Summer National Meeting related to the Variable Annuities Framework for both reserves and capital. He said the amendment informs companies of the existing option to adopt the variable annuity reserve and capital requirements early for year-end 2019. This amendment will be coming to the Life Insurance and Annuities (A) Committee after the Summer National Meeting. Mr. Boerner also said that the Life Actuarial (A) Task Force will be submitting a request to the Statutory Accounting Principles (E) Working Group to work with the Task Force to coordinate efforts to determine what revisions to reserving and accounting requirements might be necessary to address the yearly renewable term (YRT) reinsurance reserve credit issue for which Valuation Manual amendment proposal 2019-39 provides an interim solution. Mr. Boerner said he will update the Committee on this issue at the Summer National Meeting. Having no further business, the Life Insurance and Annuities (A) Committee adjourned.

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Conference Call

ANNUITY DISCLOSURE (A) WORKING GROUP

July 29, 2019 / July 15, 2019 / June 5, 2019 / May 13, 2019 Summary Report

The Annuity Disclosure (A) Working Group met via conference call July 29, 2019; July 15, 2019; June 5, 2019; and May 13, 2019. During these meetings, the Working Group: 1. Reviewed and discussed comments on several iterations of draft revisions to the Annuity Disclosure Model Regulation

(#245). 2. Identified five outstanding issues requiring a choice between language contained in the July 9 draft or language in the July

15 draft. 3. Voted on four of the five outstanding issues and was able to reach a resolution on three of the issues during its July 29

conference call.

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2019 Summer National Meeting New York, New York

ANNUITY SUITABILITY (A) WORKING GROUP

Saturday, August 3, 2019 9:00 ? 10:00 a.m.

Meeting Summary Report The Annuity Suitability (A) Working Group of the Life Insurance and Annuities (A) Committee met Aug. 3, 2019. During this meeting, the Working Group: 1. Adopted its June 20 and Spring National Meeting minutes. During its June 20 meeting, the Working Group:

a. Discussed a framework for including a best interest standard of conduct in the revisions to the Suitability in Annuity Transactions Model Regulation (#275).

2. Continued its discussions of parking lot issues identified at the Working Group's June 20 meeting in Columbus, Ohio. The Working Group settled a few more of those issues.

3. Discussed its next steps, which include forming a technical drafting group to develop an initial draft of proposed revisions to the Model #275 to present to the Working Group based on its June 20 meeting and July 23 and July 29 conference calls. It is anticipated the technical drafting group will meet in early September. Upon receipt of the draft from the technical drafting group, the Working Group will set a public comment period to receive comments on the draft. The Working Group plans to set a regular day and time to begin holding weekly conference calls to discuss the comments received. The Working Group's goal is to present a draft to the Life Insurance and Annuities (A) Committee for its consideration prior to or at the Fall National Meeting.

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