USA Statutes : nevada
Title : Title 57 - INSURANCE
Chapter : CHAPTER 681B - ASSETS AND LIABILITIES
In any determination of the financial
condition of an insurer, there must be allowed as assets only such assets
as are owned by the insurer and which consist of:
1. Cash in the possession of the insurer, or in transit under its
control, and including the true balance of any deposit in a solvent bank,
credit union or trust company.
2. Investments, securities, properties and loans acquired or held
in accordance with this Code, and in connection therewith the following
items:
(a) Interest due or accrued on any bond or evidence of indebtedness
which is not in default and which is not valued on a basis including
accrued interest.
(b) Declared and unpaid dividends on stock and shares, unless such
amount has otherwise been allowed as an asset.
(c) Interest due or accrued upon a collateral loan in an amount not
to exceed 1 year’s interest thereon.
(d) Interest due or accrued on deposits in solvent banks, credit
unions and trust companies, and interest due or accrued on other assets,
if such interest is, in the judgment of the Commissioner, a collectible
asset.
(e) Interest due or accrued on a mortgage loan, in an amount not
exceeding in any event the amount, if any, of the excess of the value of
the property less delinquent taxes thereon over the unpaid principal; but
in no event may interest accrued for a period in excess of 18 months be
allowed as an asset.
(f) Rent due or accrued on real property if such rent is not in
arrears for more than 3 months, and rent more than 3 months in arrears if
the payment of such rent is adequately secured by property held in the
name of the tenant and conveyed to the insurer as collateral.
(g) The unaccrued portion of taxes paid before the due date on real
property.
3. Premium notes, policy loans and other policy assets and liens
on policies and certificates of life insurance and annuity contracts and
accrued interest thereon, in an amount not exceeding the legal reserve
and other policy liabilities carried on each individual policy.
4. The net amount of uncollected and deferred premiums and annuity
considerations in the case of a life insurer.
5. Premiums in the course of collection, other than for life
insurance, not more than 3 months past due, less commissions payable
thereon. The foregoing limitation does not apply to premiums payable
directly or indirectly by the United States Government or by any of its
instrumentalities.
6. Installment premiums other than life insurance premiums to the
extent of the unearned premium reserve carried on the policy to which
premiums apply.
7. Notes and like written obligations not past due, taken for
premiums other than life insurance premiums, on policies permitted to be
issued on such basis, to the extent of the unearned premium reserves
carried thereon.
8. The full amount of reinsurance recoverable by a ceding insurer
from a solvent reinsurer, which reinsurance is authorized under NRS
681A.110 .
9. Amounts receivable by an assuming insurer representing money
withheld by a solvent ceding insurer under a reinsurance treaty.
10. Deposits or equities recoverable from underwriting
associations, syndicates and reinsurance funds, or from any suspended
financial institution, to the extent deemed by the Commissioner available
for the payment of losses and claims and at values to be determined by
him.
11. All such assets, whether or not consistent with the provisions
of this section, as may be allowed pursuant to the annual statement form
approved by the Commissioner for the kinds of insurance to be reported
upon therein.
12. As to a title insurer, its title plant and equipment
reasonably necessary for the conduct of its abstract or title insurance
business, at not to exceed the cost thereof.
13. Electronic and mechanical machines and related equipment
constituting a data processing, recordkeeping or accounting system or
systems if the cost of each such system is at least $25,000, which cost
must be amortized in full over a period not to exceed 10 years. The
aggregate amount invested in all such systems must not exceed 5 percent
of the insurer’s assets.
14. Other assets, not inconsistent with the provisions of this
section, deemed by the Commissioner to be available for the payment of
losses and claims at values to be determined by him.
(Added to NRS by 1971, 1607; A 1993, 1447; 1995, 470; 1997, 299;
1999, 1547 )
1. In addition to assets impliedly excluded by the provisions of
NRS 681B.010 , the following expressly
may not be allowed as assets in any determination of the financial
condition of an insurer:
(a) Goodwill, trade names and other like intangible assets.
(b) Advances to officers, other than policy loans, whether secured
or not, and advances to employees, agents and other persons on personal
security only.
(c) Stock of such insurer, owned by it, or any equity therein or
loans secured thereby, or any proportionate interest in such stock
acquired or held through the ownership by such insurer of an interest in
another firm, corporation or business unit.
(d) Furniture, fixtures, furnishings, safes, vehicles, libraries,
stationery, literature and supplies, other than data processing,
recordkeeping and accounting systems authorized under subsection 13 of
NRS 681B.010 , except:
(1) In the case of title insurers such materials and plants
as the insurer is expressly authorized to invest in under NRS 682A.220
; and
(2) In the case of any insurer, such personal property as
the insurer is permitted to hold pursuant to chapter 682A of NRS, or which is reasonably necessary for the
maintenance and operation of real property lawfully acquired and held by
the insurer other than real property used by it for home office, branch
office and similar purposes.
(e) The amount, if any, by which the aggregate book value of
investments as carried in the ledger assets of the insurer exceeds the
aggregate value thereof as determined under this Code.
2. If any successor organization to the State Industrial Insurance
System that was established by section 79 of chapter 642, Statutes of
Nevada 1981, at page 1449, wishes to transact in this state property or
casualty insurance other than industrial insurance, the money required to
be held in trust by that organization pursuant to NRS 616B.042 may not be allowed as assets of the
successor organization in determining its financial condition to transact
such insurance.
(Added to NRS by 1971, 1608; A 1999, 1831 )
1. The Commissioner shall disallow as an asset or as a credit
against liabilities any reinsurance found by him after a hearing thereon
to have been arranged for the purpose principally of deception as to the
ceding insurer’s financial condition as of the date of any financial
statement of the insurer. Without limiting the general purport of the
foregoing provision, reinsurance of any substantial part of the insurer’s
outstanding risks contracted for in fact within 4 months prior to the
date of any such financial statement and cancelled in fact within 4
months after the date of such statement, or reinsurance under which the
reinsurer bears no substantial insurance risk or chance of net loss to
itself, shall prima facie be deemed to have been arranged principally for
the purpose of deception.
2. The Commissioner shall disallow as an asset any deposit, funds
or other assets of the insurer found by him after a hearing thereon:
(a) Not to be in good faith the property of the insurer;
(b) Not freely subject to withdrawal or liquidation by the insurer
at any time for the payment or discharge of claims or other obligations
arising under its policies; and
(c) To be resulting from arrangements made principally for the
purpose of deception as to the insurer’s financial condition as at the
date of any financial statement of the insurer.
3. The Commissioner may suspend or revoke the certificate of
authority of any insurer which has knowingly been a party to any such
deception or attempted deception.
(Added to NRS by 1971, 1609)
In any determination of the financial
condition of an insurer, capital stock and liabilities to be charged
against its assets shall include:
1. The amount of its capital stock outstanding, if any.
2. The amount, estimated to be consistent with the provisions of
this Code, necessary to pay all of its unpaid losses and claims incurred
on or prior to the date of the statement, whether reported or unreported,
together with the expenses of adjustment or settlement thereof.
3. With reference to life insurance policies and annuity
contracts, and disability and accidental death benefits in or
supplemental thereto:
(a) The amount of reserves on life insurance policies and annuity
contracts in force, valued according to the tables of mortality, rates of
interest and methods adopted pursuant to this Code which are applicable
thereto.
(b) Reserves for disability benefits, for both active and disabled
lives.
(c) Reserves for accidental death benefits.
(d) Any additional reserves which may be required by the
Commissioner consistent with applicable customary and general practice in
insurance accounting.
4. As to health insurance policies, the reserves required under
NRS 681B.080 .
5. With reference to insurance other than specified in subsections
3 and 4, and other than title insurance, the amount of the unearned
premium reserves computed in accordance with NRS 681B.060 and 681B.070 .
6. Taxes, expenses and other obligations due or accrued at the
date of the statement.
(Added to NRS by 1971, 1609)
1. As to casualty insurance transacted by it, each insurer shall
maintain at all times reserves in an amount estimated in the aggregate to
provide for payment of all losses and claims incurred, whether reported
or unreported, which are unpaid and for which the insurer may be liable
and to provide for the expenses of adjustment or settlement of losses and
claims. The reserves must be computed in accordance with regulations
adopted from time to time by the Commissioner upon reasonable
consideration of the ascertained experience and the character of such
kind of business for the purpose of adequately protecting the insured and
the solvency of the insurer.
2. Whenever the loss and loss expense experience of the insurer
show that reserves, calculated in accordance with those regulations, are
inadequate, the Commissioner may require the insurer to maintain
additional reserves.
3. The minimum reserve requirements prescribed by the Commissioner
for unpaid losses and loss expenses incurred during each of the most
recent 3 years for coverages included in the lines of business described
in the insurer’s annual statement as workmen’s compensation, liability
other than automobile (B.I.), and automobile liability (B.I.) must not be
less than the following: For workmen’s compensation, 65 percent of
premiums earned during each year less the amount already paid for losses
and expenses incidental thereto incurred during the year; for liability
other than automobile (B.I.) and automobile liability (B.I.), 60 percent
of premiums earned during each year less the amount already paid for
losses and expenses incidental thereto incurred during the year.
4. The Commissioner may, by regulation, prescribe the manner and
form of reporting pertinent information concerning the reserves provided
for in this section.
(Added to NRS by 1971, 1610; A 1981, 105)
1. As to property, casualty and surety insurance the insurer shall
maintain as a liability an unearned premium reserve on all policies in
force.
2. Except as provided in NRS 681B.070 as to marine and transportation risks, the
unearned premium reserve shall be equal to the unearned portion of gross
premiums in force (after deduction of applicable reinsurance in solvent
insurers) computed on an annual, monthly or more frequently pro rata
basis.
(Added to NRS by 1971, 1611)
As to marine and transportation insurance, the
entire amount of premiums on trip risks not terminated shall be deemed
unearned; and the Commissioner may require the insurer to carry a reserve
equal to 100 percent of premiums on trip risks written during the month
ended as of the date of statement.
(Added to NRS by 1971, 1611)
For all
health insurance policies the insurer shall maintain an active life
reserve which shall place a sound value on its liabilities under such
policies and be not less than the reserve according to appropriate
standards set forth in regulations issued by the Commissioner and, in no
event, less in the aggregate than the pro rata gross unearned premiums
for such policies.
(Added to NRS by 1971, 1611)
1. Casualty or surety insurers insuring real property mortgage
lenders against loss by reason of nonpayment of the mortgage indebtedness
by the borrower shall maintain a contingency reserve for the protection
of policyholders against the effects of adverse economic cycles.
2. The insurer shall contribute to such contingency reserve 50
percent of net premiums (gross premiums less premiums returned to
policyholders) written on such insurance remaining after establishment of
the unearned premium reserve.
3. Subject to the Commissioner’s approval, the contingency reserve
shall be available for payment of losses only when the insurer’s incurred
losses in any 1 calendar year exceed the rate formula expected losses by
10 percent of the related earned premiums.
(Added to NRS by 1971, 1612)
1. The Commissioner shall, in the manner provided by NRS 681B.110
to 681B.150 , inclusive, annually value, or cause to be
valued, the reserve liabilities (hereinafter called reserves) for all
outstanding life insurance policies and annuity and pure endowment
contracts of every life insurer doing business in this state, except that
in the case of an alien insurer, the valuation must be limited to its
United States business.
2. The Commissioner may certify the amount of any such reserves,
specifying the mortality table or tables, rate or rates of interest and
methods used in the calculation of the reserves.
3. The Commissioner may:
(a) Use any method, including group methods and the net level
premium method, in the calculation of the reserves.
(b) Use approximate averages for fractions of a year or other
period to calculate the reserves.
(c) In lieu of the valuation of the reserves required of any
foreign or alien company, accept any valuation made, or caused to be
made, by an insurance supervisory officer of any other state or
jurisdiction if his valuation complies with the minimum standard required
by NRS 681B.110 to 681B.150 , inclusive, and if the insurance officer of
the other state or jurisdiction accepts as sufficient and valid for all
legal purposes the certificate of valuation of the Commissioner when the
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.
4. Any such insurer which at any time has adopted any standard of
valuation producing greater aggregate reserves than those calculated
according to the minimum standard provided in NRS 681B.110 to 681B.150 , inclusive, may, with the approval of the
Commissioner, adopt any lower standard of valuation, but not lower than
the minimum provided in those sections.
(Added to NRS by 1971, 1612; A 1983, 938)
1. Except as otherwise provided in subsection 3 and in NRS
681B.125 , the minimum standards for
the valuation of all policies and contracts issued before January 1,
1972, are as follows:
(a) The legal minimum standard for valuation of contracts issued
before January 1, 1942, is a basis not lower than that used for the
annual statement of the year during which the policies were issued, and
for contracts issued on and after January 1, 1942, is the American
Experience Table of Mortality with either Craig’s or Buttolph’s Extension
for ages under 10, with interest at not more than 3.5 percent per annum.
Annuities and pure endowments purchased under group annuity and pure
endowment contracts must be valued in the same manner, with interest at
not more than 5 percent. Such policies may provide for not more than
1-year preliminary term insurance by incorporating therein a clause
plainly showing that the first year’s insurance under the contract is
term insurance purchased by the whole or part of the premiums to be
received during the first year of the contract.
(b) The legal minimum standard for the valuation of group life
insurance policies under which the premium rates are not guaranteed for
more than 5 years is the American Men Ultimate Table of Mortality with
interest at not more than 3.5 percent per annum.
(c) The legal minimum standard for the valuation of industrial
policies is the American Experience Table of Mortality or the Standard
Industrial Mortality Table or the Substandard Industrial Mortality Table
with interest at not more than 3.5 percent per annum by the net level
premium method, or in accordance with their terms by the modified
preliminary term method described in this section.
(d) Reserves for all such policies and contracts may be calculated,
at the option of the insurer, according to any standards which produce
greater aggregate reserves than the minimum reserves required by this
subsection.
2. Except as otherwise provided in subsection 3 and in NRS
681B.125 , the minimum standards for
the valuation of all policies and contracts issued on or after January 1,
1972, are the Commissioners reserve valuation methods defined in NRS
681B.130 and 681B.150 , 5 percent interest for group annuity and
pure endowment contracts and 3.5 percent interest for all other such
policies and contracts or, in the case of policies and contracts other
than annuity and pure endowment contracts issued on or after July 1,
1973, 4 percent interest for such policies issued before July 1, 1977,
5.5 percent interest for single premium life insurance policies and 4.5
percent for all other such policies issued on and after July 1, 1977, and
the following tables:
(a) For all ordinary policies of life insurance issued on the
standard basis, excluding any disability and accidental death benefits in
such policies, the Commissioners 1941 Standard Ordinary Mortality Table
until the operative date of NRS 688A.340 , and, for all such policies issued on and
after the operative date of NRS 688A.340 and before the operative date of NRS
688A.325 , the Commissioners 1958
Standard Ordinary Mortality Table, except that for any category of such
policies issued on female risks all modified net premiums and present
values referred to in NRS 681B.110 to
681B.150 , inclusive, may be
calculated according to an age not more than 6 years younger than the
actual age of the insured. For policies issued on or after the operative
date of NRS 688A.325 :
(1) The Commissioners 1980 Standard Ordinary Mortality Table;
(2) At the election of the insurer 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 which is adopted after 1980
by the National Association of Insurance Commissioners and is approved by
a regulation adopted by the Commissioner,
Ê may be used in determining the minimum standard of valuation for such
policies.
(b) For all industrial life insurance policies issued on the
standard basis, excluding any disability and accidental death benefits in
such policies, the 1941 Standard Industrial Mortality Table for such
policies issued before the operative date of NRS 688A.330 , and for such policies issued on or after
that date, the Commissioners 1961 Standard Industrial Mortality Table or
any industrial mortality table which is adopted after 1980 by the
National Association of Insurance Commissioners and is approved by a
regulation adopted by the Commissioner for use in determining the minimum
standard of valuation for such policies.
(c) For individual annuity and pure endowment contracts, excluding
any disability and accidental death benefits in such policies, the 1937
Standard Annuity Mortality Table, or, at the option of the insurer, 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 such policies, the Group
Annuity Mortality Table for 1951, any modification of that table approved
by the Commissioner, or, at the option of the insurer, 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 supplementary
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 which are adopted after
1980 by the National Association of Insurance Commissioners and are
approved by a regulation adopted by the Commissioner for use in
determining the minimum standard of valuation for such policies; and for
policies or contracts issued on or after January 1, 1961, and before
January 1, 1966, either such tables or, at the option of the insurer, the
Class (3) Disability Table (1926).
(f) Benefits for accidental death 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 which is
adopted after 1980 by the National Association of Insurance Commissioners
and is approved by a regulation adopted by the Commissioner for use in
determining the minimum standard of valuation for such policies; and for
policies issued on or after January 1, 1961, and before January 1, 1966,
either such table or, at the option of the insurer, the Inter-Company
Double Indemnity Mortality Table. Either table must be combined with a
mortality table permitted for calculating the reserves for life insurance
policies.
(g) For group life insurance, for life insurance issued on the
substandard basis and for special benefits, such tables as may be
approved by the Commissioner.
3. Except as provided in NRS 681B.125 , the minimum standards for the valuation of
all individual annuity and pure endowment contracts issued on or after
the valuation operative date defined in subsection 4 and for all
annuities and pure endowments purchased on or after that date, under
group annuity and pure endowment contracts, are the Commissioners reserve
valuation methods defined in NRS 681B.130 and the following tables and interest rates:
(a) For individual annuity and pure endowment contracts issued
before July 1, 1977, excluding any disability and accidental death
benefits in such contracts, the 1971 Individual Annuity Mortality Table,
or any modification of the table approved by the Commissioner, and 6
percent interest for single premium immediate annuity contracts, and 4
percent interest for all other individual annuity and pure endowment
contracts.
(b) For individual single premium immediate annuity contracts
issued on or after July 1, 1977, excluding any disability and accidental
death benefits in such contracts, the 1971 Individual Annuity Mortality
Table, or any individual annuity mortality table which is adopted after
1980 by the National Association of Insurance Commissioners and is
approved by a regulation adopted by the Commissioner for use in
determining the minimum standard of valuation for such contracts, or any
modification of those tables approved by the Commissioner, and 7.5
percent interest.
(c) For individual annuity and pure endowment contracts issued on
or after July 1, 1977, other than single premium immediate annuity
contracts, excluding any disability and accidental death benefits in such
contracts, the 1971 Individual Annuity Mortality Table or any individual
annuity mortality table which is adopted after 1980 by the National
Association of Insurance Commissioners and is approved by a regulation
adopted by the Commissioner for use in determining the minimum standard
of valuation for such contracts, or any modification of those tables
approved by the Commissioner, and 5.5 percent interest for single premium
deferred annuity and pure endowment contracts and 4.5 percent interest
for all other such individual annuity and pure endowment contracts.
(d) For all annuities and pure endowments purchased before July 1,
1977, under group annuity and pure endowment contracts, excluding any
disability and accidental death benefits purchased under such contracts,
the 1971 Group Annuity Mortality Table, or any modification of that table
approved by the Commissioner, and 6 percent interest.
(e) For all annuities and pure endowments purchased on or after
July 1, 1977, under group annuity and pure endowment contracts, excluding
any disability and accidental death benefits purchased under such
contracts, the 1971 Group Annuity Mortality Table, or any group annuity
mortality table which is adopted after 1980 by the National Association
of Insurance Commissioners and is approved by a regulation adopted by the
Commissioner for use in determining the minimum standard of valuation for
such annuities and pure endowments, or any modification of those tables
approved by the Commissioner, and 7.5 percent interest.
4. After July 1, 1973, any insurer may file with the Commissioner
a written notice of its election to comply with the provisions of
subsection 3 after a specified date before January 1, 1979, which then
becomes the valuation operative date for the insurer, but an insurer may
elect a different valuation operative date for individual annuity and
pure endowment contracts from that elected for group annuity and pure
endowment contracts. If an insurer makes no such election, the valuation
operative date for the insurer is January 1, 1979.
(Added to NRS by 1971, 1613; A 1973, 721; 1977, 682; 1983, 939)
1. This section sets forth the interest rates used in determining
the minimum standard for valuation of:
(a) All life insurance policies issued in a particular calendar
year on or after the operative date of NRS 688A.325 ;
(b) All individual annuity and pure endowment contracts issued in a
particular calendar year on or after January 1, 1984;
(c) All annuities and pure endowments purchased in a particular
calendar year on or after January 1, 1984, under group annuity and pure
endowment contracts; and
(d) The net increase, if any, in a particular calendar year after
January 1, 1984, in amounts held under contract which have guaranteed
interest.
2. The interest rates for valuation must be determined as follows,
and the results rounded to the nearer one-quarter of 1 percent:
(a) For life insurance:
I = .03 + W (R1 - .03) + W/2 (R2 - .09)
(b) For single-premium immediate annuities and for annuity benefits
involving life contingencies arising from other annuities with options
for cash settlement and from contracts which have guaranteed interest
with options for cash settlement:
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
section, and
W is the weighting factor defined in this section.
(c) For other annuities with options for cash settlement and
contracts which have guaranteed interest with options for cash
settlement, valued on the basis of the year issued, except as stated in
paragraph (b), the formula for life insurance set forth in paragraph (a)
applies to annuities and contracts which have guaranteed interest with a
guaranteed duration in excess of 10 years, and the formula for
single-premium immediate annuities stated in paragraph (b) applies to
annuities and contracts which have guaranteed interest with guaranteed
durations of 10 years or less.
(d) For other annuities with no options for cash settlement and for
contracts which have guaranteed interest with no options for cash
settlement, the formula for single-premium immediate annuities set forth
in paragraph (b) applies.
(e) For other annuities with options for cash settlement and
contracts which have guaranteed interest with no options for cash
settlement which are valued on the basis of a change in its fund the
formula for single-premium immediate annuities stated in paragraph (b)
applies.
(f) If the interest rate for valuation for any life insurance
policies issued in any 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 1 percent, the interest rate for the valuation of such life insurance
policies is equal to the corresponding actual rate for the immediately
preceding calendar year. The interest rate for the valuation of life
insurance policies issued in a calendar year must be determined for 1980
using the reference interest rate defined for 1979 and must be determined
for each subsequent calendar year regardless of when NRS 688A.325 becomes operative with respect to the
insurer.
3. The weighting factors referred to in the formulas set forth in
subsection 2 are given in the following tables:
(a) Weighting Factors for Life Insurance:
Guarantee
Duration
Weighting
(Years)
Factors
10 or
less.......................................................................
....................................... .50
More than 10 but not more than
20................................................................. .45
More than
20.........................................................................
.............................. .35
For life insurance, the duration of the guarantee 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;
(b) The weighting factor for single-premium immediate annuities and
for annuity benefits involving life contingencies arising from other
annuities with options for cash settlement and contracts which have
guaranteed interest with options for cash settlement is .80; and
(c) Weighting factors for other annuities and for contracts which
have guaranteed interest except as stated in paragraph (b), are specified
in the tables in subparagraphs (1), (2) and (3), according to the rules
and definitions in subparagraphs (4), (5) and (6) as follows:
(1) For annuities and contracts which have guaranteed
interest valued on the basis of the year issued:
Guarantee
Duration
Weighting Factor
(Years)
for Plan Type
A B C
5 or
less......................................................................
.80 .60 .50
More than 5, but not more than 10........................
.75 .60 .50
More than 10, but not more than 20......................
.65 .50 .45
More than
2............................................................... .45
.35 .35
(2) For annuities and contracts which have guaranteed
interest valued on a change in fund basis, the factors shown in
subparagraph (1):
Weighting Factor
for Plan Type
A B C
Increased by.............................................................
.15 .25 .05
(3) For annuities and contracts which have guaranteed
interest valued on the basis of the year issued, (other than those with
no options for cash settlement) which do not guarantee interest on
considerations received more than 1 year after issue or purchase and for
annuities and contracts which have guaranteed interest 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 subparagraph (1) or derived in subparagraph (2) increased by .05.
(4) For other annuities with options for cash settlement and
contracts which have guaranteed interest with options for cash
settlement, the guaranteed duration is the number of years for which the
contract guarantees interest rates in excess of the interest rate for the
valuation of life insurance policies with a guaranteed duration in excess
of 20 years. For other annuities with no options for cash settlement and
for contracts which have guaranteed interest with no options for cash
settlement, the guaranteed duration is the number of years from the date
of issue or date of purchase to the date on which the annuity benefits
are scheduled to commence.
(5) The types of plans listed in this subsection have the
following characteristics:
Plan Type A
Under this plan the policyholder:
(I) May withdraw money only with an adjustment to
reflect changes in interest rates or the value of assets since the
insurer’s receipt of the money, or without such an adjustment but in
installments payable over 5 years or more;
(II) May withdraw money as an immediate life annuity;
or
(III) Is not permitted to withdraw money.
Plan Type B
Under this plan, before expiration of the guaranteed
interest rate, the policyholder:
(I) May withdraw money only with an adjustment to
reflect changes in interest rates or the value of assets since the
insurer’s receipt of the money, or without such an adjustment but in
installments payable over 5 years or more; or
(II) Is not permitted to withdraw money.
Ê At the end of the guaranteed interest rate, the policyholder may
withdraw money without such an adjustment in a single sum or in
installments over a period of less than 5 years.
Plan Type C
Under this plan the policyholder may withdraw money before
expiration of the guaranteed interest rate in a single sum or in
installments over a period of less than 5 years:
(I) Without any adjustment to reflect changes in
interest rates or the value of assets since the insurer’s receipt of the
money; or
(II) Subject only to a fixed charge for surrender
which is stipulated in the contract as a percentage of the fund.
(6) An insurer may elect to value contracts which have
guaranteed interest with options for cash settlement and annuities with
options for cash settlement on the basis of the year issued or a change
in fund basis. Contracts which have guaranteed interest but no options
for cash settlement and annuities with no options for cash settlement
must be valued on the basis of the year issued. As used in this section,
“valuation on the basis of the year issued” means a basis of valuation
under which the interest rate used to determine the minimum standard of
valuation for the entire duration of an annuity or contract with
guaranteed interest is the interest rate of valuation for the year of
issue or the year of purchase of the annuity or contract, and “change in
fund basis of valuation” means a basis of valuation under which the
interest rate used to determine the minimum standard of valuation
applicable to each change in the fund held under the annuity or contract
is the interest rate for valuation for the year of the change in the fund.
4. For purposes of subsection 2, “reference interest rate” means:
(a) For all life insurance, the lesser of the average over 36
months and the average over 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.
(b) For single-premium immediate annuities, annuity benefits
involving life contingencies arising from other annuities with options
for cash settlement and contracts which have guaranteed interest with
options for cash settlement, the average over 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.
(c) For other annuities with options for cash settlement and
contracts which have guaranteed interest with options for cash
settlement, valued on the basis of the year issued, except as stated in
paragraph (b), with a guaranteed duration of more than 10 years, the
lesser of the average over 36 months and the average over 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.
(d) For other annuities with options for cash settlement and
guaranteed interest with options for cash settlement, valued on the basis
of the year issued, except as stated in paragraph (b), with a guaranteed
duration of 10 years or less, the average over 12 months, ending on June
30 of the calendar year issued or purchased, of Moody’s Corporate Bond
Yield Average—Monthly Average Corporates, as published by Moody’s
Investors Service, Inc.
(e) For other annuities with no options for cash settlement and for
contracts which have guaranteed interest with no option for cash
settlement, the average over 12 months, ending on June 30 of the calendar
year issued or purchased, of Moody’s Corporate Bond Yield Average—Monthly
Average Corporates, as published by Moody’s Investors Service, Inc.
(f) For other annuities with options for cash settlement and
contracts which have guaranteed interest with options for cash settlement
valued on a change in fund basis, except as stated in paragraph (b), the
average over 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.
5. If the publication of Moody’s Corporate Bond Yield
Average—Monthly Average Corporates by Moody’s Investors Service, Inc.,
ends or the National Association of Insurance Commissioners determines
that Moody’s Corporate Bond Yield Average—Monthly Average Corporates is
no longer appropriate for determination of the reference interest rate,
an alternative method for determination of the reference interest rate
which is adopted by the National Association of Insurance Commissioners
and approved by regulation of the Commissioner may be substituted.
(Added to NRS by 1983, 934)
1. Except as otherwise provided in subsection 4 and in NRS
681B.150 , 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 must be the
excess, if any, of the present value, at the date of valuation, of the
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 the policy must be such a uniform percentage of the
respective contract premiums for those benefits that the present value,
at the date of issue of the policy, of all the modified net premiums are
equal to the sum of the then present value of the benefits provided for
by the policy and the excess of the premium set forth in paragraph (a)
over that set forth in paragraph (b), as follows:
(a) A net level annual premium equal to the present value, at the
date of issue, of such 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 such
policy on which a premium falls due. The net level annual premium must
not exceed the net level annual premium on the 19-year premium whole life
plan for insurance of the same amount at an age 1 year higher than the
age at the time the policy is issued.
(b) A net 1-year term premium for such benefits provided for in the
first policy year.
2. If any life insurance policy issued on or after January 1,
1987, 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 in return for the excess premium 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 any policy
anniversary occurring on or before the assumed ending date, which is 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, must, except as otherwise provided in NRS 681B.150 , be the greater of:
(a) The reserve as of the policy anniversary calculated as
described in subsection 1; and
(b) The reserve as of the policy anniversary calculated as
described in subsection 1, but with:
(1) The value defined in paragraph (a) of subsection 1 being
reduced by 15 percent of the amount of the excess first-year premium;
(2) 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;
(3) The policy being assumed to mature on such date as an
endowment; and
(4) 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 NRS 681B.120 and 681B.125 must be used.
3. Reserves according to the Commissioners’ reserve valuation
method for:
(a) Life insurance policies providing for a varying amount of
insurance or requiring the payment of varying premiums;
(b) Group annuity and pure endowment contracts purchased under a
retirement plan or plan of deferred compensation, established or
maintained by an employer (including a partnership or sole
proprietorship), 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;
(c) Disability and accidental death benefits in all policies and
contracts; and
(d) All other benefits, except life insurance and endowment
benefits in life insurance policies and benefits provided by all other
annuity and pure endowment contracts,
Ê must be calculated by a method consistent with the principles of
subsection 1 and this subsection, except that any extra premiums charged
because of impairments or special hazards must be disregarded in the
determination of modified net premiums.
4. This subsection applies to all annuity and pure endowment
contracts except those group annuity and pure endowment contracts for
which reserves according to the Commissioners’ reserve valuation method
are to be calculated by a method consistent with the principles of
subsections 1, 2 and 3. Reserves according to the Commissioners’ annuity
reserve method for benefits under annuity or pure endowment contracts,
excluding any disability and accidental death benefits in those contracts
must 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 those 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, which become
payable before the end of such respective contract year. The future
guaranteed benefits must be determined by using the mortality table, if
any, and the interest rate or rates specified in such 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.
5. An insurer’s aggregate reserves for all life insurance
policies, excluding disability and accidental death benefits, issued on
or after January 1, 1972, must not be less than the aggregate reserves
calculated in accordance with the methods set forth in this section, NRS
681B.145 and 681B.150 , and the mortality table or tables and rate
or rates of interest used in calculating nonforfeiture benefits for those
policies.
6. An insurer’s aggregate reserves for all policies, contracts and
benefits must not be less than the aggregate reserves determined by a
qualified actuary to be necessary for a favorable opinion under NRS
681B.210 and 681B.220 .
(Added to NRS by 1971, 1614; A 1977, 685; 1983, 942; 1995, 1770)
1. Reserves for any category of policies, contracts or benefits as
established by the Commissioner, issued on or after January 1, 1972, may
be calculated, at the option of the insurer, according to any standards
which produce greater aggregate reserves for the category than those
calculated according to the minimum standards provided by subsections 2
and 3 of NRS 681B.120 and 681B.125
, but the rate or rates of interest
used for policies and contracts other than the annuity and pure endowment
contracts must not be higher than the corresponding rate or rates of
interest used in calculating any nonforfeiture benefits provided for in
such policies.
2. Any insurer which has adopted a standard of valuation producing
greater aggregate reserves as described in subsection 1 may, with the
approval of the Commissioner, adopt a lower standard of valuation, but
not lower than the minimum described in subsection 1.
(Added to NRS by 1971, 1615; A 1977, 687; 1983, 945; 1995, 1772)
For any plan of life insurance which provides for the
determination of a future premium, the amounts of which are to be
determined by the insurer based on estimates of future experience, or for
any plan of life insurance or annuity which is of such a nature that the
minimum reserves cannot be determined by the methods described in NRS
681B.130 and 681B.150 , the reserves which are held under the plan
must be:
1. Appropriate in relation to the benefits and the pattern of
premiums for the plan; and
2. Computed by a method which is consistent with the principles of
standard valuation contained in this chapter.
(Added to NRS by 1983, 938)
If in any
contract year the gross premium charged by any life insurer on any policy
or contract issued on or after January 1, 1972, 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 is the greater of:
1. The reserve calculated according to the mortality table, rate
of interest and method actually used for the policy or contract; or
2. 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 section
are the standards stated in NRS 681B.120 and 681B.125 .
3. If any life insurance policy is issued on or after January 1,
1987, for which the gross premium in the first policy year exceeds that
of the second year and no comparable additional benefit is provided in
the first year in return for the excess premium, and which provides an
endowment benefit or a cash surrender value, or a combination thereof, in
an amount greater than the excess premium, the provisions of this section
must be applied as if the method actually used in calculating the reserve
for the policy were the method described in NRS 681B.130 other than in subsection 2 of that section.
The minimum reserve required at each policy anniversary of such a policy
is the greater of the minimum reserve calculated in accordance with NRS
681B.130 , including subsection 2 of
that section, and the minimum reserve calculated in accordance with this
section.
(Added to NRS by 1971, 1616; A 1977, 687; 1983, 945)
1. Except as otherwise provided in subsection 5, all bonds or
other evidences of debt having a fixed term and rate of interest held by
an insurer may, if amply secured and not in default as to principal or
interest, be valued as follows:
(a) If purchased at par, at the par value.
(b) If purchased above or below par, on the basis of the purchase
price adjusted so as to bring the value to par at maturity and so as to
yield in the meantime the effective rate of interest at which the
purchase was made or, in lieu of that method, according to an accepted
method of valuation that is approved by the Commissioner.
2. The purchase price must not be taken at a higher figure than
the actual market value at the time of purchase, plus actual brokerage,
transfer, postage or express charges paid in the acquisition of such
securities.
3. Unless otherwise provided by a valuation established or
approved by the Commissioner, the security must not be carried at above
the call price for the entire issue during any period within which the
security may be so called.
4. The Commissioner has full discretion in determining the method
of calculating values pursuant to this section.
5. A valuation determined pursuant to this section must not be
inconsistent with any applicable valuation or method then currently
formulated or approved by the National Association of Insurance
Commissioners or its successor organization.
(Added to NRS by 1971, 1616; A 2003, 3287 )
1. Except as otherwise provided in subsection 4, securities, other
than those specified in NRS 681B.160 ,
held by an insurer must be valued, in the discretion of the Commissioner,
at their market value, or at their appraised value, or at prices
determined by him as representing their fair market value.
2. Preferred or guaranteed stocks or shares while paying full
dividends may be carried at a fixed value in lieu of market value, at the
discretion of the Commissioner and in accordance with a method of
computation approved by the Commissioner.
3. The stock of a subsidiary of an insurer must be valued on the
basis of the value of only those assets of the subsidiary as would
constitute lawful investments of the insurer if acquired or held directly
by the insurer.
4. A valuation determined pursuant to this section must not be
inconsistent with any applicable valuation or method then currently
formulated or approved by the National Association of Insurance
Commissioners or its successor organization.
(Added to NRS by 1971, 1616; A 2003, 3287 )
1. Real property acquired pursuant to a mortgage loan or contract
for sale, in the absence of a recent appraisal deemed by the Commissioner
to be reliable, must not be valued at an amount greater than the unpaid
principal of the defaulted loan or contract plus interest due and accrued
at the date of acquisition, together with any taxes and expenses paid or
incurred in connection with the acquisition, and the cost of improvements
thereafter made by the insurer and any amounts thereafter paid by the
insurer on assessments levied for improvements in connection with the
property.
2. Other real property held by an insurer must not be valued at an
amount in excess of the lesser of the fair value as determined by recent
appraisal or the actual cost, plus capitalized improvements, less normal
depreciation. If valuation is based on an appraisal more than 3 years
old, the Commissioner may, at his discretion, call for and require a new
appraisal in order to determine fair value.
(Added to NRS by 1971, 1617; A 1995, 1772)
Purchase
money mortgages on real property referred to in subsection 1 of NRS
681B.180 shall be valued in an amount
not exceeding the acquisition cost of the real property covered thereby
or 90 percent of the fair value of such real property, whichever is less.
(Added to NRS by 1971, 1617)
As used
in NRS 681B.200 to 681B.260 , inclusive, “qualified actuary” means a
member in good standing of the American Academy of Actuaries, or a
successor organization approved by the Commissioner who meets the
requirements set forth in the organization’s regulations.
(Added to NRS by 1995, 1768)
Every insurer offering life insurance 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 regulation 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 by regulation
may further define or enlarge the scope of this opinion.
(Added to NRS by 1995, 1768)
1. Every such insurer, unless exempted by or pursuant to
regulation, shall also annually submit an opinion of the same qualified
actuary as to whether the reserves and related actuarial items held in
support of the policies and contracts specified by the Commissioner by
regulation, when considered in light of the assets held by the insurer
with respect to the reserves and related actuarial items, including the
earnings on the assets invested and the considerations anticipated to be
received and retained under the policies and contracts, make adequate
provision for the insurer’s obligations under the policies and contracts,
including the benefits under and expenses associated with the policies
and contracts.
2. The Commissioner may provide by regulation for a period of
transition for establishing any higher reserves which the qualified
actuary may deem necessary in order to render the opinion required by
this section and NRS 681B.210 .
3. The holding of additional reserves determined by a qualified
actuary to be necessary to render the opinion required by this section or
NRS 681B.210 , shall not be deemed to
be the adoption of a higher standard of valuation for the purposes of NRS
681B.120 or 681B.140 .
(Added to NRS by 1995, 1768)
1. Each opinion required by NRS 681B.220 must be supported by memorandum, in form and
substance acceptable to the Commissioner as specified by regulation.
2. If an insurer fails to provide a supporting memorandum at the
request of the Commissioner within a period specified by regulation, or
the Commissioner determines that the supporting memorandum provided by
the insurer fails to meet the standards prescribed by the regulations or
is otherwise unacceptable to him, he may engage a qualified actuary at
the expense of the insurer to review the opinion and the basis for the
opinion and prepare such supporting memorandum as is required by the
Commissioner.
(Added to NRS by 1995, 1769)
1. Every opinion must:
(a) Be submitted with the annual statement reflecting the valuation
of reserve liabilities for each year ending on or after December 31, 1996.
(b) Apply to all business in force including, without limitation,
individual and group health insurance plans, in form and substance
acceptable to the Commissioner as specified by regulation.
(c) Be based on standards adopted from time to time by the
Actuarial Standards Board or a successor organization approved by the
Commissioner and on such additional standards as the Commissioner may by
regulation prescribe.
2. 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 commissioner of insurance of another state if he
determines that the opinion reasonably meets the requirements applicable
to an insurer domiciled in this state.
(Added to NRS by 1995, 1769; A 1997, 1623, 3024; 1999, 468 )
1. Except in a case of fraud or willful misconduct, a qualified
actuary is not liable for damages to any person other than an affected
insurer or the Commissioner for any act, error, omission, decision or
conduct with respect to the actuary’s opinion.
2. Disciplinary action by the Commissioner against an actuary must
be prescribed by regulation by the Commissioner.
(Added to NRS by 1995, 1769)
1. Except as otherwise provided in this section, an opinion, and
any other material provided by an insurer to the Commissioner in
connection therewith, must be kept confidential by the Commissioner, is
not open to the public, and is not subject to subpoena, except for the
purpose of defending an action seeking damages from any person by reason
of any action required by NRS 681B.200 to 681B.260 , inclusive, or by regulation adopted under
those sections.
2. A memorandum or other material may be released by the
Commissioner with the written consent of the insurer or to the American
Academy of Actuaries or its successor organization 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.
3. If any portion of a confidential memorandum is cited by the
insurer in its marketing or is cited before any governmental agency other
than a state commissioner of insurance or is released by an insurer to
the public, all portions of the memorandum are no longer confidential.
(Added to NRS by 1995, 1769)
The Commissioner shall adopt by regulation minimum
standards for the valuation of reserves of other insurers offering health
insurance of any kind, corporations for hospital, medical and dental
service, health maintenance organizations and plans for dental care.
(Added to NRS by 1995, 1770)
Each insurer shall report to the
Commissioner every material acquisition or disposition of assets within
15 days after the end of the month in which the transaction occurs. The
Commissioner shall define by regulation what transactions are material,
prescribe what information must be reported and specify any person to
whom a copy must be sent. Such a report is confidential and is not
subject to subpoena.
(Added to NRS by 1995, 1770)
1. Except as otherwise provided in subsection 3, on or before
March 1 of each year, each domestic insurer, and each foreign insurer
domiciled in a state which does not have requirements for reporting
risk-based capital, that transacts property, casualty, life or health
insurance in this state shall prepare and submit to the Commissioner, and
to each person designated by the Commissioner, a report of the level of
the risk-based capital of the insurer as of the end of the immediately
preceding calendar year. The report must be in such form and contain such
information as required by the regulations adopted by the Commissioner
pursuant to this section.
2. The Commissioner shall adopt regulations concerning the amount
of risk-based capital required to be maintained by each insurer licensed
to do business in this state that is transacting property, casualty, life
or health insurance in this state. The regulations must be consistent
with the instructions for reporting risk-based capital adopted by the
National Association of Insurance Commissioners, as those instructions
existed on January 1, 1997. If the instructions are amended, the
Commissioner may amend the regulations to maintain consistency with the
instructions if he determines that the amended instructions are
appropriate for use in this state.
3. The Commissioner may exempt from the provisions of this section
a domestic insurer who:
(a) Does not transact insurance in any other state; and
(b) Does not assume reinsurance that is more than 5 percent of the
direct premiums written by the insurer.
(Added to NRS by 1997, 3023; A 1999, 2789 )
