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Appendix E

Overall Impact of 2001 CSO Table The 2001 CSO Table produces reserves that are different from those produced by the existing valuation standard, the 1980 CSO Table. To facilitate comparison of reserves based on these two tables, the model office described in Appendix D was used to aggregate results overall and for various segments of business. A comparison of reserves produced by these two tables is shown below. Table E-1 Reserves Produced by the 2001 CSO Table Divided by Reserves Produced by the 1980 CSO Table (aggregated results)

Overall

After 10 years 78.0%

After 20 years 81.4%

75.5% 84.6%

79.3% 86.5%

84.8% 67.1% 94.3%

86.0% 67.5% 98.1%

80.2% 74.2% 76.9% 78.3% 81.9%

84.1% 79.1% 80.5% 81.1% 84.2%

Gender Male Female Plan Whole Life 20 Year Term UL – Level Premium to Zero Age 25 35 45 55 65

This shows that overall reserves will be lower under the table by about 20 percent. It also shows: •

The reduction will be larger for males than for females, reflecting the larger reduction in mortality rates for males.

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Term insurance will see the largest reductions, followed by whole life. The level premium to zero UL plan shows the smallest reductions because reserves cannot be less than cash values and the cash value determines the reserve, typically by the 6th to 8th duration under both the old and new tables. We did not compare UL Model Regulation reserves for higher premium UL plans, because the cash value determines the reserve at even earlier durations. After this happens, reserves under either table will be the same.

Age 35 will see the biggest reductions while ages 25 and 65 will see the smallest. The following tables give more details on this comparison. Table E-2 Reserves Produced by the 2001 CSO Table Divided by Reserves Produced by the 1980 CSO Table (details – after 10 years) Age 25

Age 35

Age 45

Age 55

Age 65 All Ages

80.0% 47.0% 92.6% 77.2%

82.0% 57.8% 92.6% 72.2%

83.5% 60.9% 93.6% 72.2%

86.3% 67.3% 94.7% 76.0%

89.7% 77.4% 95.7% 83.1%

84.1% 65.2% 94.0% 75.5%

86.1% 58.9% 94.3% 30.0%

86.9% 61.7% 94.3% 36.6%

90.2% 92.0% 96.4% 45.3%

85.1% 81.2% 95.4% 33.6%

80.0% 67.1% 94.1% 26.0%

85.8% 76.7% 95.0% 84.6%

82.6% 50.9% 93.3% 80.2%

83.6% 58.8% 93.1% 74.2%

85.8% 66.2% 94.4% 76.9%

85.8% 69.1% 94.9% 78.3%

84.9% 76.2% 95.3% 81.9%

84.8% 67.1% 94.3% 78.0%

Male Whole Life 20 Year Term Level Premium to Zero UL All Male Female Whole Life 20 Year Term Level Premium to Zero UL All Female Male and Female Combined Whole Life 20 Year Term Level Premium to Zero UL All

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Table E-3 Reserves Produced by the 2001 CSO Table Divided by Reserves Produced by the 1980 CSO Table (details – after 20 years) Male Whole Life 20 Year Term Level Premium to Zero UL All Male

Age 25

Age 35

Age 45

Age 55

Age 65

All Ages

81.2% 48.4% 97.7% 81.8%

83.4% 57.5% 97.7% 76.7%

85.7% 61.7% 97.7% 76.4%

88.8% 67.4% 98.2% 79.5%

93.1% 78.0% 98.4% 86.0%

86.0% 65.7% 97.9% 79.3%

86.8% 56.4% 98.2% 87.4%

88.9% 65.8% 98.2% 84.8%

89.7% 93.4% 98.7% 92.1%

84.5% 79.3% 98.5% 85.5%

80.6% 64.6% 98.0% 80.1%

86.1% 77.0% 98.3% 86.5%

83.6% 51.0% 97.9% 84.1%

85.2% 59.5% 97.9% 79.1%

87.1% 67.0% 98.0% 80.5%

86.9% 68.9% 98.2% 81.1%

86.7% 76.3% 98.3% 84.2%

86.0% 67.5% 98.1% 81.4%

Female Whole Life 20 Year Term Level Premium to Zero UL All Female Male and Female Combined Whole Life 20 Year Term Level Premium to Zero UL All

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CSO_taskforce_appendix_e_june2002