Practice Note for the Application of C-3 Phase II and Actuarial Guideline XLIII
2) GUIDANCE ON COMMON PRACTICE Q2.1
Which Actuarial Standards of Practice (ASOPs) apply to the actuary when performing the tasks in conjunction with determining reserves an d capital accor din g to the r eq uir eme nts in C-3 Pha se II and AG 43? A: While the actuary is ultimately responsible for determining which ASOPs are applicable to any specific task, the following list of ASOPs may be among those that apply: No. 7, Analysis of Life, Health, or Property/Casualty Insurer Cash Flows (Doc. No. 089; June 2002) Scope—This standard applies to actuaries when performing the analysis of part or all of an insurer’s asset, policy, or other liability cash flows for life or health insurers (including health benefit plans). The standard also applies to actuaries when performing the analysis of cash flows involving both invested assets and liabilities for property/casualty insurers. Cash flow analysis subject to this standard should be considered in connection with professional services such as the following: (a)
Determination of reserve adequacy;
(b)
Determination of capital adequacy;
(c)
Product development or ratemaking studies;
(d)
Evaluations of investment strategy;
(e)
Financial projections or forecasts;
(f)
Actuarial appraisals; and
(g) Testing of future charges or benefits that may vary at the discretion of the insurer (for example, policyholder dividend scales and other nonguaranteed elements of the insurer’s liabilities). No. 11. Financial Statement Treatment of Reinsurance Transactions Involving Life or Health Insurance (Doc. No. 098: June 2005) Scope— This standard applies to actuaries when performing professional services in connection with preparing, reviewing, or analyzing financial statement items that reflect reinsurance ceded or reinsurance assumed on life insurance (including annuities) or health insurance. To the extent that life/health insurance is reinsured by property/casualty companies, this standard will apply. If a reinsurance transaction involves both life/health and property/casualty insurance, the actuary should use professional judgment to determine whether this standard, ASOP No. 36, Statements of Actuarial Opinion Regarding Property/Casualty Loss and
American Academy of Actuaries
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