2005 Arizona Revised Statutes - Revised Statutes §20-696.02  General requirements; statement of actuarial opinion; qualified actuary; appointed actuary; analysis

A. The following apply to the submission of statements of actuarial opinion:

1. Pursuant to section 20-696.05, a company shall include on or attach to page 1 of its annual statement the statement of actuarial opinion that is made by an appointed actuary and that sets forth an opinion relating to reserves and related actuarial items held in support of policies and contracts. If a company is exempt from submitting a statement of actuarial opinion pursuant to section 20-696.05, the exempt company shall include on or attach to page 1 of its annual statement a statement of actuarial opinion made by an appointed actuary pursuant to section 20-696.04.

2. If in the previous year a company submitted a statement of actuarial opinion pursuant to section 20-696.04 and in the current year the company fails to qualify as exempt pursuant to section 20-696.03, subsection C, paragraph 1, 2 or 5 allowing submittal of an actuarial opinion pursuant to section 20-696.04, the company is not required to file the statement of actuarial opinion pursuant to section 20-696.05 until August 1 following the date of the annual statement. The company shall submit with its annual statement a statement of actuarial opinion pursuant to section 20-696.04 and shall note its intent to subsequently submit a statement of actuarial opinion pursuant to section 20-696.05.

3. If a foreign or alien company is required to submit a statement of actuarial opinion, the director may accept the statement of actuarial opinion filed by the company with the insurance supervisory regulator of another state if the director determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state.

4. On written request by the company, the director may grant an extension of the date for submission of the statement of actuarial opinion.

B. A qualified actuary is an individual who meets the following requirements:

1. Is a member in good standing of the American academy of actuaries.

2. Is qualified to sign statements of actuarial opinion for life and health insurance company annual statements in accordance with the American academy of actuaries qualification standards for actuaries signing statements of actuarial opinion.

3. Is familiar with the valuation requirements applicable to life and health insurance companies.

4. Except as provided in subsection C of this section, has not been found by the director, after appropriate notice and a hearing and without subsequent reinstatement as a qualified actuary, to have done any of the following:

(a) Violated any provision of or any obligation imposed by this title or any other law in the course of the person's conduct as an actuary.

(b) Committed or been convicted of fraudulent or dishonest practices.

(c) Demonstrated incompetency, lack of cooperation or untrustworthiness to act as a qualified actuary.

(d) Pursuant to this article, submitted to the director during the past five years an actuarial opinion or memorandum that the director rejected because it did not meet the provisions of this article, including standards set by the actuarial standards board.

(e) Resigned or been removed as an actuary within the past five years as a result of acts or omissions that are indicated in any adverse report on examination or as a result of failure to adhere to generally acceptable actuarial standards.

5. Has not failed to notify the director of any action taken against the actuary by the director or commissioner of another state for an act that is proscribed under paragraph 4 of this subsection.

C. Notwithstanding subsection B, paragraph 4 of this section, the director for good cause shown may classify an individual as a qualified actuary.

D. An appointed actuary is a qualified actuary who is appointed or retained by the board of directors or an executive officer of the company to prepare the statement of actuarial opinion required by this article. The company shall give the director timely written notice of the name, the title, the name of the firm if the actuary is a consulting actuary and the manner of appointment or retention of each person who is appointed or retained by the company as an appointed actuary and shall state that the person meets the requirements prescribed in subsection B of this section. After the company furnishes notice, no further notice is required with respect to this person, except that the company shall give the director timely written notice if the actuary ceases to be appointed or retained as an appointed actuary or fails to meet the requirements prescribed in subsection B of this section. If a person who is appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall state this fact and shall give the reasons for the replacement.

E. The asset adequacy analysis required by this article shall conform to standards adopted by order of the director. In establishing standards, the director shall consider both:

      1.  The  standards  of  practice  as  promulgated from time to time by the actuarial
 standards board and to any additional standards under this article.
 2.  The methods of analysis that the actuarial standards board deems appropriate.
 

F. Liabilities shall be covered in the actuarial opinion as follows:

1. The statement of actuarial opinion applies to all in force business on the statement date regardless of when or where issued.

2. If as the result of asset adequacy analysis the appointed actuary determines that a reserve should be held in addition to the aggregate reserve that is held by the company and calculated pursuant to section 20-510, the company shall establish an additional reserve.

3. For years ending before December 31, 1998, the company, in lieu of establishing the full amount of the additional reserve required by paragraph 2 of this subsection in the annual statement for that year, may comply by reserving an amount not less than the following:

(a) For December 31, 1996, the additional reserve divided by three.

(b) For December 31, 1997, two times the additional reserve divided by three.

4. Additional reserves that are established under paragraph 2 or 3 of this subsection and that are deemed not necessary in subsequent years may be released. The released amounts shall be disclosed in the actuarial opinion for the applicable year. The release of the additional reserves is not an adoption of a lower standard of valuation.