2005 Arizona Revised Statutes - Revised Statutes §20-696.03  Required opinions; company categories

A. Pursuant to section 20-510, every company doing business in this state shall annually submit the opinion of an appointed actuary pursuant to this article. The type of opinion submitted by each company shall be determined by this section and shall be in accordance with the applicable provisions of this article.

B. For the purposes of this article, companies shall be classified as follows based on the admitted assets as of the end of the calendar year for which the actuarial opinion is applicable:

1. Category A consists of companies whose admitted assets do not exceed twenty million dollars.

2. Category B consists of companies whose admitted assets are at least twenty million dollars but less than one hundred million dollars.

3. Category C consists of companies whose admitted assets are at least one hundred million dollars but less than five hundred million dollars.

4. Category D consists of companies whose admitted assets are at least five hundred million dollars or more.

C. The following tests apply to determine the actuarial opinion filing requirements that apply to the company classifications established by subsection B of this section:

1. For any year beginning with the year 1996, a category A company that does not meet all of the following criteria shall submit a statement of actuarial opinion pursuant to section 20-696.05 for the year in which the criteria are not met. The ratios in subdivisions (a), (b) and (c) of this paragraph shall be calculated based on amounts as of the end of the calendar year for which the actuarial opinion is applicable:

(a) The ratio of the sum of capital and surplus to the sum of cash and invested assets equals or exceeds .10.

(b) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .30.

(c) The ratio of the book value of the noninvestment grade bonds to the sum of capital and surplus is less than .50.

(d) The examiner team for the national association of insurance commissioners has not designated the company as a first priority company in any of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or as a second priority company in each of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or the company has resolved the first or second priority status to the satisfaction of the director of insurance of the state of domicile and the director of that state has notified the chairperson of the national association of insurance commissioners' life and health actuarial task force and the national association of insurance commissioners' staff and support office.

2. For any year beginning with the year 1996, a category B company that does not meet all of the following criteria shall submit a statement of actuarial opinion pursuant to section 20-696.05 for the year in which the criteria are not met. The ratios in subdivisions (a), (b) and (c) of this paragraph shall be calculated based on amounts as of the end of the calendar year for which the actuarial opinion is applicable:

(a) The ratio of the sum of capital and surplus to the sum of cash and invested assets equals or exceeds .07.

(b) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .40.

(c) The ratio of the book value of the noninvestment grade bonds to the sum of capital and surplus is less than .50.

(d) The examiner team for the national association of insurance commissioners has not designated the company as a first priority company in any of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or as a second priority company in each of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or the company has resolved the first or second priority status to the satisfaction of the director of the state of domicile and the director of that state has notified the chairperson of the national association of insurance commissioners' life and health actuarial task force and the national association of insurance commissioners' staff and support office.

3. Notwithstanding paragraphs 1 and 2 of this subsection, the director may order a category A or category B company that meets all the applicable criteria prescribed in paragraph 1 or 2 of this subsection to submit a statement of actuarial opinion pursuant to section 20-696.05.

4. After submitting an opinion pursuant to section 20-696.05 and except as provided in paragraph 5 of this subsection, a category C company that meets all of the following criteria is not required to submit a statement of actuarial opinion pursuant to section 20-696.05 more frequently than every third year. A category C company that fails to meet all of the following criteria for any year shall submit a statement of actuarial opinion pursuant to section 20-696.05 for that year. The ratios in subdivisions (a), (b) and (c) of this paragraph shall be calculated based on amounts as of the end of the calendar year for which the actuarial opinion is applicable:

(a) The ratio of the sum of capital and surplus to the sum of cash and invested assets equals or exceeds .05.

(b) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .50.

(c) The ratio of the book value of the noninvestment grade bonds to the sum of the capital and surplus is less than .50.

(d) The examiner team for the national association of insurance commissioners has not designated the company as a first priority company in any of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or as a second priority company in each of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or the company has resolved the first or second priority status to the satisfaction of the director of insurance of the state of domicile and the director of that state has notified the chairperson of the national association of insurance commissioners' life and health actuarial task force and the national association of insurance commissioners' staff and support office.

5. A company that is not required by this section to submit a statement of actuarial opinion pursuant to section 20-696.05 for any year shall submit a statement of actuarial opinion pursuant to section 20-696.04 for that year unless the director requires that a statement of actuarial opinion be submitted pursuant to section 20-696.05.

D. For each year beginning with the year 1996, a category D company shall submit a statement of actuarial opinion pursuant to section 20-696.05.