2005 Arizona Revised Statutes - Revised Statutes §20-696.04  Statement of actuarial opinion not based on an asset adequacy analysis

A. The statement of actuarial opinion required by this section shall include all of the following:

1. An opening paragraph that identifies the appointed actuary and the actuary's qualifications. This paragraph shall include the following information:

(a) The actuary's relationship to the company.

(b) The actuary's name, address and firm affiliation.

(c) The actuary's membership status in the American academy of actuaries.

(d) Identification of who appointed the actuary and whether the actuary was appointed as a company actuary or a consulting actuary, the scope of the appointment and the date the appointment occurred.

(e) The actuary's familiarity and compliance with the standards of the American academy of actuaries.

2. A regulatory authority paragraph that states that the company is exempt pursuant to this article from submitting a statement of actuarial opinion based on an asset adequacy analysis and that the opinion, which is not based on an asset adequacy analysis, is rendered pursuant to this section. This paragraph shall identify:

(a) If the company has a statutory obligation to file an actuarial opinion based on an asset adequacy analysis.

(b) The statute under which the actuarial opinion is being offered.

3. A scope paragraph that identifies the subject on which the opinion is to be expressed and that describes the scope of the appointed actuary's work. This paragraph shall:

(a) State if the actuary has examined the actuarial assumptions and related actuarial items of the annual statement on which the actuarial opinion is based.

(b) Identify the specific annual statement items on which the actuary is expressing an actuarial opinion, including:

(i) Aggregate reserves for and deposit funds for life or accident health policies or contracts.

(ii) Deposit funds and other liabilities without life or disability contingencies.

(iii) Policy and contract claims.

(c) State the extent to which the actuary has personally, or in reliance on another identified individual, examined and tested the underlying records of the company on which the actuary bases the actuarial opinion.

4. An opinion paragraph that expresses the appointed actuary's actuarial opinion as required by section 20-510. The opinion shall confirm that the actuarial opinion that is prepared pursuant to this section complies with subsection B of this section. The opinion shall state if the amounts that are carried in the balance sheet of the annual statement on which the actuary bases the actuarial opinion:

(a) Are computed according to presently accepted actuarial standards.

(b) Are based on actuarial assumptions that produce reserves that are greater than or equal to the company's contractual obligations regarding reserve basis and method and are consistent with all other contract provisions.

(c) Are in compliance with this title and the laws of the company's domiciliary jurisdiction.

(d) Are computed using actuarial assumptions that are consistent with those used in the previous year's annual statement filing, with any exceptions specifically identified and explained.

(e) Include a provision for all actuarial reserves and related statement items that must be established.

(f) Are based on the applicable standards of the American academy of actuaries.

5. An eligibility paragraph that confirms the company's eligibility for filing under this section, including:

(a) If the actuarial opinion includes an opinion regarding the adequacy of reserves and related actuarial items.

(b) The admitted assets of the company.

(c) The category of the company pursuant to section 20-696.03.

(d) A statement that the criteria specified for a company meeting the category's description of the company pursuant to section 20-696.03 are satisfied. The statement shall describe:

(i) The specific ratios that are calculated pursuant to the applicable formulas that are prescribed by section 20-696.03, subsection B.

(ii) If the company has been designated a priority company by the national association of insurance commissioners and the resolution, if any, of that designation.

(iii) If the company has been ordered by an insurance regulatory official to file an asset adequacy opinion.

B. All actuarial methods, considerations and analysis that are used in forming actuarial opinions prescribed by this section shall comply with standards adopted by order of the director. In establishing standards, the director shall consider the applicable standards of the American academy of actuaries.

C. If the appointed actuary is unable to form an opinion, the appointed actuary shall refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, the appointed actuary shall issue an adverse or qualified actuarial opinion that explicitly explains the reasons for the opinion.

D. If the appointed actuary does not express an opinion regarding the accuracy and completeness of the listings and summaries of policies in force, or if another person certifies the accuracy and completeness of the listings and summaries of policies in force pursuant to this section, the company officer or accounting firm that prepared the underlying data shall sign and attach a statement to the opinion indicating:

1. The name, address and telephone number of the individual signing the statement.

2. An affirmation regarding the accuracy of the listings and summaries of policies and contracts in force as of the annual statement date on which the actuarial opinion is based, including the name of the individual who prepared or directed the preparation of the listings and summaries.

3. The extent to which the listings and summaries are believed to be substantially accurate and complete.