ࡱ> QUPk bjbj 80,j,ju P ///8g4</7b!"C OL7N7N7N7N7N7N75:<tN7W!!WWN74c74___WRL7_WL7__2`4U/jX3877<7p3_=X_=0`4_=`4WW_WWWWWN7N7kWWW7WWWW_=WWWWWWWWW Y :  Life Actuarial (A) Task Force/ Health Actuarial (B) Task Force Amendment Proposal Form* 1. Identify yourself, your affiliation and a very brief description (title) of the issue. Seong-min Eom, New Jersey Department of Banking and Insurance 2. Identify the document, including the date if the document is released for comment, and the location in the document where the amendment is proposed: Valuation Manual, section VM-22, Section 3.F.5, Section 3.J (Guidance notes), Section 4, A.1.a, and Section 4, A.1.b. 3. Show what changes are needed by providing a red-line version of the original verbiage with deletions and identify the verbiage to be deleted, inserted or changed by providing a red-line (turn on track changes in Word) version of the verbiage. (You may do this through an attachment.) Revise point # 5 under Section 3.F as follows: The reserve for each longevity reinsurance contract within the Longevity Reinsurance Reserving Category shall be floored at 2% of the scheduled longevity benefits payable by the benefit provider within the next 12 months from the date of valuation. For the deals structured on a net basis, where the reinsurer covers only the benefits exceeding a predetermined reference benefit schedule, the floor will still be calculated based on the scheduled longevity benefits payable by the benefit provider withing the next 12 months from the date of valuation. Add a bullet under Guidance Note part of section 3.J as follows: Calculate the minimum reserve by flooring the reserve amount at 2% of the scheduled longevity benefits payable by the benefit provider within next 12 months from the date of valuation. For the deals structured on a net basis, where the reinsurer covers only the benefits exceeding a predetermined reference benefit schedule, the floor will still be calculated based on the scheduled longevity benefits payable by the benefit provider within the next 12 months from the valuation date. This flooring results in satisfying the requirements of Section 3.J. Remove the current K-factor approach described in Section 4: Section 4, A.1.a, and Section 4, A.1.b (refer to the attachment - VM-22 Subgroup Draft July 2023 LRT Proposal_Reserve_methodology_change_NJ.docx) 4. State the reason for the proposed amendment? (You may do this through an attachment.) The reserves for longevity reinsurance contracts are negative in the early years, which was considered undesirable. The objective of this 2% flooring is to ensure above zero reserve amounts in the early durations of the contract while eliminating the possible reserve deficiencies in the later durations. The 2% amount is equivalent to funding the longevity benefits for approximately 1 week from the date of valuation. * This form is not intended for minor corrections, such as formatting, grammar, crossreferences or spelling. 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