H2499B2950A05515 SFR:MAC 09/09/22 #90 A05515
AMENDMENTS TO HOUSE BILL NO. 2499
Sponsor: REPRESENTATIVE QUINN
Printer's No. 2950
Amend Bill, page 1, line 3, by inserting after "security"
; in reserve liabilities, repealing provisions relating to small
company exemption and providing for adoption of exemption
standards of NAIC Valuation Manual;
Amend Bill, page 15, line 9, by striking out "three" and
inserting
five
Amend Bill, page 27, line 8, by striking out all of said line
and inserting
Section 2. Section 7142 of Title 40 is repealed:
[§ 7142. Small company exemption.
(a) Requirements.--A company seeking an exemption for any of
its ordinary life policies issued on or after the operative date
of the valuation manual may file a statement of exemption for
the current calendar year with its domestic commissioner prior
to July 1 of that year if the following conditions are met:
(1) The company has less than $300,000,000 of ordinary
life premiums and, if the company is a member of an NAIC
group of life insurers, the group has combined ordinary life
premiums of less than $600,000,000.
(2) The company reported total adjusted capital of at
least 450% of the authorized control level risk-based capital
in the most recent risk-based capital report. This paragraph
shall not apply to fraternal benefit societies with less than
$50,000,000 of ordinary life premiums.
(3) The appointed actuary has provided an unqualified
opinion on the reserves reported in the most recent annual
statement.
(4) Any universal life secondary guarantee policies
issued or assumed by the company with an issue date on or
after January 1, 2020, meet the definition of a nonmaterial
secondary guarantee universal life product.
(b) Certification.--The statement of exemption under
subsection (a) must certify that:
(1) The conditions under subsection (a) are met based on
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premiums and other values from the prior calendar year's
financial statements.
(2) Any universal life secondary guarantee business
issued since January 1, 2020, meets the definition of a
nonmaterial secondary guarantee universal life product.
(c) Inclusion with NAIC filing.--The statement of exemption
under subsection (a) shall also be included with the NAIC filing
for the second quarter of that year.
(d) Rejection.--If the commissioner finds that the
conditions in subsection (a) are not met, the commissioner shall
reject the statement of exemption prior to September 1. If the
commissioner rejects the exemption or the company does not file
a statement of exemption, the company shall follow the
requirements of the valuation manual minimum standard entitled
VM-20 for the ordinary life policies issued on or after the
operative date of the valuation manual.
(e) Approval.--If the statement of exemption under
subsection (a) is granted, the minimum reserve requirements for
the exempt company's ordinary life policies issued on or after
the operative date of the valuation manual shall be as set forth
in the valuation manual except for VM-20, but using mortality
tables authorized by VM-20.
(f) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Nonmaterial secondary guarantee universal life product." A
universal life product where the secondary guarantee meets the
following parameters at the time of issue:
(1) The policy has only one secondary guarantee, which
is in the form of a required premium consisting of either a
specified annual or cumulative premium.
(2) The duration of the secondary guarantee for each
policy is no longer than 20 years from issue through issue
age 60, grading down by two-thirds year for each higher issue
age to age 82, and thereafter five years.
(3) The present value of the required premium under the
secondary guarantee must be at least as great as the present
value of net premiums resulting from the appropriate
valuation basic table over the course of the maximum
secondary guarantee duration allowable under the contract in
aggregate and subject to the duration limit under paragraph
(2). The following shall apply:
(i) The present value shall use minimum allowable
valuation basic table rates, where preferred tables are
subject to existing qualification requirements, and the
maximum valuation interest rate as defined in VM-20
section 3(C)(2).
(ii) The minimum premiums shall be the annual
required premiums over the course of the maximum
secondary guarantee duration.
"Ordinary life premiums." Direct premiums plus reinsurance
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assumed premiums from an unaffiliated company from the ordinary
life line of business reported in Exhibit 1-Part 1, entitled
Premiums and Annuity Considerations for Life and Accident and
Health Contracts, of the prior calendar year's life, accident
and health annual statement or the fraternal annual statement.]
Section 3. Title 40 is amended by adding a section to read:
§ 7143. Adoption of exemption standards of NAIC Valuation
Manual.
(a) Findings and declarations.--The General Assembly finds
and declares that the work of NAIC and the participation of the
commissioner in NAIC are essential to the general implementation
of this chapter.
(b) Standards.--To effectuate the decision as to whether to
exempt certain policies, certificates or products of a
particular company from certain provisions of the NAIC Valuation
Manual, the commissioner shall determine, on an annual basis,
whether to adopt the standards for exemption specified in the
most recent version of the NAIC Valuation Manual by submitting a
statement of policy to the Legislative Reference Bureau for
publication in the Pennsylvania Bulletin.
(c) Statement of policy.--A statement of policy issued under
subsection (b) shall be exempt from the following:
(1) Section 205 of the act of July 31, 1968 (P.L.769,
No.240), referred to as the Commonwealth Documents Law.
(2) Section 204(b) and 301(10) of the act of October 15,
1980 (P.L.950, No.164), known as the Commonwealth Attorneys
Act.
(3) The act of June 25, 1982 (P.L.633, No.181), known as
the Regulatory Review Act.
(d) Construction.--Nothing in this section shall affect any
other provision in this chapter or apply to any action taken by
the department prior to the effective date of this section.
Section 4. This act shall take effect as follows:
(1) The addition of 40 Pa.C.S. Ch. 45 shall take effect
in 180 days.
(2) The remainder of this act shall take effect
immediately.
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