Rules of Department of Insurance, Financial Institutions ...375.560.1(1), RSMo, whether an insurance...

CODE OF STATE REGULATIONS 1ROBIN CARNAHAN (4/30/09)Secretary of State

Rules of

Department of Insurance,Financial Institutions andProfessional Registration

Division 200—Insurance Solvency and Company RegulationChapter 1—Financial Solvency and Accounting

StandardsTitle Page

20 CSR 200-1.010 Financial Condition of Insurance Companies..............................................3

20 CSR 200-1.020 Accounting Standards and Principles........................................................4

20 CSR 200-1.025 Valuation of Invested Assets ..................................................................4

20 CSR 200-1.030 Financial Statement and Electronic Filing..................................................4

20 CSR 200-1.035 Diversity and Liquidity Requirements for Assets Portfolios ofProperty and Liability Insurers (Rescinded February 26, 1993) ......................6

20 CSR 200-1.037 Supplemental Annual Filing Requirements.................................................6

20 CSR 200-1.039 Supplemental Filing Requirements for Material Transactions .........................11

20 CSR 200-1.040 Financial Standards for Health Maintenance Organizations ...........................12

20 CSR 200-1.050 Financial Standards for Prepaid Dental Plans ............................................13

20 CSR 200-1.060 Chapter 383 Malpractice Associations and Financial Condition(Rescinded May 6, 1993) ...................................................................13

20 CSR 200-1.070 Subordinated Indebtedness...................................................................14

20 CSR 200-1.080 Salvage and Subrogation Recovered (Rescinded May 6, 1993) ........................14

20 CSR 200-1.090 Mortgage Loans as Admissible Assets (Moved to 20 CSR 200-13.200) ............14

20 CSR 200-1.100 Real Estate Held After Ten Years (Moved to 20 CSR 200-13.300) ..................14

20 CSR 200-1.110 Qualifications of Actuary or Consulting Actuary ....................................... 14

20 CSR 200-1.115 Actuarial Opinions of Reserves of Life and Health Insurance Policies,Annuities and Pure Endowment Contracts...............................................15

2 CODE OF STATE REGULATIONS (4/30/09) ROBIN CARNAHAN

Secretary of State

20 CSR 200-1.116 Actuarial Opinion and Memorandum Regulation........................................16

20 CSR 200-1.120 Take-Out Letters...............................................................................21

20 CSR 200-1.130 Letters of Credit (Rescinded May 6, 1993)...............................................21

20 CSR 200-1.140 Minimum Valuation Standards for Life, Accidentand Health and Annuity Contracts ........................................................22

20 CSR 200-1.150 General Standards Applicable to Audited Financial Reports ..........................23

20 CSR 200-1.160 Valuation of Life Insurance Policies .......................................................23

20 CSR 200-1.170 Derivatives for Replication Transactions ..................................................48

Title 20—DEPARTMENT OFINSURANCE, FINANCIAL

INSTITUTIONS ANDPROFESSIONAL REGISTRATION Division 200—Insurance Solvency and

Company RegulationChapter 1—Financial Solvency and

Accounting Standards

20 CSR 200-1.010 Financial Condition ofInsurance Companies

PURPOSE: This rule enumerates conditionswhich may indicate that an insurer is in afinancial condition which would require fur-ther scrutiny in order to protect its policy-holders, claimants, creditors, shareholdersand the public.

(1) Definitions. (A) Financial ratios shall include, but not

be limited to, premium-to-surplus ratios,change in writings ratios, change in surplusratios and any other financial ratios employedby the National Association of InsuranceCommissioners (NAIC) in the InsuranceRegulatory Information System and otherfinancial ratios employed by the director ofthe Department of Insurance.

(B) Insurer shall mean any company orbusiness entity authorized to transact orapplying for authority to transact the businessof insurance in Missouri under Chapter 376,377, 378, 379, 381 or 384, RSMo.

(C) Premium shall mean—i) for a propertyand casualty insurer, net written premiumwhich is direct premium plus premium writ-ten on reinsurance assumed less premiumwritten on ceded reinsurance and ii) for a lifeand health insurer, premiums and annuityconsideration which is total direct premiumsand annuity consideration plus reinsuranceassumed premiums and annuity considerationless reinsurance ceded premiums and annuityconsideration.

(D) Surplus shall mean an insurer’s admit-ted assets less its liabilities.

(2) An insurer may require additional scruti-ny when one (1) or more of the followingconditions are found to exist by the directorof the Department of Insurance:

(A) An insurer does not file a financialstatement within ten (10) days of the receiptof notice from the department of its failure tofile as required by the applicable statute;

(B) An insurer files financial informationwhich is false or misleading;

(C) An insurer overstates its surplus by amaterial amount;

(D) A material number of an insurer’sfinancial ratios are outside the acceptableranges as established by the NAIC and thedirector of the Department of Insurance;

(E) Without consideration of net incomeand the changes in paid-in capital, paid-insurplus or contributed surplus and policy-holder dividends, the net reduction to theinsurer’s surplus is a material amount ofbeginning surplus on the insurer’s financialstatements;

(F) An insurer’s reserves for losses andloss adjustment expenses are discounted amaterial amount of surplus, except reservesfor long-term lines with fixed and deter-minable payments, such as long-term disabil-ity and Workers’ Compensation, may be dis-counted on the basis of tabular reserves aspermitted by the director of the Departmentof Insurance;

(G) An insurer has reinsurance reserverecoverables or receivables which are disput-ed by the reinsurer or are due and payable andremain unpaid for a period of ninety (90) daysand the reinsurance reserve credits, recover-ables and receivables are a material amountof an insurer’s surplus;

(H) An insurer has reinsurance reservecredits, recoverables or receivables due frominsurance companies in receivership and thereinsurance reserve credits, recoverables orreceivables are a material amount of an insur-er’s surplus;

(I) An insurer’s affiliate or subsidiary isunable to pay its obligations to the insurer asthey become due and the obligations consti-tute a material portion of the insurer’s sur-plus;

(J) An insurer’s premium writings areexcessive in relation to the insurer’s surplus;

(K) An insurer fails to maintain books andrecords sufficient to permit examiners todetermine the financial condition of the insur-er;

(L) An insurer has reinsurance agreementsaffecting a material portion of its gross writ-ten premium and the assuming insurers areunauthorized under section 375.246, RSMo;

(M) An insurer has taken reinsurance cred-its or claimed assets on which there are noexecuted reinsurance agreements or other sat-isfactory evidence of cover and which are amaterial amount of surplus. This conditionshall not apply to reinsurance transactionswhere individual underwriters must bind thatcoverage. In those circumstances, a binder ofcoverage shall constitute execution;

(N) One (1) insurance producer produces amaterial amount of the gross written premi-ums of an insurer;

(O) An insurer does not follow a policy onrating and underwriting standards determinedto be appropriate to the risk;

(P) An insurer’s aggregate net retainedrisk, direct or assumed, under any one (1)policy or certificate of insurance, is in excess

of ten percent (10%) or an appropriateamount of surplus;

(Q) The insurer’s asset portfolio whenviewed in light of current economic condi-tions is not of sufficient value, liquidity ordiversity to assure the insurer’s ability tomeet its outstanding obligations as theymature;

(R) Any controlling person, as defined inChapter 382, RSMo, of an insurer is delin-quent in the transmitting to, or payment of,net premiums to that insurer;

(S) The management of an insurer, includ-ing officers, directors, or any other personwho, directly or indirectly, controls the oper-ation of that insurer, fails to possess anddemonstrate the competence, fitness and rep-utation deemed necessary to serve the insur-er in that position;

(T) The insurer has grown so rapidly andto an extent that it lacks adequate financialand administrative capacity to meet its oblig-ations in a timely manner;

(U) The company has experienced, or willexperience in the foreseeable future, cashflow, liquidity problems, or both; or

(V) Any other conditions deemed appro-priate by the director.

(3) The conditions enumerated in this rule donot conclusively establish an insurer’s finan-cial condition. In evaluating any of these con-ditions, all circumstances surrounding theinsurer’s operations shall be analyzed in mak-ing an ultimate conclusion.

(4) Notwithstanding any other provision ofthis rule to the contrary, the maximum netamount of risk to be retained by a property orliability insurer, or both, for an individualrisk shall be no larger than ten percent (10%)of that insurer’s surplus. Any insurer retain-ing a net amount of risk for an individual risklarger than ten percent (10%) of that insurer’ssurplus shall be deemed in hazardous condi-tion.

(5) Remedial Action.(A) The existence of a material number of

these conditions or a significant deficiency inone (1) or more conditions enumerated in thisrule may result in further remedial actionincluding, but not limited to, denying admis-sion into this state, removing a company fromthe approved surplus lines list, suspending orrevoking an insurer’s certificate of authorityto transact the business of insurance in thisstate and, in the case of foreign insurers, con-sulting with the insurer’s domestic state.

(B) In the event that the remedial actionpursued is suspension or revocation of


Chapter 1—Financial Solvency and Accounting Standards 20 CSR 200-1

an insurer’s certificate of authority, no suspension or revocation shall be ordereduntil the proper notice and hearing proce-dures have been afforded the company asrequired by statute and 20 CSR 800-1.100.

(C) Upon an evaluation of the conditionsset forth in this rule, the department has theauthority to require additional surplus, basedupon the type, volume and nature of insur-ance business transacted. Any requirement ofadditional capital and surplus under this sub-section shall be accomplished under section375.1162, RSMo or pursuant to a conserva-torship action or administrative supervision.

AUTHORITY: sections 374.040, 374.045 and374.190, RSMo 2000 and Chapter 375,RSMo 2000 and Supp. 2001.* This rule waspreviously filed as 4 CSR 190-11.005.Original rule filed Aug. 1, 1990, effectiveDec. 31, 1990. Amended: Filed July 2, 1991,effective Dec. 9, 1991. Amended: Filed April29, 1992, effective Dec. 3, 1992. Amended:Filed July 12, 2002, effective Jan. 30, 2003.

*Original authority: 374.040, RSMo 1939, amended1967; 374.045, RSMo 1967, amended 1993, 1995;374.190, RSMo 1939, amended 1949, 1967, 1992; andChapter 375, see Revised Statutes of Missouri, 2000 andSupp. 2001.

20 CSR 200-1.020 Accounting Standardsand Principles

PURPOSE: This rule effectuates or aids inthe interpretation of sections 375.560 and375.881, RSMo, and in the administration ofsections 354.080 and 354.355, RSMo.

(1) Each insurance company shall make andfile statements of its assets, liabilities, capitaland surplus, income and expenses, includingall schedules and exhibits used in connectionwith such statements, which statements thedirector may use to determine whether thecapital stock or guarantee fund of an insur-ance company is impaired under section375.560.1(1), RSMo, whether an insurancecompany is insolvent under section375.560.1(2) or 375.881.1(1), RSMo,whether an insurance company is in a finan-cial condition that its further transaction ofbusiness would be hazardous under section375.881.1(3) or 375.1165(1), RSMo andwhether an insurance company fails to com-ply with the requirements for admissionunder section 375.881.1(2), RSMo accordingto the applicable accounting guidance, stan-dards, and principles approved by theNational Association of Insurance Commis-sioners (NAIC), published in the AccountingPractice and Procedures Manual, AnnualStatement Instructions, Valuation of Securi-

ties and Examiner’s Handbook, except wherethe applicable provisions of Chapters374–385, RSMo or other specific rulesexpressly provide otherwise.

(2) Each health services corporation shallmake and file statements of its assets, liabili-ties, capital and surplus, income and expens-es, including all schedules and exhibits usedin connection with such statements, whichstatements the director may use to determinewhether a health services corporation ismaintaining the reserves required by section354.080, RSMo and whether a health ser-vices corporation is in a condition that its fur-ther transaction of business will be hazardousunder section 354.355(3), RSMo accordingto the applicable accounting standards orprinciples approved by the NAIC, or both, aspublished in the Accounting Practices andProcedures Manual, Annual Statement In-structions, Valuation of Securities andExaminer’s Handbook, except where theapplicable provisions of sections354.010–354.380, RSMo or other specificrules expressly provide otherwise.

(3) Each health maintenance organizationshall make and file statements of its assets,liabilities, capital and surplus, income andexpenses, including all schedules and exhibitsused in connection with such statements,which statements the director may use todetermine whether a health maintenanceorganization is no longer financially respon-sible and may reasonably be expected to beunable to meet its obligations to enrollees orprospective enrollees under section354.470.1(4), RSMo, whether the continuedoperation of a health maintenance organiza-tion would be hazardous to its enrollees undersection 354.470.1(8), RSMo, whether ahealth maintenance organization is insolventunder section 375.1175(2), RSMo, andwhether a health maintenance organization isin a financial condition that its further trans-action of business would be hazardous undersection 375.1165(1), RSMo, according tothe applicable accounting guidance, stan-dards, and principles approved by theNational Association of Insurance Commis-sioners (NAIC), published in the AccountingPractices and Procedures Manual, AnnualStatement Instructions, Valuation of Securi-ties and Examiner’s Handbook, except wherethe applicable provisions of Chapter 354,RSMo or other specific rules expressly pro-vide otherwise.

AUTHORITY: sections 354.120, 354.485,and 374.045, RSMo 2000.* This rule waspreviously filed as 4 CSR 190-11.230.

Original rule filed Feb. 3, 1989, effectiveMay 1, 1989. Amended: Filed Aug. 25, 1989,effective Jan. 1, 1990. Amended: Filed Dec.14, 2000, effective July 30, 2001. Amended:Filed Dec. 4, 2001, effective June 30, 2002.

*Original authority: 354.120, RSMo 1973, amended1983, 1993, 1995; 354.485, RSMo 1983; and 374.045,RSMo 1967, amended 1993, 1995.

20 CSR 200-1.025 Valuation of InvestedAssets

PURPOSE: This rule effectuates or aids inthe interpretation of sections 376.300–376.320 and 379.080, RSMo.

(1) Securities. Securities owned by insurancecompanies must be valued in accordance withthose standards promulgated by the Valuationof Securities Office of the NationalAssociation of Insurance Commissioners(NAIC) as published in its Valuation ofSecurities.

(2) Other Invested Assets. Invested assets,other than securities, must be valued inaccordance with the procedures promulgatedby the NAIC’s Financial Condition (EX4)Subcommittee as published in its AccountingPractices and Procedures Manual, AnnualStatement Instructions and Examiner’sHandbook.

AUTHORITY: section 374.045, RSMo 2000.*Original rule filed July 2, 1991, effectiveDec. 9, 1991. Amended: Filed Aug. 29, 2003,effective Feb. 29, 2004.

*Original authority: 374.045, RSMo 1967, amended1993, 1995.

20 CSR 200-1.030 Financial Statement andElectronic Filing

PURPOSE: This rule prescribes forms to befollowed in proceedings before theDepartment of Insurance regarding annualstatements and effectuates or aids in theinterpretation of sections 287.710, 354.105,354.435, 354.720, 375.041, 375.786,375.1030, 375.1037, 375.1047, 375.1082,375.1252, 376.350, 376.370, 376.1012,376.1092, 376.1093, 377.100, 377.380,378.350, 379.105, 380.051, 380.482,382.110, 383.030 and 384.021, RSMo.

(1) Each health services corporation, healthmaintenance organization (HMO), stock ormutual life insurance company, assessment or


Secretary of State

20 CSR 200-1—DEPARTMENT OF INSURANCE,FINANCIAL INSTITUTIONS ANDPROFESSIONAL REGISTRATION Division 200—Insurance Solvency and Company Regulation

stipulated premium plan life insurance com-pany, fraternal benefit society, stock or mutu-al insurance company other than life, Chapter383 assessment company, reciprocal and eli-gible surplus lines insurer and each accredit-ed or qualified reinsurer shall file a swornannual statement on or before March 1 ofeach year, for its business and affairs for theyear ended the next previous December 31,in accordance with the National Associationof Insurance Commissioners (NAIC) AnnualStatement Blank and the instructions for it, orin accordance with any other form as thedirector expressly permits to the entity. Thisstatement also shall be prepared in accor-dance with the applicable accounting stan-dards or principles approved by the NAIC,published in the Accounting Practices andProcedures Manual, Valuation of Securitiesor Examiner’s Handbook, or a combinationof these, except where the applicable provi-sions of Chapters 354 and 374–385, RSMo,or other specific rules expressly provide oth-erwise.

(A) For entities not domiciled in Missouri,one (1) hard copy of the annual statementshall be filed with the NAIC’s office inKansas City, Missouri, and with the MissouriDepartment of Insurance’s office in JeffersonCity a sworn and signed jurat page only, inthe form provided by the department.

(B) For entities domiciled in Missouri, one(1) signed original and one (1) hard copy ofthe annual statement shall be filed with theMissouri department’s office in JeffersonCity and one (1) hard copy shall be filed withthe NAIC’s Kansas City office; provided,however, that for domiciled companies doingbusiness in seventeen (17) or more states, forlife and health insurers writing fifty (50) mil-lion dollars or more in gross premium, andfor property and casualty insurers writingthirty (30) million dollars or more in grosspremium, an additional hard copy also shallbe filed with the NAIC’s office in KansasCity, Missouri, but only upon the writtenrequest of the NAIC. The annual statementsshould be signed by officers of the companyas required by applicable Missouri law.

(2) Each entity shall file electronically allannual statement information with theNAIC’s office in Kansas City, Missouri. Theelectronic filing shall be prepared under theNAIC’s guidelines.

(3) Each health services corporation, HMO,stock or mutual life insurance company,assessment or stipulated premium plan lifeinsurance company, fraternal benefit society,stock or mutual insurance company otherthan life, Chapter 383 assessment company,

reciprocal and eligible surplus lines insurershall file, in addition to the sworn annualstatement required in section (1), three (3)quarterly statements for its business andaffairs for the quarters ending, respectively,the next previous March 31, June 30 andSeptember 30, in accordance with the NAICQuarterly Statement Blank and the instruc-tions for it, or in accordance with any otherforms as the director expressly permits to theentity.

(A) For entities not domiciled in Missouri,one (1) hard copy of each quarterly statementshall be filed with the NAIC’s office inKansas City, Missouri, and with the MissouriDepartment of Insurance’s office in JeffersonCity a sworn and signed jurat page only, inthe form provided by the department.

(B) For entities domiciled in Missouri, one(1) signed original and one (1) hard copy ofeach quarterly statement shall be filed withthe Missouri department’s office in JeffersonCity and one (1) hard copy shall be filed withthe NAIC’s Kansas City office; provided,however, that for domiciled companies doingbusiness in seventeen (17) or more states, forlife and health insurers writing fifty (50) mil-lion dollars or more in gross premium, andfor property and casualty insurers writingthirty (30) million dollars or more in grosspremium, an additional hard copy also shallbe filed with the NAIC’s office in KansasCity, Missouri, but only upon the writtenrequest of the NAIC. The quarterly state-ments should be signed by three (3) officersof the company.

(4) Each entity shall file electronically allquarterly statement information with theNAIC’s office in Kansas City, Missouri. Theelectronic filing shall be prepared under theNAIC’s guidelines.

(5) To the extent a hard copy is required bythis rule to be filed with the MissouriDepartment of Insurance, such filings for therespective quarters shall be mailed on orbefore May 15, August 15 and November 15of each year.

(6) This rule will apply to filing of the annu-al and quarterly statements and electronic fil-ings beginning with the year endingDecember 31, 1992, to be filed by March 1,1993, as well as all future years.

(7) All entities domiciled in Missouri shallplace bar code labels on the following docu-ments that are required to be filed with theMissouri Department of Insurance:

(A) Annual statement and all exhibitsrequired by the NAIC;

(B) Quarterly financial statements (duethree (3) times a year);

(C) Audited financial report; (D) Qualification letter; (E) Application to Renew Certificate of

Authority; (F) Notification of Insurers/Trust

Agreement form (third-party administrators); (G) Premium Tax Form (including quarter-

ly assessment notices); (H) Actuarial certification included with

annual statement filing; (I) Management Discussion and Analysis

form; (J) Basket clause investments listing; (K) Electronic data processing equipment

listing; (L) Risk-based capital report; (M) Supplemental compensation exhibit; (N) Affidavit of stock ownership; (O) Form B and C holding company regis-

tration statement; (P) Form B inter-company agreements sup-

plement; (Q) Certificate of Valuation (form MO

375-0420); (R) Title Insurance Premium Reserve; (S) Actuarial opinion summary; (T) Reinsurance attestation supplement; (U) Reinsurance summary supplement;

and(V) Any other documents determined by

the director.

(8) All entities not domiciled in Missourishall place bar code labels on the followingdocuments that are required to be filled withthe Missouri Department of Insurance:

(A) All annual and quarterly sworn andsigned jurat pages; and

(B) Any other documents determined bythe director.

(9) A master sheet of bar code labels will beprovided once a year. If the master sheet orany part thereof has to be reproduced for anyreason, a fee of ten dollars ($10) will becharged. This fee, along with a writtenrequest for a replacement set of labels, mustbe received by the department before thereplacement set of labels will be provided. Adocument will not be considered filed unlessthe proper bar code label is affixed thereto.Loss of any bar code label(s) and a requestfor a replacement set of labels will not excusethe late filing of any documents and appro-priate penalties will be imposed for any latefilings.

AUTHORITY: sections 354.120, 354.485,354.723, 374.045 and 380.561, RSMo2000.* This rule was previously filed as 4




Secretary of State


CSR 190-11.180. Original rule filed Sept. 2,1988, effective Jan. 1, 1989. Amended: FiledJan. 3, 1990, effective May 1, 1990.Amended: Filed May 21, 1990, effective Sept.28, 1990. Amended: Filed Oct. 31, 1990,effective March 14, 1991. Amended: FiledApril 29, 1992, effective Dec. 3, 1992.Amended: Filed Aug. 4, 1992, effective May6, 1993. Amended: Filed June 14, 1994,effective Dec. 30, 1994. Amended: Filed June14, 2001, effective Dec. 30, 2001. Amended:Filed Aug. 29, 2003, effective Feb. 29, 2004.Amended: Filed Dec. 15, 2005, effective June30, 2006.

*Original authority: 354.120, RSMo 1973, amended1983, 1993, 1995; 354.485, RSMo 1983; 354.723, RSMo1987; 374.045, RSMo 1967, amended 1993, 1995; and380.561, RSMo 1984, amended 1993, 1995.

20 CSR 200-1.035 Diversity and LiquidityRequirements for Assets Portfolios ofProperty and Liability Insurers (Rescinded February 26, 1993)

AUTHORITY: section 374.045.1(3), RSMo1986. Original rule filed Oct. 11, 1991, effec-tive May 14, 1992. Rescinded: Filed June 18,1992, effective Feb. 26, 1993.

20 CSR 200-1.037 Supplemental AnnualFiling Requirements

PURPOSE: This rule prescribes the use ofsupplemental forms to be filed by either fireand casualty insurers or life, accident andhealth insurers. These forms will take the so-called state page data currently requiredunder the National Association of InsuranceCommissioners’ requirements and break thisdata down into more specific classes for thevarious different type of policies written. Thisrule aids in the interpretation of sections376.350 and 379.105, RSMo.

PUBLISHER’S NOTE: The secretary of statehas determined that the publication of theentire text of the material which is incorpo-rated by reference as a portion of this rulewould be unduly cumbersome or expensive.Therefore, the material which is so incorpo-rated is on file with the agency who filed thisrule, and with the Office of the Secretary ofState. Any interested person may view thismaterial at either agency’s headquarters orthe same will be made available at the Officeof the Secretary of State at a cost not toexceed actual cost of copy reproduction. Theentire text of the rule is printed here. Thisnote refers only to the incorporated by refer-ence material.

(1) In addition to the financial statement anddiskette filing requirements set forth in 20CSR 200-1.030, entities issued a Certificateof Authority with the Missouri Department ofInsurance, as part of their Annual Statement,also shall file supplemental forms as follows:

(A) Those insurers filing in accordancewith the accounting standards or principlesapproved by the National Association ofInsurance Commissioners’ (NAIC) and pub-lished in the Accounting Practices andProcedures Manual for Fire and CasualtyInsurance Companies shall also file the formset forth in Appendix A of this rule; and

(B) Those insurers filing in accordancewith the accounting standards or principlesapproved by the NAIC and published in theAccounting Practices and Procedures Manualfor Life and Accident and Health InsuranceCompanies shall also file the form set forth inAppendix B of this rule.

(2) The Supplemental Compensation Exhibitmust include all types of compensationreceived by top executives, including stockoptions. Compensation information must bereported for top executives of all companies,including non-insurance entities, within aninsurance group, or in a holding companysystem. Compensation information should bereported on a total gross basis for each indi-vidual for whom compensation information isreported.

(3) Future modifications to these supplemen-tal filing requirements shall be specified bythe Missouri Department of Insurance by bul-letin sent to the individual insurers affected,accompanied by the appropriate forms, asmodified.

AUTHORITY: sections 374.040, RSMo 1994and 374.045, RSMo Supp 1997.* Originalrule filed April 5, 1994, effective Nov. 30,1994. Rescinded and readopted: Filed Feb. 1,1995, effective Sept. 30, 1995. Amended:Filed Nov. 23, 1998, effective July 30, 1999.

*Original authority: 374.040, RSMo 1939, amended 1967and 374.045, RSMo 1967, amended 1993, 1995.


Secretary of State


20 CSR 200-1.039 Supplemental FilingRequirements for Material Transactions

PURPOSE: This rule aids in the interpreta-tion of sections 354.105, 354.190, 354.435,354.465, 354.717, 354.720, 374.190,375.041, 375.400, 376.350, 377.100,377.380, 378.626, 379.105, 381.241,383.030 and 384.021, RSMo, and requiresdomestic insurance companies to disclosematerial transactions as addenda to theannual and quarterly financial statement fil-ings in order to protect policyholders,claimants, creditors, shareholders and thepublic.

(1) “Insurer domiciled in this state”,“domestic insurer”, and “insurer” shall havethe same definition as provided in section375.012, RSMo.

(2) Every insurer domiciled in this state shallfile a report with the director disclosingmaterial acquisitions and dispositions ofassets or material nonrenewals, cancellationsor revisions of ceded reinsurance agreementsunless the acquisitions and dispositions ofassets or material nonrenewals, cancellationsor revisions of ceded reinsurance agreementshave been submitted to the director forreview, approval or information purposes pur-suant to other provisions of the insurancelaws or regulations of this state.

(A) The report required in section (2) ofthis rule is due within fifteen (15) days afterthe end of the calendar month in which any ofthe foregoing transactions occur. However,the director may grant an extension of anadditional thirty (30) days in which to file thereport.

(B) One complete copy of the report,including any exhibits or other attachments,in addition to being filed with the director,shall also be filed with the NationalAssociation of Insurance Commissioners.

(C) All reports obtained by or disclosed tothe director pursuant to this rule, shall begiven confidential treatment and shall not besubject to subpoena and shall not be madepublic by the director, the NationalAssociation of Insurance Commissioners, orany other person, except to insurance depart-ments of other states, without the prior writ-ten consent of the reporting insurer. However,if the director, after giving notice and anopportunity to be heard to the reportinginsurer determines that the interest of theinsurer’s policyholders or shareholders or thepublic will be served by publication of thereport, the director may publish all or anypart of the report in any manner the directormay deem appropriate.

(3) No acquisitions or dispositions of assetsneed be reported pursuant to section (2) ofthis rule if the acquisitions or dispositions arenot material. For purposes of this rule, amaterial acquisition (or the aggregate of anyseries of related acquisitions during any thir-ty (30)-day period) or disposition (or theaggregate of any series of related dispositionsduring any thirty (30)-day period) is one thatis non-recurring and not in the ordinarycourse of business and involves more thanfive percent (5%) of the reporting insurer’stotal admitted assets as reported in its mostrecent statutory statement filed with thedepartment.

(A) Asset acquisitions subject to this ruleinclude every purchase, lease, exchange,merger, consolidation, succession or otheracquisition other than the construction ordevelopment of real property by or for thereporting insurer or the acquisition of materi-als for such purpose.

(B) Asset dispositions subject to this ruleinclude every sale, lease, exchange, merger,consolidation, mortgage, hypothecation,assignment (whether for the benefit of credi-tors or otherwise), abandonment, destructionor other disposition.

(4) The following information is required tobe disclosed in any report of a material acqui-sition or disposition of assets:

(A) Date of the transaction;(B) Manner of acquisition or disposition;(C) Description of the assets involved;(D) Nature and amount of the considera-

tion given or received;(E) Purpose of, or reason for, the transac-

tion;(F) Manner by which the amount of con-

sideration was determined;(G) Gain or loss recognized or realized as

a result of the transaction; and(H) Name(s) of the person(s) from whom

the assets were acquired or to whom theywere disposed.

(5) Domestic insurers are required to reportmaterial acquisitions and dispositions on anon-consolidated basis unless the insurer ispart of a consolidated group of insurers whichutilizes a pooling arrangement or one hun-dred percent (100%) reinsurance agreementthat affects the solvency and integrity of theinsurer’s reserves and the insurer ceded sub-stantially all of its direct and assumed busi-ness to the pool. An insurer is deemed tohave ceded substantially all of its direct andassumed business to a pool if the insurer hasless than $1,000,000 total direct plusassumed written premiums during a calendaryear that are not subject to a pooling arrange-

ment and the net income of the business notsubject to the pooling arrangement representsless than five percent (5%) of the insurer'scapital and surplus.

(6) No nonrenewals, cancellations or revi-sions of ceded reinsurance agreements needbe reported pursuant to section (2) of this ruleif the nonrenewals, cancellations or revisionsare not material. For purposes of this rule, amaterial nonrenewal, cancellation or revisionis one that affects:

(A) For property and casualty business,including accident and health business writ-ten by a property and casualty insurer:

1. More than fifty percent (50%) of theinsurer's total ceded written premium; or

2. More than fifty percent (50%) of theinsurer's total ceded indemnity and lossadjustment reserves.

(B) For life, annuity, and accident andhealth business: more than fifty percent(50%) of the total reserve credit taken forbusiness ceded, on an annualized basis, asindicated in the insurer’s most recent annualstatement.

(C) For either property and casualty orlife, annuity, and accident and health busi-ness, either of the following events shall con-stitute a material revision which must bereported:

1. An authorized reinsurer representingmore than ten percent (10%) of a total ces-sion is replaced by one (1) or more unautho-rized reinsurers; or

2. Previously established collateralrequirements have been reduced or waivedrespecting one (1) or more unauthorized rein-surers representing collectively more than tenpercent (10%) of a total cession.

(D) However, no filing shall be requiredif—

1. For property and casualty business,including accident and health business writ-ten by a property and casualty insurer: theinsurer's total ceded written premium repre-sents, on an annualized basis, less than tenpercent (10%) of its total written premium fordirect and assumed business; or

2. For life, annuity, and accident andhealth business: the total reserve credit takenfor business ceded represents, on an annual-ized basis, less than ten percent (10%) of thestatutory reserve requirement prior to anycession.

(E) The following information is requiredto be disclosed in any report of a materialnonrenewal, cancellation or revision of cededreinsurance agreements:

1. Effective date of the nonrenewal, can-cellation or revision;



2. The description of the transactionwith an identification of the transaction’s ini-tiator;

3. Purpose of, or reason for, the trans-action; and

4. If applicable, the identity of thereplacement reinsurer.

(F) Insurers are required to report all mate-rial nonrenewals, cancellations or revisions ofceded reinsurance agreements on a non-con-solidated basis unless—

1. The insurer is part of a consolidatedgroup of insurers which utilizes a poolingarrangement or one hundred percent (100%)reinsurance agreements that affects the sol-vency and integrity of the insurer's reserves;and

2. The insurer ceded substantially all ofits direct and assumed business to the pool.An insurer is deemed to have ceded substan-tially all of its direct and assumed business toa pool if the insurer has less than $1,000,000total direct plus assumed written premiumsduring a calendar year that are not subject toa pooling arrangement and the net income ofthe business not subject to the poolingarrangement represents less than five percent(5%) of the insurer capital and surplus.

(7) This rule shall apply to any transactionentered into after the effective date of thisrule.

AUTHORITY: sections 354.120, 354.485,354.723, 374.045, 375.013 and 381.231,RSMo 1994.* Original rule filed Aug. 1,1995, effective March 30, 1996.

*Original authority: 354.120, RSMo 1973, amended1983, 1993, 1995; 354.485, RSMo 1983; 354.723, RSMo1987; 374.045, RSMo 1967, amended 1993, 1995; and375.013, RSMo 1993, amended 1995.

20 CSR 200-1.040 Financial Standards forHealth Maintenance Organizations

PURPOSE: This rule implements sections354.410, 354.415, 354.450, 354.455,354.470.1(4) and 354.480, RSMo as this ruleis necessary and proper to carry out the pro-visions of sections 354.400–354.550, RSMo.

(1) A health maintenance organization(HMO) must maintain a capital account asrequired by section 354.410.6., RSMo. Thecapital account is the equivalent of net worthand shall be equal to the assets of the HMOless its liabilities, which is also the equivalentof “net of any accrued liabilities” as used insection 354.410.6., RSMo. Assets and liabil-ities will be admitted and determined underthe provisions of this rule.

(2) Assets of an HMO will be admitted andincluded in determining the financial condi-tion of the HMO only if included within one(1) or more of the following list of admissibleassets:

(A) Investable funds under section354.450, RSMo are as follows:

1. Any asset or investment described inand limited by sections 375.1070—375.1075,RSMo, and 376.300, 376.305 and 376.307,RSMo; and

2. Any asset or investment described inand limited by section 354.415.1(1), RSMo.Under section 354.415.2, RSMo, the HMOmust file notice and adequate supportinginformation with the director for any asset orinvestment in excess of five hundred thousanddollars ($500,000). If the director does notdisapprove the notice within sixty (60) daysof the date of filing, the notice shall bedeemed approved; and

(B) Other assets as follows:1. Reinsurance recoverables pursuant to

section 375.246, RSMo;2. Data processing system pursuant to

section 375.325, RSMo;3. Premium receivable from any agency

of this state, of any political subdivision ofthis state or of the United States;

4. Accrued interest receivable, if accord-ing to generally accepted standards ofaccounting for HMOs such interest is proba-bly collectible;

5. Inventory of medical, pharmaceuticaland optical supplies, furniture, equipmentand fixtures, but only if according to general-ly accepted standards of accounting forHMOs such supplies, furniture, equipmentand fixtures are used by the HMO in connec-tion with the direct provision of health careservices;

6. Funds paid by the HMO into escrowfor the purpose of purchasing or buildingoffices or medical facilities but only ifaccording to generally accepted standards ofaccounting for HMOs such offices or facili-ties are for use by the HMO in connectionwith the direct provision of health care ser-vices;

7. Goodwill and other intangible assets.Any goodwill or intangible asset must beamortized on a straight-line basis over a peri-od of five (5) years or less. Any goodwill orintangible asset accrued after September 1,1989 will be admissible only with the priorconsent of the director;

8. Amounts receivable from HMOs,health service corporations, insurance com-panies, self-insurance plans and third-partytortfeasors on account of coordination of ben-efits or subrogation, limited to the less of the

actual amounts receivable or the amountsreceived during the prior year;

9. Any other asset expressly approved inwriting by the director.

(3) No asset shall be admissible except asstated in section (2). The following is a non-exclusive list of nonadmitted assets and noitem listed may be admitted under section376.307, RSMo:

(A) Premiums receivable net of bad debtallowance when the receivable is greater thanninety (90) days past due, except as allowedin paragraph (2)(B)3.;

(B) Prepaid expenses, except as allowed inparagraph (2)(B)6.;

(C) Security deposits;(D) Automobiles;(E) Office furniture and equipment in

excess of fifty percent (50%) of its depreciat-ed value;

(F) Computer software;(G) Letters of credit, except to secure rein-

surance credit as outlined in section 375.246,RSMo, pledges to purchase stock or otherguarantees by outside organizations;

(H) Capital leases; and(I) Any asset expressly disapproved in

writing by the director.

(4) Liabilities shall be determined by theinstructions to the National Association ofInsurance Commissioners (NAIC) blankannual statement form for HMOs except thefollowing need not be reflected as liabilities:

(A) Capital leases; and(B) Any debt subordinated and approved

under 20 CSR 200-1.070.

(5) In determining whether an HMO is finan-cially responsible and may reasonably beexpected to meet its obligations to enrolleesand prospective enrollees under sections354.410.1(3) and 354.470.1(4), RSMo andwhether the continued operation of the HMOwould be hazardous either to the enrollees orto the people of this state under section354.480, RSMo, the director requires com-pliance with the following minimum stan-dards:

(A) A new HMO forming initially, and forits first full calendar year of operation, musthave net worth of at least ten percent (10%)of the yearly average of the three (3)-yearannual premium projected in its applicationsfor a certificate of authority, or three hundredthousand dollars ($300,000) if an individualpractice association, or one hundred fiftythousand dollars ($150,000) if a medicalgroup/staff, whichever is greater. After anHMO has been in business from January 1through December 31 of a year, that is, one


Secretary of State


(1) full calendar year, it shall be treated as anexisting HMO;

(B) An existing HMO must maintain a networth of at least two percent (2%) of annualpremium as shown in the HMO’s mostrecently filed annual statement, three hun-dred thousand dollars ($300,000) for an indi-vidual practice association, or one hundredfifty thousand dollars ($150,000) for a med-ical group/staff model, whichever is greater.The two percent (2%) of annual premiumpreviously mentioned shall be phased in asfollows:

1. Two-thirds of one percent (2/3 of 1%)of annual premium as of December 31, 1989;

2. One and one-third percent (1 1/3%)of annual premium as of December 31, 1990;and

3. Two percent (2%) of annual premiumas of December 3, 1991 and after that date;and

(C) On any policy of insolvency insurance,the named insured must include the directorof the Missouri Department of Insurance andhis/her successor(s) in office.

AUTHORITY: section 354.485, RSMo 2000.*This rule was previously filed as 4 CSR 190-11.125. Original rule filed April 19, 1989,effective Sept. 1, 1989. Amended: Filed Sept.15, 1992, effective June 7, 1993. Amended:Filed Nov. 23, 1998, effective July 30, 1999.Amended: Filed Dec. 14, 2000, effective July30, 2001.

*Original authority: 354.485, RSMo 1983.

20 CSR 200-1.050 Financial Standards forPrepaid Dental Plans

PURPOSE: This rule implements sections354.705, 354.707, 354.710, 354.717,354.720 and 354.722, RSMo relating to thefinancial requirements for the operation ofprepaid dental plans. This rule is authorizedunder the provisions of section 354.723,RSMo.

Editor’s Note: The secretary of state hasdetermined that the publication of this rule inits entirety would be unduly cumbersome orexpensive. The entire text of the material ref-erenced has been filed with the secretary ofstate. This material may be found at theOffice of the Secretary of State or at the head-quarters of the agency and is available to anyinterested person at a cost established bystate law.

(1) Assets of a prepaid dental plan will beadmitted and included in determining the

financial condition of the prepaid dental planonly if included within one (1) or more of thefollowing list of admissible assets:

(A) Investable funds invested as followsshall be deemed admissible assets:

1. Any asset or investment described inand limited by sections 376.300, 376.305 and376.307, RSMo; and

2. Any asset or investment representingthe purchase, lease, construction, renovation,operation or maintenance of facilities fromwhich dental benefits under the plan will beperformed or property as may reasonably berequired for the principal office of the pre-paid dental plan or for other purposes as maybe necessary in the transaction of the businessof the plan; and

(B) Other assets shall be determinedadmissible assets, as follows:

1. Reinsurance recoverables;2. Data processing system;3. Premium receivable from any agency

of this state, of any political subdivision ofthis state or of the United States;

4. Accrued interest receivable, if accord-ing to generally accepted standards ofaccounting for prepaid dental plans suchinterest is probably collectable;

5. Inventory of dental supplies, but onlyif according to generally accepted standardsof accounting for prepaid dental plans suchsupplies are used by the prepaid dental planin connection with the direct provision ofdental services;

6. Funds paid by the prepaid dental planinto escrow for the purpose of purchasing orbuilding offices or facilities from which den-tal benefits under the plan will be performed,but only if according to generally acceptedstandards of accounting for prepaid dentalplans such offices or facilities are for use bythe prepaid dental plan in connection with thedirect provision of health care services;

7. Goodwill and other intangible assets.Any goodwill or intangible asset must beamortized on a straight-line basis over a peri-od of five (5) years or less. Any goodwill orintangible asset accrued after April 1, 1990will be admissible only with the prior consentof the director;

8. Amounts receivable on account ofcoordination of benefits or subrogation, lim-ited to the actual amounts receivable or theamounts received during the prior year,whichever is less;

9. Any other asset expressly approved inwriting by the director.

(2) No asset shall be admissible except asstated in section (1). The following list is anonexclusive list of nonadmitted assets andno item listed may be admitted in determin-

ing the financial condition of the prepaid den-tal plan:

(A) Premiums receivable net of bad debtallowance when the receivable is greater thanninety (90) days past due, except as allowedin paragraph (1)(B)3.;

(B) Prepaid expenses, except as allowed inparagraph (1)(B)6.;

(C) Security deposits;(D) Automobiles;(E) Office furniture and equipment;(F) Computer software;(G) Letters of credit, except to secure rein-

surance credit as outlined in section 375.246,RSMo, pledges to purchase stock or otherguarantees by outside organizations;

(H) Capital leases; and(I) Any asset expressly disapproved in

writing by the director.

(3) Liabilities shall be determined by theinstructions to the National Association ofInsurance Commissioners (NAIC) blankannual statement form for health maintenanceorganizations or any blank annual statementforms designed specifically for prepaid dentalplans except the following need not be reflect-ed as liabilities:

(A) Capital leases; and(B) Any debt subordinated and approved

pursuant to 20 CSR 200-1.070.

(4) In lieu of the examination by the directoror any of his/her duly appointed agents, thedirector may accept a full report of an exam-ination or audit of an independent certifiedpublic accountant. The report shall be basedon the standards set out in this rule.

AUTHORITY: section 354.723, RSMo2000.* This rule was previously filed as 4CSR 190-11.280. Original rule filed Dec. 12,1989, effective April 1, 1990. Amended:Filed Dec. 14, 2000, effective July 30, 2001.

*Original authority: 354.723, RSMo 1987.

20 CSR 200-1.060 Chapter 383 Malprac-tice Associations and Financial Condition(Rescinded May 6, 1993)

AUTHORITY: 374.045 and 383.010–383.500,RSMo 1986. This rule previously filed as 4CSR 190-11.320. Original rule filed Sept. 19,1990, effective March 14, 1991. Rescinded:Filed Sept. 2, 1992, effective May 6, 1993.



20 CSR 200-1.070 Subordinated Indebt-edness

PURPOSE: This rule specifies informationwhich must be submitted to the director forprior approval of subordinated indebtednessagreements, the form which consideration forthese agreements must take and the account-ing procedures to be followed. This ruleimplements sections 354.355, 354.480,375.535, 375.540, 375.560 and 380.271,RSMo.

(1) Application. This rule applies to all healthservice corporations, health maintenanceorganizations (HMOs), insurance companiesand reciprocal interinsurance exchanges orga-nized under the laws of this state and isapplicable to any debts other than thoseshown as a legal liability of the company.Notwithstanding any other provision to thecontrary, no company or other entity whichhas the power to assess its members mayissue any subordinated indebtedness unless itis a mutual company organized under sec-tions 379.205—379.310, RSMo.

(2) Definition, Subordinated Indebtedness(Surplus Notes). Subordinated indebtedness,for the purposes of this rule includes any con-tingent obligation for the repayment of a sumof money upon a written agreement that theloan or advance with interest shall be repaidonly out of surplus profits of the company inexcess of the minimum surplus as required byMissouri law and as shall be deemed neces-sary by the director of insurance to secure theinterests of the policyholders and creditors ofthis company.

(3) Approval by the Director.(A) The following shall be submitted to the

director of insurance for approval:1. Duplicate copies of the entire indebt-

edness agreement; and2. Certified copy of the resolution of the

board of directors of proper company body orcommittee which is empowered to authorizethese agreements. The resolution shall stipu-late the maximum amount of subordinatedindebtedness authorized and the purpose forwhich it is incurred. It also shall limit theapplication of the proceeds to the specificpurpose for which the indebtedness isincurred.

(B) After submission of the documents andapproval, the director may authorize the exe-cution of the indebtedness agreement. Allagreements shall be executed and the consid-eration received immediately after theapproval.

(4) Consideration. The consideration ten-dered to the company in exchange for theagreement shall be lawful money or otherconsideration as may be acceptable to andapproved by the director.

(5) Reporting and Accounting of Indebted-ness.

(A) The director shall be notified immedi-ately in writing upon the execution of anyindebtedness agreement as to the amount andto whom payable.

(B) Any existing subordinated indebted-ness incurred prior to March 29, 1976, alsoshall be reported immediately in writing tothe director.

(C) All outstanding subordinated indebted-ness and interest accruing shall be reported atface value in the annual statement on page 3and in other financial statements of the com-pany as a special surplus account.

(6) Approval of Repayment by Director.Repayment of principal or payment of inter-est may be made only with the approval of thedirector when s/he is satisfied that the finan-cial condition of the company warrants thisaction.

(7) Other Loans. Nothing in this section shallbe construed to mean that a company may nototherwise borrow money, but the amount soborrowed with accrued interest shall be car-ried by the company as a liability.

AUTHORITY: sections 354.120, 354.485,374.045 and 380.561, RSMo 1986.* Thisrule was previously filed as 4 CSR 190-11.010. Original rule filed June 12, 1970,effective July 1, 1970. Amended: Filed Aug.5, 1974, effective Aug. 15, 1974. Amended:Filed July 18, 1989, effective Nov. 1, 1989.

*Original authority: 354.040, RSMo 1973, amended1983; 354.485, RSMo 1983; 374.045, RSMo 1967; and380.561, RSMo 1984.

20 CSR 200-1.080 Salvage and Subroga-tion Recovered(Rescinded May 6, 1993)

AUTHORITY: sections 374.045 and 379.105,RSMo 1986. This rule was previously filed as4 CSR 190-11.020. Original rule filed Dec.23, 1975, effective Jan. 2, 1976. Rescinded:Filed Aug. 4, 1992, effective May 6, 1993.

20 CSR 200-1.090 Mortgage Loans asAdmissible Assets(Moved to 20 CSR 200-13.200)

20 CSR 200-1.100 Real Estate Held AfterTen Years(Moved to 20 CSR 200-13.300)

20 CSR 200-1.110 Qualifications ofActuary or Consulting Actuary

PURPOSE: This rule describes the qualifica-tions required of an actuary signing and cer-tifying the life and accident and health annu-al statement of an insurer. This rule wasadopted pursuant to the provisions of section374.045, RSMo and implements section376.350, RSMo.

(1) Every life insurance company authorizedto do business in this state is required to filean annual statement. Missouri instructionsfor completing the life and accident andhealth annual statement blank require thatthese forms be signed and certified by a qual-ified actuary.

(2) For this purpose, a “qualified actuary”shall mean a member in good standing of theAmerican Academy of Actuaries.

(3) Scope. This rule shall apply to all reports,statements and other documents filed with thedirector or issued to the public in relation tothe business of insurance.

(4) Restriction of Signing as an Actuary. Noreport, statement or document shall be filedwith the director or issued to the public inrelation to the business of insurance if it issigned by a person who represents him/her-self in the instrument to be an actuary unlessthe person signing as an actuary is a qualifiedactuary.

(5) Actuarial Representation. No person inany representation made to the public or tothe director in respect to any matter subject tothis rule shall use the word actuary or actuar-ial to indicate a degree of professional com-petence unless the representation was pre-pared or approved by a qualified actuary.

(6) Annual Statements of Domestic LifeInsurance Companies. Section 376.380,RSMo prescribes the general form of theannual statement which must be filed with thedirector each year. The form which isrequired by the director is that which hasbeen developed by the National Associationof Insurance Commissioners. This form nowincludes a requirement relating to policyreserves and other actuarial items. Theinstructions for completion of the blankdescribe the content of this requirement. The


Secretary of State


items on which actuarial opinion is requiredare—

(A) Aggregate reserve for life policies andcontracts (Exhibit 8);

(B) Aggregate reserve for accident andhealth policies (Exhibit 9);

(C) Net deferred and uncollected premi-ums; and

(D) Policy and Contract Claims—LiabilityEnd of Current Year (Exhibit 11, Part 1). Theexpanded actuarial opinion requirements withrespect to life insurance company reserveshas been designed with the intent to providegreater assurance that policyholders’ benefitsand shareholders’ interests are being proper-ly protected through adequate reserve prac-tices. If the company does not employ anactuary on a staff or consulting basis, thedepartment will use the verification made bythe department’s actuary or the consultingactuary to the department in lieu of thatcalled for in the instructions. The necessaryinformation and data to render an opinionmust be provided by the company and theindividual of the company responsible for thiscompilation must submit a statement to thedepartment that the listings and summaries ofpolicies in force and other information neces-sary to comply with these rules are completeand accurate to the best of his/her knowledgeand belief. If the company intends to relyupon the verification by the department’sactuary or consultant, it should so indicate inthe space provided for certification.

(7) Qualified Opinions. A qualified opinion isusually an indication that some correctiveaction is indicated. The director will questionany company, foreign or domestic, aboutwhich the opinion is received, whether thatopinion is rendered by its own staff, its con-sultant or the department, as to its plans forcorrecting the indicated problem. It is recom-mended that in any situation in which anactuary finds it necessary to give a qualifiedopinion, s/he notify both the company andthe department. If the department’s actuaryor consultant is unable to render an unquali-fied opinion, the department may require thecompany to obtain a separate opinion fromanother qualified actuary, which may be lim-ited to the subject matter in question.

(8) Special Provisions for Certain DomesticCompanies. The department is aware of theexistence of some business in force on whichthere is no statutory basis for reserves. Lackof a statute, however, does not imply that noliability exists. The actuary valuing the busi-ness is not limited to statutory requirementsfor comparable business, but should use anyappropriate assumptions and methods to

establish the true liability. S/he, of course,must be prepared to justify to the directorhis/her choice of assumptions and methods.

AUTHORITY: sections 374.045 and 376.350,RSMo 2000.* This rule was previously filedas 4 CSR 190-11.080. Original rule filedAug. 5, 1974, effective Aug. 15, 1974.Amended: Filed Aug. 16, 1977, effective Dec.11, 1977. Amended: Filed Dec. 14, 2000,effective July 30, 2001.

*Original authority: 374.045, RSMo 1967, amended1993, 1995; and 376.350, RSMo 1939, amended 2000.

20 CSR 200-1.115 Actuarial Opinions ofReserves of Life and Health InsurancePolicies, Annuities and Pure EndowmentContracts

PURPOSE: This rule effectuates or aids inthe interpretation of sections 376.370,376.380 and 376.390, RSMo.

(1) Actuarial Opinion Required. (A) Every life insurance company doing

business in this state annually shall submitthe opinion of a qualified actuary as towhether the reserves and related actuarialitems held in support of the company’s poli-cies and contracts are computed appropriate-ly, are based on assumptions which satisfycontractual provisions, are consistent withprior reported amounts and comply withapplicable laws of this state.

(B) The opinion shall be submitted withthe annual statement reflecting the valuationof those reserve liabilities for each year end-ing on or after December 31, 1992.

(C) The opinion shall apply to all businessin force including individual and group healthinsurance plans.

(D) The opinion shall be based on stan-dards adopted from time-to-time by theActuarial Standards Board.

(E) In the case of an opinion required to besubmitted by a foreign or alien company, thedirector may accept the opinion filed by thatcompany with the insurance supervisory offi-cial of another state if the director determinesthat the opinion reasonably meets the require-ments applicable to a company domiciled inthis state.

(F) For the purposes of this section, quali-fied actuary means a member in good stand-ing of the American Academy of Actuarieswho meets the requirements set forth in thoserules.

(G) Except in cases of fraud or willful mis-conduct, the qualified actuary shall not beliable for damages to any person (other thanthe insurance company and the director) for

any act, error, omission, decision or conductwith respect to the actuary’s opinion.

(H) Disciplinary action by the directoragainst the company or the qualified actuaryshall include any actions authorized by theinsurance laws of this state and as to the qual-ified actuary, refusal to accept future opin-ions.

(I) A memorandum, in form and substanceacceptable to the director, shall be preparedto support each actuarial opinion.

(J) If the insurance company fails to pro-vide a supporting memorandum at the requestof the director within thirty (30) days of thatrequest, or the director determines that thesupporting memorandum provided by theinsurance company fails to meet the standardsprescribed by this rule, or is otherwise unac-ceptable to the director, the director mayengage a qualified actuary at the expense ofthe company to review the opinion and thebasis for the opinion and prepare the sup-porting memorandum as is required by thedirector.

(K) Any memorandum in support of theopinion, and any other material provided bythe company to the director in connectionwith the opinion shall be kept confidential bythe director and shall not be made public andshall not be subject to subpoena, other thanfor the purpose of defending an action seek-ing damages from any person by reason ofany action required by this rule; provided,that the memorandum or other material mayotherwise be released by the director—a)with the written consent of the company or b)to the American Academy of Actuaries uponrequest stating that the memorandum or othermaterial is required for the purpose of pro-fessional disciplinary proceedings and settingforth procedures satisfactory to the directorfor preserving the confidentiality of the mem-orandum or other material. Once any portionof the confidential memorandum is cited bythe company in its marketing, or is citedbefore any governmental agency other than astate insurance department, or is released bythe company to the news media, all portionsof the confidential memorandum shall nolonger be confidential.

(2) Matching Assets to Liabilities. (A) Annually every life insurance compa-

ny, except as may be exempted by or pursuantto this rule, also shall include in the opinionrequired by subsection (1)(A) of this rule, anopinion of the same qualified actuary as towhether the reserves and related actuarialitems held in support of the policies and con-tracts specified by the director by this rule,when considered in light of the assets held bythe company with respect to the reserves and



related actuarial items, including, but notlimited to, the investment earnings on theassets and the considerations anticipated to bereceived and retained under the policies andcontracts, make adequate provision for thecompany’s obligations under the policies andcontracts including, but not limited to, thebenefits under and expenses associated withthe policies and contracts.

(B) The director, on a case-by-case basis,may provide for a transition period for estab-lishing any higher reserves which the quali-fied actuary may deem necessary in order torender the opinion required by this section.

AUTHORITY: section 374.045.1(3), RSMoSupp. 1993.* Original rule filed July 2,1991, effective Dec. 9, 1991.

*Original authority: 374.045.1(3), RSMo 1967, amended1993.

20 CSR 200-1.116 Actuarial Opinion andMemorandum Regulation

PURPOSE: This rule prescribes: a) require-ments for statements of actuarial opinionwhich are to be submitted in accordance withsections 376.370 and 376.380, RSMo, and 20CSR 200-1.115 and for memoranda in sup-port thereof; b) guidance as to the meaning of“adequacy of reserves”; and c) rules applica-ble to the appointment of an appointed actu-ary.

(1) Scope. This rule shall apply to all lifeinsurance companies and fraternal benefitsocieties doing business in this state and to alllife insurance companies and fraternal bene-fit societies which are authorized to reinsurelife insurance, annuities, or accident andhealth insurance business in this state. Thisregulation shall be applied in a manner thatallows the appointed actuary to utilize his orher professional judgment in performing theasset analysis and developing the actuarialopinion and supporting memoranda, consis-tent with relevant actuarial standards of prac-tice. However, the director shall have theauthority to specify methods of actuarialanalysis and actuarial assumptions when, inthe director’s judgment, these specificationsare necessary for an acceptable opinion to berendered relative to the adequacy of reservesand related items. This rule shall be applic-able to all annual statements filed with thedirector after the effective date of this rule. Astatement of opinion on the adequacy of thereserves and related actuarial items based onan asset adequacy analysis in accordance withsection (4) of this rule, and a memorandum in

support thereof in accordance with section(5) of this rule, shall be required each year.

(2) Definitions.(A) “Actuarial opinion” means the opinion

of an appointed actuary regarding the ade-quacy of the reserves and related actuarialitems based on an asset adequacy analysis inaccordance with section (4) of this rule andwith applicable Actuarial Standards ofPractice.

(B) “Actuarial Standards Board” means theboard established by the American Academyof Actuaries to develop and promulgate stan-dards of actuarial practice.

(C) “Annual statement” means that state-ment required by sections 375.041 and376.350, RSMo, to be filed by the companywith the director annually.

(D) “Appointed actuary” means an indi-vidual who is appointed or retained in accor-dance with the requirements set forth in sub-section (3)(C) of this rule to provide the actu-arial opinion and supporting memorandum asrequired by 20 CSR 200-1.115 and section376.380, RSMo.

(E) “Asset adequacy analysis” means ananalysis that meets the standards and otherrequirements referred to in subsection (3)(D)of this rule.

(F) “Company” means a life insurancecompany, fraternal benefit society, or reinsur-er subject to the provisions of this rule.

(G) “Director” means the director of theMissouri Department of Insurance, FinancialInstitutions and Professional Registration.

(H) “Qualified actuary” means an individ-ual who meets the requirements set forth insubsection (3)(B) of this rule.

(3) General Requirements. (A) Submission of Statement of Actuarial

Opinion.1. There is to be included on or attached

to page 1 of the annual statement for eachyear beginning with the year in which thisrule becomes effective the statement of anappointed actuary, entitled “Statement ofActuarial Opinion,” setting forth an opinionrelating to reserves and related actuarialitems held in support of policies and con-tracts, in accordance with section (4) of thisrule.

2. Upon written request by the company,the director may grant an extension of thedate for submission of the statement of actu-arial opinion.

(B) Qualified actuary. A “qualified actu-ary” is an individual who—

1. Is a member of the AmericanAcademy of Actuaries;

2. Is qualified to sign statements of actu-arial opinion for life and health insurancecompany annual statements in accordancewith the American Academy of Actuariesqualification standards for actuaries signingthose statements;

3. Is familiar with the valuation require-ments applicable to life and health insurancecompanies;

4. Has not been found by the director(or, if so found, has subsequently been rein-stated as a qualified actuary), followingappropriate notice and hearing to have:

A. Violated any provision of, or anyobligation imposed by, the insurance law orother law in the course of his/her dealings asa qualified actuary;

B. Been found guilty of fraudulent ordishonest practices;

C. Demonstrated his/her incompeten-cy, lack of cooperation, or untrustworthinessto act as a qualified actuary;

D. Submitted to the director duringthe past five (5) years, pursuant to this rule,an actuarial opinion or memorandum that thedirector rejected because it did not meet theprovisions of this rule including standards setby the Actuarial Standards Board; or

E. Resigned or been removed as anactuary within the past five (5) years as aresult of acts or omissions indicated in anyadverse report on examination or as a resultof failure to adhere to generally acceptableactuarial standards; and

5. Has not failed to notify the director ofany action taken by any director of any otherstate similar to that under paragraph (3)(B)4.

(C) Appointed actuary. An appointed actu-ary is a qualified actuary who is appointed orretained to prepare the Statement of ActuarialOpinion required by this rule; either directlyor by the authority of the board of directorsthrough an executive officer of the company.The company shall give the director timelywritten notice of the name, title (and in thecase of a consulting actuary, the name of thefirm) and manner of appointment or retentionof each person appointed or retained by thecompany as an appointed actuary and shallstate in that notice that the person meets therequirements set forth in subsection (3)(B).Once notice is furnished, no further notice isrequired with respect to this person, providedthat the company shall give the director time-ly written notice in the event the actuaryceases to be appointed or retained as anappointed actuary or to meet the require-ments set forth in subsection (3)(B). If anyperson appointed or retained as an appointedactuary replaces a previously appointed actu-ary, the notice shall so state and give the rea-sons for replacement.


Secretary of State


(D) Standards for Asset AdequacyAnalysis. The asset adequacy analysisrequired by this rule:

1. Shall conform to the Standards ofPractice as promulgated from time-to-time bythe Actuarial Standards Board and on anyadditional standards under this rule, whichstandards are to form the basis of the state-ment of actuarial opinion in accordance withthis rule; and

2. Shall be based on methods of analysisas are deemed appropriate for such purposesby the Actuarial Standards Board.

(E) Liabilities to Be Covered.1. Under authority of 20 CSR 200-1.115

and sections 376.370 and 376.380, RSMo,the statement of actuarial opinion shall applyto all in force business on the statement date,whether directly issued or assumed, regard-less of when or where issued, for example,reserves of Exhibits 8, 9, and 10, and claimliabilities in Exhibit 11, Part 1 and equivalentitems in the separate account statement(s).

2. If the appointed actuary determines asthe result of asset adequacy analysis that areserve should be held in addition to theaggregate reserve held by the company andcalculated in accordance with methods setforth in sections 376.370 and 376.380,RSMo, the company shall establish the addi-tional reserve.

3. Additional reserves established underparagraph (3)(E)2. and deemed not necessaryin subsequent years may be released. Anyamounts released must be disclosed in theactuarial opinion for the applicable year. Therelease of these reserves would not bedeemed an adoption of a lower standard ofvaluation.

(4) Statement of Actuarial Opinion Based Onan Asset Adequacy Analysis.

(A) General Description. The statement ofactuarial opinion submitted in accordancewith this section shall consist of:

1. A paragraph identifying the appoint-ed actuary and his/her qualifications (seeparagraph (4)(B)1.);

2. A scope paragraph identifying thesubjects on which an opinion is to beexpressed and describing the scope of theappointed actuary’s work, including a tabula-tion delineating the reserves and related actu-arial items which have been analyzed forasset adequacy and the method of analysis,(see paragraph (4)(B)2.) and identifying thereserves and related actuarial items coveredby the opinion which have not been so ana-lyzed;

3. A reliance paragraph describing thoseareas, if any, where the appointed actuary hasdeferred to other experts in developing data,

procedures, or assumptions (for example,anticipated cash flows from currently ownedassets, including variation in cash flowsaccording to economic scenarios (see para-graph (4)(B)3.) supported by a statement ofeach expert in the form prescribed by subsec-tion (4)(E);

4. An opinion paragraph expressing theappointed actuary’s opinion with respect tothe adequacy of the supporting assets tomature the liabilities (see paragraph(4)(B)6.); and

5. One (1) or more additional para-graphs will be needed in individual companycases as follows:

A. If the appointed actuary considersit necessary to state a qualification of his/heropinion;

B. If the appointed actuary must dis-close an inconsistency in the method ofanalysis or basis of asset allocation used atthe prior opinion date with that used for thisopinion;

C. If the appointed actuary must dis-close whether additional reserves of the prioropinion date are released as of this opiniondate and the extent of the release; and

D. If the appointed actuary chooses toadd a paragraph briefly describing theassumptions which form the basis for theactuarial opinion.

(B) Recommended Language. The follow-ing paragraphs are to be included in the state-ment of actuarial opinion in accordance withthis section. Language is that which in typi-cal circumstances should be included in astatement of actuarial opinion. The languagemay be modified as needed to meet the cir-cumstances of a particular case, but theappointed actuary should use language whichclearly expresses his/her professional judg-ment. However, in any event the opinion shallretain all pertinent aspects of the languageprovided in this section.

1. The opening paragraph should gener-ally indicate the appointed actuary’s relation-ship to the company and his/her qualifica-tions to sign the opinion. For a companyactuary, the opening paragraph of the actuar-ial opinion should include a statement suchas: “I, (name), am (title) of (insurance com-pany name) and a member of the AmericanAcademy of Actuaries. I was appointed by, orby the authority of, the board of directors ofsaid insurer to render this opinion as stated inthe letter to the director dated (insert date). Imeet the Academy qualification standards forrendering the opinion and am familiar withthe valuation requirements applicable to lifeand health insurance companies.” For a con-sulting actuary, the opening paragraph shouldcontain a statement such as: “I, (name), a

member of the American Academy ofActuaries, am associated with the firm of(name of consulting firm). I have beenappointed by, or by the authority of, the boardof directors of (name of company) to renderthis opinion as stated in the letter to the direc-tor dated (insert date). I meet the Academyqualification standards for rendering thisopinion and am familiar with the valuationrequirements, relating to life and health com-panies.”

2. The scope paragraph should include astatement such as: “I have examined the actu-arial assumptions and actuarial methods usedin determining reserves and related actuarialitems listed below, as shown in the annualstatement of the company, as prepared for fil-ing with state regulatory officials, as ofDecember 31, 20(__). Tabulated as followsare those reserves and related actuarial itemswhich have been subjected to asset adequacyanalysis.”



3. If the appointed actuary has relied onother experts to develop certain portions ofthe analysis, the reliance paragraph shouldinclude a statement such as:

“I have relied on (name), (title) for(for example, anticipated cash flows fromcurrently owned assets, including variationsin cash flows according to economic scenar-ios) and, as certified in the attached statementI have reviewed the information relied uponfor reasonableness.”

A statement of reliance on otherexperts should be accompanied by a state-ment by each of these experts in the form pre-scribed by subsection (4)(E).

4. If the appointed actuary has examinedthe underlying asset and liability records, thereliance paragraph should include a statementsuch as: “My examination included a reviewof the actuarial assumptions and actuarialmethods and of the underlying basic asset andliability records and tests of the actuarial cal-culations as I considered necessary. I alsoreconciled the underlying basic asset and lia-bility records to (exhibits and schedules list-ed as applicable) of the company’s currentannual statement.”

5. If the appointed actuary has notexamined the underlying records, but hasrelied upon data (e.g., listings and summariesof policies in force or asset records), pre-pared by the company, the reliance paragraphshould include a sentence such as: “In form-ing my opinion on (specify types of reserves),I relied upon data prepared by (name and titleof company officer certifying in-force recordsor other data) as certified in the attachedstatements. I also reconciled that data to(exhibits and schedules to be listed as applic-able) of the company’s current annual state-ment. In other respects, my examinationincluded review of the actuarial assumptions

and actuarial methods and tests of the calcu-lations I considered necessary.” This sectionshall be accompanied by a statement by eachperson relied upon in the form prescribed bysubsection (4)(E).

6. The opinion paragraph should includea statement such as: “In my opinion thereserves and related actuarial values concern-ing the statement items identified above:

A. “Are computed in accordance withpresently accepted actuarial standards consis-tently applied and are fairly stated, in accor-dance with sound actuarial principles;

B. “Are based on actuarial assump-tions which produce reserves at least as greatas those called for in any contract provisionas to reserve basis and method, and are inaccordance with all other contract provisions;

C. “Meet the requirements of theinsurance law and regulation of the state of(state of domicile) and are at least as great asthe minimum aggregate amounts required bythe state in which this statement is filed;

D. “Are computed on the basis ofassumptions consistent with those used incomputing the corresponding items in theannual statement of the preceding year-end(with any exceptions noted here);

E. “Include provision for all actuarialreserves and related statement items whichought to be established.

“The reserves and related items, when con-sidered in light of the assets held by the com-pany with respect to such reserves and relat-ed actuarial items including, but not limitedto, the investment earnings on the assets, andthe considerations anticipated to be receivedand retained under the policies and contracts,make adequate provision, according topresently accepted actuarial standards ofpractice, for the anticipated cash flows

required by the contractual obligations andrelated expenses of the company. (At the dis-cretion of the director, this language may beomitted for an opinion filed on behalf of acompany doing business only in this state andin no other state.) “The actuarial methods, considerations, andanalyses used in forming my opinion conformto the appropriate Standards of Practice aspromulgated by the Actuarial StandardsBoard, which standards form the basis of thisstatement of opinion. “This opinion is updated annually as requiredby statute. To the best of my knowledge, therehave been no material changes from theapplicable date of the annual statement to thedate of the rendering of this opinion whichshould be considered in reviewing this opin-ion”; or “The following material change(s) whichoccurred between the date of the statementfor which this opinion is applicable and thedate of this opinion should be considered inreviewing this opinion: (Describe thechange(s).)” (Note: Choose one of the pre-ceding two (2) paragraphs, whichever isapplicable.) “The impact of unanticipated events subse-quent to the date of this opinion is beyond thescope of this opinion. The analysis of assetadequacy portion of this opinion should beviewed recognizing that the company’s futureexperience may not follow all the assump-tions used in the analysis.

____________________________________(Signature of Appointed Actuary)

____________________________________(Address of Appointed Actuary)


Secretary of State


Reserves And LiabilitiesAsset Adequacy Tested Amounts

Additional TotalFormula Actuarial Analysis Other AmountReserves Reserves (a) Method (b) Amount (1)+(2)+(3)

Statement Item (c) (1) (2) (3) (4)

TOTAL RESERVES ___________ _____________ ______________ ____________IMR (Page _____ Line _____) ___________

AVR (Page _____ Line _____) ___________ (d)(a) The additional actuarial reserves are the reserves established under paragraph (3)(E)2.(b) The appointed actuary should indicate the method of analysis, determined in accordance with the standards for asset adequacy

analysis referred to in subsection (3)(D) of this regulation, by means of symbols which should be defined in footnotes to the table.(c) Statement Items should describe lines of business subjected to asset adequacy analysis and contain appropriate references to the exhibits,

pages, and lines of the insurer’s annual statement filed with the director to which the amounts listed reconcile.(d) Allocated amount of Asset Valuation Reserve (AVR).

____________________________________(Telephone Number of Appointed Actuary)

____________________________________(Date)”

(C) Assumptions for New Issues. Theadoption for new issues or new claims orother new liabilities of an actuarial assump-tion which differs from a correspondingassumption used for prior new issues or newclaims or other new liabilities is not a changein actuarial assumptions within the meaningof this section.

(D) Adverse Opinions. If the appointedactuary is unable to form an opinion, thens/he shall refuse to issue a statement of actu-arial opinion. If the appointed actuary’s opin-ion is adverse or qualified, then s/he shallissue an adverse or qualified actuarial opin-ion explicitly stating the reason(s) for thatopinion. This statement should follow thescope paragraph and precede the opinionparagraph.

(E) Reliance on Information Furnished byOther Persons. If the appointed actuary relieson the certification of others on matters con-cerning the accuracy or completeness of anydata underlying the actuarial opinion, or theappropriateness of any other informationused by the appointed actuary in forming theactuarial opinion, the actuarial opinionshould so indicate the persons the actuary isrelying upon and a precise identification ofthe items subject to reliance. In addition, thepersons on whom the appointed actuary reliesshall provide a certification that preciselyidentifies the items on which the person isproviding information and a statement as tothe accuracy, completeness, or reasonable-ness, as applicable, of the items. This certifi-cation shall include the signature, title, com-pany, address, and telephone number of theperson rendering the certification, as well asthe date on which it is signed.

(F) Alternate Option.1. Section 376.380.4(4)(d), RSMo

2000, gives the director broad authority toaccept the valuation of a foreign insurer whenthat valuation meets the requirements applic-able to a company domiciled in this state inthe aggregate. As an alternative to therequirements of subparagraph (4)(B)6.C., thedirector may make one (1) or more of the fol-lowing additional approaches available to theopining actuary:

A. A statement that the reserves“meet the requirements of the insurance lawsand regulations of the state of (state of domi-cile) and the formal written standards and

conditions of this state for filing an opinionbased on the law of the state of domicile.” Ifthe director chooses to allow this alternative,a formal written list of standards and condi-tions shall be made available. If a companychooses to use this alternative, the standardsand conditions in effect on July 1 of a calen-dar year shall apply to statements for that cal-endar year, and they shall remain in effectuntil they are revised or revoked. If no list isavailable, this alternative is not available;

B. A statement that the reserves“meet the requirements of the insurance lawsand regulations of the state of (state of domi-cile) and I have verified that the company’srequest to file an opinion based on the law ofthe state of domicile has been approved andthat any conditions required by the directorfor approval of that request have been met.”If the director chooses to allow this alterna-tive, a formal written statement of suchallowance shall be issued no later than March31 of the year it is first effective. It shallremain valid until rescinded or modified bythe director. The rescission or modificationsshall be issued no later than March 31 of theyear they are first effective. Subsequent tothat statement being issued, if a companychooses to use this alternative, the companyshall file a request to do so, along with justi-fication for its use, no later than April 30 ofthe year of the opinion to be filed. Therequest shall be deemed approved on October1 of that year if the director has not deniedthe request by that date; and/or

C. A statement that the reserves“meet the requirements of the insurance lawsand regulations of the state of (state of domi-cile) and I have submitted the required com-parison as specified by this state.”

(I) If the director chooses to allowthis alternative, a formal written list of prod-ucts (to be added to the table in Part (II)below) for which the required comparisonshall be provided will be published. If a com-pany chooses to use this alternative, the list ineffect on July 1 of a calendar year shall applyto statements for that calendar year, and itshall remain in effect until it is revised orrevoked. If no list is available, this alternativeis not available.

(II) If a company desires to use thisalternative, the appointed actuary shall pro-vide a comparison of the gross nationwidereserves held to the gross nationwide reservesthat would be held under NationalAssociation of Insurance Commissioners(NAIC) codification standards. Gross nation-wide reserves are the total reserves calculat-ed for the total company in force businessdirectly sold and assumed, indifferent to the

state in which the risk resides, without reduc-tion for reinsurance ceded. The informationprovided shall be at least:




Secretary of State


(III) The information listed shallinclude all products identified by either thestate of filing or any other states subscribingto this alternative.

(IV) If there is no codification stan-dard for the type of product or risk in forceor if the codification standard does not direct-ly address the type of product or risk in force,the appointed actuary shall provide detaileddisclosure of the specific method andassumptions used in determining the reservesheld.

(V) The comparison provided bythe company is to be kept confidential to thesame extent and under the same conditions asthe actuarial memorandum.

2. Notwithstanding the above, the direc-tor may reject an opinion based on the lawsand regulations of the state of domicile andrequire an opinion based on the laws of thisstate. If a company is unable to provide theopinion within sixty (60) days of the requestor such other period of time determined bythe director after consultation with the com-pany, the director may contract with an inde-pendent actuary at the company’s expense toprepare and file the opinion.

(5) Description of Actuarial MemorandumIncluding an Asset Adequacy Analysis andRegulator Asset Adequacy Issues Summary.

(A) General.1. In accordance with 20 CSR 200-

1.115 and sections 376.370 and 376.380,RSMo, the appointed actuary shall prepare amemorandum to the company describing theanalysis done in support of his/her opinionregarding the reserves. The memorandumshall be made available for examination bythe director upon his/her request but shall bereturned to the company after such examina-tion and shall not be considered a record ofthe insurance department or subject to auto-matic filing with the director.

2. In preparing the memorandum, theappointed actuary may rely on, and includeas a part of his/her own memorandum, mem-oranda prepared and signed by other actuar-ies who are qualified within the meaning ofsubsection (3)(B) of this rule, with respect to

the areas covered in such memoranda, and sostate in their memoranda.

3. If the director requests a memoran-dum and no memorandum exists or if thedirector finds that the analysis described inthe memorandum fails to meet the standardsof the Actuarial Standards Board or the stan-dards and requirements of this rule, the direc-tor may designate a qualified actuary toreview the opinion and prepare the support-ing memorandum as is required for review.The reasonable and necessary expense of theindependent review shall be paid by the com-pany but shall be directed and controlled bythe director.

4. The reviewing actuary shall have thesame status as an examiner for purposes ofobtaining data from the company and thework papers and documentation of thereviewing actuary shall be retained by thedirector; provided, however, that any infor-mation provided by the company to thereviewing actuary and included in the workpapers shall be considered as material pro-vided by the company to the director andshall be kept confidential to the same extentas is prescribed by law with respect to othermaterial provided by the company to thedirector pursuant to the statute governing thisrule. The reviewing actuary shall not be anemployee of a consulting firm involved withthe preparation of any prior memorandum oropinion for the insurer pursuant to this rulefor any one (1) of the current year or the pre-ceding three (3) years.

5. In accordance with 20 CSR 200-1.115 and section 376.380, RSMo, theappointed actuary shall prepare a regulatoryasset adequacy issues summary, the contentsof which are specified in subsection (5)(C).The regulatory asset adequacy issues summa-ry will be submitted no later than March 15of the year following the year for which astatement of actuarial opinion based on assetadequacy is required. The regulatory assetadequacy issues summary is to be kept confi-dential to the same extent and under the sameconditions as the actuarial memorandum.

(B) Details of the Memorandum SectionDocumenting Asset Adequacy Analysis.

When an actuarial opinion is provided, thememorandum shall demonstrate that theanalysis has been done in accordance with thestandards for asset adequacy referred to insubsection (3)(D) of this rule and any addi-tional standards under this rule. It shall spec-ify—

1. For reserves—A. Product descriptions including

market description, underwriting, and otheraspects of a risk profile and the specific risksthe appointed actuary deems significant;

B. Source of liability in force;C. Reserve method and basis;D. Investment reserves;E. Reinsurance arrangements;F. Identification of any explicit or

implied guarantees made by the generalaccount in support of benefits providedthrough a separate account or under a sepa-rate account policy or contract and the meth-ods used by the appointed actuary to providefor the guarantees in the asset adequacyanalysis; and

G. Documentation of assumptions totest reserves for the following:

(I) Lapse rates (both base andexcess);

(II) Interest crediting rate strategy;(III) Mortality;(IV) Policyholder dividend strate-

gy;(V) Competitor or market interest

rate;(VI) Annuitization rates;(VII) Commissions and expenses;

and(VIII) Morbidity;

2. For assets—A. Portfolio descriptions, including a

risk profile disclosing the quality, distribu-tion, and types of assets;

B. Investment and disinvestmentassumptions;

C. Source of asset data;D. Asset valuation bases; andE. Documentation of assumptions

made for:(I) Default costs;(II) Bond call function;

(1)

Product Type

(2)

Death Benefit

or Account

Value

(3)

Reserves Held

(4)

Codification

Reserves

(5)

Codification

Standard



(III) Mortgage prepayment func-tion;

(IV) Determining market value forassets sold due to disinvestment strategy; and

(V) Determining yield on assetsacquired through the investment strategy. Thedocumentation of the assumptions shall besuch that an actuary reviewing the actuarialmemorandum could form a conclusion as tothe reasonableness of the assumptions;

3. For the analysis basis—A. Methodology;B. Rationale for inclusion/exclusion

of different blocks of business and how perti-nent risks were analyzed;

C. Rationale for degree of rigor inanalyzing different blocks of business(include in the rationale the level of material-ity that was used in determining how rigor-ously to analyze different blocks of business);

D. Criteria for determining asset ade-quacy (include in the criteria the precise basisfor determining if assets are adequate tocover reserves under moderately adverse con-ditions or other conditions as specified in rel-evant actuarial standards of practice); and

E. Whether the impact of federalincome taxes was considered, and the methodof treating reinsurance in the asset adequacyanalysis;

4. Summary of material changes inmethods, procedures, or assumptions fromprior year’s asset adequacy analysis;

5. Summary of results; and6. Conclusion(s).

(C) Details of the Regulatory AssetAdequacy Issues Summary.

1. The regulatory asset adequacy issuessummary shall include:

A. Descriptions of the scenarios test-ed (including whether those scenarios are sto-chastic or deterministic) and the sensitivitytesting done relative to those scenarios. Ifnegative ending surplus results under certaintests in the aggregate, the actuary shoulddescribe those tests and the amount of addi-tional reserve as of the valuation date which,if held, would eliminate the negative aggre-gate surplus values. Ending surplus valuesshall be determined by either extending theprojection period until the in force and asso-ciated assets and liabilities at the end of theprojection period are immaterial or by adjust-ing the surplus amount at the end of the pro-jection period by an amount that appropriate-ly estimates the value that can reasonably beexpected to arise from the assets and liabili-ties remaining in force;

B. The extent to which the appointedactuary uses assumptions in the asset adequa-cy analysis that are materially different than

the assumptions used in the previous assetadequacy analysis;

C. The amount of reserves and theidentity of the product lines that had beensubjected to asset adequacy analysis in theprior opinion but were not subject to analysisfor the current opinion;

D. Comments on any interim resultsthat may be of significant concern to theappointed actuary;

E. The methods used by the actuaryto recognize the impact of reinsurance on thecompany’s cash flows, including both assetsand liabilities, under each of the scenariostested; and

F. Whether the actuary has been sat-isfied that all options whether explicit orembedded, in any asset or liability (includ-ing, but not limited to, those affecting cashflows embedded in fixed income securities)and equity-like features in any investmentshave been appropriately considered in theasset adequacy analysis.

2. The regulatory asset adequacy issuessummary shall contain the name of the com-pany for which the regulatory asset adequacyissues summary is being supplied and shall besigned and dated by the appointed actuaryrendering the actuarial opinion.

(D) Conformity to Standards of Practice.The memorandum shall include a statement:“Actuarial methods, considerations andanalyses used in the preparation of this mem-orandum conform to the appropriateStandards of Practice as promulgated by theActuarial Standards Board, which standardsform the basis for this memorandum.”

(E) Use of Assets Supporting the InterestMaintenance Reserve and the Asset ValuationReserve. An appropriate allocation of assetsin the amount of the interest maintenancereserve (IMR), whether positive or negative,shall be used in any asset adequacy analysis.Analysis of risks regarding asset default mayinclude an appropriate allocation of assetssupporting the asset valuation reserve (AVR);these AVR assets may not be applied for anyother risks with respect to reserve adequacy.Analysis of these and other risks may includeassets supporting other mandatory or volun-tary reserves available to the extent not usedfor risk analysis and reserve support. Theamount of the assets used for the AVR mustbe disclosed in the Table of Reserves andLiabilities of the opinion and in the memo-randum. The method used for selecting par-ticular assets or allocated portions of assetsmust be disclosed in the memorandum.

(F) Documentation. The appointed actuaryshall retain on file, for at least seven (7)years, sufficient documentation so that it willbe possible to determine the procedures fol-

lowed, the analyses performed, the bases forassumptions and the results obtained.

AUTHORITY: sections 376.370 and 376.380,RSMo 2000 and section 374.045, RSMoSupp. 2008.* Original rule filed Dec. 28,1992, effective Sept. 9, 1993. Amended:Filed Oct. 30, 2008, effective May 30, 2009.

*Original authority: 374.045 RSMo 1967, amended 1993,1995, 2008; 376.370, RSMo 1939, amended 1943, 1947,1961, 1993; and 376.380, RSMo 1939, amended 1943,1947, 1959, 1961, 1965, 1971, 1975, 1979, 1982, 1993.

20 CSR 200-1.120 Take-Out Letters

PURPOSE: This rule states requirements forinsurance companies entering into take-outletters and similar contracts to provide after-construction financing of commercial build-ings. This rule was adopted pursuant to theprovisions of section 374.045, RSMo andimplements sections 376.300 and 379.080,RSMo.

(1) Limitations on Amounts Guaranteed.Take-out letters and similar contracts to pro-vide permanent after-construction financingof commercial buildings shall be subject tothe following requirements:

(A) Any such contract must be approved bythe company investment committee, if any, orbe signed by two (2) officers of the company;and

(B) The total amount of all such contractsshall be disclosed in that company’s annualstatement in the interrogatory section.

AUTHORITY: sections 374.045 and 379.080,RSMo Supp. 1993 and 376.300, RSMo1986.* This rule was previously filed as 4CSR 190-11.100. Original rule filed Dec. 20,1974, effective Dec. 30, 1974.

*Original authority: 374.045, RSMo 1967; 376.300,RSMo 1939, amended 1943, 1945, 1945, 1949, 1953,1961, 1963, 1973, 1979, 1982, 1985; and 379.080, RSMo1939, amended 1943, 1947, 1963, 1977, 1981, 1982,1985, 1987, 1989, 1993.

20 CSR 200-1.130 Letters of Credit(Rescinded May 6, 1993)

AUTHORITY: section 379.080.3(2)(d), RSMo1986. This rule was previously filed as 4 CSR190-11.240. Original rule filed July 20,1989, effective Nov. 11, 1989. Rescinded:Filed Sept. 2, 1992, effective May 6, 1993.

20 CSR 200-1.140 Minimum ValuationStandards for Life, Accident and Healthand Annuity Contracts

PURPOSE: This rule specifies standards forvaluation of specifically identified life insur-ance, health and accident insurance policies.This rule was adopted pursuant to the provi-sions of section 374.045, RSMo and imple-ments sections 376.380, 376.390, 376.405,376.410 and 376.670, RSMo.

(1) Life Insurance.(A) Group Insurance.

1. Yearly renewable term life insurance(including waiver of premium and accidentaldeath benefits).

A. Gross pro rata unearned premiummethod.

B. The Commissioners 1960 Stand-ards Group Mortality Table with interest asspecified in section 376.380, RSMo.

C. Any other valuation basis produc-ing higher reserves.

2. Inasmuch as the Federal EmployeesGroup Life Insurance Act of 1954, 5U.S.C.A. Section 8701, provides thatappointive or elective officers or employeesof the United States government, at a timeand under conditions of eligibility as the CivilService Commission by regulation may pre-scribe, shall be eligible to be insured forspecified amounts of group life insurance andspecified amounts of group accidental deathand dismemberment insurance, as providedin the Act; and since as the Act requires themaintenance of a special contingency reserveupon group insurance issued or reinsured inaccordance with its provisions, the provisionsof this rule shall not be applicable to anygroup insurance issued or reinsured by a lifeinsurance company in accordance with theprovision of the Act.

3. Inasmuch as the Servicemen’s GroupLife Insurance Act of 1965, 38 U.S.C.A.section 765, provides that members of theuniformed services on active duty shall beeligible to be insured for specified amounts ofgroup life insurance, as provided in the Act;and inasmuch as the Act requires that main-tenance of a special contingency reserve upongroup insurance issued or reinsured in accor-dance with its provisions, the provisions ofthis rule shall not be applicable to any groupinsurance issued or reinsured by any lifeinsurance company in accordance with theprovisions of the Act.

(B) Credit Life Insurance. All credit lifeinsurance shall be valued on the 1958Commissioners Standards Ordinary Mortal-ity Table with interest assumption of three

and one-half percent (3 1/2%) or any othervaluation basis producing higher reserves.

(C) Other Standards.1. Extra or additional reserves, calculat-

ed according to the previously mentionedstandards, will be required in all cases tocover the nondeduction of deferred fractionalpremiums or return of premiums, in the eventof death. No extra reserve is required whenthe basic policy reserve makes a provision forthis, for example, when continuous functionsare used.

2. Other valuation standards may beused so long as the reserves computed onthose standards for each of the previouslymentioned categories are greater in the aggre-gate than the reserves computed according tominimum standards.

3. Reserves for annuity and pure endow-ment contracts, for disability and accidentaldeath benefits in all policies and contracts,for life insurance policies providing for avarying amount of insurance or requiring thepayment of varying premiums, and for allother benefits, except life insurance andendowment benefits in life insurance policies,shall be calculated by a method consistentwith the principles of the commissioner’sreserve valuation method, as defined in sec-tion 376.380.2(b), RSMo. In the calculationof reserves for life policies containing couponor annual pure endowment benefits, eachbenefit shall be treated as a pure endowmentmaturing for its cash value on the date itbecomes due. This coupon or annual pureendowment benefit shall be considered to bea part of the guaranteed benefits provided forby the policies.

(2) Policies of Accident or Health Insurance,or Combination Policies of Accident andHealth Insurance.

(A) On all such policies actually writtenthere shall be maintained an unearned grosspremium reserve computed according to theprovisions of sections 376.410(1), RSMo.

(B) On all such policies written on a non-cancellable plan and under the terms ofwhich the company is obligated to renew orcontinue for a stated period, or to a stated ageor for life, there shall be maintained activelife reserves and reserves for losses inamounts not less than active life and lossreserves determined in accordance with theapplicable minimum reserve standards pre-scribed by the National Association ofInsurance Commissioners (NAIC) in itsAccounting Practices and ProceduresManual.

(C) On all such policies other than thosewritten on a noncancellable plan there shallbe maintained reserves for losses in amounts

not less than loss reserves determined inaccordance with the applicable minimumreserve standards prescribed by the NAIC inits Accounting Practices and ProceduresManual.

(D) In addition to the minimum reservesmentioned in section 376.410, RSMo, andelsewhere in this section, companies shallmaintain reserves for extraordinary losses inamounts not less than extraordinary lossreserves determined in accordance with theapplicable minimum reserve standards pre-scribed by the NAIC in its AccountingPractices and Procedures Manual.

(E) Credit Accident and Health Insurance.All credit accident and health insurance (bothindividual and group) shall be established andmaintained on the basis of not less than theunearned gross premium computed on thebasis of the sum of digits formula, common-ly known as the Rule of 78.

(F) This section shall not apply to total andpermanent disability benefits, or to accidentaldeath benefits, contained in or supplementalto life insurance policies or other contractsand for which benefits the standard of valua-tion is prescribed by section 376.380, RSMo,or other sections of this or other rules of theDepartment of Insurance.

(3) The new operative date with respect tothis rule, means the date on or before January1, 1989 when the company files a writtennotice with the director of its election to com-ply with the provisions of section 376.380(3),RSMo or if no election is filed, the date isJanuary 1, 1989.

AUTHORITY: sections 374.045, 376.380,376.390, 376.405, 376.410 and 376.670,RSMo 2000.* This rule was previously filedas 4 CSR 190-11.090. This version of rulefiled Dec. 5, 1969, effective Dec. 15, 1969.Amended: Filed Aug. 5, 1974, effective Aug.15, 1974. Amended: Filed July 9, 1976,effective Feb. 20, 1977. Amended: Filed Aug.16, 1977, effective Dec. 11, 1977. Rescindedand readopted: Filed May 11, 1984, effectiveNov. 13, 1984. Amended: Filed Dec. 14,2000, effective July 30, 2001.

*Original authority: 374.045, RSMo 1967 amended 1993,1995; 376.380, RSMo 1939, amended 1943, 1947, 1959,1961, 1965, 1971, 1975, 1979, 1982, 1993; 376.390,RSMo 1939, amended 1943; 376.405, RSMo 1959,amended 1984; 376.410, RSMo 1945; and 376.670, RSMo1943, amended 1959, 1961, 1965, 1975, 1979, 1982.

Survivors Ben. Ins. Co. v. Farmer, 514SW2d 565 (Mo. 1974). Superintendent ofinsurance has the duty to approve or disap-prove life insurance contracts and forms andno contract or form may be used in Missouriwithout the approval of the superintendent.


Secretary of State


20 CSR 200-1.150 General StandardsApplicable to Audited Financial Reports

PURPOSE: This rule provides interpretationsof various terms and provisions used in sec-tions 375.1025—375.1062, RSMo which gov-ern how the financial reports of insurers areto be audited.

PUBLISHER’S NOTE: The secretary of statehas determined that the publication of theentire text of the material which is incorpo-rated by reference as a portion of this rulewould be unduly cumbersome or expensive.Therefore, the material which is so incorpo-rated is on file with the agency who filed thisrule, and with the Office of the Secretary ofState. Any interested person may view thismaterial at either agency’s headquarters orthe same will be made available at the Officeof the Secretary of State at a cost not toexceed actual cost of copy reproduction. Theentire text of the rule is printed here. Thisnote refers only to the incorporated by refer-ence material.

(1) Definitions.(A) As used in section 375.1037.4(3),

RSMo, the phrase “has demonstrated a pat-tern or practice of failing to detect or disclosematerial information” shall be deemed toinclude, but not limited to, any accountant oraccounting firm that has failed to detect ordisclose an insolvency which is later deter-mined to have existed on the “as of” date ofa financial report which the accountant offirm has filed under sections 375.1025–375.1062, RSMo.

(B) As used in section 375.1032.3(3),RSMo, the term “insignificant” shall meanamounts which, when combined, will notexceed five percent (5%) of the insurer’s totalassets.

(C) As used in section 375.1045.1.,RSMo, the term “material” as it relates to amisstatement of an insurer’s financial condi-tion shall mean any misstatement of theinsurer’s financial condition—

1. By an amount greater than or equal totwenty percent (≥20%) of the insurer’s capi-tal and surplus; or

2. By any amount where the indepen-dent certified public accountant determinesthe misstatement to be material in accordancewith SAS No. 47, Audit Risk and Materialityin Conducting an Audit (AU Section 312 ofthe Professional Standards of the AmericanInstitute of Certified Public Accountants.)

(D) As used in section 375.1032.2(6)(c),RSMo, the term “significant” shall mean anyintercompany transaction or balance involv-ing an amount greater than or equal to five

percent (≥5%) of the insurer’s capital andsurplus.

(E) As provided in section 375.1037.3.,RSMo, no partner or other person responsi-ble for rendering a report under sections375.1025–375.1062, RSMo, may act in thatcapacity for more than seven (7) consecutiveyears. For purposes of determining whether aperson is competent under this section, a“year” shall be deemed to be that period oftime beginning on January 1 and ending onDecember 31 of a given calendar year, com-mencing January 1, 1992.

(2) Pursuant to section 375.1047, RSMo,each insurer shall furnish the director with awritten report prepared by the accountantdescribing the insurer’s internal control struc-ture noted by the accountant during the audit.SAS No. 60, Communication of InternalControl Structure Matters Noted in an Audit(AU Section 325 of the ProfessionalStandards of the American Institute ofCertified Public Accountants) requires anaccountant to communicate significant defi-ciencies (known as “reportable conditions”)noted during a financial statement audit to theappropriate parties within an entity. Noreport under section 375.1047, RSMo, needsto be issued if the accountant does not identi-fy significant deficiencies. If significant defi-ciencies are noted, the written report shall befiled annually by the insurer with the directorwithin sixty (60) days after the filing of theannual audited financial statements. Theinsurer shall provide a description of remedi-al actions taken or proposed to correct signif-icant deficiencies, if those actions are notdescribed in the accountant’s report.

(3) An insurer may make written applicationto the director for approval to file auditedconsolidated or combined financial state-ments in lieu of separate annual auditedfinancial statements if the insurer is part of agroup of insurance companies which utilizesa pooling or one hundred percent (100%)reinsurance agreement that affects the solven-cy and integrity of the insurer’s reserves andsuch insurer cedes all of its direct andassumed business to the pool. In such cases,if approved in writing by the director, acolumnar consolidating or combining work-sheet shall be filed with the report, as fol-lows:

(A) Amounts shown on the consolidated orcombined Audited Financial Report shall beshown on the worksheet;

(B) Amounts for each insurer subject tothis section shall be stated separately;

(C) Noninsurance operations may beshown on the worksheet on a combined orindividual basis;

(D) Explanations of consolidating andeliminating entries shall be included; and

(E) A reconciliation shall be included ofany differences between the amounts shownin the individual insurer columns of the work-sheet and comparable amounts shown on theAnnual Statements of the insurers.

AUTHORITY: sections 374.045, 375.1032,375.1037, 375.1045, 375.013 and 375.1060RSMo 1994.* Original rule filed Aug. 11,1992, effective May 6, 1993. Amended: FiledJuly 3, 1995, effective Feb. 25, 1996.

*Original authority: 374.045, RSMo 1967, amended1993; 375.1032, RSMo 1991, amended 1992; and375.1037 and 375.1045, RSMo 1991.

20 CSR 200-1.160 Valuation of LifeInsurance Policies

PURPOSE: The purpose of this regulation isto provide: 1) tables of select mortality factorsand rules for their use; 2) rules concerning aminimum standard for the valuation of planswith nonlevel premiums or benefits; and 3)rules concerning a minimum standard for thevaluation of plans with secondary guaran-tees. The method for calculating basicreserves defined in this regulation will consti-tute the Commissioners’ Reserve ValuationMethod for policies to which this regulationis applicable.

(1) Applicability. This rule shall apply to alllife insurance policies, with or without non-forfeiture values, issued on or after the effec-tive date of this rule, subject to the followingexceptions and conditions:

(A) Exceptions. 1. This rule shall not apply to any indi-

vidual life insurance policy issued on or afterthe effective date of this rule if the policy isissued in accordance with and as a result ofthe exercise of a reentry provision containedin the original life insurance policy of thesame or greater face amount, issued beforethe effective date of this rule, that guaranteesthe premium rates of the new policy. Thisrule also shall not apply to subsequent poli-cies issued as a result of the exercise of sucha provision, or a derivation of the provision,in the new policy.

2. This rule shall not apply to any uni-versal life policy that meets all the followingrequirements:

A. Secondary guarantee period, ifany, is five (5) years or less;



B. Specified premium for the sec-ondary guarantee period is not less than thenet level reserve premium for the secondaryguarantee period based on the CSO valuationtables as defined in subsection (2)(F) and theapplicable valuation interest rate; and,

C. The initial surrender charge is notless than one hundred percent (100%) of thefirst year annualized specified premium forthe secondary guarantee period.

3. This rule shall not apply to any vari-able life insurance policy that provides forlife insurance, the amount or duration ofwhich varies according to the investmentexperience of any separate account oraccounts.

4. This rule shall not apply to any vari-able universal life insurance policy that pro-vides for life insurance, the amount or dura-tion of which varies according to the invest-ment experience of any separate account oraccounts.

5. This rule shall not apply to a grouplife insurance certificate unless the certificateprovides for a stated or implied schedule ofmaximum gross premiums required in orderto continue coverage in force for a period inexcess of one year.

(B) Conditions.1. Calculation of the minimum valuation

standard for policies with guaranteed nonlev-el gross premiums or guaranteed nonlevelbenefits (other than universal life policies),or both, shall be in accordance with the pro-visions of section (4).

2. Calculation of the minimum valuationstandard for flexible premium and fixed pre-mium universal life insurance policies thatcontain provisions resulting in the ability of apolicyholder to keep a policy in force over asecondary guarantee period shall be in accor-dance with the provisions of section (5).

(2) Definitions. For purposes of this rule:(A) “Basic reserves” means reserves cal-

culated pursuant to section 376.380.1(2)(b),RSMo.

(B) “Contract segmentation method”means the method of dividing the period fromissue to mandatory expiration of a policy intosuccessive segments, with the length of eachsegment being defined as the period from theend of the prior segment (from policy incep-tion, for the first segment) to the end of thelatest policy year as determined below. Allcalculations are made using the 1980 CSOvaluation tables, as defined in subsection (F)of this section (or any other valuation mortal-ity table adopted by the National Associationof Insurance Commissioners (NAIC), afterthe effective date of this rule and promulgat-ed by rule by the director for this purpose)

and, if elected, the optional minimum mor-tality standard for deficiency reserves stipu-lated in subsection (3)(B) of this rule. Thelength of a particular contract segment shallbe equal to the minimum of the value t forwhich Gt is greater than Rt (if Gt never

exceeds Rt the segment length is deemed to

be the number of years from the beginning ofthe segment to the mandatory expiration dateof the policy), where Gt and Rt are defined as

follows:

GPx+k+tGt =

GPx+k+t–1where:x = original issue age;k = the number of years from

the date of issue to thebeginning of the segment;

t = 1, 2, ...; t is reset to 1 at the beginning of each segment;

GPx+k+t–1 = Guaranteed gross pre-

mium per thousand of face amount for year t of the segment, ignoring policy fees only if level for the premium paying period ofthe policy.

qx+k+tRt =

qx+k+t–1

However, Rt may be in-

creased or decreased by onepercent in any policy year,at the company’s option,but Rt shall not be less than

one;

where:x, k and t are as defined above, and qx+k+t–1 = valuation mortality rate for

deficiency reserves inpolicy year k+t but usingthe mortality of paragraph (3)(B)2. if paragraph (3)(B)3. is elected fordeficiency reserves.

However, if GPx+k+t is greater than 0 andGPx+k+t–1 is equal to 0, Gt shall bedeemed to be 1000. If GPx+k+t andGPx+k+t–1 are both equal to 0, Gt shall bedeemed to be 0.

(C) “Deficiency reserves” means theexcess, if greater than zero, of—

1. Minimum reserves calculated pur-suant to section 376.380.1(2)(h), RSMo,over

2. Basic reserves.(D) “Guaranteed gross premiums” means

the premiums under a policy of life that areinsurance guaranteed and determined atissue.

(E) “Maximum valuation interest rates”means the interest rates defined in section376.380.2, RSMo, that are to be used indetermining the minimum standard for thevaluation of life insurance policies.

(F) “1980 CSO valuation tables” meansthe Commissioners’ 1980 Standard OrdinaryMortality Table (1980 CSO Table) withoutten-year selection factors, incorporated intosection 376.380, RSMo, and 20 CSR 400-1.110, 20 CSR 400-1.120 and 20 CSR-1.130.

(G) “Scheduled gross premium” means thesmallest illustrated gross premium at issuefor other than universal life insurance poli-cies. For universal life insurance policies,scheduled gross premium means the smallestspecified premium described in paragraph(5)(A)3., if any, or else the minimum premi-um described in paragraph (5)(A)4.;

(H) Segmented Reserves.1.”Segmented reserves” means

reserves, calculated using segments producedby the contract segmentation method, equalto the present value of all future guaranteedbenefits less the present value of all future netpremiums to the mandatory expiration of apolicy, where the net premiums within eachsegment are a uniform percentage of therespective guaranteed gross premiums withinthe segment. The uniform percentage foreach segment is such that, at the beginning ofthe segment, the present value of the net pre-miums within the segment equals:

A. The present value of the death ben-efits within the segment, plus

B. The present value of any unusualguaranteed cash value (see subsection (4)(D))occurring at the end of the segment, less

C. Any unusual guaranteed cash valueoccurring at the start of the segment, plus

D. For the first segment only, theexcess of part (I) over part (II) as follows:

(I) A net level annual premiumequal to the present value, at the date ofissue, of the benefits provided for in the firstsegment after the first policy year, divided bythe present value, at the date of issue, of anannuity of one (1) per year payable on thefirst and each subsequent anniversary withinthe first segment on which a premium fallsdue. However, the net level annual premiumshall not exceed the net level annual premiumon the nineteen (19)-year premium whole lifeplan of insurance of the same renewal year


Secretary of State


equivalent level amount at an age one (1)-yearhigher than the age at issue of the policy.

(II) A net one (1)-year term premi-um for the benefits provided for in the firstpolicy year.

2. The length of each segment is deter-mined by the “contract segmentationmethod,” as defined in this section.

3. The interest rates used in the presentvalue calculations for any policy may notexceed the maximum valuation interest rate,determined with a guarantee duration equalto the sum of the lengths of all segments ofthe policy.

4. For both basic reserves and deficien-cy reserves computed by the segmentedmethod, present values shall include futurebenefits and net premiums in the current seg-ment and in all subsequent segments.

(I) “Tabular cost of insurance,” means thenet single premium at the beginning of a pol-icy year for one (1)-year term insurance inthe amount of the guaranteed death benefit inthat policy year.

(J) “Ten-year select factors,” means theselect factors adopted with section 376.380,RSMo and 20 CSR 400-1.110, 20 CSR400–1.120 and 20 CSR 400–1.130.

(K) Unitary Reserves.1. “Unitary reserves” means the present

value of all future guaranteed benefits less thepresent value of all future modified net pre-miums, where:

A. Guaranteed benefits and modifiednet premiums are considered to the mandato-ry expiration of the policy; and

B. Modified net premiums are a uni-form percentage of the respective guaranteedgross premiums, where the uniform percent-age is such that, at issue, the present value ofthe net premiums equals the present value ofall death benefits and pure endowments, plusthe excess of part (I) over part (II), as follows:

(I) A net level annual premiumequal to the present value, at the date ofissue, of the benefits provided for after thefirst policy year, divided by the present value,at the date of issue, of an annuity of one (1)per year payable on the first and each subse-quent anniversary of the policy on which apremium falls due. However, the net levelannual premium shall not exceed the net levelannual premium on the nineteen (19)-yearpremium whole life plan of insurance of thesame renewal year equivalent level amount atan age one (1) year higher than the age atissue of the policy.

(II) A net one (1)-year term premi-um for the benefits provided for in the firstpolicy year.

2. The interest rates used in the presentvalue calculations for any policy may notexceed the maximum valuation interest rate,

determined with a guarantee duration equalto the length from issue to the mandatoryexpiration of the policy.

(L) “Universal life insurance policy”means any individual life insurance policyunder the provisions of which separatelyidentified interest credits (other than in con-nection with dividend accumulations, premi-um deposit funds or other supplementaryaccounts) and mortality or expense chargesare made to the policy.

(3) General Calculation Requirements forBasic Reserves and Premium DeficiencyReserves.

(A) At the election of the company for anyone or more specified plans of life insurance,the minimum mortality standard for basicreserves may be calculated using the 1980CSO valuation tables with select mortalityfactors (or any other valuation mortality tableadopted by the NAIC after the effective dateof this rule and promulgated by rule by thedirector for this purpose). If select mortalityfactors are elected, they may be:

1. The ten (10)-year select mortality fac-tors incorporated into Section 376.380,RSMo, and 20 CSR 400-1.100, 20 CSR 400-1.120 and 20 CSR 400-1.130;

2. The select mortality factors in theAppendix; or

3. Any other table of select mortalityfactors adopted by the NAIC after the effec-tive date of this rule and promulgated by ruleby the director for the purpose of calculatingbasic reserves.

(B) Deficiency reserves, if any, are calcu-lated for each policy as the excess, if greaterthan zero, of the quantity A over the basicreserve. The quantity A is obtained by recal-culating the basic reserve for the policy usingguaranteed gross premiums instead of netpremiums when the guaranteed gross premi-ums are less than the corresponding net pre-miums. At the election of the company forany one or more specified plans of insurance,the quantity A and the corresponding net pre-miums used in the determination of quantityA may be based upon the 1980 CSO valua-tion tables with select mortality factors (orany other valuation mortality table adopted bythe NAIC after the effective date of this ruleand promulgated by rule by the director). Ifselect mortality factors are elected, they maybe:

1. The ten (10)-year select mortality fac-tors incorporated into section 376.380,RSMo, and 20 CSR 400-1.110, 20 CSR 400-1.120 and 20 CSR 400-1.130;

2. The select mortality factors in theAppendix of this rule;

3. For durations in the first segment, Xpercent of the select mortality factors in theAppendix, subject to the following:

A. X may vary by policy year, policyform, underwriting classification, issue ageor any other policy factor expected to affectmortality experience;

B. X shall not be less than twenty per-cent (20%);

C. X shall not decrease in any suc-cessive policy years;

D. X is such that, when using the val-uation interest rate used for basic reserves,part (I) is greater than or equal to part (II):

(I) The actuarial present value offuture death benefits, calculated using themortality rates resulting from the applicationof X;

(II) The actuarial present value offuture death benefits calculated using antici-pated mortality experience without recogni-tion of mortality improvement beyond the val-uation date;

E. X is such that the mortality ratesresulting from the application of X are atleast as great as the anticipated mortalityexperience, without recognition of mortalityimprovement beyond the valuation date, ineach of the first five (5) years after the valu-ation date;

F. The appointed actuary shallincrease X at any valuation date where it isnecessary to continue to meet all the require-ments of paragraph (B)3.;

G. The appointed actuary maydecrease X at any valuation date as long as Xdoes not decrease in any successive policyyears and as long as it continues to meet allthe requirements of paragraph (B)3. of thissection;

H. The appointed actuary shallspecifically take into account the adverseeffect on expected mortality and lapsation ofany anticipated or actual increase in grosspremiums; and

I. If X is less than one hundred per-cent (100%) at any duration for any policy,the following requirements shall be met:

(I) The appointed actuary shallannually prepare an actuarial opinion andmemorandum for the company in confor-mance with the requirements of section 20CSR 200-1.116(6);

(II) The appointed actuary shallannually opine for all policies subject to thisrule as to whether the mortality rates result-ing from the application of X meet therequirements of paragraph (B)3. of this sec-tion. This opinion shall be supported by anactuarial report, subject to appropriateActuarial Standards of Practice promulgatedby the Actuarial Standards Board of the



American Academy of Actuaries. The X fac-tors shall reflect anticipated future mortality,without recognition of mortality improvementbeyond the valuation date, taking into accountrelevant emerging experience; and

(III) The company shall file anyopinion(s) required by parts (I) or (II) of thissubparagraph with the director of theDepartment of Insurance as an attachment orattachments to and at the same time as thecompany’s annual statement to which suchopinion(s) relate.

4. Any other table of select mortalityfactors adopted by the NAIC after the effec-tive date of this rule and promulgated by ruleby the director for the purpose of calculatingdeficiency reserves.

(C) This subsection applies to both basicreserves and deficiency reserves. Any set ofselect mortality factors may be used only forthe first segment. However, if the first seg-ment is less than ten (10) years, the appropri-ate ten-year select mortality factors incorpo-rated into section 376.380, RSMo, and 20CSR 400-1.110, 20 CSR 400-1.120 and 20CSR 400-1.130 may be used thereafterthrough the tenth policy year from the date ofissue.

(D) In determining basic reserves or defi-ciency reserves, guaranteed gross premiumswithout policy fees may be used where thecalculation involves the guaranteed gross pre-mium, but only if the policy fee is a level dol-lar amount after the first policy year. In deter-mining deficiency reserves, policy fees maybe included in guaranteed gross premiums,even if not included in the actual calculationof basic reserves.

(E) Reserves for policies that have changesto guaranteed gross premiums, guaranteedbenefits, guaranteed charges, or guaranteedcredits that are unilaterally made by theinsurer after issue and that are effective formore than one (1) year after the date of thechange shall be the greatest of the following:

1. Reserves calculated ignoring theguarantee;

2. Reserves assuming the guarantee wasmade at issue; and

3. Reserves assuming that the policy wasissued on the date of the guarantee.

(F) The director may require that the com-pany document the extent of the adequacy ofreserves for specified blocks, including, butnot limited to policies issued prior to theeffective date of this rule. This documenta-tion may include a demonstration of theextent to which aggregation with other non-specified blocks of business is relied upon inthe formation of the appointed actuary opin-ion pursuant to and consistent with the

requirements of section 20 CSR 200-1.116(6).

(4) Calculation of Minimum ValuationStandard for Policies with GuaranteedNonlevel Gross Premiums or GuaranteedNonlevel Benefits (Other than Universal LifePolicies).

(A) Basic Reserves. Basic reserves shall becalculated as the greater of the segmentedreserves and the unitary reserves. Both thesegmented reserves and the unitary reservesfor any policy shall use the same valuationmortality table and selection factors. At theoption of the insurer, in calculating segment-ed reserves and net premiums, either of theadjustments described in paragraph 1. or 2.of this subsection may be made:

1. Treat the unitary reserve, if greaterthan zero, applicable at the end of each seg-ment as a pure endowment and subtract theunitary reserve, if greater than zero, applica-ble at the beginning of each segment from thepresent value of guaranteed life insurance andendowment benefits for each segment;

2. Treat the guaranteed cash surrendervalue, if greater than zero, applicable at theend of each segment as a pure endowment;and subtract the guaranteed cash surrendervalue, if greater than zero, applicable at thebeginning of each segment from the presentvalue of guaranteed life insurance and endow-ment benefits for each segment.

(B) Deficiency Reserves.1. The deficiency reserve at any duration

shall be calculated:A. On a unitary basis if the corre-

sponding basic reserve determined by subsec-tion (A) of this section is unitary;

B. On a segmented basis if the corre-sponding basic reserve determined by subsec-tion (A) of this section is segmented; or

C. On the segmented basis if the cor-responding basic reserve determined by sub-section (A) of this section is equal to both thesegmented reserve and the unitary reserve.

2. This subsection shall apply to anypolicy for which the guaranteed gross premi-um at any duration is less than the corre-sponding modified net premium calculated bythe method used in determining the basicreserves, but using the minimum valuationstandards of mortality (specified in subsec-tion (3)(B)) and rate of interest.

3. Deficiency reserves, if any, shall becalculated for each policy as the excess ifgreater than zero, for the current and allremaining periods, of the quantity A over thebasic reserve, where A is obtained as indicat-ed in subsection (3)(B).

4. For deficiency reserves determinedon a segmented basis, the quantity A is deter-

mined using segment lengths equal to thosedetermined for segmented basic reserves.

(C) Minimum Value. Basic reserves maynot be less than the tabular cost of insurancefor the balance of the policy year, if meanreserves are used. Basic reserves may not beless than the tabular cost of insurance for thebalance of the current modal period or to thepaid to date, if later, but not beyond the nextpolicy anniversary, if mid-terminal reservesare used. The tabular cost of insurance shalluse the same valuation mortality table andinterest rates as that used for the calculationof the segmented reserves. However, if selectmortality factors are used, they shall be theten (10)-year select factors incorporated intosection 376.380, RSMo, and 20 CSR 400-1.110, 20 CSR 400-1.120 and 20 CSR 400-1.130. In no case may total reserves (includ-ing basic reserves, deficiency reserves andany reserves held for supplemental benefitsthat would expire upon contract termination)be less than the amount that the policy ownerwould receive (including the cash surrendervalue of the supplemental benefits, if any,referred to above), exclusive of any deductionfor policy loans, upon termination of the pol-icy.

(D) Unusual Pattern of Guaranteed CashSurrender Values.

1. For any policy with an unusual pat-tern of guaranteed cash surrender values, thereserves actually held prior to the first unusu-al guaranteed cash surrender value shall notbe less than the reserves calculated by treat-ing the first unusual guaranteed cash surren-der value as a pure endowment and treatingthe policy as an n year policy providing terminsurance plus a pure endowment equal to theunusual cash surrender value, where n is thenumber of years from the date of issue to thedate the unusual cash surrender value isscheduled.

2. The reserves actually held subsequentto any unusual guaranteed cash surrendervalue shall not be less than the reserves cal-culated by treating the policy as an n year pol-icy providing term insurance plus a pureendowment equal to the next unusual guaran-teed cash surrender value, and treating anyunusual guaranteed cash surrender value atthe end of the prior segment as a net singlepremium, where:

A. n is the number of years from thedate of the last unusual guaranteed cash sur-render value prior to the valuation date to theearlier of:

(I) The date of the next unusualguaranteed cash surrender value, if any, thatis scheduled after the valuation date; or

(II) The mandatory expiration dateof the policy; and


Secretary of State


B. The net premium for a given yearduring the n year period is equal to the prod-uct of the net to gross ratio and the respectivegross premium; and

C. The net to gross ratio is equal topart (I) divided by part (II) as follows:

(I) The present value, at the begin-ning of the n year period, of death benefitspayable during the n year period plus the pre-sent value, at the beginning of the n year peri-od, of the next unusual guaranteed cash sur-render value, if any, minus the amount of thelast unusual guaranteed cash surrender value,if any, scheduled at the beginning of the nyear period.

(II) The present value, at the begin-ning of the n year period, of the scheduledgross premiums payable during the n yearperiod.

3. For purposes of this subsection, apolicy is considered to have an unusual pat-tern of guaranteed cash surrender values ifany future guaranteed cash surrender valueexceeds the prior year’s guaranteed cash sur-render value by more than the sum of:

A. One hundred ten percent (110%)of the scheduled gross premium for that year;

B. One hundred ten percent (110%) ofone (1)-year’s accrued interest on the sum ofthe prior year’s guaranteed cash surrendervalue and the scheduled gross premium usingthe nonforfeiture interest rate used for calcu-lating policy guaranteed cash surrender val-ues; and

C. Five percent (5%) of the first pol-icy year surrender charge, if any.

(E) Optional Exemption for YearlyRenewable Term Reinsurance (YRT). At theoption of the company, the following ap-proach for reserves on YRT reinsurance maybe used:

1. Calculate the valuation net premiumfor each future policy year as the tabular costof insurance for that future year;

2. Basic reserves shall never be less thanthe tabular cost of insurance for the appropri-ate period, as defined in subsection (4)(C);

3. Deficiency reserves.A. For each policy year, calculate the

excess, if greater than zero, of the valuationnet premium over the respective maximumguaranteed gross premium.

B. Deficiency reserves shall never beless than the sum of the present values, at thedate of valuation, of the excesses determinedin accordance with subparagraph A. of thisparagraph.

4. For purposes of this subsection, thecalculations use the maximum valuationinterest rate and the 1980 CSO mortalitytables with or without ten (10)-year selectmortality factors, or any other table adopted

by the NAIC after the effective date of thisrule and promulgated by rule of the directorfor this purpose.

5. A reinsurance agreement shall beconsidered YRT reinsurance for purposes ofthis subsection if only the mortality risk isreinsured.

6. If the assuming company chooses thisoptional exemption, the ceding company’sreinsurance reserve credit shall be limited tothe amount of reserve held by the assumingcompany for the affected policies.

(F) Optional Exemption for Attained-Age-Based Yearly Renewable Term Life InsurancePolicies. At the option of the company, thefollowing approach for reserves for attained-age-based YRT life insurance policies may beused:

1. Calculate the valuation net premiumfor each future policy year as the tabular costof insurance for that future year.

2. Basic reserves shall never be less thanthe tabular cost of insurance for the appropri-ate period, as defined in subsection (4)(C);

3. Deficiency reserves.A. For each policy year, calculate the

excess, if greater than zero, of the valuationnet premium over the respective maximumguaranteed gross premium.

B. Deficiency reserves shall never beless than the sum of the present values, at thedate of valuation, of the excesses determinedin accordance with subparagraph A. of thisparagraph.

4. For purposes of this subsection, thecalculations use the maximum valuationinterest rate and the 1980 CSO valuationtables with or without ten (10)-year selectmortality factors, or any other table adoptedby the NAIC after the effective date of thisrule and promulgated by rule by the directorfor this purpose.

5. A policy shall be considered anattained-age-based YRT life insurance policyfor purposes of this subsection if:

A. The premium rates (on both theinitial current premium scale and the guaran-teed maximum premium scale) are basedupon the attained age of the insured such thatthe rate for any given policy at a givenattained age of the insured is independent ofthe year the policy was issued; and

B. The premium rates (on both theinitial current premium scale and the guaran-teed maximum premium scale) are the sameas the premium rates for policies covering allinsured persons of the same sex, risk class,plan of insurance and attained age.

6. For policies that become attained-age-based YRT policies after an initial period ofcoverage, the approach of this subsection maybe used after the initial period if:

A. The initial period is constant forall insured persons of the same sex, risk classand plan of insurance; or

B. The initial period runs to a com-mon attained age for all insureds of the samesex, risk class and plan of insurance; and

C. After the initial period of cover-age, the policy meets the conditions of para-graph 5. of this subsection.

7. If this election is made, this approachshall be applied in determining reserves forall attained-age-based YRT life insurancepolicies issued on or after the effective dateof this rule.

(G) Exemption for Unitary Reserves forCertain n-Year Renewable Term Life Insur-ance Policies. Unitary basic reserves and uni-tary deficiency reserves need not be calculat-ed for a policy if the following conditions aremet:

1. The policy consists of a series of n-year periods, including the first period and allrenewal periods, where n is the same for eachperiod, except that for the final renewal peri-od, n may be truncated or extended to reachthe expiry age, provided that this final renew-al period is less than ten (10) years and lessthan twice the size of the earlier n-year peri-ods, and for each period, the premium rateson both the initial current premium scale andthe guaranteed maximum premium scale arelevel;

2. The guaranteed gross premiums in alln-year periods are not less than the corre-sponding net premiums based upon the 1980CSO Table with or without the ten (10)-yearselect mortality factors; and

3. There are no cash surrender values inany policy year.

(H) Exemption from Unitary Reserves forCertain Juvenile Policies. Unitary basicreserves and unitary deficiency reserves neednot be calculated for a policy if the followingconditions are met, based upon the initialcurrent premium scale at issue:

1. At issue, the insured is age twenty-four (24) or younger;

2. Until the insured reaches the end ofthe juvenile period, which shall occur at orbefore age twenty-five (25), the gross premi-ums and death benefits are level, and thereare no cash surrender values; and

3. After the end of the juvenile period,gross premiums are level for the remainder ofthe premium paying period, and death bene-fits are level for the remainder of the life ofthe policy.

(5) Calculation of Minimum ValuationStandard for Flexible Premium and FixedPremium Universal Life Insurance PoliciesThat Contain Provisions Resulting in the



Ability of a Policyowner to Keep a Policy inForce Over a Secondary Guarantee Period.

(A) General. 1. Policies with a secondary guarantee

include:A. A policy with a guarantee that the

policy will remain in force at the originalschedule of benefits, subject only to the pay-ment of specified premiums;

B. A policy in which the minimumpremium at any duration is less than the cor-responding one (1)-year valuation premium,calculated using the maximum valuationinterest rate and the 1980 CSO valuationtables with or without ten (10)-year selectmortality factors, or any other table adoptedafter the effective date of this rule by theNAIC and promulgated by regulation by thedirector for this purpose; or

C. A policy with any combination ofsubparagraphs A. and B. of this paragraph.

2. A secondary guarantee period is theperiod for which the policy is guaranteed toremain in force subject only to a secondaryguarantee. When a policy contains more thanone secondary guarantee, the minimumreserve shall be the greatest of the respectiveminimum reserves at that valuation date ofeach unexpired secondary guarantee, ignor-ing all other secondary guarantees.Secondary guarantees that are unilaterallychanged by the insurer after issue shall beconsidered to have been made at issue.Reserves described in subsections (B) and (C)below shall be recalculated from issue toreflect these changes.

3. Specified premiums mean the premi-ums specified in the policy, the payment ofwhich guarantees that the policy will remainin force at the original schedule of benefits,but which otherwise would be insufficient tokeep the policy in force in the absence of theguarantee if maximum mortality and expensecharges and minimum interest credits weremade and any applicable surrender chargeswere assessed.

4. For purposes of this section, the min-imum premium for any policy year is the pre-mium that, when paid into a policy with azero account value at the beginning of thepolicy year, produces a zero account value atthe end of the policy year. The minimum pre-mium calculation shall use the policy costfactors (including mortality charges, loadsand expense charges) and the interest credit-ing rate which are all guaranteed at issue.

5. The one (1)-year valuation premiummeans the net one (1) year premium basedupon the original schedule of benefits for agiven policy year. The one (1)-year valuationpremiums for all policy years are calculatedat issue. The select mortality factors defined

in paragraphs (3)(B)2., 3., and 4. may not beused to calculate the one (1)-year valuationpremiums.

6. The one (1)-year valuation premiumshould reflect the frequency of fund process-ing, as well as the distribution of deathsassumption employed in the calculation of themonthly mortality charges to the fund.

(B) Basic Reserves for the SecondaryGuarantees. Basic reserves for the secondaryguarantees shall be the segmented reservesfor the secondary guarantee period. In cal-culating the segments and the segmentedreserves, the gross premiums shall be setequal to the specified premiums, if any, orotherwise to the minimum premiums, thatkeep the policy in force and the segments willbe determined according to the contract seg-mentation method as defined in subsection(2)(B).

(C) Deficiency Reserves for the SecondaryGuarantees. Deficiency reserves, if any, forthe secondary guarantees shall be calculatedfor the secondary guarantee period in thesame manner as described in subsection(4)(B) with gross premiums set equal to thespecified premiums, if any, or otherwise tothe minimum premiums that keep the policyin force.

(D) Minimum Reserves. The minimumreserves during the secondary guarantee peri-od are the greater of:

1. The basic reserves for the secondaryguarantee plus the deficiency reserve, if any,for the secondary guarantees; or

2. The minimum reserves required byother rules or regulations governing universallife plans.

(6) This rule incorporates by reference theAppendix hereto containing tables of selectmortality factors.

(7) Effective Date. This rule shall becomeeffective thirty (30) days after publication inthe Code of State Regulations or on January1, 2001, whichever later occurs.


Secretary of State


Appendix to Rule 20 CSR 200-1.160 Valuation of Life Insurance Policies

SELECT MORTALITY FACTORS

This appendix contains tables of select mortality factors that are the bases to which the respective percentage of Section (3)(A)2, (3)(B)2, and(3)(B)3 are applied.

The six tables of select mortality factors contained herein include: (1) male aggregate, (2) male nonsmoker, (3) male smoker, (4) female aggre-gate, (5) female nonsmoker, and (6) female smoker.

These tables apply to both age last birthday and age nearest birthday mortality tables.

For sex-blended mortality tables, compute select mortality factors in the same proportion as the underlying mortality. For example, for the1980 CSO-B Table, the calculated select mortality factors are eighty percent (80%) of the appropriate male table in this Appendix, plus twen-ty percent (20%) of the appropriate female table in this Appendix.




Secretary of State


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