CHAPTER 698
INSURERS

Table of Contents

Sec. 38a-47. (Formerly Sec. 38-53a). Payments by domestic insurance companies for expenditures of Insurance Department.
Sec. 38a-48. (Formerly Sec. 38-53b). Assessment of payments by domestic insurance companies. Adjustments. Penalty. Interest. Payments credited to Insurance Fund. Allocation of assessments.
Sec. 38a-53. (Formerly Sec. 38-24). Requirements re filing of annual reports and financial statements by company. Late filing fee.
Sec. 38a-55. Hypothecation of assets.
Sec. 38a-60. (Formerly Sec. 38-27a). Continuity of management during national emergencies.
Sec. 38a-78. (Formerly Sec. 38-130e). Ascertainment of reserves for life insurance policies and annuity and pure endowment contracts. Annual reporting of reserves to commissioner. Issuance of opinion by qualified actuary. Memorandum in support of opinion. Additional reserves as determined by qualified actuary not deemed a higher standard of valuation. Minimum standards of valuation for health insurance plans. Regulations.
Sec. 38a-91k. Captive insurers: Information to be submitted to commissioner.
Sec. 38a-92d. Reserves against unpaid losses and loss expense.

PART I
IN GENERAL. COSTS

      Sec. 38a-47. (Formerly Sec. 38-53a). Payments by domestic insurance companies for expenditures of Insurance Department. All domestic insurance companies and other domestic entities subject to taxation under chapter 207 shall, in accordance with section 38a-48, annually pay to the Insurance Commissioner, for deposit in the Insurance Fund established under section 38a-52a, an amount equal to the actual expenditures made by the Insurance Department during each fiscal year, and the actual expenditures made by the Office of the Healthcare Advocate, including the cost of fringe benefits for department and office personnel as estimated by the Comptroller, plus the expenditures made on behalf of the department and the office from the Capital Equipment Purchase Fund pursuant to section 4a-9 for such year, but excluding expenditures paid for by fraternal benefit societies, foreign and alien insurance companies and other foreign and alien entities under sections 38a-49 and 38a-50. Payments shall be made by assessment of all such domestic insurance companies and other domestic entities calculated and collected in accordance with the provisions of section 38a-48. Any such domestic insurance company or other domestic entity aggrieved because of any assessment levied under this section may appeal therefrom in accordance with the provisions of section 38a-52.

      (P.A. 80-482, S. 280, 345, 348; P.A. 82-26, S. 1; 82-456, S. 1, 2; P.A. 85-185, S. 1, 3; P.A. 86-265, S. 1, 2; P.A. 87-515, S. 3, 4; P.A. 89-165, S. 1, 3; P.A. 90-148, S. 25, 34; 90-243, S. 20; June Sp. Sess. P.A. 91-14, S. 12, 30; June Sp. Sess. P.A. 01-9, S. 66, 131; P.A. 05-102, S. 3.)

      History: P.A. 82-26 provided that the comptroller rather than administrative services department estimate fringe benefit costs for insurance department personnel; P.A. 82-456 increased the percentage of expenditures of the insurance department paid by companies from seventy to one hundred and eliminated the eight per cent of taxes and charges option, replacing it with various dollar amounts per fiscal year; P.A. 85-185 provided the method of calculation of the proper amount for the fiscal year commencing July 1, 1984; P.A. 86-265 added Subsec. (b), providing for an assessment for the fiscal year ending June 30, 1987, covering the total expenditures of the department in that year, and amended Subsec. (a) to provide that the amount assessed pursuant to Subsec. (b) shall be used as the basis for the calculation of the assessments for the following years; P.A. 87-515 provided that domestic insurance companies shall be assessed for the actual expenditures made by the department during each fiscal year, and removed prior limitations on the total assessment amount; P.A. 89-165 provided that domestic insurance companies shall be assessed for the expenditures made on behalf of the department from the capital equipment purchase fund; P.A. 90-148 inserted reference to Sec. 38-53b as a technical change related to certain procedural amendments occurring in said Sec. 38-53b; P.A. 90-243 inserted references to "foreign" and "alien" insurance companies to replace references to "nonresident" and "foreign" companies; Sec. 38-53a transferred to Sec. 38a-47 in 1991; June Sp. Sess. P.A. 91-14 deleted reference to deposit general fund and substituted reference to insurance fund deposits; June Sp. Sess. P.A. 01-9 added provisions re expenditures by the Office of the Managed Care Ombudsman, effective July 1, 2001; P.A. 05-102 renamed the Office of the Managed Care Ombudsman the Office of the Healthcare Advocate.

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      Sec. 38a-48. (Formerly Sec. 38-53b). Assessment of payments by domestic insurance companies. Adjustments. Penalty. Interest. Payments credited to Insurance Fund. Allocation of assessments. (a) On or before June thirtieth, annually, the Commissioner of Revenue Services shall render to the Insurance Commissioner a statement certifying the amount of taxes or charges imposed on each domestic insurance company or other domestic entity under chapter 207 on business done in this state during the preceding calendar year; the statement for local domestic insurance companies shall set forth the amount of taxes and charges before any tax credits allowed as provided in section 12-202.

      (b) On or before July thirty-first, annually, the Insurance Commissioner and the Office of the Healthcare Advocate shall render to each domestic insurance company or other domestic entity liable for payment under section 38a-47, (1) a statement which includes the amount appropriated to the Insurance Department and the Office of the Healthcare Advocate for the fiscal year beginning July first of the same year, the cost of fringe benefits for department and office personnel for such year, as estimated by the Comptroller, and the estimated expenditures on behalf of the department and the office from the Capital Equipment Purchase Fund pursuant to section 4a-9 for such year, (2) a statement of the total taxes imposed on all domestic insurance companies and domestic insurance entities under chapter 207 on business done in this state during the preceding calendar year, and (3) the proposed assessment against that company or entity, calculated in accordance with the provisions of subsection (c) of this section, provided that for the purposes of this calculation the amount appropriated to the Insurance Department and the Office of the Healthcare Advocate plus the cost of fringe benefits for department and office personnel and the estimated expenditures on behalf of the department and the office from the Capital Equipment Purchase Fund pursuant to section 4a-9 shall be deemed to be the actual expenditures of the department and the office.

      (c) (1) The proposed assessments for each domestic insurance company or other domestic entity shall be calculated by (A) allocating twenty per cent of the amount to be paid under section 38a-47 among the domestic entities organized under sections 38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, in proportion to their respective shares of the total taxes and charges imposed under chapter 207 on such entities on business done in this state during the preceding calendar year, and (B) allocating eighty per cent of the amount to be paid under section 38a-47 among all domestic insurance companies and domestic entities other than those organized under sections 38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, in proportion to their respective shares of the total taxes and charges imposed under chapter 207 on such domestic insurance companies and domestic entities on business done in this state during the preceding calendar year, provided if there are no domestic entities organized under sections 38a-199 to 38a-209, inclusive, and 38a-214 to 38a-225, inclusive, at the time of assessment, one hundred per cent of the amount to be paid under section 38a-47 shall be allocated among such domestic insurance companies and domestic entities. (2) When the amount any such company or entity is assessed pursuant to this section exceeds twenty-five per cent of the actual expenditures of the Insurance Department and the Office of the Healthcare Advocate, such excess amount shall not be paid by such company or entity but rather shall be assessed against and paid by all other such companies and entities in proportion to their respective shares of the total taxes and charges imposed under chapter 207 on business done in this state during the preceding calendar year. The provisions of this subdivision shall not be applicable to any corporation which has converted to a domestic mutual insurance company pursuant to section 38a-155 upon the effective date of any public act which amends said section to modify or remove any restriction on the business such a company may engage in, for purposes of any assessment due from such company on and after such effective date.

      (d) For purposes of calculating the amount of payment under section 38a-47, as well as the amount of the assessments under this section, the "total taxes imposed on all domestic insurance companies and other domestic entities under chapter 207" shall be based upon the amounts shown as payable to the state for the calendar year on the returns filed with the Commissioner of Revenue Services pursuant to chapter 207; with respect to calculating the amount of payment and assessment for local domestic insurance companies, the amount used shall be the taxes and charges imposed before any tax credits allowed as provided in section 12-202.

      (e) On or before September thirtieth, annually, for each fiscal year ending prior to July 1, 1990, the Insurance Commissioner and the Healthcare Advocate, after receiving any objections to the proposed assessments and making such adjustments as in their opinion may be indicated, shall assess each such domestic insurance company or other domestic entity an amount equal to its proposed assessment as so adjusted. Each domestic insurance company or other domestic entity shall pay to the Insurance Commissioner on or before October thirty-first an amount equal to fifty per cent of its assessment adjusted to reflect any credit or amount due from the preceding fiscal year as determined by the commissioner under subsection (g) of this section. Each domestic insurance company or other domestic entity shall pay to the Insurance Commissioner on or before the following April thirtieth, the remaining fifty per cent of its assessment.

      (f) On or before September first, annually, for each fiscal year ending after July 1, 1990, the Insurance Commissioner and the Healthcare Advocate, after receiving any objections to the proposed assessments and making such adjustments as in their opinion may be indicated, shall assess each such domestic insurance company or other domestic entity an amount equal to its proposed assessment as so adjusted. Each domestic insurance company or other domestic entity shall pay to the Insurance Commissioner (1) on or before June 30, 1990, and on or before June thirtieth annually thereafter, an estimated payment against its assessment for the following year equal to twenty-five per cent of its assessment for the fiscal year ending such June thirtieth, (2) on or before September thirtieth, annually, twenty-five per cent of its assessment adjusted to reflect any credit or amount due from the preceding fiscal year as determined by the commissioner under subsection (g) of this section, and (3) on or before the following December thirty-first and March thirty-first, annually, each domestic insurance company or other domestic entity shall pay to the Insurance Commissioner the remaining fifty per cent of its proposed assessment to the department in two equal installments.

      (g) Immediately following the close of the fiscal year, the Insurance Commissioner and the Healthcare Advocate shall recalculate the proposed assessment for each domestic insurance company or other domestic entity in accordance with subsection (c) of this section using the actual expenditures made by the Insurance Department and the Office of the Healthcare Advocate during that fiscal year and the actual expenditures made on behalf of the department and the office from the Capital Equipment Purchase Fund pursuant to section 4a-9. On or before July thirty-first, the Insurance Commissioner and the Healthcare Advocate shall render to each such domestic insurance company and other domestic entity a statement showing the difference between their respective recalculated assessments and the amount they have previously paid. On or before August thirty-first, the Insurance Commissioner and the Healthcare Advocate, after receiving any objections to such statements, shall make such adjustments which in their opinion may be indicated, and shall render an adjusted assessment, if any, to the affected companies.

      (h) If any assessment is not paid when due, a penalty of ten dollars shall be added thereto, and interest at the rate of six per cent per annum shall be paid thereafter on such assessment and penalty.

      (i) The commissioner shall deposit all payments made under this section with the State Treasurer. On and after June 6, 1991, the moneys so deposited shall be credited to the Insurance Fund established under section 38a-52a and shall be accounted for as expenses recovered from insurance companies.

      (P.A. 80-482, S. 281, 345, 348; P.A. 82-26, S. 2; P.A. 84-185, S. 1; P.A. 88-326, S. 1, 11; P.A. 89-165, S. 2, 3; P.A. 90-148, S. 26, 34; June Sp. Sess. P.A. 91-14, S. 13, 30; P.A. 92-60, S. 5; June Sp. Sess. P.A. 01-9, S. 67, 131; P.A. 05-102, S. 4.)

      History: P.A. 82-26 amended Subsec. (b) to provide that the comptroller rather than administrative services department estimate fringe benefit costs for insurance department personnel; P.A. 84-185 amended Subsec. (g) to provide for a ten-dollar penalty on overdue assessments and to provide the interest charges shall accrue on both the assessment and penalty; P.A. 88-326 inserted a new Subdiv. (2) in Subsec. (c) concerning assessments which exceed twenty-five per cent of the expenditures of the insurance department; P.A. 89-165 amended Subdiv. (1) of Subsec. (b) to provide that the statement rendered to each insurance company include the estimated expenditures on behalf of the department from the capital equipment purchase fund, amended Subdiv. (3) of Subsec. (b) to provide that the proposed assessment against each company be calculated to include such estimated expenditures, amended Subsec. (f) to provide that when the proposed assessment is recalculated the actual expenditures from such fund shall be used and deleted Subsec. (i); P.A. 90-148 (1) amended Subsec. (e) to make assessment procedure therein applicable to state fiscal years ending prior to July 1, 1990, and (2) inserted a new Subsec. (f), with appropriate changes in lettering for succeeding subsections, applicable to state fiscal years ending after July 1, 1990, providing for assessment procedures very similar to those in Subsec. (e) except that on June thirtieth annually, first payable June 30, 1990, each domestic company shall make an estimated payment for the following year, such payment being in addition to payments of twenty-five per cent of the company's assessment for the year in each of September, December and March following; Sec. 38-53b transferred to Sec. 38a-48 in 1991; June Sp. Sess. P.A. 91-14 amended Subsec. (i) to provide that on and after June 6, 1991, moneys deposited with treasurer shall be credited to insurance fund, rather than general fund; P.A. 92-60 amended Subsec. (c) by changing the manner of assessment for domestic entities organized under certain sections of the insurance statutes; (Revisor's note: In 1997 in Subsec. (i) the phrase "... the Insurance Fund and established under section 38a-52a ..." was changed editorially by the Revisors to "... the Insurance Fund established under section 38a-52a and ..." thereby correcting an error in the codification of June Sp. Sess. P.A. 91-14, S. 13); June Sp. Sess. P.A. 01-9 added provisions re the Office of the Managed Care Ombudsman in Subsecs. (b), (c), and (e) to (g), effective July 1, 2001; P.A. 05-102 amended Subsecs. (b), (c), (e), (f) and (g) by renaming the Office of the Managed Care Ombudsman the Office of the Healthcare Advocate and making technical and conforming changes.

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      Sec. 38a-53. (Formerly Sec. 38-24). Requirements re filing of annual reports and financial statements by company. Late filing fee. (a) Each insurance company or health care center doing business in this state shall, annually, on or before the first day of March, render to the commissioner a true report, signed and sworn to by its president or a vice president, and secretary or an assistant secretary, of its financial condition on the thirty-first day of December next preceding, prepared in accordance with the National Association of Insurance Commissioners annual statement instructions handbook and following those accounting procedures and practices prescribed by the National Association of Insurance Commissioners accounting practices and procedures manual, subject to any deviations in form and detail as may be prescribed by the commissioner.

      (b) In addition to such annual report, the commissioner, when he deems it necessary, may require any insurance company or health care center doing business in this state to file financial statements on a quarterly basis.

      (c) In addition to such annual report and the quarterly report required under subsection (b) of this section, the commissioner, whenever the commissioner determines that more frequent reports are required because of certain factors or trends affecting companies writing a particular class or classes of business or because of changes in the company's management or financial or operating condition, may require any insurance company or health care center doing business in this state to file financial statements on other than an annual or quarterly basis.

      (d) Any insurance company or health care center doing business in this state which fails to file any report or statement required under this section shall pay a late filing fee of one hundred dollars per day for each day from the due date of such report or statement to the date of filing.

      (e) Each insurance company or health care center doing business in this state shall include in all reports required to be filed with the commissioner under this section a certification by an actuary or reserve specialist of all reserve liabilities prepared in accordance with regulations which shall be adopted by the commissioner in accordance with chapter 54. The regulations shall: (1) Specify the contents and scope of the certification; (2) provide for the availability to the commissioner of the workpapers of the actuary or loss reserve specialist; and (3) provide for exemptions to the companies or centers from compliance with the requirements of this subsection.

      (1949 Rev., S. 6077; P.A. 76-167, S. 1; P.A. 88-326, S. 2; P.A. 90-243, S. 9; P.A. 92-112, S. 3; P.A. 05-29, S. 3.)

      History: P.A. 76-167 added Subsecs. (b) and (c) re quarterly financial reports and other reports; P.A. 88-326 added a new Subsec. (d) imposing a late filing fee of one hundred dollars per day; P.A. 90-243 added references to health care centers re filing of financial statements with the commissioner and added Subsec. (e) re certification of the disclosure of reserve liabilities; Sec. 38-24 transferred to Sec. 38a-53 in 1991; P.A. 92-112 amended Subsec. (a) to require that reports be filed in accordance with standards set by the National Association of Insurance Commissioners; P.A. 05-29 made technical changes in Subsec. (c).

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      Sec. 38a-55. Hypothecation of assets. (a) No domestic insurer, health care center or fraternal benefit society may pledge, hypothecate or otherwise encumber its assets to secure the debt, guaranty or obligations of any other person without the prior written consent of the Insurance Commissioner. This prohibition shall not apply to obligations of the insurer under surety bonds or insurance contracts issued in the regular course of business.

      (b) (1) No domestic insurer, health care center or fraternal benefit society may, without the prior written consent of the Insurance Commissioner, pledge, hypothecate or otherwise encumber its assets to secure its own debt, guaranty or obligations if the amount of the assets pledged, hypothecated or otherwise encumbered, when the pledge, hypothecation or encumbrance is made, together with the aggregate amount of assets pledged, hypothecated or encumbered to secure all such debts, guarantees and obligations, exceeds the lesser of five per cent of admitted assets or twenty-five per cent of surplus as regards policyholders as reported in its last financial statement filed with the commissioner pursuant to section 38a-53 or 38a-614.

      (2) Nothing in this subsection shall be construed as prohibiting a domestic insurer, health care center or fraternal benefit society from pledging, hypothecating or encumbering any assets in connection with: (A) Transactions in the ordinary course of business, including, but not limited to: (i) Complying with any statutory requirement, (ii) reinsurance transactions otherwise in compliance with applicable statutory requirements, or (iii) investments or investment practices otherwise in compliance with applicable statutory requirements, including, but not limited to, securities lending, repurchase transactions, reverse repurchase transactions, swap, futures and options transactions, and any other transactions which are not prohibited by the investment law and regulations of this state; (B) transactions subject to the provisions of sections 38a-129 to 38a-140, inclusive; or (C) any other transaction deemed excluded by the Insurance Commissioner. Assets pledged, hypothecated or encumbered pursuant to subparagraph (A), (B) or (C) of this subdivision shall not be charged against the limits set forth in subdivision (1) of this subsection.

      (3) In the case of a domestic life insurance company, the provisions of this subsection shall apply to a separate account only to the extent that reserves for guarantees with respect to (A) benefits guaranteed as to dollar amount and duration or (B) funds guaranteed as to principal amount or stated rate of interest are held in a separate account in accordance with subdivision (iii) of subsection (a) of section 38a-433.

      (P.A. 90-243, S. 167; P.A. 98-60; P.A. 05-29, S. 4.)

      History: P.A. 98-60 designated existing language as Subsec. (a) and substituted "domestic" for "licensed" re insurers and "shall" for "does" re prohibition, and added new Subsec. (b) re assets of domestic companies; P.A. 05-29 made a technical change in Subsec. (b)(2)(C).

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      Sec. 38a-60. (Formerly Sec. 38-27a). Continuity of management during national emergencies. (a) The board of directors of a domestic insurance company may at any time, and from time to time, by resolution or amendment to the company's bylaws, provide for an emergency management plan as they consider necessary or appropriate, subject to repeal or change by action of those having power to adopt bylaws for the company.

      (b) If such emergency plan has not been adopted by any such corporation upon the occurrence of a national emergency caused by an attack on the United States or by a nuclear, atomic or other disaster, the following provisions shall automatically become effective and shall remain effective throughout the emergency or until superseded by such emergency plan: (1) Two directors shall constitute a quorum for the transaction of business at all meetings of the board. (2) Notice of any meeting of the board need be given only to such of the directors as it may be practical to reach at the time and by such means as may be practical at the time, including publication or radio broadcast. (3) Any vacancy in the board may be filled by a majority of the remaining directors, even if less than a quorum, or by the sole remaining director. (4) If there are no surviving directors able and willing to serve, or if no surviving directors can be located, all directorships shall be presumed to be vacant. Such vacancies in the board of directors, not to exceed three, shall be filled by the most senior surviving officers of the company able and willing to serve; seniority to be determined by rank and, within rank, first, by year of appointment to that rank and, second, by birth date. If thereafter a surviving director able and willing to serve is located, he shall automatically resume his position on the board of directors and the most junior officer serving as a director under the authority of this subdivision shall thereupon be considered to have resigned. In addition, if there are no surviving directors, one vacancy may be filled by the Insurance Commissioner or other person authorized to exercise his powers.

      (c) If such emergency plan is adopted, it may provide that it will become operative automatically during any such national emergency and, notwithstanding any contrary provision of the law or the charter or bylaws of the company, may contain any provisions reasonably necessary for the operation of the company during any such national emergency. Such provisions need not be consistent with the comparable provisions stated in subsection (b) of this section. Such provisions may provide, among other things, for (1) the designation of persons who may call a meeting of the board of directors; (2) the quorum and notice requirements for, and location of, any such meeting; (3) the filling of vacancies on the board of directors; (4) a succession list of persons by name or title who will succeed to positions of higher rank; (5) the establishment of the principal office of the company at a new location in or out of the state.

      (1963, P.A. 451, S. 1, 2, 3; P.A. 77-614, S. 163, 610; P.A. 80-482, S. 272, 348; P.A. 05-29, S. 5.)

      History: P.A. 77-614 placed insurance commissioner within the department of business regulation and made insurance department a division within that department, effective January 1, 1979; P.A. 80-482 restored insurance commissioner and division to prior independent status and abolished the department of business regulation; Sec. 38-27a transferred to Sec. 38a-60 in 1991; P.A. 05-29 made a technical change in Subsec. (c).

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PART II
FINANCIAL REQUIREMENTS

      Sec. 38a-78. (Formerly Sec. 38-130e). Ascertainment of reserves for life insurance policies and annuity and pure endowment contracts. Annual reporting of reserves to commissioner. Issuance of opinion by qualified actuary. Memorandum in support of opinion. Additional reserves as determined by qualified actuary not deemed a higher standard of valuation. Minimum standards of valuation for health insurance plans. Regulations. (a) The commissioner shall annually value, or cause to be valued, the reserve liabilities, hereinafter called reserves, for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurance company doing business in this state except that in the case of an alien company, the valuation shall be limited to its United States business, and may certify the amount of any such reserves, specifying the mortality table or tables, rate or rates of interest, and methods, including net level premium method or other, used in the calculation of such reserves. In calculating such reserves, he may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves herein required of any foreign or alien company, he may accept any valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standard herein provided and if the official of such state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the commissioner when such certificate states the valuation to have been made in a specified manner according to which the aggregate reserves would be at least as large as if they had been computed in the manner prescribed by the law of that state or jurisdiction.

      (b) (1) Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation are computed appropriately, are based on assumptions which satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this state. The commissioner by regulation shall define the specifics of this opinion and add any other items deemed to be necessary to its scope.

      (2) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 1991.

      (3) The opinion shall apply to all business in force including individual and group health insurance plans, in form and substance acceptable to the commissioner as specified by regulation.

      (4) The opinion shall be based on standards adopted from time to time by the actuarial standards board and on such additional standards as the commissioner may by regulation prescribe.

      (5) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state.

      (6) For the purposes of this section, "qualified actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in regulations the commissioner may prescribe.

      (7) Except in cases of fraud or wilful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision or conduct with respect to the actuary's opinion.

      (8) Disciplinary action by the commissioner against the company or the qualified actuary shall be as defined in such regulations by the commissioner.

      (9) A memorandum, in form and substance acceptable to the commissioner as specified by regulation, shall be prepared to support each actuarial opinion.

      (10) If the insurance company fails to provide a supporting memorandum at the request of the commissioner within a period specified by regulation or the commissioner determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the regulations or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare such supporting memorandum as is required by the commissioner.

      (11) Any memorandum in support of the opinion, and any other material provided by the company to the commissioner in connection therewith, shall be kept confidential by the commissioner and shall not be made public and shall not be subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required by this section or by regulations adopted under this section provided the memorandum or other material may otherwise be released by the commissioner (A) with the written consent of the company or (B) upon the request of the American Academy of Actuaries stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the commissioner for preserving the confidentiality of the memorandum or other material. Once any portion of the confidential memorandum is referred to by the company in its marketing or is referred to before any governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall no longer be confidential.

      (12) Any regulation adopted by the commissioner under the provisions of this subsection shall be adopted in accordance with the provisions of chapter 54.

      (c) (1) Every life insurance company, except as exempted by or pursuant to regulation, shall annually include in the opinion required by subdivision (1) of subsection (b) of this section, an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including but not limited to the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including but not limited to the benefits under and expenses associated with the policies and contracts.

      (2) The commissioner may provide by regulation for a transition period for establishing any higher reserves which the qualified actuary may deem necessary in order to render the opinion required by this section.

      (d) Except as otherwise provided in subsections (e), (f) and (l) of this section, the minimum standard for the valuation of all such policies and contracts issued prior to the effective date specified in accordance with the provisions of subsection (h) of section 38-130e of the general statutes, revision of 1958, revised to 1981, shall be that provided by the laws in effect immediately prior to such date, except that the minimum standard for the valuation of annuities and pure endowments purchased prior to January 1, 1973, under group annuity and pure endowment contracts shall be the 1971 Group Annuity Mortality Table, or any modification of this table approved by the commissioner, and an interest rate of five per cent per annum. Except as otherwise provided in subsections (e), (f) and (l) of this section, the minimum standard for the valuation of all such policies and contracts issued on and after such effective date shall be the commissioner's reserve valuation methods defined in subsections (g), (h) and (j) of this section, four and one-half per cent interest for all other such policies and contracts, and the following tables: (1) For all ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies, the Commissioners' 1958 Standard Ordinary Mortality Table for such policies issued prior to the compliance date established by subdivision (11) of subsection (e) of section 38a-439, provided that for any category of such policies issued on female risks, all modified net premiums and present values referred to in this section may be calculated according to an age not more than six years younger than the actual age of the insured and for such policies issued on or after the compliance date established by subdivision (11) of subsection (e) of section 38a-439, (A) the Commissioners' 1980 Standard Ordinary Mortality Table, or (B) at the election of the company for any one or more specified plans of life insurance, the Commissioners' 1980 Standard Ordinary Mortality Table with ten-year select mortality factors, or (C) on or after January 1, 2005, until January 1, 2009, at the election of the company for any one or more specified plans of life insurance issued on or after January 1, 2004, on the basis of the Commissioners' 2001 Standard Ordinary Mortality Table, except that with respect to such plans issued before April 1, 2005, such mortality table shall be used solely for the basis of valuation and nonforfeiture and shall not be used to increase the previously agreed required premium, or (D) issued on or after January 1, 2009, the Commissioners' 2001 Standard Ordinary Mortality Table, or (E) any ordinary mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such policies; (2) for all industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in such policies, the Commissioners' 1961 Standard Industrial Mortality Table or any industrial mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such policies; (3) for total and permanent disability benefits in or supplementary to ordinary policies or contracts, the tables of period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study of the Society of Actuaries, with due regard to the type of benefit or any tables of disablement rates and termination rates, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such policies. These tables shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies; (4) for accidental death benefits in or supplementary to policies, the 1959 Accidental Death Benefits Table or any accidental death benefits table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such policies. These tables shall be combined with a mortality table permitted for calculating the reserves for life insurance policies; and (5) for group life insurance, life insurance issued on the substandard basis and other special benefits, such tables as may be approved by the commissioner.

      (e) Except as otherwise provided in subsection (f) of this section, the minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the effective date as specified in accordance with the provisions of subsection (h) of section 38-130e of the general statutes, revision of 1958, revised to 1981, and for all annuities and pure endowments purchased on or after such effective date under group annuity and pure endowment contracts, shall be the commissioners reserve valuation methods defined in subsections (g) and (h) of this section and the following tables and interest rates: (1) For individual single premium immediate annuity contracts issued on or after such effective date, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such contracts, or any modification of these tables approved by the commissioner, and seven and one-half per cent interest; (2) for individual annuity and pure endowment contracts issued on or after such effective date, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such contract, or any modification of these tables approved by the commissioner, and five and one-half per cent interest for single premium deferred annuity and pure endowment contracts and four and one-half per cent interest for all other such annuity and pure endowment contracts; (3) for all annuities and pure endowments purchased on or after such effective date under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table or any group annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54 for use in determining the minimum standard of valuation for such annuities and pure endowments, or any modification of these tables approved by the commissioner, and seven and one-half per cent interest.

      (f) (1) The interest rates used in determining the minimum standard for the valuation of (A) all life insurance policies issued in a particular calendar year, on or after the compliance date established by subdivision (11) of subsection (e) of section 38a-439, (B) all individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1982, (C) all annuities and pure endowments purchased in a particular calendar year on or after January 1, 1982, under group annuity and pure endowment contracts, and (D) the net increase, if any, in a particular calendar year after January 1, 1982, in amounts held under guaranteed interest contracts shall be the calendar year statutory valuation interest rates as defined in this subsection;

      (2) The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearest one-quarter of one per cent:

      (A) For life insurance,

I = .03 + W (R1 − .03) +  W 

2
(R2 − .09);

      (B) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options,

                        I = .03 + W(R − .03),

where R1 is the lesser of R and .09,
R2 is the greater of R and .09,
R is the reference interest rate defined in subdivision (4) of this subsection and
W is the weighting factor defined in subdivision (3) of this subsection.

      (C) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in subparagraph (B), the formula for life insurance stated in subparagraph (A) shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of ten years and the formula for single premium immediate annuities stated in subparagraph (B) shall apply to annuities and guaranteed interest contracts with guarantee durations of ten years or less.

      (D) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in subparagraph (B) shall apply.

      (E) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in subparagraph (B) shall apply.

      (F) If the calendar year statutory valuation interest rate for any life insurance policies issued in any calendar year determined without reference to this subdivision differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than one- half of one per cent, the calendar year statutory valuation interest rate for such life insurance policies shall be equal to the corresponding actual rate for the immediately preceding calendar year. For purposes of applying the foregoing, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980 using the reference interest rate defined for 1979 and shall be determined for each subsequent calendar year regardless of the compliance date established by subdivision (11) of subsection (e) of section 38a-439;

      (3) The weighting factors referred to in the formulas stated in subdivision (2) of this subsection are given in the following tables:

Guarantee Duration (Years)Weighting Factors
10 or less.50
More than 10, but not more than 20.45
More than 20.35
For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy.

      (B) Weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options: .80

      (C) Weighting factors for other annuities and for guaranteed interest contracts, except as stated in subparagraph (B), shall be as specified in tables (i), (ii) and (iii) according to the rules and definitions in (iv), (v) and (vi):

      (i) For annuities and guaranteed interest contracts valued on an issue year basis:

 Weighting Factor For
Plan Type
Guarantee Duration (Years)ABC
5 or less:.80.60.50
More than 5, not more than 10:.75.60.50
More than 10 not more than 20:.65.50.45
More than 20:.45.35.35

      (ii) For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in (i) increased by:

 Weighting Factor For
Plan Type
More than 10 not more than 20:ABC
More than 10 not more than 20:.15.25.05

(iii) For annuities and guaranteed interest contracts valued on an issue guarantee interest on considerations received more than one year after issue or purchase and for annuities and guaranteed interest contracts valued on a change in fund basis which do not guarantee interest rates on considerations received more than twelve months beyond the valuation date, the factors shown in (i) or derived in (ii) increased by:

 Weighting Factor For
Plan Type
More than 10 not more than 20:ABC
More than 10 not more than 20:.05.05.05

      (iv) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee duration in excess of twenty years. For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.

      (v) Plan type as used in the tables in subparagraph (C) is defined as follows:

      a. Plan Type A: At any time policyholder may withdraw funds only: (1) With an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without such adjustment but in installments over five years or more, or (3) as an immediate life annuity, or (4) no withdrawal permitted.

      b. Plan Type B: Before expiration of the interest rate guarantee, policyholder may withdraw funds only: (1) With an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without such adjustment but in installments over five years or more, or (3) no withdrawal permitted. At the end of the interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than five years.

      c. Plan Type C: Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than five years either: (1) Without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.

      (vi) A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options must be valued on an issue year basis. As used in this subsection, an issue year basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract. The change in fund basis of valuation refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in fund;

      (4) The reference interest rate referred to in subdivision (2) of this subsection shall be defined as follows: a. For all life insurance, the lesser of the average over a period of thirty-six months and the average over a period of twelve months, ending on June thirtieth of the calendar year next preceding the year of issue, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.; b. for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the average over a period of twelve months, ending on June thirtieth of the calendar year of issue or year of purchase of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.; c. for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in b. above, with guarantee duration in excess of ten years, the lesser of the average over a period of thirty-six months and the average over a period of twelve months, ending on June thirtieth of the calendar year of issue or purchase of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.; d. for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except as stated in b. above, with guarantee duration of ten years or less, the average over a period of twelve months, ending on June thirtieth of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.; e. for other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the average over a period of twelve months, ending on June thirtieth of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.; f. for other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except as stated in b. above, the average over a period of twelve months, ending on June thirtieth of the calendar year of the change in the fund, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.

      (5) In the event that Moody's Corporate Bond Yield Average-Monthly Average Corporates is no longer published by Moody's Investors Service, Inc., or in the event that the National Association of Insurance Commissioners determines that Moody's Corporate Bond Yield Average-Monthly Average Corporates as published by Moody's Investors Service, Inc. is no longer appropriate for the determination of the reference interest rate, an alternative method for determination of the reference interest rate, which is adopted by the National Association of Insurance Commissioners and approved by regulations adopted by the commissioner in accordance with the provisions of chapter 54, may be substituted.

      (g) Except as otherwise provided in subsections (h), (j) and (l) of this section, reserves according to the commissioner's reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such policies, over the then present value of any future modified net premiums therefor. The modified net premiums for any such policy shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then present value of such benefits provided for by the policy and the excess of (1) over (2), as follows: (1) A net level annual premium equal to the present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due; provided such net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of such policy, and (2) a net one year term premium for such benefits provided for in the first policy year provided that for any life insurance policy issued on or after January 1, 1985, for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the reserve according to the commissioners reserve valuation method as of any policy anniversary occurring on or before the assumed ending date defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than such excess premium shall, except as otherwise provided in subsection (j) of this section, be the greater of the reserve as of such policy anniversary calculated as described in this subsection and the reserve as of such policy anniversary calculated as described in this subsection but with the value defined in subdivision (1) of this subsection being reduced by fifteen per cent of the amount of such excess first year premium, all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date, the policy being assumed to mature on such date as an endowment, and the cash surrender value provided on such date being considered as an endowment benefit. In making the above comparison, the mortality and interest bases stated in subsections (e) and (f) of this section shall be used. Reserves according to the commissioners reserve valuation method for: (A) Life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums; (B) group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter amended; (C) disability and accidental death benefits in all policies and contracts; and (D) all other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of this subsection.

      (h) This subsection shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter amended. Reserves according to the commissioners annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in such contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by such contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of such contract, that become payable prior to the end of such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values.

      (i) (1) In no event shall a company's aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, issued on or after the effective date as specified in accordance with the provisions of subsection (h) of section 38-130e of the general statutes, revision of 1958, revised to 1981, be less than the aggregate reserves calculated in accordance with the methods set forth in subsections (f), (g), (i) and (k) of this section, and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for such policies; (2) in no event shall the aggregate reserves for all policies, contracts and benefits be less than the aggregate reserves determined by the qualified actuary to be necessary to render the opinion required by subsection (b) of this section; (3) reserves for any category of policies, contracts or benefits as established by the commissioner may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard herein provided, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for therein; (4) any such company which at any time shall have adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard herein provided may, with the approval of the commissioner, adopt any lower standard of valuation, but not lower than the minimum herein provided; provided, for the purposes of this subsection, the holding of additional reserves previously determined by a qualified actuary to be necessary to render the opinion required by subsection (b) of this section shall not be deemed to be the adoption of a higher standard of valuation.

      (j) If in any contract year the gross premium charged by any life insurance company on any policy or contract, in force as of or written after the effective date as specified in accordance with the provisions of subsection (h) of section 38-130e of the general statutes, revision of 1958, revised to 1981, is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve thereon but using the most recent minimum valuation standards of mortality and rate of interest, the minimum reserve required for such policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for such policy or contract, or the reserve calculated by the method actually used for such policy or contract but using the minimum standards of mortality and rate of interest in effect in the year that the policy or contract was issued and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this subsection are those standards stated in subsections (d) and (f) of this section. For any life insurance policy issued on or after January 1, 1985, for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the foregoing provisions of this subsection shall be applied as if the method actually used in calculating the reserve for such policy were the method described in subsection (g) of this section. The minimum reserve at each policy anniversary of such policy shall be the greater of the minimum reserve calculated in accordance with subsection (g) of this section and the minimum reserve calculated in accordance with this subsection.

      (k) In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance or annuity which is of such nature that the minimum reserves cannot be determined by the methods described in subsections (g), (h), and (j) of this section, the reserves which are held under any such plan must be appropriate in relation to the benefits and the pattern of premiums for that plan, and be computed by a method which is consistent with the principles of this standard valuation law, as determined by regulations adopted by the commissioner in accordance with the provisions of chapter 54.

      (l) The commissioner shall adopt regulations in accordance with the provisions of chapter 54 containing the minimum standards applicable to the valuation of health insurance plans.

      (m) The provisions of sections 38a-77 and 38a-433 shall apply to policies issued by a company before the date of its election to comply with section 38-130e of the general statutes, revision of 1958, revised to 1981, or January 1, 1981, whichever occurred first. The provisions of section 38-130e of the general statutes, revision of 1958, revised to 1981, shall apply to policies issued by a company on and after the date of such election or on and after January 1, 1981, whichever occurred first, and before October 1, 1981.

      (P.A. 78-312, S. 4; P.A. 81-170, S. 2; P.A. 90-243, S. 56; P.A. 91-175, S. 2; P.A. 05-162, S. 2.)

      History: P.A. 81-170 authorized the use of new mortality tables, specified the formula used in calculating the interest rate for determining a company's maximum reserves and provided for the reference interest rate as an average over a specified time period of Moody's Corporate Index; P.A. 90-243 made technical corrections substituting "alien" for "foreign", "the" for "such", "foreign" for "nonresident" and amended the method for calculating the reserves on life insurance policies in Subsec. (h); Sec. 38-130e transferred to Sec. 38a-78 in 1991; P.A. 91-175 amended Subsec. (a) to include the phrase "or cause to be valued" to allow the insurance companies to submit to the insurance commissioner an independent evaluation of the reserves, inserted a new Subsec. (b) requiring that every life insurance company annually submit the opinion of a qualified actuary re the computation and adequacy of the reserves, the reserving practices of that particular insurance company and provide a written memorandum to the insurance commissioner, inserted a new Subsec. (c) requiring that the insurance company provide an actuarial opinion to the insurance commissioner which contains a determination of whether the company's reserve and actuarial items which support the policies and contracts are sufficient to meet the company's obligations, relettered former Subsecs. (b) to (f) as (d) to (h) and amended internal references, relettered Subsec. (g) as Subsec. (i), amended all internal references, added a provision re aggregate reserves for all policies, contracts and benefits and added a provision that the adoption of additional reserves determined by a qualified actuary in the rendition of his annual opinion would not heighten the standard of valuation, relettered Subsecs. (h) and (i) as (j) and (k) and amended internal references, added new Subsec. (l) requiring the insurance commissioner to adopt regulations for the minimum standards valuation of health insurance plans and relettered Subsec. (j) as (m) and amended internal references; P.A. 05-162 amended Subsec. (d) to insert new Subdiv. (1)(C) and (1)(D) re the Commissioners' 2001 Standard Ordinary Mortality Table, and redesignate existing Subdiv. (1)(C) as Subdiv. (1)(E), effective July 1, 2005.

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PART IIa
MANAGING GENERAL AGENTS AND CONTROLLED INSURERS

      Sec. 38a-91k. Captive insurers: Information to be submitted to commissioner. Each captive insurer that offers, renews or continues insurance in this state shall provide the information described in subdivisions (1) to (3), inclusive, of subsection (a) of section 38a-253 to the Insurance Commissioner in the same manner required for risk retention groups. If a captive insurer does not maintain information in the form prescribed in section 38a-253, the captive insurer may submit the information to the Insurance Commissioner on such form as the commissioner prescribes. As used in this section and section 38a-25, "captive insurer" means an insurance company owned by another organization whose primary purpose is to insure risks of a parent organization or affiliated persons, as defined in section 38a-1, or in the case of groups and associations, an insurance organization owned by the insureds whose primary purpose is to insure risks of member organizations and group members and their affiliates.

      (P.A. 05-275, S. 16.)

      History: P.A. 05-275 effective July 1, 2005.

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PART IIb
FINANCIAL GUARANTY INSURANCE ACT

      Sec. 38a-92d. Reserves against unpaid losses and loss expense. (a) Each financial guaranty insurance corporation shall establish and maintain reserves against unpaid losses and loss expense. Such reserves shall be calculated in accordance with the accounting requirements of the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions.

      (b) Except as otherwise permitted by the commissioner, no deduction shall be made for anticipated salvage in computing case basis loss reserves, unless that salvage is held by or under the control of the financial guaranty insurance corporation and would qualify as an admitted asset under this title or unless that salvage constitutes or is secured by a letter of credit which is approved by the commissioner or complies with the criteria set forth in subdivision (4) of section 38a-92a.

      (c) If the insured principal and interest on a defaulted issue of obligations due and payable during any three years following the date of default exceed ten per cent of the financial guaranty insurance corporation's capital, surplus and contingency reserves, its reserves so established shall be supported by a report from an independent actuarial firm or other source acceptable to the commissioner.

      (P.A. 93-136, S. 5; P.A. 00-30, S. 7, 14; P.A. 05-29, S. 6.)

      History: P.A. 00-30 amended Subsec. (a) to delete reference to the case basis method or other method prescribed by the commissioner and to substitute the requirement that "reserves be calculated in accordance with the accounting requirements of the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions", effective January 1, 2001; P.A. 05-29 made a technical change in Subsec. (b).

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