COPLFR (7,8) - AOS / AR

Question 1

Who should the AOS not be filed with and why?

Answer 1

The NAIC because it is confidential and not intended for public inspection

Question 2

Who should the AOS be filed with?

Answer 2

-domiciliary state regulator and other states ONLY IF SPECIFICALLY REQUESTED

Question 3

When should the AOS be filed?

Answer 3

by 3/15 if domicile state requires filing of an AOS unless they specify otherwise
other states can request in 15 days (after 3/15) provided they can demonstrate confidentiality will be preserved

Question 4

Do the same exemptions for filing SAOs apply to the AOS?

Answer 4

yes

Question 5

Is there a requirement for the actuary to produce a range and point estimate?

Answer 5

Not necessarily, but it must follow their analysis

Question 6

What is required for ITEM E

Answer 6

is 1 yr adverse deviation relative to prior PHS exceeds 5% in 3+/ past 5 years
explain what elements of reserves are causing this, and possible management decisions to mitigate this
state, summarize, explain, mitigate (SSEM)

Question 7

Is the actuary required to include Item E if it passes the test?

Answer 7

no, but should include for clarity

Question 8

If the AOS is qualified what is the order used?

Answer 8

A - range
B - actuary’s point estimate
C1 - total carried
C2 - carried (excluded by opinion)
C3 - carried (covered by opinion)
D - C3 - B

Question 9

AOS for 0% intercompany pooling participant language

Answer 9

XYZ Insurance Company is a member of an intercompany pooling
arrangement, with zero percent participation. The lead company is ABC Insurance Company with an XX% share of the consolidated pool
amount. The following information is that of the lead company, ABC
Insurance Company.

Question 10

What should the actuary do if the AOS was submitted in error?

Answer 10

same as SAO

Question 11

What should the actuary do in actuarial report?

Answer 11

state the findings, identify methods, procedures, assumptions and data used with sufficient clarity such that another qualified actuary could make an objective appraisal of the reasonableness

Question 12

What should the SAO state about the AR?

Answer 12

must assure AR will be filed (before 5/1) and maintained for seven years for regulatory examination

Question 13

Intended users of the AR

Answer 13

meant to convey actuarys professional conclusions to
state regulatory authority
board of directors

Question 14

What should the AR include in regard to A&H?

Answer 14

all associated reserve amounts - should tie to annual stment
if > 10,000 in-force lives for LTC insurance, perform and document stand-alone asset-adequacy testing results (AG 51)

Question 15

What should the AR include in regard to actuarys relationship to the company?

Answer 15

description of relationship
how do they advise the BOD and or management on setting carried reserves? (how exactly do they present results to them and who specifically?)

Question 16

What three exhibits should the AR include?

Answer 16

exhibit comparing actuarys estimates to annual statement carried values (consistent with the analysis segmentation)
reconciliation to schedule P (explanation for any differences) for all material data
exhibit (and discussion) on change in AAs estimates

Question 17

For the change in estimates exhibit, how should the changes be calculated?

Answer 17

If calc ult, diff in ult for prior years
if calc reserves, incremental paid + chg(unpaid) for prior years

Question 18

AR discussion on significant risks and uncertainties

Answer 18

should support actuarys decision on RMAD, more detail than SAO
can provide comments on both trends and one-time events

Question 19

AR discussion on IRIS 11-13

Answer 19

only for unusual results
extended comments and how they were addressed in prior / current analyses