# Title 45 — Insurance, Commissioner of

## Article 45-03 — Regulation of Insurance Companies

## Chapter 45-03-19 — Actuarial Opinion and Memorandum Regulation

Regulatory Asset Adequacy Issues Summary
### § 45-03-19-01. Scope.

This chapter applies to all life insurance companies and fraternal benefit societies doing business in
this state and to all life insurance companies and fraternal benefit societies that are authorized to
reinsure life insurance, annuities, or accident and health insurance business in this state. This chapter
shall be applied in a manner that allows the appointed actuary to utilize the actuary's professional
judgment in performing the asset analysis and developing the actuarial opinion and supporting
memoranda, consistent with relevant actuarial standards of practice. However, the commissioner shall
have the authority to specify specific methods of actuarial analysis and actuarial assumptions when, in
the commissioner's judgment, these specifications are necessary for an acceptable opinion to be
rendered relative to the adequacy of reserves and related items. This chapter is applicable to all annual
statements filed with the office of the commissioner on or after October 1, 1995. A statement of opinion
on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in
accordance with section 45-03-19-06, and a supporting memorandum in accordance with section
45-03-19-07, are required each year.
History: Effective October 1, 1995; amended effective March 1, 2004.
General Authority: NDCC 26.1-35-01.1
Law Implemented: NDCC 26.1-35-01.1
### § 45-03-19-02. Definitions.

1. "Actuarial standards board" means the board established by the American academy of
actuaries to develop and promulgate standards of actuarial practice.
2. "Annual statement" means the statement required by North Dakota Century Code section
3. "Appointed actuary" means an individual who is appointed or retained in accordance with
subsection 3 of section 45-03-19-03 to provide the actuarial opinion and supporting
memorandum as required by North Dakota Century Code section 26.1-35-01.1.
4. "Asset adequacy analysis" means an analysis that meets the standards and other
requirements referred to in subsection 4 of section 45-03-19-03.
5. "Company" means a life insurance company, fraternal benefit society, or reinsurer subject to
the provisions of this chapter.
6. "Qualified actuary" means an individual who meets the requirements in subsection 2 of section
45-03-19-03.
History: Effective October 1, 1995; amended effective March 1, 2004.
General Authority: NDCC 26.1-35-01.1

Law Implemented: NDCC 26.1-35-01.1
### § 45-03-19-03. General requirements.

1. Submission of statement of actuarial opinion.
a. There must be included on or attached to page one of the annual statement for each
year beginning 1995 the statement of an appointed actuary, entitled "statement of
actuarial opinion", setting forth an opinion relating to reserves and related actuarial items
held in support of policies and contracts, in accordance with section 45-03-19-06.
b. Upon written request by the company, the commissioner may grant an extension of the
date for submission of the statement of actuarial opinion.
2. A "qualified actuary" is an individual who:
a. Is a member in good standing of the American academy of actuaries;
b. Is qualified to sign statements of actuarial opinion for life and health insurance company
annual statements in accordance with the American academy of actuaries qualification
standards for actuaries signing the statements;
c. Is familiar with the valuation requirements applicable to life and health insurance
companies;
d. Has not been found by the commissioner, or if so found, has subsequently been
reinstated as a qualified actuary, following appropriate notice and hearing to have:
(1) Violated any provision of, or any obligation imposed by, the insurance law or other
law in the course of the actuary's dealings as a qualified actuary;
(2) Been found guilty of fraudulent or dishonest practices;
(3) Demonstrated incompetency, lack of cooperation, or untrustworthiness to act as a
qualified actuary;
(4) Submitted to the commissioner during the past five years, pursuant to this chapter,
an actuarial opinion or memorandum that the commissioner rejected because it did
not meet the provisions of this chapter, including standards set by the actuarial
standards board; or
(5) Resigned or been removed as an actuary within the past five years as a result of
acts or omissions indicated in any adverse report on examination or as a result of
failure to adhere to generally acceptable actuarial standards; and
e. Has not failed to notify the commissioner of any action taken by any commissioner of any
other state similar to that under subdivision d.
3. An "appointed actuary" is a qualified actuary who is appointed or retained to prepare the
statement of actuarial opinion required by this chapter, either directly by or by the authority of
the board of directors through an executive officer of the company other than the qualified
actuary. The company shall give the commissioner timely written notice of the name and title
and, in the case of a consulting actuary, the name of the firm and manner of appointment or
retention of each person appointed or retained by the company as an appointed actuary and
shall state in the notice that the person meets the requirements set forth in subsection 2. Once
notice is furnished, no further notice is required with respect to that person, provided that the
company gives the commissioner timely written notice in the event the actuary ceases to be
appointed or retained as an appointed actuary or to meet the requirements set forth in

subsection 2. If any person appointed or retained as an appointed actuary replaces a
previously appointed actuary, the notice shall so state and give the reasons for replacement.
4. The asset adequacy analysis required by this chapter:
a. Must conform to the standards of practice as promulgated from time to time by the
actuarial standards board and on any additional standards under this chapter, which
standards are to form the basis of the statement of actuarial opinion in accordance with
this chapter; and
b. Must be based on methods of analysis as are deemed appropriate for the purposes by
the actuarial standards board.
5. Liabilities to be covered.
a. Under authority of North Dakota Century Code section 26.1-35-01.1, the statement of
actuarial opinion shall apply to all in-force business on the statement date, whether
directly issued or assumed, regardless of when or where issued, for example, reserves of
exhibits 8, 9, and 10, and claim liabilities in exhibit 11, part 1 and equivalent items in the
separate account statement or statements.
b. If the appointed actuary determines as the result of asset adequacy analysis that a
reserve should be held in addition to the aggregate reserve held by the company and
calculated in accordance with methods set forth in North Dakota Century Code sections
26.1-35-02, 26.1-35-05, 26.1-35-06, 26.1-35-09, and 26.1-35-10, the company shall
establish the additional reserve.
c. Additional reserves established under subdivision b and deemed not necessary in
subsequent years may be released. Any amounts released must be disclosed in the
actuarial opinion for the applicable year. The release of the reserves would not be
deemed an adoption of a lower standard of valuation.
History: Effective October 1, 1995; amended effective March 1, 2004.
General Authority: NDCC 26.1-35-01.1
Law Implemented: NDCC 26.1-35-01.1
### § 45-03-19-04. Required opinions.

Repealed effective March 1, 2004.
### § 45-03-19-05. Statement of actuarial opinion not including an asset adequacy analysis.

Repealed effective March 1, 2004.
### § 45-03-19-06. Statement of actuarial opinion based on an asset adequacy analysis.

1. The statement of actuarial opinion submitted in accordance with this section must consist of:
a. A paragraph identifying the appointed actuary and the appointed actuary's qualifications
(see subdivision a of subsection 2).
b. A scope paragraph identifying the subjects on which an opinion is to be expressed and
describing the scope of the appointed actuary's work, including a tabulation delineating
the reserves and related actuarial items that have been analyzed for asset adequacy and
the method of analysis (see subdivision b of subsection 2), and identifying the reserves
and related actuarial items covered by the opinion that have not been so analyzed.

c. A reliance paragraph describing those areas, if any, where the appointed actuary has
deferred to other experts in developing data, procedures or assumptions, for example,
anticipated cash flows from currently owned assets, including variation in cash flows
according to economic scenarios (see subdivision c of subsection 2), supported by a
statement of each expert in the form prescribed by subsection 5.
d. An opinion paragraph expressing the appointed actuary's opinion with respect to the
adequacy of the supporting assets to mature the liabilities (see subdivision f of
subsection 2).
e. One or more additional paragraphs will be needed in individual company cases as
follows:
(1) If the appointed actuary considers it necessary to state a qualification of the
appointed actuary's opinion.
(2) If the appointed actuary must disclose an inconsistency in the method of analysis or
basis of asset allocation used at the prior opinion date with that used for this
opinion.
(3) If the appointed actuary must disclose whether additional reserves of the prior
opinion date are released as of this opinion date, and the extent of the release.
(4) If the appointed actuary chooses to add a paragraph briefly describing the
assumptions that form the basis for the actuarial opinion.
2. The following paragraphs are to be included in the statement of actuarial opinion in
accordance with this section. Language is that which in typical circumstances should be
included in a statement of actuarial opinion. The language may be modified as needed to
meet the circumstances of a particular case, but the appointed actuary should use language
that clearly expresses the appointed actuary's professional judgment. However, in any event
the opinion must retain all pertinent aspects of the language provided in this section.
a. The opening paragraph should generally indicate the appointed actuary's relationship to
the company and the qualifications to sign the opinion. For a company actuary, the
opening paragraph of the actuarial opinion should include a statement such as:
"I, [name], am [title] of [insurance company name] and a member of the American
Academy of Actuaries. I was appointed by, or by the authority of, the Board of
Directors of said insurer to render this opinion as stated in the letter to the
commissioner dated [insert date]. I meet the Academy qualification standards for
rendering the opinion and am familiar with the valuation requirements applicable to
life and health insurance companies."
For a consulting actuary, the opening paragraph should include a statement such as:
"I, [name], a member of the American Academy of actuaries, am associated with the
firm of [name of consulting firm]. I have been appointed by, or by the authority of,
the Board of Directors of [name of company] to render this opinion as stated in the
letter to the commissioner dated [insert date]. I meet the Academy qualification
standards for rendering the opinion and am familiar with the valuation requirements
applicable to life and health insurance companies."
b. The scope paragraph should include a statement such as:
"I have examined the actuarial assumptions and actuarial methods used in
determining reserves and related actuarial items listed below, as shown in the

annual statement of the company, as prepared for filing with state regulatory
officials, as of December 31, 20[ ]. Tabulated below are those reserves and related
actuarial items which have been subjected to asset adequacy analysis.
Asset Adequacy Tested Amounts - Reserves and Liabilities
Additional
Actuarial
Formula Reserves (a) Analysis Other Total Amount
Statement Item Reserves (1) (2) Method (b) Amount (3) (1)+(2)+(3) (4)
Exhibit 8
A Life Insurance
B Annuities
C Supplementary Contracts
Involving Life
Contingencies
D Accidental Death Benefit
E Disability - Active
F Disability - Disabled
G Miscellaneous
Total (Exhibit 8, Item 1,
Page 3)
Exhibit 9
A Active Life Reserve
B Claim Reserve
Total (Exhibit 9, Item 2,
Page 3)
Exhibit 10
Premium and Other
Deposit Funds (Column 5,
Line 14)
Guaranteed Interest
Contracts (Column 2,
Line 14)
Other (Column 6, Line 14)
Supplemental Contracts
and Annuities Certain
(Column 3, Line 14)
Dividend Accumulations or
Refunds (Column 4,
Line 14)
Total Exhibit 10 (Column 1,
Line 14)
Exhibit 11, Part 1
1 Life (Page 3, Line 4.1)
2 Health (Page 3, Line 4.2)
Total Exhibit 11, Part 1

Separate Accounts (Page 3 of
the Annual Statement of the
Separate Accounts, Lines 1, 2,
3.1, 3.2, 3.3)
IMR (General Account, Page _______, Line _______)
(Separate Accounts, Page _______, Line _______)
AVR (Page _______, Line _______) (c)
Net Deferred and Uncollected Premium
Notes:
(a) The additional actuarial reserves are the reserves established under subdivision b of
subsection 5 of section 45-03-19-03.
(b) The appointed actuary should indicate the method of analysis, determined in accordance with
the standards for asset adequacy analysis referred to in subsection 4 of section 45-03-19-03,
by means of symbols that should be defined in footnotes to the table.
(c) Allocated amount of asset valuation reserve (AVR).
c. If the appointed actuary has relied on other experts to develop certain portions of the
analysis, the reliance paragraph should include a statement such as the following:
"I have relied on [name], [title] for [e.g., "anticipated cash flows from currently owned
assets, including variations in cash flows according to economic scenarios" or
"certain critical aspects of the analysis performed in conjunction with forming my
opinion"], as certified in the attached statement. I have reviewed the information
relied upon for reasonableness."
Such a statement of reliance on other experts should be accompanied by a statement by
each of the experts of the form prescribed by subsection 5.
d. If the appointed actuary has examined the underlying asset and liability records, the
reliance paragraph should include a statement such as:
"My examination included such review of the actuarial assumptions and actuarial
methods and of the underlying basic asset and liability records and such tests of the
actuarial calculations as I considered necessary. I also reconciled the underlying
basic asset and liability records to [exhibits and schedules listed as applicable] of
the company's current annual statement."
e. If the appointed actuary has not examined the underlying records, but has relied upon
data [e.g., listings and summaries of policies in force or asset records] prepared by the
company, the reliance paragraph should include a statement such as:
"In forming my opinion on [specify types of reserves] I relied upon data prepared by
[name and title of company officer certifying in-force records or other data] as
certified in the attached statements. I evaluated that data for reasonableness and
consistency. I also reconciled that data to [exhibits and schedules to be listed as
applicable] of the company's current annual statement. In other respects, my

examination included review of the actuarial assumptions and actuarial methods
used and tests of the calculations I considered necessary."
The section must be accompanied by a statement by each person relied upon of the form
prescribed by subsection 5.
f. The opinion paragraph should include a statement such as:
"In my opinion the reserves and related actuarial values concerning the statement
items identified above:
1. Are computed in accordance with presently accepted actuarial standards
consistently applied and are fairly stated, in accordance with sound actuarial
principles;
2. Are based on actuarial assumptions that produce reserves at least as great as
those called for in any contract provision as to reserve basis and method, and
are in accordance with all other contract provisions;
3. Meet the requirements of the Insurance Law and chapter of the State of [state
of domicile] and are at least as great as the minimum aggregate amounts
required by the state in which this statement is filed;
4. Are computed on the basis of assumptions consistent with those used in
computing the corresponding items in the annual statement of the preceding
yearend (with any exceptions noted below); and
5. Include provision for all actuarial reserves and related statement items which
ought to be established.
The reserves and related items, 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, according to presently accepted actuarial standards of practice, for the
anticipated cash flows required by the contractual obligations and related expenses
of the company. (At the discretion of the commissioner, this language may be
omitted for an opinion filed on behalf of a company doing business only in this state
and in no other state.)
The actuarial methods, considerations, and analyses used in forming my opinion
conform to the appropriate Standards of Practice as promulgated by the Actuarial
Standards Board, which standards form the basis of this statement of opinion.
This opinion is updated annually as required by statute. To the best of my
knowledge, there have been no material changes from the applicable date of the
annual statement to the date of the rendering of this opinion which should be
considered in reviewing this opinion.
or
The following material changes which occurred between the date of the statement
for which this opinion is applicable and the date of this opinion should be considered
in reviewing this opinion: (Describe the change or changes.)
The impact of unanticipated events subsequent to the date of this opinion is beyond
the scope of this opinion. The analysis of asset adequacy portion of this opinion

should be viewed recognizing that the company's future experience may not follow
all the assumptions used in the analysis.
Signature of Appointed Actuary
Address of Appointed Actuary
Telephone Number of Appointed Actuary
Date"
3. The adoption for new issues or new claims or other new liabilities of an actuarial assumption
that differs from a corresponding assumption used for prior new issues or new claims or other
new liabilities is not a change in actuarial assumptions within the meaning of this section.
4. If the appointed actuary is unable to form an opinion, then the appointed actuary shall refuse
to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or
qualified, then the appointed actuary shall issue an adverse or qualified actuarial opinion
explicitly stating the reasons for the opinion. This statement should follow the scope paragraph
and precede the opinion paragraph.
5. If the appointed actuary relies on the certification of others on matters concerning the
accuracy or completeness of any data underlying the actuarial opinion, or the appropriateness
of any other information used by the appointed actuary in forming the actuarial opinion, the
actuarial opinion should so indicate the persons the actuary is relying upon and a precise
identification of the items subject to reliance. In addition, the persons on whom the appointed
actuary relies shall provide a certification that precisely identifies the items on which the
person is providing information and a statement as to the accuracy, completeness, or
reasonableness, as applicable, of the items. This certification shall include the signature, title,
company, address, and telephone number of the person rendering the certification, as well as
the date on which it is signed.
6. Alternate option.
a. North Dakota Century Code section 26.1-35-01.1 gives the commissioner broad authority
to accept the valuation of a foreign insurer when that valuation meets the requirements
applicable to a company domiciled in this state in the aggregate. As an alternative to the
requirements of paragraph 3 of subdivision f of subsection 2, the commissioner may
make one or more of the following additional approaches available to the opining actuary:
(1) A statement that the reserves "meet the requirements of the insurance laws and
regulations of the State of [state of domicile] and the formal written standards and
conditions of this state for filing an opinion based on the law of the state of
domicile." If the commissioner chooses to allow this alternative, a formal written list
of standards and conditions shall be made available. If a company chooses to use
this alternative, the standards and conditions in effect on July first of a calendar year
shall apply to statements for that calendar year, and they shall remain in effect until
they are revised or revoked. If no list is available, this alternative is not available.

(2) A statement that the reserves "meet the requirements of the insurance laws and
regulations of the State of [state of domicile] and I have verified that the company's
request to file an opinion based on the law of the state of domicile has been
approved and that any conditions required by the commissioner for approval of that
request have been met." If the commissioner chooses to allow this alternative, a
formal written statement of such allowance shall be issued no later than March
thirty-first of the year it is first effective. It shall remain valid until rescinded or
modified by the commissioner. The rescission or modifications shall be issued no
later than March thirty-first of the year they are first effective. Subsequent to that
statement being issued, if a company chooses to use this alternative, the company
shall file a request to do so, along with justification for its use, no later than April
thirtieth of the year of the opinion to be filed. The request shall be deemed approved
on October first of that year if the commissioner has not denied the request by that
date.
(3) A statement that the reserves "meet the requirements of the insurance laws and
regulations of the State of [state of domicile] and I have submitted the required
comparison as specified by this state."
(a) If the commissioner chooses to allow this alternative, a formal written list of
products (to be added to the table in paragraph b) for which the required
comparison shall be provided will be published. If a company chooses to use
this alternative, the list in effect on July first of a calendar year shall apply to
statements for that calendar year, and it shall remain in effect until it is revised
or revoked. If no list is available, this alternative is not available.
(b) If a company desires to use this alternative, the appointed actuary shall
provide a comparison of the gross nationwide reserves held to the gross
nationwide reserves that would be held under national association of insurance
commissioners codification standards. Gross nationwide reserves are the total
reserves calculated for the total company in-force business directly sold and
assumed, indifferent to the state in which the risk resides, without reduction for
reinsurance ceded. The information provided shall be at least:
(1) (2) (3) (4) (5)
Product Type Death Benefit or Reserves Held Codification Codification
Account Value Reserves Standard
(c) The information listed shall include all products identified by either the state of
filing or any other states subscribing to this alternative.
(d) If there is no codification standard for the type of product or risk in force or if
the codification standard does not directly address the type of product or risk in
force, the appointed actuary shall provide detailed disclosure of the specific
method and assumptions used in determining the reserves held.
(e) The comparison provided by the company is to be kept confidential to the
same extent and under the same conditions as the actuarial memorandum.
b. Notwithstanding the above, the commissioner may reject an opinion based on the laws
and regulations of the state of domicile and require an opinion based on the laws of this

state. If a company is unable to provide the opinion within sixty days of the request or
such other period of time determined by the commissioner after consultation with the
company, the commissioner may contract an independent actuary at the company's
expense to prepare and file the opinion.
History: Effective October 1, 1995; amended effective March 1, 2004.
General Authority: NDCC 26.1-35-01.1
Law Implemented: NDCC 26.1-35-01.1
### § 45-03-19-07. Description of actuarial memorandum including an asset adequacy analysis

and regulatory asset adequacy issues summary.
1. General.
a. In accordance with North Dakota Century Code section 26.1-35-01.1, the appointed
actuary shall prepare a memorandum to the company describing the analysis done in
support of the opinion regarding the reserves. The memorandum must be made available
for examination by the commissioner upon the commissioner's request but must be
returned to the company after the examination and may not be considered a record of
the insurance department or subject to automatic filing with the commissioner.
b. In preparing the memorandum, the appointed actuary may rely on, and include as a part
of the appointed actuary's own memorandum, memoranda prepared and signed by other
actuaries who are qualified within the meaning of subsection 2 of section 45-03-19-03,
with respect to the areas covered in the memoranda, and so state in their memoranda.
c. If the commissioner requests a memorandum and no memorandum exists or if the
commissioner finds that the analysis described in the memorandum fails to meet the
standards of the actuarial standards board or the standards and requirements of this
chapter, the commissioner may designate a qualified actuary to review the opinion and
prepare the supporting memorandum as is required for review. The reasonable and
necessary expense of the independent review must be paid by the company but must be
directed and controlled by the commissioner.
d. The reviewing actuary shall have the same status as an examiner for purposes of
obtaining data from the company and the workpapers and documentation of the
reviewing actuary shall be retained by the commissioner, provided, however, that any
information provided by the company to the reviewing actuary and included in the
workpapers must be considered as material provided by the company to the
commissioner and must be kept confidential to the same extent as is prescribed by law
with respect to other material provided by the company to the commissioner pursuant to
the statute governing this chapter. The reviewing actuary may not be an employee of a
consulting firm, or have been personally involved, with the preparation of any prior
memorandum or opinion for the insurer pursuant to this chapter for any one of the current
year or the preceding three years.
e. In accordance with North Dakota Century Code section 26.1-35-01.1, the appointed
actuary shall prepare a regulatory asset adequacy issues summary, the contents of
which are specified in subsection 3. The regulatory asset adequacy issues summary will
be submitted no later than March fifteenth of the year following the year for which a
statement of actuarial opinion based on asset adequacy is required. The regulatory asset
adequacy issues summary is to be kept confidential to the same extent and under the
same conditions as the actuarial memorandum.
2. When an actuarial opinion is provided, the memorandum must demonstrate that the analysis
has been done in accordance with the standards for asset adequacy referred to in

subsection 4 of section 45-03-19-03 and any additional standards under this chapter. It must
specify:
a. For reserves:
(1) Product descriptions, including market description, underwriting, and other aspects
of a risk profile and the specific risks the appointed actuary deems significant;
(2) Source of liability in force;
(3) Reserve method and basis;
(4) Investment reserves;
(5) Reinsurance arrangements;
(6) Identification of any explicit or implied guarantees made by the general account in
support of benefits provided through a separate account or under a separate
account policy or contract and the methods used by the appointed actuary to
provide for the guarantees in the asset adequacy analysis; and
(7) Documentation of assumptions to test reserves for the following:
(a) Lapse rates (both base and excess);
(b) Interest crediting rate strategy;
(c) Mortality;
(d) Policyholder dividend strategy;
(e) Competitor or market interest rate;
(f) Annuitization rates;
(g) Commissions and expenses; and
(h) Morbidity.
The documentation of the assumptions shall be such that an actuary reviewing the
actuarial memorandum could form a conclusion as to the reasonableness of the
assumptions.
b. For assets:
(1) Portfolio descriptions, including a risk profile disclosing the quality, distribution, and
types of assets;
(2) Investment and disinvestment assumptions;
(3) Source of asset data;
(4) Asset valuation bases; and
(5) Documentation of assumptions made for:
(a) Default costs;
(b) Bond call function;

(c) Mortgage prepayment function;
(d) Determining market value for assets sold due to disinvestment strategy; and
(e) Determining yield on assets acquired through the investment strategy.
The documentation of the assumptions shall be such that an actuary reviewing the
actuarial memorandum could form a conclusion as to the reasonableness of the
assumptions.
c. For the analysis basis:
(1) Methodology;
(2) Rationale for inclusion or exclusion of different blocks of business and how pertinent
risks were analyzed;
(3) Rationale for degree of rigor in analyzing different blocks of business (include in the
rationale the level of "materiality" that was used in determining how rigorously to
analyze different blocks of business);
(4) Criteria for determining asset adequacy (include in the criteria the precise basis for
determining if assets are adequate to cover reserves under "moderately adverse
conditions" or other conditions as specified in relevant actuarial standards of
practice); and
(5) Whether the impact of federal income taxes was considered and the method of
treating reinsurance in the asset adequacy analysis;
d. Summary of material changes in methods, procedures, or assumptions from prior year's
asset adequacy analysis;
e. Summary of results; and
f. Conclusions.
3. Details of the regulatory asset adequacy issues summary.
a. The regulatory asset adequacy issues summary shall include:
(1) Descriptions of the scenarios tested, including whether those scenarios are
stochastic or deterministic, and the sensitivity testing done relative to those
scenarios. If negative ending surplus results under certain tests in the aggregate,
the actuary should describe those tests and the amount of additional reserve as of
the valuation date which, if held, would eliminate the negative aggregate surplus
values. Ending surplus values shall be determined by either extending the projection
period until the in-force and associated assets and liabilities at the end of the
projection period are immaterial or by adjusting the surplus amount at the end of the
projection period by an amount that appropriately estimates the value that can
reasonably be expected to arise from the assets and liabilities remaining in force;
(2) The extent to which the appointed actuary uses assumptions in the asset adequacy
analysis that are materially different than the assumptions used in the previous
asset adequacy analysis;
(3) The amount of reserves and the identity of the product lines that had been
subjected to asset adequacy analysis in the prior opinion but were not subject to
analysis for the current opinion;

(4) Comments on any interim results that may be of significant concern to the appointed
actuary;
(5) The methods used by the actuary to recognize the impact of reinsurance on the
company's cash flows, including both assets and liabilities, under each of the
scenarios tested; and
(6) Whether the actuary has been satisfied that all options, whether explicit or
embedded, in any asset or liability (including those affecting cash flows embedded
in fixed income securities) and equity-like features in any investments have been
appropriately considered in the asset adequacy analysis.
b. The regulatory asset adequacy issues summary shall contain the name of the company
for which the regulatory asset adequacy issues summary is being supplied and shall be
signed and dated by the appointed actuary rendering the actuarial opinion.
4. The memorandum must include a statement:
"Actuarial methods, considerations, and analyses used in the preparation of this
memorandum conform to the appropriate Standards of Practice as promulgated by the
Actuarial Standards Board, which standards form the basis for this memorandum."
5. An appropriate allocation of assets in the amount of the interest maintenance reserve,
whether positive or negative, must be used in any asset adequacy analysis. Analysis of risks
regarding asset default may include an appropriate allocation of assets supporting the asset
valuation reserve; these asset valuation reserve assets may not be applied for any other risks
with respect to reserve adequacy. Analysis of these and other risks may include assets
supporting other mandatory or voluntary reserves available to the extent not used for risk
analysis and reserve support. The amount of the assets used for the asset valuation reserve
must be disclosed in the table of reserves and liabilities of the opinion and in the
memorandum. The method used for selecting particular assets or allocated portions of assets
must be disclosed in the memorandum.
6. The appointed actuary shall retain on file, for at least seven years, sufficient documentation so
that it will be possible to determine the procedures followed, the analyses performed, the
bases for assumptions, and the results obtained.
History: Effective October 1, 1995; amended effective March 1, 2004.
General Authority: NDCC 26.1-35-01.1
Law Implemented: NDCC 26.1-35-01.1
### § 45-03-19-08. Additional considerations for analysis.

Repealed effective March 1, 2004.
