§ 4217. Valuation of insurance policies and contracts. (a) (1) The
superintendent shall annually value, or cause to be valued, the reserve
liabilities (hereinafter called reserves) for all outstanding insurance
policies and contracts of every life insurance company doing business in
this state, except that, in the case of an alien company, such 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 (net level premium method or
other) used in the calculation of such reserves. In calculating such
reserves, the superintendent may use group methods and approximate
averages for fractions of a year or otherwise.

(2) In lieu of the valuation of the reserves herein required of any
foreign or alien company, the superintendent 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 superintendent 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.

(3) (A) The superintendent may, in his discretion, vary the standards
of mortality applicable to policies of insurance on substandard lives
and other extra-hazardous lives issued by any life insurance company
doing business in this state.

(B) He may also, in his discretion, vary the standards of interest and
mortality applicable to contracts issued by an alien insurer in
countries other than the United States, if such alien insurer maintains
the trusteed surplus prescribed by section one thousand three hundred
twelve of this chapter.

(4) (A) Any life insurance company doing business in this state which
has adopted as a basis for the valuation of its insurance policies and
contracts standards producing greater reserves in the aggregate than the
minimum standards herein prescribed may continue to use such higher
standards as a basis of valuation.

(B) After January first, nineteen hundred forty, any life insurance
company doing business in this state may, subject to the provisions of
paragraph eight of subsection (c) of this section, adopt as the basis
for the valuation of its insurance policies and contracts standards
producing greater reserves in the aggregate than the minimum standards
herein prescribed; and any such company which shall have at any time
adopted such higher standards of valuation may, with the approval of the
superintendent, adopt lower standards of valuation, but in no case lower
than the minimum standards herein prescribed, provided, however, that,
for the purposes of this paragraph, the holding of additional reserves
determined by a qualified actuary to be necessary to render the opinion
required by subsection (e) of this section shall not be deemed to be the
adoption of a higher standard of valuation.

(C) The superintendent may approve any such change if he finds that
the proposed standards are for the best interests of the holders of the
policies and contracts and annuitants of such company.

(D) Nothing contained herein shall be deemed to affect the contractual
rights or obligations of the holder of any such policy or contract.

(b) (1) This subsection shall apply only to those policies and
contracts issued prior to the operative date of section four thousand
two hundred twenty-one of this article.

(2) Except as provided in paragraph six hereof the legal minimum
standards for the valuation of life insurance contracts shall be as
follows:

(A) For the valuation of all such contracts issued before the first
day of January, nineteen hundred one, it shall be the Actuaries' or
Combined Experience Table of Mortality with interest at four percent per
annum.

(B) For the valuation of such contracts issued on or after said day,
except as provided in subparagraphs (C) and (D) hereof, it shall be the
American Experience Table of Mortality with Craig's extension for ages
under ten years and with interest at three and one-half percent per
annum.

(C) For the valuation of group term insurance policies under which
premium rates are not guaranteed for a period in excess of five years,
it shall be the American Men Ultimate Table of Mortality with interest
at three and one-half percent per annum.

(D) Any life insurance company may, at its option, value its life
insurance contracts issued on or after the first day of January,
nineteen hundred thirty, in accordance with their terms on the basis of
the American Men Ultimate Table of Mortality, supplemented by such
extension and modification for ages under twenty years, as may be
approved by the superintendent, with interest at three and one-half
percent per annum by the level net premium method or by the modified
preliminary term method prescribed in paragraph four hereof.

(3) Life insurance policies issued on or after the first day of
January, nineteen hundred seven, may, at the option of the insurer, be
valued in accordance with their terms by the modified preliminary term
method prescribed in paragraph four hereof, or in accordance with the
select and ultimate method on the basis that the rate of mortality
during the first five years after the issuance of said contracts
respectively shall be calculated according to the following percentages
of the rates shown by the American Experience Table of Mortality:

For the first insurance year, fifty percent thereof; for the second
insurance year, sixty-five percent thereof; for the third insurance
year, seventy-five percent thereof; for the fourth insurance year,
eighty-five percent thereof; and for the fifth insurance year,
ninety-five percent thereof.

(4) (A) Life insurance policies may provide for not more than one year
of preliminary term insurance by incorporating in the provisions thereof
specifying the premium consideration to be received by the insurer, a
clause plainly showing that the first year's insurance under such
policies is term insurance, purchased by the whole or a part of the
premium to be received during the first policy year.

(B) Such policies may, in accordance with their terms, be valued on
the basis of the mortality tables and interest rates prescribed in
paragraph two hereof, by the modified preliminary term plan described as
follows: If the premium charged for term insurance under a limited
payment life preliminary term policy providing for the payment of all
premiums thereon in less than twenty years from the date of the policy,
or under an endowment preliminary term policy, exceeds that charged for
like insurance under twenty payment life preliminary term policies of
the same company, the reserve thereon at the end of any year, including
the first, shall be not less than the reserve on a twenty payment life
preliminary term policy issued in the same year and at the same age,
together with an amount which shall be equivalent to the accumulation of
a level net premium sufficient to provide for a pure endowment at the
end of the premium paying period equal to the difference between items
(i) and (ii) hereof as follows: (i) the value at the end of such period
of such a twenty payment life preliminary term policy and (ii) the full
level net premium reserve at such time of such a limited payment life or
endowment policy.

(C) The premium paying period referred to above is the period during
which premiums are concurrently payable under such twenty payment life
preliminary term policy and such limited payment life or endowment
policy.

(5) (A) The legal minimum standard for the valuation of all individual
annuity contracts issued on or after January first, nineteen hundred
forty (including life annuities provided or available under optional
modes of settlement in insurance contracts issued on or after such date)
shall be the Combined Annuity Tables with age set back one year, with
interest at three and one-half percent per annum.

(B) The legal minimum standard for the valuation of all individual
annuity contracts issued prior to January first, nineteen hundred forty
(including annuities provided or available under optional modes of
settlement in insurance contracts issued prior to such date) shall be in
accordance with the provisions of law applicable thereto as of the date
of issuance.

(C) Except as otherwise provided in paragraphs three and four of
subsection (c) hereof for group annuity and pure endowment contracts,
the legal minimum standard for the valuation of all group annuity
contracts shall be the 1971 Group Annuity Mortality Table, or any
modification of this table approved by the superintendent, and five
percent interest.

(D) Annuities, annuity benefits and guaranteed interest contracts to
which this subsection applies shall be subject to item (vi) of
subparagraph (B) of paragraph four of subsection (c) of this section.

(6) (A) The legal minimum standard for the valuation of all industrial
life insurance policies issued on or after January first, nineteen
hundred forty shall, at the option of the company, be either (i) the
1941 Standard Industrial Mortality Table or the 1941 Substandard
Industrial Mortality Table, with interest at three and one-half percent
per annum by the net level premium method, or (ii) either of the tables
specified in item (i) hereof, by the modified preliminary term method
prescribed in paragraph four hereof, in accordance with the terms of the
policy, or (iii) in the case of policies issued on the monthly premium
plan, the New York Standard Intermediate Table of Mortality (1907 Table)
with interest at three and one-half percent per annum. In lieu of such
tables, at the option of the company, the Standard Industrial Mortality
Table (1907) or the Substandard Industrial Mortality Table (1907) may be
used with respect to such policies issued prior to January first,
nineteen hundred forty-two.

(B) The legal minimum standard for the valuation of all industrial
life insurance policies issued prior to January first, nineteen hundred
forty shall be the minimum standard required by the law of this state in
force at the date of issuance.

(7) The legal minimum standard for the valuation of all accidental
death benefits and disability benefits, provided in connection with or
supplemental to life insurance policies or annuity contracts shall be
such tables as the superintendent may prescribe.

(c) (1) This subsection shall apply only to policies and contracts
issued on or after the operative date of section four thousand two
hundred twenty-one of this article, except as otherwise provided in
paragraphs three and four of this subsection for group annuity and pure
endowment contracts issued prior to such operative date.

(2) Except as otherwise provided in paragraphs three, four and ten of
this subsection, the minimum standard for the valuation of all such
policies and contracts shall be the commissioners reserve valuation
method defined in paragraph six of this subsection and in section four
thousand two hundred eighteen of this article, three percent interest
for all life insurance policies issued prior to January first, nineteen
hundred sixty-six and for all individual annuity and pure endowment
contracts issued prior to January first, nineteen hundred sixty, or
three and one-half percent interest for all life insurance policies
issued on or after January first, nineteen hundred sixty-six and prior
to June thirteenth, nineteen hundred seventy-four and for all individual
annuity and pure endowment contracts issued on or after January first,
nineteen hundred sixty, and prior to the operative date of paragraph
three of this subsection, or four percent interest for all life
insurance policies issued on or after June thirteenth, nineteen hundred
seventy-four and prior to January first, nineteen hundred seventy-nine,
or four and one-half percent interest for all life insurance policies,
issued on or after January first, nineteen hundred seventy-nine, or five
percent interest for all annuities purchased or to be purchased under
group annuity contracts, and the following tables:

(A) For all ordinary policies of life insurance issued on the standard
basis, excluding any disability and accidental death benefits in such
policies, the Commissioners 1941 Standard Ordinary Mortality Table for
such policies issued prior to the operative date of subsection (h) of
section four thousand two hundred twenty-one of this article, the
Commissioners 1958 Standard Ordinary Mortality Table for such policies
issued on or after such operative date and prior to the operative date
of subsection (k) of such section; provided that for any category of
such policies issued on female risks all modified net premiums and
present values 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 operative date of such subsection, and, at the
option of the company, for such policies not providing for nonforfeiture
benefits which are issued on or after nineteen hundred eighty-one and
prior to the operative date of such subsection, (i) the Commissioners
1980 Standard Ordinary Mortality Table, or (ii) 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 (iii) any ordinary mortality table, adopted
after nineteen hundred eighty by the National Association of Insurance
Commissioners, that is approved by the superintendent for use in
determining the minimum standard of valuation for such policies, or (iv)
any other ordinary mortality table, or any modification of any of the
foregoing tables, approved by the superintendent for any specified class
or classes of risks.

(B) For all industrial life insurance policies issued on the standard
basis, excluding any disability and accidental death benefits in such
policies, the 1941 Standard Industrial Mortality Table for such policies
issued prior to the operative date of subsection (i) of section four
thousand two hundred twenty-one of this article, and for such policies
issued on or after such operative date (i) the Commissioners 1961
Standard Industrial Mortality Table, or (ii) any industrial mortality
table, adopted after nineteen hundred eighty by the National Association
of Insurance Commissioners, that is approved by the superintendent for
use in determining the minimum standard of valuation for such policies,
or (iii) any other industrial mortality table, or any modification of
any of the foregoing tables, approved by the superintendent for any
specified class or classes of risks.

(C) For individual annuity and pure endowment contracts, excluding any
disability and accidental death benefits in such contracts,--the 1937
Standard Annuity Mortality Table or, at the option of the company, the
Annuity Mortality Table for 1949, Ultimate, or any modification of
either of these tables approved by the superintendent.

(D) For group annuity and pure endowment contracts, excluding any
disability and accidental death benefits in such contracts,--the 1971
Group Annuity Mortality Table or any modification of this table approved
by the superintendent.

(E) For total and permanent disability benefits in or supplementary to
ordinary policies or contracts--for policies or contracts issued on or
after January first, nineteen hundred sixty-six, 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 benefits or any tables of disablement rates and termination
rates, adopted after nineteen hundred eighty by the National Association
of Insurance Commissioners, that are approved by the superintendent for
use in determining the minimum standard of valuation for such policies
or any other tables of disablement rates and termination rates, or any
modification of any of the foregoing tables, approved by the
superintendent for any specified class or classes of risks; for policies
or contracts issued prior to January first, nineteen hundred sixty-six,
either such tables or, at the option of the company, the Class (3)
Disability Table (1926). Any such table shall, for active lives, be
combined with a mortality table permitted for calculating the reserves
for life insurance policies.

(F) For accidental death benefits in or supplementary to policies--
for policies issued on or after January first, nineteen hundred
sixty-six, the 1959 Accidental Death Benefits Table or any accidental
death benefits table, adopted after nineteen hundred eighty by the
National Association of Insurance Commissioners, that is approved by the
superintendent for use in determining the minimum standard of valuation
for such policies or any other accidental death benefits table, or any
modification of any of the foregoing tables, approved by the
superintendent for any specified class or classes of risks; for policies
issued prior to January first, nineteen hundred sixty-six, either such
table or, at the option of the company, the Inter-Company Double
Indemnity Mortality Table. Any such table shall be combined with a
mortality table permitted for calculating the reserves for life
insurance policies.

(G) For group life insurance, life insurance issued on the substandard
basis, annuities involving life contingencies provided or available
under optional modes of settlement in life insurance policies or annuity
contracts and other special benefits--such tables as may be approved by
the superintendent.

(3) Except as provided in paragraph four hereof, the minimum standard
for the valuation of all individual annuity and pure endowment contracts
issued on or after the operative date of this paragraph, as defined
herein, and for all annuities and pure endowments purchased or to be
purchased on or after the operative date under group annuity and pure
endowment contracts, shall be the commissioners reserve valuation method
defined in paragraph six hereof and the following tables and interest
rates:

(A) For individual annuity and pure endowment contracts issued prior
to January first, nineteen hundred seventy-nine, excluding any
disability and accidental death benefits in such contracts and excluding
any annuities, purchased under individual deferred annuity contracts, to
which the company has elected to have subparagraph (B) hereof apply--the
1971 Individual Annuity Mortality Table, or any modification of this
table approved by the superintendent, and six percent interest for
single premium immediate annuity contracts, and four percent interest
for all other individual annuity and pure endowment contracts, or such
higher rate or rates of interest for any of such contracts as may be
approved from time to time by the superintendent.

(B) For individual annuity and pure endowment contracts issued on or
after January first, nineteen hundred seventy-nine, excluding any
disability and accidental death benefits in such contracts, and, at the
election of the company, for annuities purchased on or after such date
under individual deferred annuity contracts--the 1971 Individual Annuity
Mortality Table, or any individual annuity mortality table, adopted
after nineteen hundred eighty by the National Association of Insurance
Commissioners, that is approved by the superintendent for use in
determining the minimum standard of valuation for such contracts, or any
other individual annuity mortality table, or any modification of any of
the foregoing tables, approved by the superintendent, and seven and
one-half percent interest for all single premium individual immediate
annuity contracts and all annuities, purchased under individual deferred
annuity contracts, to which the company has elected to have this
subparagraph apply and five and one-half percent interest for all other
individual annuity and pure endowment contracts, excluding any
annuities, purchased under deferred annuity contracts, for which the
interest rate is seven and one-half percent or such higher rate or rates
of interest for any of such contracts or annuities purchased under
deferred annuity contracts as may be approved from time to time by the
superintendent.

(C) For all annuities and pure endowments purchased or to be purchased
prior to January first, nineteen hundred seventy-seven 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 modification of this table
approved by the superintendent, and six percent interest, or such higher
rate or rates of interest for any of such annuities and pure endowments
as may be approved from time to time by the superintendent.

(D) For all annuities and pure endowments purchased or to be purchased
on or after January first, nineteen hundred seventy-seven 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 nineteen hundred eighty by the National Association of Insurance
Commissioners, that is approved by the superintendent for use in
determining the minimum standard of valuation for such annuities and
pure endowments, or any other group annuity mortality table, or any
modification of any of the foregoing tables, approved by the
superintendent, and seven and one-half percent interest, or such higher
rate or rates of interest for any such annuities and pure endowments as
may be approved from time to time by the superintendent.

(E) After June thirteenth, nineteen hundred seventy-four, any company
may file with the superintendent a written notice of its election to
comply with the provisions of this paragraph after a specified date
before January first, nineteen hundred seventy-nine, which shall be the
operative date of this paragraph for such company, provided that an
insurer may elect a different operative date for individual annuity and
pure endowment contracts from that elected for group annuity and pure
endowment contracts. If a company makes no such election, the operative
date of this paragraph for such company shall be January first, nineteen
hundred seventy-nine.

(F) Annuities, annuity benefits and guaranteed interest contracts to
which this subsection applies shall be subject to item (vi) of
subparagraph (B) of paragraph four of this subsection.

(4) (A) The interest rates used in determining the minimum standard
for the valuation of:

(i) all life insurance policies issued in a particular calendar year,
on or after January first, nineteen hundred eighty-two,

(ii) all individual annuity and pure endowment contracts issued in a
particular calendar year on or after January first, nineteen hundred
eighty-two, and, at the option of the company, all annuities purchased
in a particular calendar year on or after such date under individual
deferred annuity contracts issued prior thereto,

(iii) all annuities and pure endowments purchased in a particular
calendar year on or after January first, nineteen hundred eighty-two
under group annuity and pure endowment contracts, and

(iv) the net increase, if any, in a particular calendar year after
January first, nineteen hundred eighty-two, in amounts held under
guaranteed interest contracts,
shall be the calendar year statutory valuation interest rates as defined
in this subsection, or such higher rate or rates of interest for any of
such policies, contracts or annuities as may be approved from time to
time by the superintendent.

(B) The calendar year statutory valuation interest rates ("I") shall
be determined in accordance with the following formulae (where R is the
reference interest rate, and W is the weighting factor, defined in this
paragraph) and the results rounded to the nearer one-quarter of one
percent:

(i) For life insurance, except as otherwise provided in this
subparagraph,

I = .03 + W(R1 - .03) + W/2 (R2 - .09);

where R1 is the lesser of R and .09,

R2 is the greater of R and .09,

(ii) For single premium immediate annuities and for annuity benefits
arising from life insurance policies and annuity and guaranteed interest
contracts with cash settlement options,

I = .03 + W(R - .03)

(iii) 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 item (ii), the formula for life insurance
stated in item (i) 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 item (ii) shall
apply to annuities and guaranteed interest contracts with guarantee
durations of ten years or less, and to single premium life insurance
policies of the kind referred to in item (vi) valued on a year of issue
basis with guarantee durations of ten years or less,

(iv) 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 item (ii) shall
apply,

(v) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, and for single premium
life insurance policies of the kind referred to in item (vi), valued on
a change in fund basis, the formula for single premium immediate
annuities stated in item (ii) shall apply,

(vi) Single premium life insurance policies of the kind referred to in
this item are all single premium life insurance policies, issued on or
after January first, nineteen hundred eighty-two, which provide for the
crediting of additional amounts pursuant to subsection (b) of section
four thousand two hundred thirty-two of this article and under which
interest rates provided in, or declared pursuant to, the policy are, for
some period, guaranteed to exceed the greater of (I) six percent per
annum and (II) the calendar year statutory valuation interest rate for
other life insurance policies with guarantee durations in excess of
twenty years.

(C) If the calendar year statutory valuation interest rate for any
life insurance policies, other than single premium life insurance
policies of the kind referred to in item (vi) of subparagraph (B) of
this paragraph, issued in any calendar year determined without reference
to this sentence differs from the corresponding actual rate for similar
policies issued in the immediately preceding calendar year by less than
one-half of one percent 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 immediately preceding sentence, the
calendar year statutory valuation interest rate for life insurance
policies issued in a calendar year shall be determined for nineteen
hundred eighty, (using the reference interest rate defined for nineteen
hundred seventy-nine) and shall be determined for each subsequent
calendar year regardless of when subsection (k) of section four thousand
two hundred twenty-one of this article becomes operative.

(D) The weighting factors referred to in the formulas stated above are
given in the following tables:

(i) Weighting factors for life insurance:

Guarantee Duration (Years) Weighting Factors

10 or less .50

More than 10, but not more than 20 .45

More than 20 .35
except that the factors shown above shall be increased for single
premium policies of the kind referred to in item (vi) of subparagraph
(B) of this paragraph valued on an issue year basis by .05 and for
single premium policies of such kind valued on a change in fund basis by
..10.

For life insurance, other than single premium policies of the kind
referred to in item (vi) of subparagraph (B) of this paragraph, 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; for such
single premium policies of the kind referred to in item (vi) of
subparagraph (B) of this paragraph, the guarantee duration is the number
of years for which interest rates provided in, or declared pursuant to,
the policy are guaranteed to exceed the greater of (I) six percent per
annum and (II) the calendar year statutory valuation interest rate for
life insurance policies, other than such single premium policies, with
guarantee durations in excess of twenty years;

(ii) Weighting factor for single premium immediate annuities, and for
annuity benefits arising from life insurance policies and annuity and
guaranteed interest contracts with cash settlement options: .80

(iii) Weighting factors for other annuities and for guaranteed
interest contracts, except as stated in item (ii), shall be as specified
in tables (I), (II), (III), according to the rules and definitions in
tables (IV) and (V):

Weighting Factor

for Plan Type

Guarantee Duration (Years) A B C

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

5 or less: .80 .60 .50

More than 5, but not more than 10: .75 .60 .50

More than 10, but 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 factor shown in table
(I) above increased by: .15 .25 .05

(III) For annuities and guaranteed
interest contracts valued on an issue
year basis (other than those with no
cash settlement options) which do not
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 table (I) or derived in
table (II) increased by: .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 interest rates provided in, or
declared pursuant to, the contract are guaranteed to exceed the calendar
year statutory valuation interest rate for life insurance policies other
than single premium policies of the kind referred to in item (vi) of
subparagraph (B) of this paragraph, with guarantee durations 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 above tables is defined as follows:

Plan Type A: The policyholder may withdraw funds only (i) with an
adjustment to reflect changes in interest rates or asset values since
receipt of the funds by the insurance company, or (ii) without such
adjustment but in installments over five years or more, or (iii) as an
immediate life annuity.

Plan Type B: The policyholder may not withdraw funds before the
expiration of the interest rate guarantee or, if withdrawals are
permitted before the expiration of such guarantee, may withdraw funds
only (i) with an adjustment to reflect changes in interest rates or
asset values since receipt of the funds by the insurance company, or
(ii) without such adjustment but in installments over five years or
more. 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.

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

(E) A company may elect to value single premium life insurance
policies of the kind referred to in item (vi) of subparagraph (B) of
this paragraph, guaranteed interest contracts with cash settlement
options or other 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 paragraph, and except as otherwise permitted by the
superintendent, 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 life insurance policy,
annuity contract or guaranteed interest contract is the calendar year
valuation interest rate for the year of issue or year of purchase of the
policy or contract, and 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 policy or contract is the calendar year valuation interest
rate for the year of the change in the fund.

(F) The reference interest rate referred to above shall be defined as
follows:

(i) For all life insurance, except single premium policies of the kind
referred to in item (vi) of subparagraph (B) of this paragraph, 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.

(ii) For single premium immediate annuities and for annuity benefits
arising from life insurance policies and annuity 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.

(iii) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, and for single premium
life insurance policies of the kind referred to in item (vi) of
subparagraph (B) of this paragraph, valued on a year of issue basis,
except as stated in item (ii) hereof, with guarantee durations 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 Corporates, as published by
Moody's Investors Service, Inc.

(iv) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, and for single premium
life insurance policies of the kind referred to in item (vi) of
subparagraph (B) of this paragraph, valued on a year of issue basis,
except as stated in item (ii) hereof, with guarantee durations 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.

(v) 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.

(vi) For other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, and for single premium
life insurance policies of the kind referred to in item (vi) of
subparagraph (B) of this paragraph, valued on a change in fund basis,
except as stated in item (ii) hereof, 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.

(G) 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, then an alternative method for determination of the
reference interest rate, which is adopted by the National Association of
Insurance Commissioners and approved by the superintendent, may be
substituted.

(H) The provisions of this subparagraph shall apply to any life
insurance company which has life insurance policies or annuity or pure
endowment contracts in effect which were issued in a foreign country and
under which premiums and benefits, and the assets supporting reserves in
respect thereof, are denominated in the currency of a foreign country
which is rated in one of the two highest rating categories by an
independent, nationally recognized United States rating agency. For the
purpose of determining the reference interest rate to be used in valuing
such policies and contracts, the superintendent may permit any such
company, or may by regulation require all such companies (except as
exempted pursuant to such regulation), to adjust the yield average of
the applicable index published by Moody's Investors Service, Inc. (or
the yield average determined on the basis of any substitute method
applicable to such policies or contracts and approved by the
superintendent in accordance with subparagraph (G) of this paragraph) in
accordance with a method approved by the superintendent, or to
substitute an alternative method approved by the superintendent in place
of the applicable index published by Moody's Investors Service, provided
that any such substitute or alternative method shall produce
year-to-year consistency in reserving methods and shall appropriately
reflect the difference between the yield average on corporate bonds
issued in the United States and the yield average on corporate bonds
issued in such foreign country. Any company which adjusts yield averages
in accordance with a method approved by the superintendent pursuant to
this subparagraph shall continue to use such method with respect to the
valuation of such policies and contracts until the superintendent
permits or requires such company to cease using such method.

(6) (A) Except as otherwise provided in section four thousand two
hundred eighteen of this article, reserves according to the
commissioners 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 item (i) over item (ii), as
follows:

(i) 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, however, that 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.

(ii) A net one year term premium for such benefits provided for in the
first policy year.

(B) Provided that for any life insurance policy issued on or after
January first, nineteen hundred eighty-six 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 section four thousand two hundred eighteen of this article, be the
greater of the reserve as of such policy anniversary calculated as
described in the preceding paragraph and the reserve as of such policy
anniversary calculated as described in that paragraph, but with (i) the
value defined in item (i) of subparagraph (A) hereof being reduced by
fifteen percent of the amount of such excess first year premium, (ii)
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, (iii) the policy being assumed to mature on such
date as an endowment, and (iv) 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 paragraphs two
and four shall be used.

(C) Reserves according to the commissioners reserve valuation method
for (i) life insurance policies providing for a varying amount of
insurance or requiring the payment of varying premiums, (ii) disability
and accidental death benefits in all policies and contracts, and (iii)
all other benefits, except life insurance and endowment benefits in life
insurance policies and benefits in annuity, pure endowment and
guaranteed interest contracts, shall be calculated by a method
consistent with the principles of this paragraph, except that any extra
premiums charged because of impairments or special hazards shall be
disregarded in the determination of modified net premiums.

(D) The superintendent may, by regulation, issue guidelines for the
application of the reserve valuation provisions of this section to such
policies and contracts as the superintendent deems appropriate. Such
guidelines may provide that the minimum standard for the valuation of
single premium life insurance policies of the kind referred to in item
(vi) of subparagraph (B) of paragraph four of this subsection may be
based on interest rates determined in accordance with paragraph four of
subsection (c) of this section for the first ten years following the
date of valuation and thereafter on interest rates determined in
accordance with the formula stated in item (i) of subparagraph (B) of
paragraph four of this subsection. Such guidelines may permit
recognition of surrender charges in determining reserves to the extent
and under the conditions specified in the regulation. With respect to
annuity, pure endowment, or guaranteed interest contracts providing
allocation of assets to a separate account which qualifies under item
(iii) of paragraph five of subsection (a) of section four thousand two
hundred forty of this article and in which the assets are valued at
their market value in accordance with the terms of such contracts, such
guidelines may provide for the valuation of the reserves for such
contracts in a consistent manner.

(7) In no event shall a company's aggregate reserves for all life
insurance policies, excluding disability and accidental death benefits,
be less than the aggregate reserves calculated in accordance with the
methods set forth in paragraphs six and nine hereof and the mortality
table or tables and rate or rates of interest used in calculating
nonforfeiture benefits for such policies, nor less than the aggregate
reserves calculated in accordance with section four thousand two hundred
eighteen of this article. This paragraph shall not apply to single
premium life insurance policies of the kind referred to in item (vi) of
subparagraph (B) of paragraph four of this subsection nor to life
insurance policies that provide for the crediting of additional amounts
pursuant to subsection (b) of section four thousand two hundred
thirty-two of this article if the aggregate reserves for all such
policies are at least equal to the greatest of present values, at the
date of valuation, of the future guaranteed cash surrender values at any
time under all such policies, assuming no future premiums and the
mortality tables and interest rates prescribed under paragraphs two and
four of this subsection.

(8) Notwithstanding the provisions of subsection (a) hereof and
notwithstanding the provisions of subsection (g) of section four
thousand two hundred twenty-one of this article, after a life insurance
company has established reserves for participating life insurance
policies in accordance with a method consistent with the provisions of
this chapter, it may calculate such reserves according to a rate of
interest lower than the rate of interest previously used in calculating
reserves for the same policies only with the consent of the
superintendent, subject to such conditions, if any, as he may impose.

(9) 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
a nature that the minimum reserves cannot be determined by the methods
described in paragraph six hereof and section four thousand two hundred
eighteen of this article, the reserves which are held under any such
plan must:

(A) be appropriate in relation to the benefits and the pattern of
premiums for that plan, and

(B) be computed by a method which is consistent with the principles of
such paragraph and such section as determined by the superintendent.

(10) (A) The superintendent shall, by regulation, issue guidelines for
the determination of the minimum reserve value required by this section
for any plan or plans of life insurance policies under which cash
surrender values and policy loan values are adjusted in accordance with
a market-value adjustment formula.

(B) The regulation may require any company issuing or delivering such
policies in this state to submit to the superintendent with each annual
report an opinion, in form and substance satisfactory to the
superintendent, of a qualified actuary that the reserves for all such
policies in force at the end of the year, and the assets held by the
company in support of such reserves, make adequate provision for the
liabilities of the company with respect thereto, such opinion to be
accompanied by a memorandum, also in form and substance satisfactory to
the superintendent, of the qualified actuary describing the calculations
made in support of such opinion and the assumptions used in the
calculations. The regulation may prescribe the calculations required to
support such opinions and may provide that if the company has designated
particular assets primarily to support reserves for a class or classes
of policies, including reserves for policies determined in accordance
with the regulation, the opinion of the company's qualified actuary may
apply to the policies whose reserves are supported by such assets. For
purposes hereof, "qualified actuary" has the meaning ascribed to it by
subparagraph (E) of paragraph four of subsection (e) of this section.

(C) With respect to any policies covered by the regulation that
provide for the allocation of assets to a separate account which
qualifies under item (iii) of paragraph five of subsection (a) of
section four thousand two hundred forty of this article and in which
assets are valued at their market value in accordance with the terms of
such policies, the regulation may provide for the valuation of the
reserves for such policies in a consistent manner.

(d) The company shall maintain reserves for all individual and group
accident and health insurance policies which reserves shall reflect a
sound value placed on its liabilities under such policies and shall be
not less than the reserves required by regulations which the
superintendent shall promulgate.

(e) Actuarial opinion of reserves.

(1) General. 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 superintendent 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 superintendent by regulation shall
define the specifics of this opinion and add any other items deemed to
be necessary to its scope.

(2) (A) Actuarial analysis of reserves and assets supporting such
reserves. Every life insurance company, except as exempted by or
pursuant to regulation, shall also annually include in the opinion
required by paragraph one of this subsection, 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
superintendent 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.

(B) The superintendent may provide by regulation for a transition
period for establishing any additional reserves which the qualified
actuary may deem necessary in order to render the opinion required by
this paragraph.

(3) Requirement for actuarial memorandum. (A) Except as exempted by or
pursuant to regulation, a memorandum, in form and substance acceptable
to the superintendent as specified by regulation, shall be prepared to
support each actuarial opinion submitted pursuant to subparagraph (A) of
paragraph two of this subsection. Each company required to prepare such
memorandum shall submit such memorandum to the superintendent as part of
its submission of the opinion of the qualified actuary pursuant to such
subparagraph (A), except as otherwise provided in subparagraph (B) of
this paragraph and except that if a foreign or alien company has
submitted a memorandum in support of an opinion of a qualified actuary
for the prior year to the commissioner of a state accredited by the
National Association of Insurance Commissioners and if that memorandum
was in form and substance acceptable to the commissioner and was in
support of an opinion of a qualified actuary that was required by laws
or regulations of that state to meet standards adopted from time to time
by the Actuarial Standards Board and such additional standards as the
superintendent has prescribed, the foreign or alien company need submit
the memorandum required by this subparagraph only at the request of the
superintendent or as the superintendent may by regulation require.

(B) In lieu of preparing a memorandum as required by subparagraph (A)
of this paragraph, a company may increase its reserves in the manner
provided by the superintendent by regulation. If a company that has not
so increased its reserves fails to file a supporting memorandum as
required by subparagraph (A) of this paragraph or fails to provide a
supporting memorandum at the request of the superintendent within a
period specified by regulation or the superintendent determines that the
supporting memorandum provided by the company fails to meet the
standards prescribed by the regulations or is otherwise unacceptable to
the superintendent, the superintendent 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
superintendent.

(4) Requirement for all opinions. Every opinion shall be governed by
the following provisions:

(A) The opinion shall be submitted with the annual statement
reflecting the valuation of such reserve liabilities for each year
ending on or after December thirty-first, nineteen hundred ninety-four.

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

(C) The opinion shall be based on standards adopted from time to time
by the Actuarial Standards Board and on such additional standards as the
superintendent may by regulation prescribe.

(D) In the case of an opinion required to be submitted by a foreign or
alien company, the superintendent may accept the opinion submitted by
that company to the commissioner of a state accredited by the National
Association of Insurance Commissioners if the superintendent determines
that the opinion reasonably meets the requirements applicable to a
company domiciled in this state.

(E) For the purposes of this subsection, "qualified actuary" means a
member in good standing of the American Academy of Actuaries who meets
the requirements prescribed by the superintendent by regulation.

(F) Except in cases of fraud, willful misconduct or gross negligence,
the qualified actuary shall not be liable for damages to any person
(other than the insurance company or the superintendent) for any act,
error, omission, decision or conduct with respect to the actuary's
opinion and memorandum. The provisions of this subparagraph shall not
operate to remove, condition or limit any rights, remedies or actions at
law or equity which the insurance company or the superintendent may have
or take against or with respect to the qualified actuary.

(G) Disciplinary action by the superintendent against the company or
the qualified actuary shall be defined in regulations by the
superintendent.

(H) Non-public information (meaning information not otherwise
available from public documents or records) contained in any memorandum
in support of the opinion, or in any other material provided by the
company to the superintendent in connection therewith, shall at the
written request of the company be kept confidential by the
superintendent and shall not be made public, other than for the purpose
of enabling any person to defend against an action seeking damages from
such person by reason of any action required by this section or by
regulations promulgated hereunder; provided, however, that such
non-public information may otherwise be released by the superintendent
(i) with the written consent of the company or (ii) for the purpose of
professional disciplinary proceedings conducted by the superintendent or
by any professional body, provided that steps deemed appropriate by the
superintendent are taken to preserve the confidentiality of such
non-public information. Notwithstanding the foregoing, the
superintendent shall release the non-public information to persons
making demand therefor in a criminal proceeding pursuant to lawful
subpoena, warrant or court order or in response to a subpoena from a
grand jury served upon the superintendent. Any such request by the
company for confidentiality shall designate with reasonable specificity
the portion of such memorandum or other material with respect to which
confidentiality is requested pursuant to this subparagraph. Once such
memorandum or other material, or any portion thereof containing matters
with respect to which confidentiality has been requested, is cited by
the company in its marketing or is cited before any governmental agency
(other than a state insurance department) or is released by the company
to the news media, all portions of such memorandum or other material
shall be no longer confidential.

(f) (1) An insurer shall be deemed to meet the minimum standard for
the valuation of life insurance, if the amount of its aggregate reserves
for group life insurance, for ordinary life insurance and for industrial
life insurance, whether or not held in separate accounts pursuant to
section four thousand two hundred forty of this article, is in each case
at least equal to the aggregate minimum standard required by this
section for the respective valuation thereof.

(2) An insurer shall be deemed to meet the minimum standard for the
valuation of annuities and guaranteed interest contracts if the amount
of its aggregate reserves therefor, whether or not held in separate
accounts pursuant to such section forty-two hundred forty of this
article, is at least equal to the aggregate minimum standard required by
this section for the valuation thereof.

(3) An insurer shall be deemed to meet the minimum standard for the
valuation of individual and group accident and health insurance policies
if the amount of its aggregate reserves therefor is at least equal to
the aggregate minimum standard required by this section for the
valuation thereof.

(4) Without the specific approval of the superintendent subject to
such conditions as he may prescribe and as provided by regulation, an
insurer shall not aggregate the reserves referred to in two or more of
paragraph one, two or three of this subsection. Such regulation may
prescribe the conditions under which the valuation of two or more
classes of business of insurance or the valuation of all of its
insurance business to which this section applies may be combined.

(5) For purposes of this subsection, the aggregate minimum standard
required by this section for the valuation of any insurance policies or
contracts shall be deemed to include such additional reserves as the
qualified actuary deems necessary, taking into account any transition
rules provided by regulation pursuant to subparagraph (B) of paragraph
two of subsection (e) of this section, in order to render the opinion
required by subsection (e) of this section and such additional reserves
as may be necessary to comply with regulations promulgated by the
superintendent pursuant to this section.

* (g)(1) This subsection shall apply only to individual and group life
insurance policies and annuity contracts issued on or after the
operative date of the valuation manual as prescribed by the
superintendent by regulation, provided that the operative date shall be
no sooner than January first, two thousand nineteen.

(2) For the purposes of this subsection, "NAIC" shall mean the
National Association of Insurance Commissioners.

(3) For purposes of this subsection, "principle-based valuation" shall
mean a reserve valuation that uses methods and assumptions required by
paragraph eleven of this subsection as specified in the valuation
manual.

(4) For purposes of this subsection, "qualified actuary" shall mean a
member in good standing of the American Academy of Actuaries who meets
the requirements prescribed by the superintendent by regulation.

(5) For purposes of this subsection, "valuation manual" shall mean the
valuation manual adopted by the NAIC on December second, two thousand
twelve, as subsequently amended, and as approved by the superintendent
upon a finding that such manual is for the best interests of the holders
of policies and contracts and annuitants of this state and which meets
the requirements as set forth in this subsection.

(6) Notwithstanding subsection (c) of this section and section four
thousand two hundred eighteen of this article, the minimum standard for
the valuation of all such policies and contracts shall be the standard
prescribed in the valuation manual.

(7) The valuation manual shall not become operative in this state
unless and until the superintendent has approved of such manual and has
adopted all necessary regulations to effectuate this subsection.

(8) (A) No amendment to the valuation manual shall take effect in this
state unless the superintendent finds that such amendment is for the
best interests of the holders of policies and contracts and annuitants
of this state.

(B) The superintendent may deviate, through regulations, from the
reserve standards, valuation methods, assumptions, and related
requirements in the valuation manual, including for individual
companies, provided, however, that such deviation shall not result in
reserve valuations that are lower than the minimum standards prescribed
in the valuation manual and may be based on a percentage of the reserves
being held for the policies and contracts subject to this subsection
prior to the operative date of such manual.

(9) The valuation manual shall specify all of the following:

(A) Minimum valuation standards for and definitions of the policies
and contracts subject to this subsection as determined by the
superintendent. Such minimum valuation standards shall be:

(i) The commissioners reserve valuation method for life insurance
policies subject to this subsection; and

(ii) The commissioners annuity reserve valuation method for annuity
contracts subject to this subsection.

(B) Requirements for the format of reports to the superintendent under
item (iii) of subparagraph (B) of paragraph eleven of this subsection
and which shall include information necessary to determine if the
valuation is appropriate and in compliance with this subsection;

(C) Assumptions for risks over which a company does not have
significant control or influence;

(D) Procedures for corporate governance and oversight of the actuarial
function, and a process for appropriate waiver or modification of such
procedures;

(E) Other requirements, including, but not limited to, those relating
to reserve methods, models for measuring risk, generation of economic
scenarios, assumptions, margins, use of company experience, risk
measurement, disclosure, certifications, reports, actuarial opinions and
memorandums, transition rules and internal controls; and

(F) The data and form of the data required under paragraph twelve of
this subsection, with whom the data shall be submitted, and other
requirements including data analyses and reporting of analyses.

(10) The superintendent may engage a qualified actuary, at the expense
of a company, to perform an actuarial examination of such company and
opine on the appropriateness of any reserve assumption or method used by
such company, or to review and opine on such company's compliance with
any requirement set forth in this subsection.

(11) (A) A company that issues policies and contracts subject to this
subsection shall establish reserves using a principle-based valuation
that meets the following conditions for such policies and contracts as
specified in the valuation manual:

(i) Quantify the benefits and guarantees, and the funding, associated
with the policies or contracts and their risks at a level of
conservatism that reflects conditions that include unfavorable events
that have a reasonable probability of occurring during the lifetime of
the policies and contracts. For policies and contracts with significant
tail risk, reflect conditions appropriately adverse to quantify the tail
risk.

(ii) Incorporate assumptions, risk analysis methods and financial
models and management techniques that are consistent with, but not
necessarily identical to, those utilized within the company's overall
risk assessment process, while recognizing potential differences in
financial reporting structures and any prescribed assumptions or
methods.

(iii) Incorporate assumptions that are derived in one of the following
manners:

(I) The assumption is prescribed in the valuation manual.

(II) For assumptions that are not prescribed, the assumptions shall:

a. be established utilizing the company's available experience, to the
extent it is relevant and statistically credible; or

b. to the extent that company experience is not available, relevant,
or statistically credible, be established utilizing other relevant,
statistically credible experience.

(iv) Provide margins for uncertainty including adverse deviation and
estimation error, such that the greater the uncertainty the larger the
margin and resulting reserve.

(B) A company that issues policies and contracts subject to this
subsection shall:

(i) Establish procedures for corporate governance and oversight of the
actuarial valuation function consistent with those described in the
valuation manual.

(ii) Provide to the superintendent, annually on or before a date as
determined by the superintendent, and the board of directors of the
company an annual certification of the effectiveness of the internal
controls with respect to the principle-based valuation. Such controls
shall be designed to assure that all material risks inherent in the
liabilities and associated assets subject to such valuation are included
in the valuation, and that valuations are made in accordance with the
valuation manual. The certification shall be based on the controls in
place as of the end of the preceding calendar year.

(iii) Develop, and file with the superintendent upon request, a
principle-based valuation report that complies with standards prescribed
in the valuation manual.

(C) A principle-based valuation shall include a prescribed formulaic
reserve component.

(12) A company that issues policies and contracts subject to this
subsection shall submit mortality, morbidity, policyholder behavior, or
expense experience and other data as prescribed in the valuation manual
to the superintendent annually on or before a date as determined by the
superintendent.

(13) (A) The superintendent may exempt specific product forms or
product lines of a domestic company that is licensed and doing business
only in this state from the requirements of this subsection provided:

(i) The superintendent has issued an exemption in writing to the
company and has not subsequently revoked the exemption in writing; and

(ii) The company computes reserves using assumptions and methods used
prior to the operative date of the valuation manual in addition to any
requirements established by the superintendent and promulgated by
regulation.

(B) For any company granted an exemption under this paragraph,
subsections (c), (d), (e) and (f) of this section and section four
thousand two hundred eighteen of this article shall be applicable. With
respect to any company applying for this exemption, any reference to
subsection (g) found in subsections (c), (d), (e) and (f) of this
section and section four thousand two hundred eighteen of this article
shall not be applicable.

* NB Repealed December 7, 2028