§ 26-6-206 — Computation of minimum standard for annuities; computation of minimum standard valuation by calendar year of issue

(a) Except as provided in subsection (b) of this section
the minimum standard of valuation for individual annuity and
pure endowment contracts issued on or after the operative date
of this section as defined in subsection (b) of this section,
and for annuities and pure endowments purchased on or after that
operative date under group annuity and pure endowment contracts,
shall be the commissioners' reserve valuation method defined in
W.S. 26-6-205(c), (d) and (e) and the following tables and
interest rates:
(i) For individual annuity and pure endowment
contracts issued:
(A) Prior to May 20, 1981, excluding any
disability and accidental death benefits in those contracts, the
1971 individual annuity mortality table, or any modification of
this table the commissioner approves, with six percent (6%)
interest for single premium immediate annuity contracts and four
percent (4%) interest for all other individual annuity and pure
endowment contracts;
(B) On or after May 20, 1981, excluding any
disability and accidental death benefits in those contracts, the
1971 individual annuity mortality table or any individual
annuity mortality table the National Association of Insurance
Commissioners adopts after 1980 and is approved by regulation
the commissioner promulgates for use in determining the minimum
standard of valuation for those contracts, or any modification
of these tables the commissioner approves, and seven and
one-half percent (7 1/2%) interest for single premium immediate
annuity contracts, five and one-half percent (5 1/2%) interest
for single premium deferred annuity and pure endowment contracts
and four and one-half percent (4 1/2%) interest for all other
individual annuity and pure endowment contracts.
(ii) For annuities and pure endowments purchased:
(A) Prior to May 20, 1981 under group annuity
and pure endowment contracts, excluding any disability and
accidental death benefits purchased under those contracts, the
1971 group annuity mortality table, or any modification of this
table the commissioner approves, and six percent (6%) interest;
(B) On or after May 20, 1981 under group annuity
and pure endowment contracts, excluding any disability and
accidental death benefits purchased under those contracts, the
1971 group annuity mortality table or any group annuity
mortality table the National Association of Insurance
Commissioners adopts after 1980 and the commissioner approves
for use in determining the minimum standard of valuation for
those annuities and pure endowments, or any modification of
these tables the commissioner approves, and seven and one-half
percent (7 1/2%) interest.
(b)(i) The interest rates used in determining the
minimum standard for the valuation of:
(A) Life insurance policies issued in a
particular calendar year, on or after the operative date of W.S.
26-16-209;
(B) Individual annuity and pure endowment
contracts issued in a particular calendar year on or after
January 1, 1995;
(C) Annuities and pure endowments purchased in a
particular calendar year on or after January 1, 1995, under
group annuity and pure endowment contracts; and
(D) The net increase, if any, in a particular
calendar year after January 1, 1995, in amounts held under
guaranteed interest contracts shall be the calendar year
statutory valuation interest rates as defined in this
subsection.
(ii) The calendar year statutory valuation interest
rates, I, shall be determined as follows and the results rounded
to the nearer one-fourth percent (1/4%):
(A) For Life Insurance,
I = .03 + W (R1 - .03) + W (R2 - .09);
(B) For single premium immediate annuities and
for annuity benefits involving life contingencies arising from
other annuities with cash settlement options and from guaranteed
interest contracts with cash settlement options;
I = .03 + W (R - .03)
Where R1 is the lesser of R and .09, R2 is the greater of R and
.09, R is the reference interest rate defined in this
subsection, and W is the weighting factor defined in this
subsection;
(C) For other annuities with cash settlement
options and guaranteed interest contracts with cash settlement
options, valued on an issue year basis, except as stated in
subparagraph (B) of this paragraph, the formula for life
insurance stated in subparagraph (A) of this paragraph shall
apply to annuities and guaranteed interest contracts with
guarantee durations in excess of ten (10) years and the formula
for single premium immediate annuities stated in subparagraph
(B) of this paragraph shall apply to annuities and guaranteed
interest contracts with guarantee duration of ten (10) years or
less;
(D) For other annuities with no cash settlement
options and for guaranteed interest contracts with no cash
settlement options, the formula for single premium immediate
annuities stated in subparagraph (B) of this paragraph shall
apply;
(E) For other annuities with cash settlement
options and guaranteed interest contracts with cash settlement
options, valued on a change in fund basis, the formula for
single premium immediate annuities stated in subparagraph (B) of
this paragraph shall apply.
(iii) However, if the calendar year statutory
valuation interest rate for any life insurance policies 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 percent (1/2%), 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 1980 (using the reference
interest rate defined for 1979) and shall be determined for each
subsequent calendar year regardless of when W.S. 26-16-209
becomes operative;
(iv) The weighting factors referred to in the
formulas stated above are given in the following tables:
(A) Weighting factors for life insurance:
GUARANTEE WEIGHTING
DURATION FACTORS
(YEARS)
10 or less .50
More than 10, but not more than 20 .45
More than 20 .35
For life insurance, the guarantee duration is the maximum number
of years the life insurance can remain in force on a basis
guaranteed in the policy or under options to convert to plans of
life insurance with premium rates or nonforfeiture values or
both which are guaranteed in the original policy;
(B) Weighting factor for single premium
immediate annuities and for annuity benefits involving life
contingencies arising from other annuities with cash settlement
options and guaranteed interest contracts with cash settlement
options:
.80
(C) Weighting factors for other annuities and
for guaranteed interest contracts, except as stated in
subparagraph (B) of this paragraph, shall be as specified in
tables (I), (II) and (III) of this subparagraph, according to
the rules and definitions in subdivisions (IV), (V) and (VI) of
this subparagraph:
(I) For annuities and guaranteed interest
contracts valued on an issue year basis:
GUARANTEE WEIGHTING FACTOR
DURATION FOR PLAN TYPE
(YEARS) A B C
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) PLAN TYPE
A B C
For annuities and guaranteed interest
contracts valued on a change in fund
basis, the factors shown in
subdivision (I) of this subparagraph
increased by: .15 .25 .05
(III) PLAN TYPE
A B C
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
(1) 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 (12) months beyond the valuation
date, the factors shown in subdivision (I)
of this subparagraph or derived in
subdivision (II) of this subparagraph
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 contract guarantees interest rates in excess
of the calendar year statutory valuation interest rate for life
insurance policies with guarantee duration in excess of twenty
(20) years. For other annuities with no cash settlement options
and for guaranteed interest contracts with no cash settlement
options, the guarantee duration is the number of years from the
date of issue or date of purchase to the date annuity benefits
are scheduled to commence;
(V) Plan type as used in the tables in this
subparagraph is defined as follows:
Plan Type A: At any time policyholder may withdraw funds only
(1) with an adjustment to reflect changes in interest rates or
asset values since receipt of the funds by the insurance
company, or (2) without such adjustment but in installments over
five (5) years or more, or (3) as an immediate life annuity, or
(4) no withdrawal permitted.
Plan Type B: Before expiration of the interest rate guarantee,
policyholder may withdraw funds only (1) with an adjustment to
reflect changes in interest rates or assets values since receipt
of the funds by the insurance company, or (2) without such
adjustment but in installments over five (5) years or more, or
(3) no withdrawal permitted. At the end of interest rate
guarantee, funds may be withdrawn without such adjustment in a
single sum or installments over less than five (5) years.
Plan Type C: Policyholder may withdraw funds before expiration
of interest rate guarantee in a single sum or installments over
less than five (5) years either without adjustment to reflect
changes in interest rates or asset values since receipt of the
funds by the insurance company, or subject only to a fixed
surrender charge stipulated in the contract as a percentage of
the fund.
(VI) A company may elect to value
guaranteed interest contracts with cash settlement options and
annuities with cash settlement options on either an issue year
basis or on a change in fund basis. Guaranteed interest
contracts with no cash settlement options and other annuities
with no cash settlement options must be valued on an issue year
basis. As used in this subsection, an issue year basis of
valuation refers to a valuation basis under which the interest
rate used to determine the minimum valuation standard for the
entire duration of the annuity or guaranteed interest contract
is the calendar year valuation interest rate for the year of
issue or year of purchase of the annuity or guaranteed interest
contract, 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 annuity or guaranteed interest contract is
the calendar year valuation interest rate for the year of the
change in the fund.
(v) The reference interest rate referred to in
paragraphs (ii) and (iii) of this subsection shall be defined as
follows:
(A) For life insurance, the lesser of the
average over a period of thirty-six (36) months and the average
over a period of twelve (12) months, ending on June 30 of the
calendar year next preceding the year of issue, of the monthly
average of the composite yield on seasoned corporate bonds, as
published by Moody's Investors Service, Inc.;
(B) For single premium immediate annuities and
for annuity benefits involving life contingencies arising from
other annuities with cash settlement options and guaranteed
interest contracts with cash settlement options, the average
over a period of twelve (12) months, ending on June 30 of the
calendar year of issue or year of purchase, of the monthly
average of the composite yield on seasoned corporate bonds, as
published by Moody's Investors Service, Inc.;
(C) For other annuities with cash settlement
options and guaranteed interest contracts with cash settlement
options, valued on a year of issue basis, except as stated in
subparagraph (B) of this paragraph, with guarantee duration in
excess of ten (10) years, the lesser of the average over a
period of thirty-six (36) months and the average over a period
of twelve (12) months, ending on June 30 of the calendar year of
issue or purchase, of the monthly average of the composite yield
on seasoned corporate bonds, as published by Moody's Investors
Service, Inc.;
(D) For other annuities with cash settlement
options and guaranteed interest contracts with cash settlement
options, valued on a year of issue basis, except as stated in
subparagraph (B) of this paragraph, with guarantee duration of
ten (10) years or less, the average over a period of twelve (12)
months, ending on June 30 of the calendar year of issue or
purchase, of the monthly average of the composite yield on
seasoned corporate bonds, as published by Moody's Investors
Service, Inc.;
(E) For other annuities with no cash settlement
options and for guaranteed interest contracts with no cash
settlement options, the average over a period of twelve (12)
months, ending on June 30 of the calendar year of issue or
purchase, of the monthly average of the composite yield on
seasoned corporate bonds, as published by Moody's Investors
Service, Inc.;
(F) For other annuities with cash settlement
options and guaranteed interest contracts with cash settlement
options, valued on a change in fund basis, except as stated in
subparagraph (B) of this paragraph, the average over a period of
twelve (12) months, ending on June 30 of the calendar year of
the change in the fund, of the monthly average of the composite
yield on seasoned corporate bonds, as published by Moody's
Investors Service, Inc.
(vi) If the monthly average of the composite yield on
seasoned corporate bonds is no longer published by Moody's
Investor's Service, Inc., or if the National Association of
Insurance Commissioners determines that the monthly average of
the composite yield on seasoned corporate bonds 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 regulation promulgated by the
commissioner, may be substituted.
(c) Any insurer may file with the commissioner a written
notice of its election to comply with this section after a
specified date before January 1, 1979, which is the operative
date of this section for that insurer. 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 an insurer makes no election, the
operative date of this section for that insurer is January 1,
1979.