Jan. 1, 2022 Edition

1 Valuation Manual Jan. 1, 2022 Edition The NAIC is the authoritative source for insurance industry information. Our expert solutions support the efforts of regulators, insurers and researchers by providing detailed and comprehensive insurance information. The NAIC offers a wide range of publications in the following categories: Accounting & Reporting Information about statutory accounting principles and the procedures necessary for fi ling financial annual statements and conducting risk-based capital calculations. special studies studies , reports, handbooks and regulatory research conducted by NAIC members on a variety of insurance related topics .

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3 Capital Markets & Investment Analysis Information regarding portfolio values and procedures for complying with NAIC reporting requirements. Market Regulation Regulatory and industry guidance on market-related issues, including antifraud, product fi ling requirements, producer licensing and market analysis. White Papers Relevant studies , guidance and NAIC policy positions on a variety of insurance topics . NAIC Activities NAIC member directories, in-depth reporting of state regulatory activities and official historical records of NAIC national meetings and other activities. For more information about NAIC publications, visit us at: 2020 National Association of Insurance Commissioners. All rights reserved.

4 ISBN: Printed in the United States of America No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any storage or retrieval system, without written permission from the NAIC. NAIC Executive Office 444 North Capitol Street, NW Suite 700 Washington, DC 20001 NAIC Central Office 1100 Walnut Street Suite 1500 Kansas City, MO 64106 NAIC Capital Markets & Investment Analysis Office One New York Plaza, Suite 4210 New York, NY 10004 2021 National Association of Insurance Commissioners i VALUATION MANUAL NAIC Adoptions through August 17, 2021 The National Association of Insurance Commissioners (NAIC) initially adopted the Valuation Manual on Dec.

5 2, 2012, with subsequent adoptions of amendments on June 18, 2015; Nov. 22, 2015; April 6, 2016; Aug. 29, 2016; Aug. 9, 2017; Aug. 7, 2018; Sept. 10, 2018; Aug. 6, 2019; Aug. 14, 2020; and Aug. 17, 2021. 2021 National Association of Insurance Commissioners ii JPMorgan Chase Bank, ( Morgan ) is the source of certain data for this Valuation Manual. The data was obtained from sources believed to be reliable, but Morgan does not warrant its completeness or accuracy. The Valuation Manual is not sponsored, endorsed, sold or promoted by Morgan, and Morgan makes no representation regarding the advisability of trading in or use of such Valuation Manual.

6 The data is used with permission and may not be copied, used or distributed without Morgan s prior written approval. Morgan makes no express or implied warranties and hereby expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to the data and the Valuation Manual. All warranties and representations of any kind with regard to the data and/or the Valuation Manual are disclaimed, including any implied warranties of merchantability, quality, accuracy, fitness for a particular purpose and/or against infringement and/or warranties as to any results to be obtained by and/or from the Valuation Manual without limiting any of the foregoing, in no event shall Morgan have any liability for any special , punitive, direct, indirect, or consequential damages, including loss of principal and/or lost profits, even if notified of the possibility of such damages.

7 Copyright 2013. JPMorganChase & Co. All rights reserved. Table of Contents 2021 National Association of Insurance Commissioners iii I. Introduction .. 1 Authority and Applicability .. 1 Background .. 1 Description of the Valuation Manual .. 2 Operative Date of the Valuation Manual .. 2 PBR Review and Updating Process .. 2 Process for Updating the Valuation Manual .. 2 Overview of Reserve Concepts .. 5 Corporate Governance Requirements for Principle-Based Reserves .. 6 II. Reserve Requirements .. 7 Life Insurance Products .. 7 Annuity Products .. 8 Deposit-Type Contracts .. 9 Health Insurance Products .. 9 Credit Life and Disability Products .. 9 Riders and Supplemental 10 Claim Reserves .. 10 III.

8 actuarial Opinion and Report Requirements .. 11 IV. Experience Reporting Requirements .. 11 V. Valuation Manual Minimum Standards .. 11 VM-01: Definitions for Terms in Requirements .. 01-1 VM-02: Minimum Nonforfeiture Mortality and Interest .. 02-1 VM-20: Requirements for Principle-Based Reserves for Life Products .. 20-1 VM-21: Requirements for Principle-Based Reserves for Variable Annuities .. 21-1 VM-22: Statutory Maximum Valuation Interest Rates for Income Annuities .. 22-1 VM-25: Health Insurance Reserves Minimum Reserve Requirements .. 25-1 VM-26: Credit Life and Disability Reserve Requirements .. 26-1 VM-30: actuarial Opinion and Memorandum Requirements .. 30-1 VM-31: PBR actuarial Report Requirements for Business Subject to a Principle-Based Valuation.

9 31-1 VM-50: Experience Reporting Requirements .. 50-1 VM-51: Experience Reporting Formats .. 51-1 VM-A: Appendix A Requirements .. A-1 VM-C: Appendix C actuarial Guidelines .. C-1 VM-G: Appendix G Corporate Governance Guidance for Principle-Based Reserves .. G-1 VM-M: Appendix M Mortality Tables .. M-1 Introduction 2021 National Association of Insurance Commissioners 1 I. Introduction Authority and Applicability The Valuation Manual (VM) sets forth the minimum reserve and related requirements for jurisdictions where the Standard Valuation Law (#820), as amended by the National Association of Insurance Commissioners (NAIC) in 2009, or legislation including substantially similar terms and provisions has been enacted by jurisdictions, and this Valuation Manual is operative.

10 The reserve requirements in the Valuation Manual satisfy the minimum valuation requirements of Model #820. Requirements in the Valuation Manual are applicable to life insurance, accident and health (A&H) insurance, and deposit-type contracts as provided in the Valuation Manual. These contracts include the definition provided by Statement of Statutory Accounting Principles (SSAP) No. 50 Classifications of Insurance or Managed Care Contracts as found in the NAIC Accounting Practices and Procedures Manual (AP&P Manual). Annuity contracts are, therefore, included within the terminology life insurance contracts unless specifically indicated otherwise in this Valuation Manual.