MORTALITY TABLE UPDATE - 2015 VBT & 2017 CSO

1 Legal & General America MORTALITY TABLE . UPDATE - 2015 VBT &. 2017 CSO. Presented from research on behalf of the Joint American Academy of Actuaries Life Experience Committee and Society of Actuaries Joint Preferred MORTALITY Project Oversight Group Legal & General America REGULATORY MORTALITY IN DEVELOPMENT. TABLE Regulatory Use Status 2015 VBT Basic Exposure period ended June Tables AG38 18. VM-20 Deterministic reserves Expected adoption August VM-20 Stochastic reserves 2015 . 2015 VBT Relative Risk Tables 2017 CSO and 2017 Net premium reserves Loading structure and CSO Preferred Tax reserves coverage tests complete Structure Tables Non-forfeiture determination Tables currently tested via Basis for 7702/7702A impact study Cap for universal life cost of Waiting for exposure.

2 Insurance charges margins approved by LATF. PBR Margins VM-20 Deterministic and Recommendations complete Stochastic reserves Reserve impacts of margins tested via impact study Waiting to be exposed GI/SI/Preneed CRVM reserves In progress Legal & General America ADOPTION PROCESS. All tables must be exposed for at least 30 days VBT and Relative Risk Tables Exposure period has ended Very few comments received Expect adoption at August NAIC meeting CSO and CSO Preferred Structure Tables Not yet exposed NAIC LATF has approved in concept the level of the loading, margin structure and coverage level Underwriting Criteria Scoring Tool and PBR Margins Not yet discussed by NAIC LATF or exposed Targeting exposure and adoption along with CSO tables Will be adopted via Amendment Proposal Forms for the Valuation Manual to be exposed this summer Legal & General America 2015 VBT DEVELOPMENT.

3 Legal & General America UNDERLYING EXPERIENCE. SOA's Individual Life Experience Committee (ILEC). experience data from 2002-2009. Significant increase in exposure and number of claims over the studies underlying both the 2008 and 2001 VBT tables Exposure Actual deaths Companies Study/ TABLE By Amount By Number Number Number Claims 2002-2009 / 2015 VBT $ trillion 266 million million 51. 2002-2004/ 2008 VBT $ trillion 75 million million 35. 1990-1995 / 2001 VBT $ trillion 175 million ~ million 21. Increase from 2008 VBT 345% 255% 257% 46%. Increase from 2001 VBT 439% 52% 100% 143%. Legal & General America MORTALITY IMPROVED FROM 2008 VBT. Exposure # Death Study Period Male Female Aggregate (Trillion) Claims 2002-2004 (underlying $ 699,890. 2008 VBT).

4 2002-2009 (underlying 2,549,490. 2015 VBT). 2002-2009 experience for common companies to 1,940,403. 2002-2004 study 2002 2009 100k+ 162,095. 2002 2009 250k+ 46,570. Expected basis is 2008 VBT RR 100 TABLE Source: Society of Actuaries, Individual Life Experience Reports 2002 through 2009 Preliminary Legal & General America EXPERIENCE VARIES BY MANY FACTORS. A/E* Ratio NS versus SM A/E* Ratio By Amount Smoker Status A/E Ratio by Face Amount Band A/E Ratio by Amount ($) Amount Non-smoker 50,000 99,999 Smoker 250,000 499,999 Unknown Status 1,000,000 2,499,999 Aggregate 5,000,000 9,999,999 Aggregate A/E* Ratio By Issue Age Issue Age A/E Ratio by * Expected basis = 2008 VBT Primary Tables, ANB Amount ** 80-90 for common companies drops to 55% but 40 49 credibility is limited 60 69 Source: Society of Actuaries, Individual Life Experience Reports 2003.

5 Through 2009 Preliminary 80-89** 23. Legal & General America EXPERIENCE VARIES SIGNIFICANTLY BY COMPANY. A/E Ratios for contributing companies non-smoker risks By count Average By amount Range [49% - 863%]. Average Range [36% - 1,164%]. Expected basis = 2008 VBT RR 100 TABLE Legal & General America EXPERIENCE BY COMPANY, CONT'D. A/E Ratios for contributing companies Smoker risks By count Average By amount Range [75% - 184%]. Average Range [41% - 194%]. Expected basis = 2008 VBT RR 100 TABLE Legal & General America 2015 VBT AND RR TABLE STRUCTURES. VBT Primary Tables RR Tables NS/SM/Uni-smoke 10 NS/4 SM tables M/F M/F. ANB/ALB ANB, ALB. Select & Ultimate, No juvenile rates or uni- Ultimate only smoke tables Juvenile rates on uni- Utilizes preferred wear-off smoke basis only pattern that wears off by age Select factors vary by 95.

6 Gender and issue age RR 100 TABLE same as VBT. Omega rate of per Primary TABLE 1,000 at attained age 112 New UCS Calculator No omega age Legal & General America SELECT PERIOD. Varies by issue age and gender Considered both observable as well as prospective select period Underlying select period independent of preferred wear-off Select Period for Sample Issue Ages Issue Age MALE FEMALE. 0-17 0 0. 18-54 25 20. 55 24 19. 65 19 17. 75 15 14. 85 8 8. 95 1 1. 96+ 0 0. Legal & General America JUVENILE RATES. Consider ages 0-17 as juveniles Examined MORTALITY relative to population MORTALITY and insured MORTALITY (2008 VBT). No clear relationship to population MORTALITY No smoker/non-smoker distinction No observable select period Proposed TABLE juvenile rates attained age only Some grading/graduation was necessary to smoothly grade at attained age 26 into adult attained ages Legal & General America 3 ADJUSTMENTS TO UNDERLYING EXPERIENCE.

7 1. Adjust data to remove post level term anti-selective MORTALITY ;. 2. Adjust data to recognize differences in experience from different underwriting eras; and 3. Improve the underlying experience to start date of TABLE ( 2015 ). Legal & General America 1. REMOVE EFFECTS OF POST LEVEL TERM MORTALITY . Calculated actual to expected (A/E) ratios based on face amount by issue age group and duration in total and for 10, 15 and 20 year term plans Recalculated the A/E ratios estimating impact of removing the post level term experience Determined the ratio of the A/E excluding post-level term to the total A/E. This provided the proposed adjustment to decrease the total rates to account for the impact of post-level term experience. Factors vary by issue age/duration Average at duration 13 versus at duration 18.

8 Legal & General America 2. ACCOUNT FOR DIFFERENT UNDERWRITING ERAS. Issue era Underwriting Consideration Prior 1980 Aggregate smoker This experience comprises the bulk of the basis ultimate data Early to mid- Introduction of High replacement activity amongst NS. 1980s SM/NS distinct risks rates; Anti-selective MORTALITY Introduction of High preponderance of SM risks in blood testing underlying data Mid-1980's to SM/NS distinct rates Preponderance of experience on early 1990's aggregate NS or aggregate SM basis Early 1990's Introduction of High replacement activity amongst and later preferred Preferred risks underwriting and Anti-selective MORTALITY better utilization of Exhibit lower overall MORTALITY than the blood profiles earlier generations of policies both through the select period and beyond Legal & General America 2.

9 ACCOUNT FOR DIFFERENT UNDERWRITING ERAS. Adjustment factors to select period MORTALITY to account for differences in underwriting eras Legal & General America 3. MORTALITY IMPROVEMENT. Considerations After looking at General population improvement 3 sources, SSA. US Vital Statistics data selected as source for Human MORTALITY Data Base (HMD). general Social Security Administration Data (SSA) population Insured data Common company data for period 2002-2009. Given short period of time for historical experience and volatility from year over year, believe general population data is preferable Additional factors Legal & General America 3. MORTALITY IMPROVEMENT, CONT'D. Additional factors considered Gender;. Attained age;. Smoker status;. Socio-economic status; and Differences in cause of death for insured lives vs general population.

10 Legal & General America 3. MORTALITY IMPROVEMENT, CONT'D. For period 2002-2009: Apply actual MORTALITY improvement to adjust each experience year. For period 2009- 2015 : Apply annual improvement rates varying by attained age and gender = average of: (a) Average annual improvement rates implied by the SSA's most recent intermediate level projection of MORTALITY for the social security population; and (b) Actual average annual improvement rates from historical SSA data for the most recent 10-year period. Beyond 2015 , annual improvement factors will be determined and published on SOA website Legal & General America 3. MORTALITY IMPROVEMENT, CONT'D. 2015 VBT MORTALITY Improvement Factors from 2009- 2015 . Male Age Improvement Factor Female Age Improvement Factor 18-82 18-80 83 81 84 82 85 83 86 84 87 85 88 86 89 87 90 88 91 89 92 90 93 91 94 92 95+ 93+ Legal & General America GRADUATION APPROACH.