A.M. Best Co. has updated its 2012 statement year U.S.
"Life/Health Supplemental Rating Questionnaire" (SRQ) in several key
areas. While minor revisions have been made to a number of exhibits, the
most material changes to this year's SRQ include: new exhibits for new
business annualized premium by product and distribution channel,
operating leverage detail and a request for the components of C-3 Phase
2 capital requirements for variable annuities with guaranteed benefits.
The previous exhibit (Question 2) requesting detail on licensed
producers by distribution channel has been redesigned to focus on new
business annualized premium by both product line and distribution
channel. A new exhibit (Question 6) for operating leverage requests
details on the various operating company borrowings as defined in A.M.
Best's Insurance Criteria Report entitled, "A.M. Best's Perspective on
Operating Leverage," which is posted on the A.M. Best website. A noted
in the instructions, provide only amounts that are specific to the
operating company in question. In addition, information is being
requested regarding the use of parental guarantees and letters of credit
for reserve financing.
A new schedule (Question 7b) has been added to the Annuity Operations
section to capture components of the C-3 Phase 2 capital requirement for
variable annuities with guaranteed benefits. This schedule replaces
Question 8d from prior SRQs. The new schedule shows the basis for
determining the total asset requirement (stochastic vs. standard
scenario), the impact of applying the current prescribed smoothing
formula and the resulting capital after netting reserves, including the
basis for determining AG43 reserves (stochastic vs. standard scenario).
The schedule further allows companies to show the allocation of the
required capital between interest rate risk and market risk, consistent
with current regulatory capital requirements.
A copy of the new and revised life/health questions can be accessed at http://www3.ambest.com/ratings/default.asp
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
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