Chapter 04 Valuation Standards for Individual Annuity and Pure Endowment Contracts

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Code of Maryland Regulations

Title 31 MARYLAND INSURANCE ADMINISTRATION

Subtitle 05 ASSETS, LIABILITIES, RESERVES, AND INVESTMENTS OF INSURERS

Chapter 04 Valuation Standards for Individual Annuity and Pure Endowment Contracts

Code of Maryland Regulations

Chapter 04 Valuation Standards for Individual Annuity and Pure Endowment Contracts

Administrative History Effective date: December 31, 1985 (12:26 Md. R. 2545) —————— Chapter recodified from COMAR 09.30.68 to COMAR 31.05.04 effective September 7, 1998 (25:18 Md. R. 1439) —————— Chapter revised effective May 24, 2004 (31:10 Md. R. 796) Regulation .01 amended effective November 10, 2014 (41:22 Md. R. 1320) Regulation .02B amended effective January 1, 2015 (41:22 Md. R. 1320) Regulation .05 amended effective January 1, 2015 (41:22 Md. R. 1320) Regulation .06 adopted effective January 1, 2015 (41:22 Md. R. 1320) Regulation .07 adopted effective January 1, 2015 (41:22 Md. R. 1320) Regulation .08 adopted effective January 1, 2015 (41:22 Md. R. 1320) Authority Insurance Article, §2-109 and Title 5, Subtitle 3, Annotated Code of Maryland

.01 Purpose. The purpose of this chapter is to approve the use of the following mortality tables adopted by the National Association of Insurance Commissioners after 1980 as a basis for determining the minimum standards of valuation for individual annuity and pure endowment contracts: A. The 1983 Table “a”; B. The Annuity 2000 Mortality Table; and C. The 2012 Individual Annuity Reserving Table.

.02 Definitions. A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) "Annuity 2000 Mortality Table" means the mortality table: (a) Developed by the Society of Actuaries Committee on Life Insurance Research; and (b) Set out in Regulation .04 of this chapter . (2) “Generational mortality table” means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a period table and a projection scale containing rates of mortality improvement. (3) “Period table” means a table of mortality rates applicable to a given calendar year. (4) “Projection Scale G2” means a table: (a) Containing annual rates, G2 x , of mortality improvement by age for projecting future mortality rates beyond calendar year 2012; (b) Developed by the Society of Actuaries Committee on Life Insurance Research; and (c) Set out in Regulation .07 of this chapter . (5) "1983 Table "a" means the mortality table: (a) Developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation; (b) Adopted as a recognized mortality table for annuities in June 1982 by the National Association of Insurance Commissioners; and (c) Set out in Regulation .03 of this chapter . (6) “2012 Individual Annuity Mortality Period Life Table” or “2012 IAM Period Table” means the period table containing loaded mortality rates for calendar year 2012. This table: (a) Contains rates, q x 2012 , developed by the Society of Actuaries Committee on Life Insurance Research; and (b) Is set out in Regulation .06 of this chapter . (7) “2012 Individual Annuity Reserving Table” or “2012 IAR Table” means the generational mortality table: (a) Developed by the Society of Actuaries Committee on Life Insurance Research; and (b) Containing rates, q x 2012+n , that are derived from a combination of the 2012 IAM Period Table and Projection Scale G2 using the methodology set out in Regulation .08 of this chapter .

.03 Table "a". The 1983 Table "a", as shown below, is the mortality table designated by that name and adopted in June, 1982, by the National Association of Insurance Commissioners.

1983 TABLE "a"—1,000qx

Age Males Females

5 0.377 0.194

6 0.350 0.160

7 0.333 0.134

8 0.352 0.134

9 0.368 0.136

10 0.382 0.141

11 0.394 0.147

12 0.405 0.155

13 0.415 0.165

14 0.425 0.175

15 0.435 0.183

16 0.446 0.201

17 0.458 0.214

18 0.472 0.229

19 0.488 0.244

20 0.505 0.260

21 0.525 0.276

22 0.546 0.293

23 0.570 0.311

24 0.596 0.330

25 0.622 0.349

26 0.650 0.368

27 0.677 0.387

28 0.704 0.405

29 0.731 0.423

30 0.759 0.441

31 0.786 0.460

32 0.814 0.479

33 0.843 0.499

34 0.876 0.521

35 0.917 0.545

36 0.968 0.574

37 1.032 0.607

38 1.114 0.646

39 1.216 0.691

40 1.341 0.742

41 1.492 0.801

42 1.673 0.867

43 1.886 0.942

44 2.129 1.026

45 2.399 1.122

46 2.693 1.231

47 3.009 1.356

48 3.343 1.499

49 3.694 1.657

50 4.057 1.830

51 4.431 2.016

52 4.812 2.215

53 5.198 2.426

54 5.591 2.650

55 5.994 2.891

56 6.409 3.151

57 6.839 3.432

58 7.290 3.739

59 7.782 4.081

60 8.338 4.467

61 8.983 4.908

62 9.740 5.413

63 10.630 5.990

64 11.664 6.633

65 12.851 7.336

66 14.199 8.090

67 15.717 8.888

68 17.414 9.731

68 19.296 10.653

70 21.371 11.697

71 23.647 12.905

72 26.131 14.319

73 28.835 15.980

74 31.794 17.909

75 35.046 20.127

76 38.631 22.654

77 42.587 25.509

78 46.951 28.717

79 51.755 32.328

80 57.026 36.395

81 62.791 40.975

82 69.081 46.121

83 75.908 51.889

84 83.230 58.336

85 90.987 65.518

86 99.122 73.493

87 107.577 82.318

88 116.316 92.017

89 125.394 102.491

90 134.887 113.605

91 144.873 125.227

92 155.429 137.222

93 166.629 149.462

94 178.537 161.834

95 191.214 174.228

96 204.721 186.535

97 219.120 198.646

98 234.735 211.102

99 251.889 224.445

100 270.906 239.215

101 292.111 255.953

102 315.826 275.201

103 342.377 297.500

104 372.086 323.390

105 405.278 353.414

106 442.277 388.111

107 483.406 428.023

108 528.989 473.692

109 579.351 525.658

110 634.814 584.462

111 695.704 650.646

112 762.343 724.750

113 835.056 807.316

114 914.167 898.885

115 1000.000 1000.000

.04 Annuity 2000 Mortality Table.

1000q

Age Nearest Birthday (x) Male Female*

5 0.291 0.171

6 0.270 0.141

7 0.257 0.118

8 0.294 0.118

9 0.325 0.121

10 0.350 0.126

11 0.371 0.133

12 0.388 0.142

13 0.402 0.152

14 0.414 0.164

15 0.425 0.177

16 0.437 0.190

17 0.449 0.204

18 0.463 0.219

19 0.480 0.234

20 0.499 0.250

21 0.519 0.265

22 0.542 0.281

23 0.566 0.298

24 0.592 0.314

25 0.616 0.331

26 0.639 0.347

27 0.659 0.362

28 0.675 0.376

29 0.687 0.389

30 0.694 0.402

31 0.699 0.414

32 0.700 0.425

33 0.701 0.436

34 0.702 0.449

35 0.704 0.463

36 0.719 0.481

37 0.749 0.504

38 0.796 0.532

39 0.864 0.567

40 0.953 0.609

41 1.065 0.658

42 1.201 0.715

43 1.362 0.781

44 1.547 0.855

45 1.752 0.939

46 1.974 1.035

47 2.211 1.141

48 2.460 1.261

49 2.721 1.393

50 2.994 1.538

51 3.279 1.695

52 3.576 1.864

53 3.884 2.047

54 4.203 2.244

55 4.534 2.457

56 4.876 2.689

57 5.228 2.942

58 5.593 3.218

59 5.988 3.523

60 6.428 3.863

61 6.933 4.242

62 7.520 4.668

63 8.207 5.144

64 9.008 5.671

65 9.940 6.250

66 11.016 6.878

67 12.251 7.555

68 13.657 8.287

69 15.233 9.102

70 16.979 10.034

71 18.891 11.117

72 20.967 12.386

73 23.209 13.871

74 25.644 15.592

75 28.304 17.564

76 31.220 19.805

77 34.425 22.328

78 37.948 25.158

79 41.812 28.341

80 46.037 31.933

81 50.643 35.985

82 55.651 40.552

83 61.080 45.690

84 66.948 51.456

85 73.275 57.913

86 80.076 65.119

87 87.370 73.136

88 95.169 81.991

89 103.455 91.577

90 112.208 101.758

91 121.402 112.395

92 131.017 123.349

93 141.030 134.486

94 151.422 145.689

95 162.179 156.846

96 173.279 167.841

97 184.706 178.563

98 196.946 189.604

99 210.484 201.557

100 225.806 215.013

101 243.398 230.565

102 263.745 248.805

103 287.334 270.326

104 314.649 295.719

105 346.177 325.576

106 382.403 360.491

107 423.813 401.054

108 470.893 447.860

109 524.128 501.498

110 584.004 562.563

111 651.007 631.645

112 725.622 709.338

113 808.336 796.233

114 899.633 892.923

115 1000.000 1000.000

*Based on 50% of Female Improvement Scale G.

.05 Valuation Standards. A. In valuing the reserve liabilities under individual annuity and pure endowment contracts in accordance with the provisions of Insurance Article, §5-305(c) and (d), Annotated Code of Maryland, insurers may use either the 1971 Individual Annuity Mortality Table or the 1983 Table "a" for contracts issued on or after July 1, 1980, and before January 1, 1987. B. Except as provided in §§C, D, and E of this regulation, the 1983 Table “a”, as shown in Regulation .03 of this chapter , is to be used by insurers in valuing reserve liabilities under individual annuity and pure endowment contracts in accordance with the provisions of Insurance Article, §5-305(c) and (d), Annotated Code of Maryland, for contracts issued on and after January 1, 1987. C. Except as provided in §§D and E of this regulation, either the 1983 Table “a” or the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after July 1, 2004. D. Except as provided in §§E and F of this regulation, the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after July 1, 2005 and before January 1, 2015. E. Except as provided in §F of this regulation , the 2012 IAR Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2015. F. The 1983 Table "a" without projection shall be used for determining the minimum standards of valuation for an individual annuity or pure endowment contract issued on or after July 1, 2005, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from: (1) Settlements of various forms of claims pertaining to court settlements or out-of-court settlements from tort actions; (2) Settlements involving similar actions such as Workers' Compensation claims; or (3) Settlements of long-term disability claims if a temporary or life annuity has been used instead of continuing disability payments.

.06 2012 IAM Period Table. The 2012 Individual Annuity Mortality Period Life Table, as shown below, is the mortality table designated by that name and developed by the Society of Actuaries Committee on Life Insurance Research.

1000 q x 2012

Age Nearest Birthday Male Female

0 1.605 1.621

1 0.401 0.405

2 0.275 0.259

3 0.229 0.179

4 0.174 0.137

5 0.168 0.125

6 0.165 0.117

7 0.159 0.110

8 0.143 0.095

9 0.129 0.088

10 0.113 0.085

11 0.111 0.086

12 0.132 0.094

13 0.169 0.108

14 0.213 0.131

15 0.254 0.156

16 0.293 0.179

17 0.328 0.198

18 0.359 0.211

19 0.387 0.221

20 0.414 0.228

21 0.443 0.234

22 0.473 0.240

23 0.513 0.245

24 0.554 0.247

25 0.602 0.250

26 0.655 0.256

27 0.688 0.261

28 0.710 0.270

29 0.727 0.281

30 0.741 0.300

31 0.751 0.321

32 0.754 0.338

33 0.756 0.351

34 0.756 0.365

35 0.756 0.381

36 0.756 0.402

37 0.756 0.429

38 0.756 0.463

39 0.800 0.504

40 0.859 0.552

41 0.926 0.600

42 0.999 0.650

43 1.069 0.697

44 1.142 0.740

45 1.219 0.780

46 1.318 0.825

47 1.454 0.885

48 1.627 0.964

49 1.829 1.051

50 2.057 1.161

51 2.302 1.308

52 2.545 1.460

53 2.779 1.613

54 3.011 1.774

55 3.254 1.950

56 3.529 2.154

57 3.845 2.399

58 4.213 2.700

59 4.631 3.054

60 5.096 3.460

61 5.614 3.916

62 6.169 4.409

63 6.759 4.933

64 7.398 5.507

65 8.106 6.146

66 8.548 6.551

67 9.076 7.039

68 9.708 7.628

69 10.463 8.311

70 11.357 9.074

71 12.418 9.910

72 13.675 10.827

73 15.150 11.839

74 16.860 12.974

75 18.815 14.282

76 21.031 15.799

77 23.540 17.550

78 26.375 19.582

79 29.572 21.970

80 33.234 24.821

81 37.533 28.351

82 42.261 32.509

83 47.441 37.329

84 53.233 42.830

85 59.855 48.997

86 67.514 55.774

87 76.340 63.140

88 86.388 71.066

89 97.634 79.502

90 109.993 88.377

91 123.119 97.491

92 137.168 107.269

93 152.171 118.201

94 168.194 130.969

95 185.260 146.449

96 197.322 163.908

97 214.751 179.695

98 232.507 196.151

99 250.397 213.150

100 268.607 230.722

101 290.016 251.505

102 311.849 273.007

103 333.962 295.086

104 356.207 317.591

105 380.000 340.362

106 400.000 362.371

107 400.000 384.113

108 400.000 400.000

109 400.000 400.000

110 400.000 400.000

111 400.000 400.000

112 400.000 400.000

113 400.000 400.000

114 400.000 400.000

115 400.000 400.000

116 400.000 400.000

117 400.000 400.000

118 400.000 400.000

119 400.000 400.000

120 1000.000 1000.000

.07 Projection Scale G2. Projection Scale G2, as shown below, is a table containing annual rates, G2 x , of mortality improvement by age for projecting future mortality rates beyond calendar year 2012 and was developed by the Society of Actuaries Committee on Life Insurance Research.

G2 x

Age Nearest Birthday Male Female

0 0.010 0.010

1 0.010 0.010

2 0.010 0.010

3 0.010 0.010

4 0.010 0.010

5 0.010 0.010

6 0.010 0.010

7 0.010 0.010

8 0.010 0.010

9 0.010 0.010

10 0.010 0.010

11 0.010 0.010

12 0.010 0.010

13 0.010 0.010

14 0.010 0.010

15 0.010 0.010

16 0.010 0.010

17 0.010 0.010

18 0.010 0.010

19 0.010 0.010

20 0.010 0.010

21 0.010 0.010

22 0.010 0.010

23 0.010 0.010

24 0.010 0.010

25 0.010 0.010

26 0.010 0.010

27 0.010 0.010

28 0.010 0.010

29 0.010 0.010

30 0.010 0.010

31 0.010 0.010

32 0.010 0.010

33 0.010 0.010

34 0.010 0.010

35 0.010 0.010

36 0.010 0.010

37 0.010 0.010

38 0.010 0.010

39 0.010 0.010

40 0.010 0.010

41 0.010 0.010

42 0.010 0.010

43 0.010 0.010

44 0.010 0.010

45 0.010 0.010

46 0.010 0.010

47 0.010 0.010

48 0.010 0.010

49 0.010 0.010

50 0.010 0.010

51 0.011 0.010

52 0.011 0.011

53 0.012 0.011

54 0.012 0.011

55 0.013 0.012

56 0.013 0.012

57 0.014 0.012

58 0.014 0.012

59 0.015 0.013

60 0.015 0.013

61 0.015 0.013

62 0.015 0.013

63 0.015 0.013

64 0.015 0.013

65 0.015 0.013

66 0.015 0.013

67 0.015 0.013

68 0.015 0.013

69 0.015 0.013

70 0.015 0.013

71 0.015 0.013

72 0.015 0.013

73 0.015 0.013

74 0.015 0.013

75 0.015 0.013

76 0.015 0.013

77 0.015 0.013

78 0.015 0.013

79 0.015 0.013

80 0.015 0.013

81 0.014 0.012

82 0.013 0.012

83 0.013 0.011

84 0.012 0.010

85 0.011 0.010

86 0.010 0.009

87 0.009 0.008

88 0.009 0.007

89 0.008 0.007

90 0.007 0.006

91 0.007 0.006

92 0.006 0.005

93 0.005 0.005

94 0.005 0.004

95 0.004 0.004

96 0.004 0.004

97 0.003 0.003

98 0.003 0.003

99 0.002 0.002

100 0.002 0.002

101 0.002 0.002

102 0.001 0.001

103 0.001 0.001

104 0.000 0.000

105 0.000 0.000

106 0.000 0.000

107 0.000 0.000

108 0.000 0.000

109 0.000 0.000

110 0.000 0.000

111 0.000 0.000

112 0.000 0.000

113 0.000 0.000

114 0.000 0.000

115 0.000 0.000

116 0.000 0.000

117 0.000 0.000

118 0.000 0.000

119 0.000 0.000

120 0.000 0.000

.08 Application of the 2012 IAR Table. A. In using the 2012 IAR Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows: q x 2012+n = q x 2012 (1 - G2 x ) n . B. The resulting q x 2012+n , as calculated in §A of this regulation , shall be rounded to three decimal places per 1,000. C. The rounding described in §B of this regulation shall occur according to the formula in §A of this regulation , starting at the 2012 period table rate.

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