§ 33-10-13 - Valuation of reserves -- Generally - Georgia Statutes

O.C.G.A. 33-10-13 (2010)
33-10-13. Valuation of reserves -- Generally

(a) This Code section shall be known as the "Standard Valuation Law."

(a.1) As used in this Code section, the term "reserves" means reserve liabilities.

(b) The Commissioner shall annually value or cause the insurer to value the reserve liabilities for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurer doing business in this state and may certify the amount of the reserves specifying the mortality table or tables, rate or rates of interest, and methods, net level premium method or others, used in the calculation of the reserves. In the case of an alien insurer, such valuation shall be limited to its insurance transactions in the United States. In calculating such reserves, the Commissioner may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves as required by this Code section of any foreign or alien insurer, the Commissioner may accept any valuation made or caused to be made by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standard provided by this Code section and if the official of that state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the Commissioner when the certificate states the valuation to have been made in a specified manner according to which the aggregate reserves would be at least as large as if they had been computed in the manner prescribed by the law of the state or jurisdiction.

(b.1) (1) This subsection shall become operative on December 31, 1994.

(2) Every life insurance company doing business in this state shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions which satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this state. The Commissioner by regulation as provided in subsection (l) of this Code section shall define the specific elements of this opinion.

(3) (A) Every life insurance company, except as may be exempted by regulation as provided in subsection (l) of this Code section, shall also annually include in the opinion required by paragraph (2) of this subsection an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provisions for the company's obligations under the policies and contracts, including but not limited to, the benefits under and expenses associated with the policies and contracts.

(B) Regulations as provided in subsection (l) of this Code section shall provide for a transition period for establishing any higher reserves which the qualified actuary may deem necessary in order to render the opinion required by this paragraph.

(4) Each opinion required by paragraph (3) of this subsection shall be governed by the following provisions:

(A) A memorandum shall be prepared to support each actuarial opinion; and

(B) If the insurer fails to provide a supporting memorandum at the request of the Commissioner within a period specified by regulations as provided in subsection (l) of this Code section or the Commissioner determines that the supporting memorandum provided by the insurer fails to meet the standards prescribed by such regulations, the Commissioner may engage a qualified actuary at the expense of the insurer to review the opinion and the basis for the opinion and prepare such supporting memorandum as is required by the Commissioner.

(5) Every opinion issued pursuant to this subsection shall be governed by the following provisions:

(A) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after December 31, 1994;

(B) The opinion shall apply to all business in force, including individual and group health insurance plans;

(C) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on such additional standards prescribed by regulations as provided in subsection (l) of this Code section;

(D) In the case of an opinion required to be submitted by a foreign or alien insurer, the Commissioner may accept the opinion filed by that insurer with the insurance supervisory official of another state if the opinion reasonably meets the requirements applicable to an insurer domiciled in this state;

(E) For the purposes of this subsection, "qualified actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in the regulations of such academy;

(F) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurer or the Commissioner, for any act, error, omission, decision, or conduct with respect to the actuary's opinion;

(G) Disciplinary action by the Commissioner against the insurer or the qualified actuary shall be as defined in regulations as provided in subsection (l) of this Code section; and

(H) Any memorandum in support of the opinion and any other material provided by the insurer to the Commissioner in connection therewith shall be kept confidential by the Commissioner and shall not be made public and shall not be subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required by this subsection or by regulations promulgated pursuant to this subsection; provided, however, that the memorandum or other material may otherwise be released by the Commissioner with the written consent of the insurer or to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the Commissioner for preserving the confidentiality of the memorandum or other material. Once any portion of the confidential memorandum is cited by the insurer in its marketing materials or is cited before any governmental agency other than a state insurance department or is released by the insurer to the news media, all portions of the memorandum shall be no longer confidential.

(c) The minimum standard for the valuation of all such policies and contracts issued prior to January 1, 1966, shall be as required under the laws in effect immediately prior to January 1, 1961, or the minimum provided in subsection (d) of this Code section if less.

(d) (1) Except as otherwise provided in paragraphs (2) and (3) through (7) of this subsection, the minimum standards for the valuation of all life insurance policies and annuity or pure endowment contracts issued on or after January 1, 1966, shall be the Commissioner's reserve valuation methods defined in subsections (e), (f), and (j) of this Code section and the following interest rates and tables:

(A) Three and one-half percent interest or, in the case of policies and contracts other than annuity and pure endowment contracts issued on or after July 1, 1973, 4 percent interest for such policies issued prior to July 1, 1979, 51/2 percent interest for single premium life insurance policies, and 41/2 percent interest for all other such policies issued on or after July 1, 1979;

(B) For all ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies, the Commissioners 1958 Standard Ordinary Mortality Tables for such policies issued prior to the operative date of subsection (e) of Code Section 33-25-4 as amended, except that for any category of such policies issued on female risk modified net premiums and present values, referred to in subsection (e) of this Code section, may be calculated at the insurer's option and with the Commissioner's approval according to an age not more than six years younger than the actual age of the insured; and for such policies issued on or after the operative date of subsection (e) of Code Section 33-25-4, (i) the Commissioners 1980 Standard Ordinary Mortality Table or, (ii) at the election of the insurer for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors, or (iii) any ordinary mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such policies;

(C) For all industrial life insurance policies issued on the standard basis, excluding any disability and accidental death benefits in such policies, the 1941 Standard Industrial Mortality Table; for such policies issued prior to the date on which the Commissioners 1961 Standard Industrial Mortality Table becomes applicable in accordance with subsection (d) of Code Section 33-25-4 and for such policies issued on or after such date the Commissioners 1961 Standard Industrial Mortality Table or any industrial mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such policies;

(D) For individual annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the 1937 Standard Annuity Mortality Table or, at the option of the insurer, the Annuity Mortality Table for 1949, ultimate, or any modification of either of these tables approved by the Commissioner;

(E) For group annuity and pure endowment contracts, excluding any disability and accidental death benefits in such policies, the Group Annuity Mortality Table for 1951, any modification of such table approved by the Commissioner or, at the option of the insurer, any of the tables or modifications of tables specified for individual annuity and pure endowment contracts;

(F) For total and permanent disability benefits in or supplementary to ordinary policies or contracts, for policies or contracts issued on or after January 1, 1966, the tables of Period 2 disablement rates and the 1930 to 1960 termination rates of the 1952 Disability Study of the Society of Actuaries, with due regard to the type of benefit or any tables of disablement rates and termination rates, adopted after 1980 by the National Association of Insurance Commissioners, that are approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such policies; for policies or contracts issued prior to January 1, 1966, either such tables or, at the option of the insurer, the Class (3) Disability Table (1926). Any such table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies;

(G) For accidental death benefits in or supplementary to policies, for policies issued on or after January 1, 1966, the 1959 Accidental Death Benefits Table or any accidental death benefits table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such policies; for policies issued prior to January 1, 1966, either such table or, at the option of the insurer, the Inter-Company Double Indemnity Mortality Table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies; and

(H) For group life insurance, life insurance issued on the substandard basis, and other special benefits such tables or appropriate modifications of such tables as may be approved by the Commissioner as being sufficient with relation to the benefits provided by those policies.

(2) Except as provided in paragraphs (3) through (7) of this subsection, the minimum standard for the valuation of all individual annuity and pure endowment contracts issued on or after the operative date of this paragraph, as defined in this paragraph, and for all annuities and pure endowments purchased on or after the operative date under group annuity and pure endowment contracts, shall be the Commissioner's reserve valuation methods defined in subsections (e) and (f) of this Code section and the following tables and interest rates:

(A) For individual annuity and pure endowment contracts issued prior to July 1, 1979, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table or any modification of this table approved by the Commissioner and 6 percent interest for single premium immediate annuity contracts and 4 percent interest for all other individual annuity and pure endowment contracts;

(B) For individual single premium immediate annuity contracts issued on or after July 1, 1979, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such contracts or any modification of these tables approved by the Commissioner and 71/2 percent interest;

(C) For individual annuity and pure endowment contracts issued on or after July 1, 1979, other than single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table or any individual annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such contracts or any modification of these tables approved by the Commissioner and 51/2 percent interest for single premium deferred annuity and pure endowment contracts and 41/2 percent interest for all other such individual annuity and pure endowment contracts;

(D) For all annuities and pure endowments purchased prior to July 1, 1979, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table or any modification of this table approved by the Commissioner and 6 percent interest; and

(E) For all annuities and pure endowments purchased on or after July 1, 1979, under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table or any group annuity mortality table, adopted after 1980 by the National Association of Insurance Commissioners, that is approved by regulation promulgated by the Commissioner for use in determining the minimum standard of valuation for such annuities and pure endowments or any modification of these tables approved by the Commissioner and 71/2 percent interest.

After July 1, 1973, any insurer may file with the Commissioner a written notice of its election to comply with this paragraph after a specified date before January 1, 1979, which shall be the operative date of this paragraph for such insurer, provided that if an insurer makes no such election, the operative date of this paragraph for such insurer shall be January 1, 1979.

(3) The interest rates used in determining the minimum standard for the valuation of:

(A) All life insurance policies issued in a particular calendar year, on or after the operative date of subsection (e) of Code Section 33-25-4;

(B) All individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1994;

(C) All annuities and pure endowments purchased in a particular calendar year on or after January 1, 1994, under group annuity and pure endowment contracts; and

(D) The net increase, if any, in a particular calendar year after January 1, 1994, in amounts held under guaranteed interest contracts

shall be the calendar year statutory valuation interest rates as defined in paragraphs (4) through (7) of this subsection.

(4) The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearer one-quarter of 1 percent:

(A) For life insurance:
I = .03 + W(R1 - .03) + 1/2 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 paragraph (6) of this subsection, and W is the weighting factor defined in paragraph (5) of 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 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 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;

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 of 1 percent, 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 subsection (e) of Code Section 33-25-4 becomes operative.

(5) The weighting factors referred to in the formulas stated above are given in the following tables:

(A) Weighting Factors for Life Insurance:

Guarantee
Duration Weighting
Years Factors
------ -------
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 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. For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in Table I increased by:

Plan Type
A B C
-- -- --
.15 .25 .05

III. 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 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 12 months beyond the valuation date, the factors shown in Table I or derived in Table II increased by:

Plan Type
A B C
-- -- --
.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 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 above tables 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 insurer, or (2) without such adjustment but in installments over five 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 adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer, or (2) without such adjustment but in installments over five 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 years;
Plan Type C: Policyholder may withdraw funds before expiration of interest rate guarantee in a single sum or installments over less than five years either (1) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurer, or (2) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund;

VI. An insurer 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.

(6) The Reference Interest Rate referred to in paragraph (4) of this subsection shall be defined as follows:

(A) For all life insurance, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year next preceding the year of issue, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates, as published in 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 12 months, ending on June 30 of the calendar year of issue or year of purchase, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates, 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 years, the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates, 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 years or less, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates, 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 12 months, ending on June 30 of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates, 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 12 months, ending on June 30 of the calendar year of the change in the fund, of Moody's Corporate Bond Yield Average -- Monthly Average Corporates, as published by Moody's Investors Service, Inc.

(7) In the event that Moody's Corporate Bond Yield Average -- Monthly Average Corporates is no longer published by Moody's Investors Service, Inc., or, in the event that the National Association of Insurance Commissioners determines that Moody's Corporate Bond Yield Average -- Monthly Average Corporates as published by Moody's Investors Service, Inc., is no longer appropriate for the determination of the reference interest rate, then the 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.

(e) (1) Except as otherwise provided in subsections (f) and (g) of this Code section reserves according to the Commissioner's reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums, shall be the excess, if any, of the present value at the date of valuation of the future guaranteed benefits provided for by the policies over the then present value of any future modified net premiums therefor. The modified net premiums for the policy shall be the uniform percentage of the respective contract premiums for the benefits, excluding extra premiums on a substandard policy, that the present value at the date of issue of the policy of all the modified net premiums shall be equal to the sum of the then present value of the benefits provided for by the policy and the excess of subparagraph (A) of this paragraph over subparagraph (B) of this paragraph as follows:

(A) A net level annual premium equal to the present value at the date of issue of such benefits provided for after the first policy year, divided by the present value at the date of issue of an annuity of one per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due; provided, however, that the net level annual premium shall not exceed the net level annual premium on the 19 year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of the policy; and

(B) A net one-year term premium for the benefits provided for in the first policy year.

Provided that for any life insurance policy issued on or after the effective date of subsection (h) of Code Section 33-25-4 for which the contract premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess and which provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the reserve according to the Commissioner's reserve valuation method as of any policy anniversary occurring on or before the assumed ending date defined in this subsection as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than such excess premium shall, except as otherwise provided in subsection (j) of this Code section, be the greater of the reserve as of such policy anniversary calculated as described in the preceding paragraph and the reserve as of such policy anniversary calculated as described in that paragraph, but with (i) the value defined in subparagraph (A) of that paragraph being reduced by 15 percent of the amount of such excess first year premium, (ii) all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date, (iii) the policy being assumed to mature on such date as an endowment, and (iv) the cash surrender value provided on such date being considered as an endowment benefit. In making the above comparison the mortality and interest bases stated in subsection (d) of this Code section shall be used.

(2) Reserves according to the Commissioner's reserve valuation method for:

(A) Life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums;

(B) Group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code as now or hereafter amended;

(C) Disability and accidental death benefits in all policies and contracts; and

(D) All other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of this subsection.

(f) This subsection shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation established or maintained by an employer, including a partnership or sole proprietorship, or by an employee organization or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code. Reserves according to the Commissioner's annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in the contracts, shall be the greatest of the respective excesses of the present values at the date of valuation of the future guaranteed benefits, including guaranteed nonforfeiture benefits provided for by the contracts at the end of each respective contract year, over the present value at the date of valuation of any future valuation considerations derived from future gross considerations required by the terms of the contract that become payable prior to the end of the respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of the contracts to determine nonforfeiture values.

(g) In no event shall an insurer's aggregate reserve for all life insurance policies, excluding disability and accidental death benefits issued on or after January 1, 1966, be less than the aggregate reserves calculated in accordance with the methods set forth in subsections (e), (f), (j), and (k) of this Code section and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for the policies.

(h) (1) Reserves for all policies and contracts issued prior to January 1, 1966, may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for all the policies and contracts than the minimum reserves required by the laws in effect immediately prior to that date.

(2) For any category of policies, contracts, or benefits specified in subsection (d) of this Code section issued on or after January 1, 1966, reserves may be calculated, at the option of the insurer, according to any standard or standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard provided in this Code section; but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for in the policies and contracts.

(i) An insurer who at any time had adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided for in subsection (g) of this Code section may, with the approval of the Commissioner, adopt any lower standard of valuation but not lower than the minimum provided in this subsection; provided, however, that for the purposes of this subsection, the holding of additional reserves previously determined by a qualified actuary to be necessary to render the opinion required by subsection (b.1) of this Code section shall not be deemed to be the adoption of a higher standard of valuation.

(j) If in any contract year the gross premium charged by any life insurer on any policy or contract issued on or after January 1, 1966, is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve thereon but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for such policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for such policy or contract or the reserve calculated by the method actually used for the policy or contract but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this Code section are those standards stated in subsection (d) of this Code section. Provided that for any life insurance policy issued on or after the effective date of subsection (h) of Code Section 33-25-4 for which the gross premium in the first policy year exceeds that of the second year and for which no comparable additional benefit is provided in the first year for such excess and which provides as an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the foregoing provisions of this subsection shall be applied as if the method actually used in calculating the reserve for such policy were the method described in subsection (e) of this Code section, ignoring the second paragraph of paragraph (1) of subsection (e) of this Code section. The minimum reserve at each policy anniversary of such a policy shall be the greater of the minimum reserve calculated in accordance with subsection (e) of this Code section, including the second paragraph of paragraph (1) of subsection (e) of this Code section, and the minimum reserve calculated in accordance with this subsection.

(k) In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurer based on then estimates of future experience, or in the case of any plan of life insurance or annuity which is of such a nature that the minimum reserves cannot be determined by the methods described in subsections (d), (e), (f), and (j) of this Code section, the reserves which are held under any such plan must:

(1) Be appropriate in relation to the benefits and the pattern of premiums for that plan; and

(2) Be computed by a method which is consistent with the principles of this Code section, the "Standard Valuation Law,"

as determined by regulations promulgated by the Commissioner.

(l) The Commissioner shall promulgate a regulation containing the minimum standards applicable to the valuation of accident and sickness and disability plans and shall promulgate a regulation to implement subsection (b.1) of this Code section. Such regulations shall conform to national standards as set by the National Association of Insurance Commissioners.