L&HCaliforniahard
A California domestic life insurer issues a block of universal life policies in 2024. Which valuation methodology is required for these new issues under California's Standard Valuation Law as currently in force?
ANet level premium reserves computed under the 1980 CSO Table with full preliminary term adjustment
Principle-Based Reserves (PBR) under the NAIC Valuation Manual using the 2017 CSO Table
CCommissioners Reserve Valuation Method (CRVM) computed exclusively under the 2001 CSO Table
DAsset-share modeling at the insurer's discretion with no statutory minimum reserve floor
Why this is the answer
California adopted the NAIC Valuation Manual and Principle-Based Reserving framework in Ins. Code §§ 10489.96-10489.97, with a three-year transition that became mandatory for new life insurance issues on or after January 1, 2020. PBR under VM-20 combines (a) a net premium reserve floor, (b) a deterministic reserve, and (c) a stochastic reserve for tail risk, using company-specific assumptions subject to margins and the 2017 CSO mortality table. CRVM is still a component (it underlies the net premium reserve floor) but is no longer the exclusive method; older 1980/2001 CSO tables apply only to prior in-force blocks.
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