Actuarial Standards Board News

The ASB recently approved a revision of ASOP No. 3 now titled Continuing Care Retirement Communities and At Home Programs. 

The standard, which was last revised in 2008, applies to actuaries when performing actuarial services, including giving advice, in connection with Continuing Care Retirement Communities (CCRCs) (including nonprofit and for-profit entities) or At Home Programs that are not regulated as insurance entities. These actuarial services may be performed for owners, operators, financing entities, current or prospective residents or members, as well as for other professionals or regulatory bodies.  

Notable changes made to the existing standard that are reflected in the exposure draft include revising the ASOP to address actuarial practice for At Home Programs that are not regulated as an insurance entity, and new disclosure requirements intended to enhance the quality of actuarial communications regarding CCRCs and At Home Programs. 

The comment deadline for the exposure draft is Feb. 1, 2021. Information on how to submit comments can be found in the exposure draft. 

The ASB recently approved an exposure draft of a revision of ASOP No. 38, now titled Catastrophe Modeling (for All Practice Areas). The ASOP provides guidance to actuaries when performing actuarial services with respect to selecting, using, reviewing, or evaluating catastrophe models. At the direction of the ASB, the standard was developed to apply to all practice areas and all forms of catastrophe models, including natural catastrophes such as hurricanes, earthquakes, and severe convective storms, and other catastrophes such as terrorist acts and pandemics. Changes also were made to ASOP No. 38 to be consistent with ASOP No. 56, Modeling, and other recent ASOPs. In addition, the scope of the ASOP was expanded to include the activities “selecting, reviewing, and evaluating” models in addition to the existing activity of “using” a model when performing actuarial services. The comment deadline for the third exposure draft is Jan. 15, 2021.

The ASB also approved a third exposure draft of a proposed ASOP titled Setting Assumptions. The ASOP provides guidance to actuaries when performing actuarial services that involve setting assumptions, giving advice on setting assumptions, or assessing the reasonableness of assumptions set by others. Twenty-five comment letters were received on the second exposure draft and considered in making changes that are reflected in the third exposure draft. Notable changes reflected in the third exposure draft include significant revisions made to coordinate with ASOP No. 56, expanding the purpose to make it more consistent with the scope, and changing guidance on assumption margins to acknowledge that margins can be either explicit or implicit. The comment deadline for the third exposure draft is April 15, 2021.

Information on how to submit comments using the new comment template can be found in both exposure drafts.

Information on the exposure drafts of ASOP Nos. 2, 22, and 28 as well as the new template for submitting comments are featured in this edition of the Boxscore.

The ASB recently adopted revisions of Actuarial Standard of Practice (ASOP) Nos. 27, Selection of Economic Assumptions for Measuring Pension Obligations, and 35, Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension Obligations.

ASOP No. 27 provides guidance to actuaries when performing actuarial services that include selecting (including giving advice on selecting) economic assumptions—primarily investment return, discount rate, post-retirement benefit increases, inflation, and compensation increases—for measuring obligations under defined benefit pension plans.

ASOP No. 35 provides guidance to actuaries when performing actuarial services that include selecting (including giving advice on selecting) demographic and other noneconomic assumptions for measuring obligations under defined benefit pension plans.

ASOP Nos. 27 and 35 are effective for actuarial reports issued on or after August 1, 2021 and when the measurement date in the actuarial report is on or after Aug. 1, 2021.

The ASB recently approved a second exposure draft of a revision of ASOP No. 2, now titled Nonguaranteed Elements for Life Insurance and Annuity Products. The ASOP applies to actuaries when performing actuarial services with respect to the determination and, if applicable, illustration of NGEs for all life insurance and annuity policies written on individual policy forms where NGEs may vary at the discretion of the insurer except where noted in the ASOP. This would include determination of NGEs on in-force policies that were issued before the ASOP took effect. The comment deadline for the second exposure draft is Nov. 13, 2020. Information on how to submit comments can be found in the draft.