ASB Adopts ASOP No. 35 Revision
The ASB recently adopted a final revision of ASOP No. 35, Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension Obligations, during its September meeting. Significant modifications from the current version of the ASOP include making the guidelines for a reasonable assumption consistent with the guidelines contained in ASOP No. 27, Selection of Economic Assumptions for Measuring Pension Obligations, and revising the guidance in the ASOP to require disclosure of rationale for assumption selection. The standard will be effective for any actuarial work product with a measurement date on or after June 30, 2015. Earlier adoption of the standard is encouraged. The final revision of ASOP No. 35 can be viewed under the tab “Current Actuarial Standards of Practice.”
Approves ASOP No. 34 Revision as Exposure Draft
The ASB also approved an exposure draft of a revision of ASOP No. 34, Actuarial Practice Concerning Retirement Plan Benefits in Domestic Relations Actions. The ASB is issuing the proposed revision to address concerns that the existing disclosure requirements in the standard do not sufficiently assist users in understanding large differences in the valuation results prepared by different actuaries. In addition, as several actuarial standards of practice applicable to work with pension plans have been recently revised, a revision of ASOP No. 34 is necessary to provide guidance consistent with the guidance in these other actuarial standards of practice. The comment deadline for the exposure draft is January 31, 2015. The exposure draft can be viewed under the tab “Exposure Drafts.”
ASB Approves Exposure Draft on Property/Casualty Ratemaking
The ASB recently approved an exposure draft titled Property/Casualty Ratemaking. This exposure draft was created in conjunction with the effort currently being undertaken by the Casualty Actuarial Society (CAS) to explore revisions to the Statement of Principles Regarding Property and Casualty and Ratemaking. Concurrent with the release of the ASB’s exposure draft, the CAS is releasing a second exposure draft of the Principles of Ratemaking. With the release of the ASB’s exposure draft, feedback is being sought on such issues as whether the scope of the ASOP is sufficiently clear and whether the items currently included in the Considerations Section of the CAS Principles (and slated for possible removal) are sufficiently addressed in the draft ASOP. The comment deadline for the exposure draft is January 31, 2015. The exposure draft can be viewed under the tab “Exposure Drafts.”
ASB Issues Request for Comments on a Proposed ASOP Related to Life Insurance and Annuity Pricing
The ASB has issued a request for comments concerning the development of an Actuarial Standard of Practice (ASOP) that would apply to actuaries when pricing new and in-force life insurance and annuity products. While there are standards on several functions related to pricing life and annuity products, there is no standard that provides guidance on pricing itself. The proposed ASOP would address the pricing of life insurance and annuity products, both individual and group product types. The proposed standard also would focus on the actuary performing profitability analysis when pricing new and in-force products, but not the actuary’s role in developing the product’s design, marketing plan, investment strategy implementation, etc. The term “pricing” would include establishing premiums, charges, fees, and other revenue elements, some guaranteed and others non-guaranteed, to cover benefits, services, and expenses arising from the insurance contract. Management adjustments to pricing would not be included in the scope of the proposed ASOP. Deadline for receipt of comments is December 15, 2014. The Request for Comments document can be found under the tab “Exposure Drafts.”
ASB Approves Second Exposure Draft on Principle-Based Reserves for Life Products
The ASB recently approved a second exposure draft titled Principle-Based Reserves for Life Products. In addition to clarifying the guidance in certain sections based on comments received on the first exposure draft, the second exposure draft was developed to receive additional feedback on such issues as whether the distinction between the company's responsibility and the actuary's responsibility is clear; whether the language of the standard quotes or summarizes VM-20 text appropriately and usefully; and whether it is sufficiently clear how the standard applies to actuaries who do not sign the PBR actuarial report but are involved in the preparation of principle-based reserves. The comment deadline for the second exposure draft is December 15, 2014 and can be viewed under the tab "Exposure Drafts."
ASB Issues Request for Comments on ASOPs Related to Public Pension Plan Funding and Accounting
The ASB has issued a request for comments concerning the application of the Actuarial Standards of Practice (ASOPs) in regards to actuarial valuations and other analyses used for determining public pension and other postemployment plan funding and accounting ("public plan actuarial valuations"). Public pension plan funding has received increased national attention in the past few years as a result of the recent recession and the emerging focus on financial economics in the pension community. Although the pension-related standards have been or are in the process of being updated to strengthen the guidance, in light of these external factors and reports, the ASB is interested in feedback from actuaries and other interested parties on whether further updates are needed. The Request for Comments document can be found under the "Exposure Drafts" tab. Deadline for receipt of comments is November 15, 2014.
ASB Adopts Revised Version of ASOP No. 6
The ASB recently adopted a revised version of ASOP No. 6, now titled Measuring Retiree Group Benefits Obligations and Determining Retiree Group Benefits Program Periodic Costs or Actuarially Determined Contributions. The revision to ASOP No. 6 provides guidance to actuaries when performing actuarial services with respect to measuring obligations under a retiree group benefits program and determining periodic costs or actuarially determined contributions for such retiree group benefits programs. The standard also provides guidance on assumptions that are specific to retiree group benefits programs and addresses broader measurement issues, cost allocation procedures, and contribution allocation procedures. In addition, the standard provides guidance for coordinating and integrating all of the elements of an actuarial valuation of a retiree group benefits program. The standard will be effective for any actuarial work product with a measurement date on or after March 31, 2015; however, if roll-forward techniques are used in the measurement, the standard is not effective until three years after the last full measurement before March 31, 2015. Earlier adoption of the standard is permitted. The final revised version of ASOP No. 6 can be viewed under the tab “Current Actuarial Standards of Practice.”
ASB Adopts Revised Version of ASOP No. 4
The ASB recently adopted a revised version of ASOP No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions. Key changes from the current standard include modifications to language pertaining to disclosure of funded status; disclosure of rationale for changes in cost or contribution allocation procedure; assessment of contribution allocation procedure or funding policy; prescribed assumptions or methods; and plan provisions that are difficult to measure. The adopted ASOP No. 4 was exposed twice between January 2012 and May 2013, generating a total of 30 comments. ASOP No. 4 will be effective for any work product with a measurement date on or after December 31, 2014. The final version can be viewed under the tab “Current Actuarial Standards of Practice.”
ASB to Meet December 9–10, 2014, in Washington
The next regularly scheduled meeting of the ASB will be held December 9–10, 2014, at the Academy offices in Washington, D.C.