The Actuarial Standards Board (ASB) of the American Academy of Actuaries approved a second exposure draft of a proposed revision of a new actuarial standard of practice (ASOP) titled Pricing Reinsurance or Similar Risk Transfer Transactions Involving Life Insurance, Annuities, or Long-Duration Health Benefit Plans. The ASOP applies to actuaries when performing actuarial services with respect to the pricing of reinsurance transactions or similar risk transfer transactions from the assuming entity perspective involving life insurance, annuities, or long-duration health benefit plans. The standard does not apply when the actuary’s principal is the assuming entity and the actuary is pricing an underlying product on behalf of the ceding entity.
The first exposure draft was released in August 2024, in which 12 comment letters were received and considered in making the changes that are reflected in the second exposure draft. Notable changes made to the second exposure draft include modifying several definitions and adding a definition of “existing reinsurance transaction.” In addition, guidance regarding “actual experience” and the “nonguaranteed reinsurance framework” was added, while guidance on “adjustments to pricing assumptions” and “adjustments to the model” was modified for clarity.
The comment deadline is Oct. 15, 2026. Information on how to submit comments can be found in the draft.
