N.J. Stat. tit. 17B, ch. 19

in effect

N.J. Stat. § 17B:19-1 Expenses of investigation, analyses, and valuation of securities

a. The purpose of this section is to provide a means of making funds not in excess of $250,000 in any one year available to the Subcommittee on Valuation of Securities of the National Association of Insurance Commissioners to defray the expenses of such committee in the investigation, analyses and valuation of securities and the determination of the amortizability of bonds, owned by insurers, for the purpose of furnishing to the several States on a uniform basis information needed in the supervision of insurers licensed to transact business in the several states. The commissioner is hereby authorized to disburse in the manner hereinafter provided, in co-operation with supervisory officials of other States, funds obtained through assessments for such purpose under this section. b. The commissioner shall periodically obtain from such Subcommittee on Valuation of Securities a verified budget estimate of the receipts and of the expenses to be incurred by the committee for a stated period, not exceeding one year, with appropriate explanations of the estimates therein contained. c. If the commissioner shall be satisfied as to the reasonableness of such budget estimate, he shall determine the portion of the funds required by such budget estimate, to be assessed as hereinafter provided, by deducting from such budget estimate or from the sum of $250,000, whichever is less, any amounts received or receivable by the committee from other states whose laws do not substantially conform to the method of assessment herein provided and applying to the remainder the proportion which the total investments in securities of domestic life insurers bears to the total investments in securities of life insurers domiciled in this and other States whose laws authorize and require assessments on substantially the same basis as herein provided. The commissioner shall thereafter as soon as convenient, by notice stating the method of computation thereof, assess the amount to be paid on account of such expenses, pro rata upon all domestic life insurers in the proportion which the total investments in securities of each domestic life insurer shall bear to the total investments in securities of all such insurers. The total investments in securities of any life insurer for purposes of this section shall be the total admitted value of stocks and bonds reported as such in its annual statement last filed prior to such assessment with the commissioner or other supervisory official of its state of domicile. Upon receipt of such notice each such insurer shall within thirty days pay said assessment of the commissioner who shall remit such funds to the State Treasurer as custodian thereof. The State Treasurer shall hold such funds separate from all other State moneys and shall disburse the same only upon vouchers signed by the commissioner. Such disbursements shall be made to the Subcommittee on Valuation of Securities of the National Association of Insurance Commissioners for the purposes of this section. d. The commissioner shall require annually and at such other times as he may deem it necessary or advisable a duly certified audit of receipts and disbursements and statement of assets and liabilities, showing the details of the financial operations of the Subcommittee on Valuation of Securities. L.1971, c. 144, s. 17B:19-1.

N.J. Stat. § 17B:19-1.1 Definitions.

58. For the purposes of chapter 19 of Title 17B of the New Jersey Statutes, N.J.S.17B:25-19, and sections 58, 60, 63, 64, 65 and 66 of P.L.2014, c.81 (C.17B:19-1.1, C.17B:19-2.1, C.17B:19-11, C.17B:19-12, C.17B:19-13 and C.17B:19-14) the following definitions shall apply on or after the operative date of the valuation manual: "Accident and health insurance" means a contract that incorporates morbidity risk and provides protection against economic loss resulting from accident, sickness, or medical conditions and as may be specified in the valuation manual. "Appointed actuary" means a qualified actuary who is appointed in accordance with the valuation manual to prepare the actuarial opinion required in subsection e. of section 2 of P.L.1995, c.339 (C.17B:19-10). "Company" means an entity, which: (1) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this State and has at least one such policy in force or on claim; or (2) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this State. "Deposit-type contract" means contracts that do not incorporate mortality or morbidity risks and as may be specified in the valuation manual. "Life insurance" means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the valuation manual. "NAIC" means the National Association of Insurance Commissioners. "Policyholder behavior" means any action a policyholder, contract holder or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to sections 58, 60, 63, 64, 65 and 66 of P.L.2014, c.81 (C.17B:19-1.1, C.17B:19-2.1, C.17B:19-11, C.17B:19-12, C.17B:19-13 and C.17B:19-14) including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract. "Principle-based valuation" means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer and is required to comply with section 64 of P.L.2014, c.81 (C.17B:19-12) as specified in the valuation manual. "Qualified actuary" means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the valuation manual. "Tail risk" means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability distribution or where there are observed events of very significant size or magnitude. "Valuation manual" means the manual of valuation instructions adopted by the NAIC as specified in sections 58, 60, 63, 64, 65 and 66 of P.L.2014, c.81 (C.17B:19-1.1, C.17B:19-2.1, C.17B:19-11, C.17B:19-12, C.17B:19-13 and C.17B:19-14) or as subsequently amended. L.2014, c.81, s.58.

N.J. Stat. § 17B:19-2 Annual valuation of reserve liabilities for outstanding policies; foreign and alien insurers.

17B:19-2. The commissioner shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurer doing business in this State issued prior to the operative date of the valuation manual, except that in the case of an alien insurer, such valuation shall be limited to its United States business, and may certify the amount of any such reserves, specifying the mortality table or tables, rate or rates of interest and methods (net level premium method or other) used in the calculation of such reserves. All valuations made by him or by his authority shall be upon the net premium basis or such modifications thereof as are provided by law. In calculating such reserves, he may use group methods and approximate averages for fractions of a year or otherwise and, with the concurrence of the insurer, make classifications of benefits by years of issue according to such relevant factors as the date as of which the rated age of the insured is determined, the date as of which the benefits have been provided or the premium rates have been changed, or, for policies under which premium rates are guaranteed for a limited period of time, the most recent date as of which the insurer had the right to modify those premium rates. In lieu of the valuation of the reserves herein required of any foreign or alien insurer, he 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 standards provided by law and if the official of such state or jurisdiction accepts as sufficient and valid for all legal purposes the certificate of valuation of the commissioner when such 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 that state or jurisdiction. Any such insurer which at any time shall have adopted any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standards provided by law may, with the approval of the commissioner, adopt any lower standard of valuation, but not lower than the minimum standards so provided. Except in the case of policies for which the reserve liabilities are valued on the basis of the provisions of the standard valuation law contained in N.J.S.17B:19-8 or policies issued on or after the operative date of the valuation manual, all valuations made by the commissioner or by his authority shall be upon the net premium basis, or such modification thereof as hereinafter expressly provided; and all policies issued prior to January 1, 1901, shall be valued according to the actuaries' table of mortality, with compound interest at the rate of 4% per annum, except in cases where a life insurer elects or has elected to have the policies or any class thereof valued according to the American Experience table of mortality, or according to the American Men Ultimate table of mortality, with compound interest at the rate of either 3% or 3 1/2 % per annum or with the approval of the commissioner at a rate of less than 3% per annum; and all policies issued on or after January 1, 1901, shall be valued according to the American Experience table of mortality, with compound interest at the rate of 3 1/2 % per annum, except in cases where a life insurer elects or has elected to have such policies or any class thereof valued according to the American Experience table of mortality with compound interest at a rate of less than 3 1/2% per annum but not less than 3% per annum or with the approval of the commissioner at a rate of less than 3% per annum; and except in cases where any life insurer with the approval of the commissioner may elect or shall have elected to have its ordinary policies or any class thereof valued according to the American Men Ultimate table of mortality, with compound interest at a rate which is not more than 3 1/2% per annum. The minimum standard for the valuation of group term insurance policies under which premium rates are not guaranteed for a period in excess of 5 years shall be the American Men Ultimate table of mortality with interest at 3 1/2 % per annum. The commissioner may vary the standards of interest and mortality in the case of annuities and industrial policies and of invalid lives and other extra hazards. When the actual premium charged for an insurance policy is less than the net premium for the insurance, computed according to the table of mortality, and the rate of interest prescribed herein, the value of the policy shall be increased by the value of an annuity, the amount of which shall equal the difference between the premiums and the term of which in years shall equal the number of future annual payments receivable on the insurance after the date of valuation. Reserves for all policies and contracts to which the foregoing standards apply may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by this section. amended 1981, c.285, s.1; 2014, c.81, s.59.

N.J. Stat. § 17B:19-2.1 Annual valuation of reserve liabilities.

60. The commissioner shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance contracts, annuity and pure endowment contracts, accident and health contracts, and deposit-type contracts of every company issued on or after the operative date of the valuation manual. In lieu of the valuation of the reserves required of a foreign or alien company, the commissioner may accept a valuation made, or caused to be made, by the insurance supervisory official of any State or other jurisdiction when the valuation complies with the minimum standard provided in sections 58, 60, 63, 64, 65 and 66 of P.L.2014, c.81 (C.17B:19-1.1, C.17B:19-2.1, C.17B:19-11, C.17B:19-12, C.17B:19-13 and C.17B:19-14). The provisions set forth in sections 63 and 64 of P.L.2014, c.81 (C.17B:19-11 and C.17B:19-12) shall apply to all policies and contracts issued on or after the operative date of the valuation manual. L.2014, c.81, s.60.

N.J. Stat. § 17B:19-3 Additional reserves

Subject to the approval of the commissioner, any life insurer of this State may set up, in addition to the reserve liabilities required pursuant to section 17B:19-2, reserves to provide for any additional liability at maturity, on the basis of rates of interest and of mortality appropriate to the valuation of annuities, on policies under which by their terms or otherwise a right has been or may be exercised to elect optional modes of settlement. The commissioner shall, at the time of the annual valuation pursuant to section 17B:19-2, make or cause to be made a valuation of the additional reserves so set up, and shall thereupon include the amount of such additional reserves in any certification of reserves made pursuant to section 17B:19-2, specifying the mortality table or tables and rate or rates of interest used in the calculation of such additional reserves. The basis of such additional reserves set aside by any insurer at the close of any year shall not thereafter be changed to a basis producing smaller aggregate reserves except upon approval by the commissioner of the insurer's application therefor. L.1971, c. 144, s. 17B:19-3.

N.J. Stat. § 17B:19-4 Preliminary term insurance; amount of reserve

This section applies to life insurance policies, other than policies for which the reserve liabilities are valued on the basis of the provisions of the standard valuation law contained in section 17B:19-8, which were previously issued by insurers doing business in this state and which provide for not more than one year preliminary term insurance by incorporating in the provision thereof specifying the premium consideration to be received a clause plainly showing that the first year's insurance or part thereof under the policies is term insurance, purchased by the whole or a part of the premium to be received during the first policy year. If the premium charged for the preliminary term insurance under any such policy issued prior to January 1, 1920 did not exceed that charged at the same time for like insurance under a twenty-payment life preliminary term policy of the same insurer, issued at the same age, or if the premium charged for the preliminary term insurance under any such policy issued on or after January 1, 1920 did not exceed 150% of the net premium therefor, computed according to the table of mortality and the rate of interest adopted by the insurer, as herein provided, such policy may be valued according to its terms on the mortality and interest bases herein provided. The reserve held on every other such policy shall be equal to that of a similar policy, issued at the same age, which does not provide for preliminary term insurance. L.1971, c. 144, s. 17B:19-4.

N.J. Stat. § 17B:19-5 Calculations of policy and loss reserves for accident and health insurance.

17B:19-5. The commissioner shall annually make or cause to be made or shall annually require the insurer to make calculations of policy and loss reserves for accident and health insurance written by insurers authorized to write accident and health insurance in this State as defined in N.J.S.17B:17-4. The commissioner shall promulgate regulations establishing the minimum standards applicable to the valuation of accident and health insurance reserves. amended 1973, c.315, s.1; 1978, c.143, s.1; 1981, c.285, s.2; 2001, c.2, s.3; 2014, c.81, s.61.

N.J. Stat. § 17B:19-7 Abandonment of standard of valuation adopted

Except in accordance with the provisions of section 17B:19-2, a life insurer shall not abandon the standard of valuation adopted for any outstanding policies if the reserve, calculated by the proposed standard, is less than the reserve calculated by the standard which is to be abandoned. L.1971, c. 144, s. 17B:19-7.

N.J. Stat. § 17B:19-8 Standard valuation law

17B:19-8. This section shall be known as the standard valuation law and shall apply to all the life insurance policies, pure endowment contracts and annuity contracts issued by every life insurer on or after January 1, 1948 or such earlier date as shall have been elected by the insurer as the operative date for such insurer of the standard nonforfeiture law. a. Except as otherwise provided in paragraph (ix) and paragraph (x) of this subsection, the minimum standard for the valuation of all such policies and contracts shall be the commissioner's reserve valuation methods defined in subsections b., e. and f. of this section, 3 1/2% interest, or in the case of life insurance policies and contracts, other than annuity and pure endowment contracts, issued on or after January 1, 1973, 4% interest for such policies issued prior to January 1, 1977 and 4 1/2% interest for such policies issued on or after January 1, 1977, and the following tables: (i) For all ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies, the Commissioners 1941 Standard Ordinary Mortality Table; provided, however, that the Commissioners 1958 Standard Ordinary Mortality Table shall be the table for the minimum standard for such policies issued on or after January 1, 1966 or, for policies in any category of ordinary insurance, such earlier date as shall have been elected by the insurer for the purpose and prior to the operative date, for such category, provided for in paragraph (xi) of subsection h. of the standard nonforfeiture law for life insurance (N.J.S.17B:25-19); provided that for any category of such policies issued on female risks on or after July 1, 1957 and prior to the operative date provided for in paragraph (xi) of subsection h. of the standard nonforfeiture law for life insurance, all modified net premiums and present values, referred to in this section may be calculated 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 provided for in paragraph (xi) of subsection h. of N.J.S.17B:25-19, the Commissioners 1980 Standard Ordinary Mortality Table, or 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 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 of those policies. (ii) 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; provided, however, that 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 shall be the table for the minimum standard for such policies issued on or after January 1, 1968 or such earlier date as shall have been elected by the insurer as the date on which the calculation of the adjusted premiums referred to in the standard nonforfeiture law for life insurance (N.J.S.17B:25-19) for such insurer's industrial life insurance policies became based upon said table. (iii) For individual annuity and pure endowment contracts issued prior to the operative date of paragraph (ix) of this subsection, excluding any disability and accidental death benefits in such contracts, 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. (iv) For group annuity and pure endowment contracts, except annuities and pure endowments purchased thereunder on or after the operative date of paragraph (ix) of this subsection, excluding any disability and accidental death benefits in such contracts, 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. (v) 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 1950 termination rates of the 1952 Disability Study of the Society of Actuaries, with due regard to the type of benefits 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 on or after January 1, 1961 and prior to January 1, 1966, either such tables, or, at the option of the insurer, the Class (3) Disability Table (1926); and for policies issued prior to January 1, 1961, the Class (3) Disability Table (1926). Either table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies. (vi) 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 on or after January 1, 1961 and prior to January 1, 1966, either such table or, at the option of the insurer, the Inter-Company Double Indemnity Mortality Table; and for policies issued prior to January 1, 1961, 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. (vii) For group life insurance, life insurance issued on the substandard basis and other special benefits, such tables as may be approved by the commissioner. (viii) For ordinary and industrial paid-up nonforfeiture term insurance, and accompanying pure endowment, the table of mortality based on the rates of mortality assumed in calculating the paid-up nonforfeiture benefits. (ix) Except as provided in paragraph (x) 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 (ix), as defined herein, and for all annuities and pure endowments purchased on or after such operative date under group annuity and pure endowment contracts, the commissioner's reserve valuation methods defined in subsections b. and f. and the following tables and interest rates: (1) For individual annuity and pure endowment 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 any such table approved by the commissioner, and, for such contracts issued prior to January 1, 1977, 6% interest for single premium immediate annuity contracts, and 4% interest for all other individual annuity and pure endowment contracts, and such contracts issued on or after January 1, 1977, 7 1/2% interest for single premium immediate annuity contracts and 4 1/2% interest for other individual annuity and pure endowment contracts. (2) For all annuities and pure endowments purchased 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 any such table approved by the commissioner, and 6% interest; except 7 1/2% interest for purchases on or after January 1, 1977. After January 1, 1973, an insurer may file with the commissioner a written notice of its election to comply with the provisions of this paragraph (ix) beginning on a specific date that is on or after January 1, 1973 but prior to January 1, 1979. Such specific date 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. (x) The interest rates used in determining the minimum standard for the valuation of: all life insurance policies issued in a particular calendar year on or after the operative date provided for in subsection h. (xi) of N.J.S.17B:25-19; all individual annuity and pure endowment contracts issued in a particular calendar year on or after January 1, 1981; all annuities and pure endowments purchased in a particular calendar year on or after January 1, 1981 under group annuity and pure endowment contracts; and the net increase, if any, in a particular calendar year after January 1, 1981, in amounts held under guaranteed interest contracts shall be the calendar year statutory valuation interest rates established below. The calendar year statutory valuation interest rates, I, shall be determined as follows and the results rounded to the nearer 1/4 of 1%: (1) For life insurance, I = .03 + W (R1 - .03) + W/2 (R2 - .09); (2) 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 subparagraph (7) of this paragraph, and W is the weighting factor defined in subparagraph (6) of this paragraph; (3) 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 (2) of this paragraph, the formula for life insurance stated in subparagraph (1) of this paragraph shall apply to annuities and guaranteed interest contracts with guarantee durations in excess of 10 years and the formula for single premium immediate annuities stated in subparagraph (2) of this paragraph shall apply to annuities and guaranteed interest contracts with guarantee durations of 10 years or less; (4) 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 (2) of this paragraph shall apply; and (5) 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 (2) 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 1/2 of 1%, 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, notwithstanding when the provisions of subsection h. of N.J.S.17B:25-19, the standard nonforfeiture law for life insurance become operative; (6) The weighting factors, W, referred to in the formulas stated above are given in the following schedules: SCHEDULE A Weighting Factors for Life Insurance: Guarantee Duration (Years) Weighting 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; SCHEDULE 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 SCHEDULE C Weighting factors for other annuities and for guaranteed interest contracts, except as stated in Schedule B above, shall be as specified in Tables A, B and C below, according to the rules and definitions in D, E and F below: TABLE A 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 TABLE B Plan Type A B C For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in Table A above increased by: .15 .25 .05 TABLE C Plan Type A B C 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 A or derived in Table B increased by: .05 .05 .05 Rule D. 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 durations 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. Rule E. 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 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) no withdrawal permitted. At the end of the 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. Rule F. 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 paragraph (x) of subsection a., 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; (7) The reference interest rate, R, referred to in this paragraph (x) is defined as follows: 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 the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc. 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 the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc. 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 above, with guarantee duration in excess of 10 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 the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc. 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 above, with guarantee duration of 10 years or less, the average over a period of 12 months, ending on June 30 of the calendar year of issue or purchase, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc. 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 the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc. 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 above, the average over a period of 12 months, ending on June 30 of the calendar year of the change in the fund, of the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc. In the event that the Monthly Average of the Composite Yield on Seasoned Corporate Bonds is no longer published by Moody's Investors Service, Inc., or in the event that the National Association of Insurance Commissioners determines that the Monthly Average of the Composite Yield on Seasoned Corporate Bonds, as published by Moody's Investors Service, Inc., is no longer appropriate for the determination of the reference interest rate, then an 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. b. Except as otherwise provided in subsections e. and f. of this 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 such future guaranteed benefits provided for by such policies, over the then present value of any future modified net premiums therefor. The modified net premiums for any such policy shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then present value of such benefits provided for by the policy and the excess of (A) over (B), 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 such 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 such policy. (B) A net one-year term premium for such benefits provided for in the first policy year. Provided that for any life insurance policy issued on or after January 1, 1985 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 herein 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 e., be the greater of the reserve as of such policy anniversary calculated as described in the first paragraph of this subsection 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% 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 a. of this section shall be used. Reserves according to the commissioner's reserve valuation method for (i) life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums, (ii) 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 of 1986, as now or hereafter amended, (iii) disability and accidental death benefits in all policies and contracts, and (iv) 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 b. c. In no event shall an insurer's aggregate reserves for all life insurance policies, excluding disability and accidental death benefits, be less than the aggregate reserves calculated in accordance with the methods set forth in subsections b., e. , f. and g. and the mortality table or tables and rate or rates of interest used in calculating nonforfeiture benefits for such policies. Reserves for any category of policies, contracts or benefits as established by the commissioner shall not be calculated according to any standards which produce smaller aggregate reserves for such category than the corresponding aggregate values of nonforfeiture benefits available as of the valuation date. In no event shall the aggregate reserves for all policies, contracts and benefits be less than the aggregate reserves determined by a qualified actuary to be necessary to render the opinion required pursuant to section 2 of P.L.1995, c.339 (C.17B:19-10). d. Reserves for any category of policies, contracts or benefits as established by the commissioner may be calculated, at the option of the insurer, according to any standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard herein provided. An insurer which adopts any standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard pursuant to this section may, with the approval of the commissioner, adopt any lower standard of valuation, but not lower than the minimum standard pursuant to this section herein provided; provided, however, that, for purposes of this subsection, the holding of additional reserves previously determined by a qualified actuary to be necessary to render the opinion required pursuant to section 2 of P.L.1995, c.339 (C.17B:19-10) shall not be deemed to be the adoption of a higher standard of valuation. e. If in any contract year the gross premium charged by any life insurer on any policy or contract 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 such 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 subsection are those standards stated in subsection a. of this section. Provided that for any life insurance policy issued on or after January 1, 1985 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 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 e. shall be applied as if the method actually used in calculating the reserve for such policy were the method described in subsection b., notwithstanding the provisions of the second paragraph of such subsection b. The minimum reserve at each policy anniversary of such a policy shall be the greater of the minimum reserve calculated in accordance with subsection b., including the second paragraph of that subsection, and the minimum reserve calculated in accordance with this subsection e. 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 of 1986, as now or hereafter amended. 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 such 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 such 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 such contract, that become payable prior to the end of such 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 such contracts to determine nonforfeiture values. g. 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 b., e., and f. of this section, the reserves which are held under any such plan shall: (i) be appropriate in relation to the benefits and the pattern of premiums for that plan, and (ii) be computed by a method which is consistent with the principles of this standard valuation law, as determined by regulations promulgated by the commissioner. L.1971, c.144; amended 1973,c.315,s.2; 1978,c.143,s.2; 1981,c.285,s.3; 1985,c.477; 1987,c.14; 1995,c.339,s.1.

N.J. Stat. § 17B:19-10 Reserves, related actuarial items; annual opinion of qualified actuary.

2. a. For years ending prior to the operative date of the valuation manual, every insurer authorized to transact life, health or annuity business and every fraternal benefit society 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 specified by the commissioner by regulation are: computed appropriately; based on assumptions which satisfy contractual provisions; and consistent with prior reported amounts and comply with applicable laws of this State. The commissioner shall define by regulation the specifics of this opinion and add such other items deemed to be necessary to its scope. b. (1) Every insurer authorized to transact life, health or annuity business and every fraternal benefit society, except as exempted by the commissioner by regulation, shall also annually include in the opinion required pursuant to subsection a. of this section, an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the commissioner by regulation, when considered in light of the assets held by the insurer or society 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 provision for the insurer's or society's obligations under the policies and contracts, including, but not limited to, the benefits under and expenses associated with the policies and contracts. (2) The commissioner may provide by regulation 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 section. c. Each opinion required pursuant to subsection b. of this section shall be governed by the following provisions: (1) A memorandum, in form and substance acceptable to the commissioner as specified by regulation, shall be prepared to support each actuarial opinion. (2) If the insurer or society fails to provide a supporting memorandum at the request of the commissioner within a period specified by regulation, or the commissioner determines that the supporting memorandum provided by the insurer or society fails to meet the standards prescribed by regulation or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the insurer or society to review the opinion and the basis for the opinion and prepare such supporting memorandum as is required by the commissioner. d. Every opinion shall be governed by the following provisions: (1) The opinion shall be submitted with the annual statement reflecting the valuation of reserves for each year ending on or after December 31, 1995. (2) The opinion shall apply to all policies or contracts in force, including individual and group health insurance plans, in form and substance acceptable to the commissioner as specified by regulation. (3) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on such additional standards as the commissioner may by regulation prescribe. (4) In the case of an opinion required to be submitted by a foreign or alien insurer or fraternal benefit society, the commissioner may accept the opinion filed by that insurer or society with the insurance supervisory official of another state or jurisdiction if the commissioner determines that the opinion reasonably meets the requirements applicable to an insurer or society domiciled in this State. (5) (Deleted by amendment, P.L.2014, c.81) (6) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person, other than the insurer, the fraternal benefit society and the commissioner, for any act, error, omission, decision or conduct with respect to the actuary's opinion. (7) Disciplinary action by the commissioner against the insurer, fraternal benefit society or the qualified actuary shall be defined in regulation by the commissioner. (8) (Deleted by amendment, P.L.2014, c.81) e. On or after the operative date of the valuation manual, every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this State and subject to regulation by the commissioner shall annually submit the opinion of the appointed 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 that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this State. The valuation manual will prescribe the specifics of this opinion including any items deemed to be necessary to its scope. f. Every company with outstanding life insurance contracts, accident and health insurance contracts or deposit-type contracts in this State and subject to regulation by the commissioner, except as exempted in the valuation manual, shall also annually include in the opinion required by subsection e. of this section, an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the valuation manual, 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 provision 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. g. Each opinion required by subsection e. of this section shall be governed by the following provisions: (1) A memorandum, in form and substance as specified in the valuation manual, and acceptable to the commissioner, shall be prepared to support each actuarial opinion. (2) If the insurer fails to provide a supporting memorandum at the request of the commissioner within a period specified in the valuation manual or the commissioner determines that the supporting memorandum provided by the insurer fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the commissioner, the commissioner may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum required by the commissioner. h. Every opinion required by subsection e. of this section shall be governed by the following provisions: (1) The opinion shall be in form and substance as specified in the valuation manual and acceptable to the commissioner. (2) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the valuation manual. (3) The opinion shall apply to all policies and contracts subject to subsection f. of this section, plus other actuarial liabilities as may be specified in the valuation manual. (4) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board or its successor, and on such additional standards as may be prescribed in the valuation manual. (5) In the case of an opinion required to be submitted by a foreign or alien company, the commissioner may accept the opinion filed by that company with the insurance supervisory official of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this State. (6) Except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person, other than the insurance company and the commissioner, for any act, error, omission, decision or conduct with respect to the appointed actuary's opinion. (7) Disciplinary action by the commissioner against the company or the appointed actuary shall be prescribed and defined in regulations by the commissioner. L.1995, c.339, s.2; amended 2014, c.81, s.62.

N.J. Stat. § 17B:19-11 Standards for policies issued on or after operative date of valuation manual.

63. a. For policies issued on or after the operative date of the valuation manual, the standard prescribed in the valuation manual is the minimum standard of valuation required under section 60 of P.L.2014, c.81 (C.17B:19-2.1) except as provided under subsection e. or g. of this section. b. The operative date of the valuation manual is January 1 of the first calendar year following the first July 1 as of which all of the following have occurred: (1) The valuation manual has been adopted by the NAIC by an affirmative vote of at least 42 members, or three-fourths of the members voting, whichever is greater. (2) The NAIC Model Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by States representing greater than 75% of the direct premiums written as reported in the following annual statements submitted for 2008: life, accident and health annual statements; health annual statements; or fraternal annual statements. (3) The NAIC Model Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by at least 42 of the following 55 jurisdictions: The 50 States of the United States, American Samoa, the American Virgin Islands, the District of Columbia, Guam, and Puerto Rico. c. Unless a change in the valuation manual specifies a later effective date, changes to the valuation manual shall be effective on January 1 following the date when all of the following have occurred: (1) The change to the valuation manual has been adopted by the NAIC by an affirmative vote representing: (a) At least three-fourths (3/4) of the members of the NAIC voting, but not less than a majority of the total membership, and (b) Members of the NAIC representing jurisdictions totaling greater than 75% of the direct premiums written as reported in the following annual statements most recently available prior to the vote in subparagraph (a) of paragraph (1) of this subsection: life, accident and health annual statements, health annual statements, or fraternal annual statements. (2) No later than 30 days before the operative date of the valuation manual or any changes thereto adopted by the NAIC, the commissioner shall by order notify all companies as defined in section 58 of P.L.2014, c.81 (C.17B:19-1.1) of the adoption and its operative date. Failure to provide this notice shall not delay the operative date of the valuation manual or any changes thereto. d. The valuation manual must specify all of the following: (1) Minimum valuation standards for and definitions of the policies or contracts subject to section 60 of P.L.2014, c.81 (C.17B:19-2.1). Such minimum valuation standards shall be: (a) The commissioner's reserve valuation method for life insurance contracts, other than annuity contracts, subject to section 60 of P.L.2014, c.81 (C.17B:19-2.1); (b) The commissioner's annuity reserve valuation method for annuity contracts subject to section 60 of P.L.2014, c.81 (C.17B:19-2.1); and (c) Minimum reserves for all other policies or contracts subject to section 60 of P.L.2014, c.81 (C.17B:19-2.1); (2) Which policies or contracts or types of policies or contracts that are subject to the requirements of a principle-based valuation in subsection a. of section 64 of P.L.2014, c.81 (C.17B:19-12) and the minimum valuation standards consistent with those requirements; (3) For policies and contracts subject to a principle-based valuation under section 64 of P.L.2014, c.81 (C.17B:19-12): (a) Requirements for the format of reports to the commissioner under paragraph (3) of subsection b. of section 64 of P.L.2014, c.81 (C.17B:19-12) and which shall include information necessary to determine if the valuation is appropriate and in compliance with sections 58, 60, 63, 64, 65 and 66 of P.L.2014, c.81 (C.17B:19-1.1, C.17B:19-2.1, C.17B:19-11, C.17B:19-12, C.17B:19-13 and C.17B:19-14); (b) Assumptions shall be prescribed for risks over which the company does not have significant control or influence. (c) Procedures for corporate governance and oversight of the actuarial function, and a process for appropriate waiver or modification of such procedures. (4) For policies not subject to a principle-based valuation under section 64 of P.L.2014, c.81 (C.17B:19-12) the minimum valuation standard shall either: (a) Be consistent with the minimum standard of valuation prior to the operative date of the valuation manual; or (b) Develop reserves that quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring; (5) Other requirements, including, but not limited to, those relating to reserve methods, models for measuring risk, generation of economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, transition rules and internal controls; and (6) The data and form of the data required under section 65 of P.L.2014, c.81 (C.17B:19-13) with whom the data must be submitted, and may specify other requirements, including data analyses and reporting of analyses. e. In the absence of a specific valuation requirement or if a specific valuation requirement in the valuation manual is not, in the opinion of the commissioner, in compliance with sections 58, 60, 63, 64, 65 and 66 of P.L.2014, c.81 (C.17B:19-1.1, C.17B:19-2.1, C.17B:19-11, C.17B:19-12, C.17B:19-13 and C.17B:19-14), then the company shall, with respect to such requirements, comply with minimum valuation standards prescribed by the commissioner by regulation. f. The commissioner may engage a qualified actuary, at the expense of the company, to perform an actuarial examination of the company and opine on the appropriateness of any reserve assumption or method used by the company, or to review and opine on a company's compliance with any requirement set forth in sections 58, 60, 63, 64, 65 and 66 of P.L.2014, c.81 (C.17B:19-1.1, C.17B:19-2.1, C.17B:19-11, C.17B:19-12, C.17B:19-13 and C.17B:19-14). The commissioner may rely upon the opinion, regarding provisions contained within sections 58, 60, 63, 64, 65 and 66 of P.L.2014, c.81 (C.17B:19-1.1, C.17B:19-2.1, C.17B:19-11, C.17B:19-12, C.17B:19-13 and C.17B:19-14), of a qualified actuary engaged by the commissioner of another state, district or territory of the United States. As used in this subsection f., the term "engage" includes employment and contracting. g. The commissioner may require a company to change any assumption or method that in the opinion of the commissioner is necessary in order to comply with the requirements of the valuation manual or sections 58, 60, 63, 64, 65 and 66 of P.L.2014, c.81 (C.17B:19-1.1, C.17B:19-2.1, C.17B:19-11, C.17B:19-12, C.17B:19-13 and C.17B:19-14); and the company shall adjust the reserves as required by the commissioner. The commissioner may suspend or revoke the authority to do business in this State of any company and impose a fine, after notice and a hearing, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) if it fails to comply with any provision of law obligatory upon it under sections 58, 60, 63, 64, 65 and 66 of P.L.2014, c.81 (C.17B:19-1.1, C.17B:19-2.1, C.17B:19-11, C.17B:19-12, C.17B:19-13 and C.17B:19-14). L.2014, c.81, s.63.

N.J. Stat. § 17B:19-12 Establishment of reserves using principle-based valuation.

64. a. A company shall establish reserves using a principle-based valuation that meets the following conditions for policies or contracts as specified in the valuation manual: (1) Quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts. For policies or contracts with significant tail risk, reflects conditions appropriately adverse to quantify the tail risk. (2) Incorporate assumptions, risk analysis methods and financial models and management techniques that are consistent with, but not necessarily identical to, those utilized within the company's overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods. (3) Incorporate assumptions that are derived in one of the following manners: (a) The assumption is prescribed in the valuation manual. (b) For assumptions that are not prescribed, the assumptions shall: (i) Be established utilizing the company's available experience, to the extent it is relevant and statistically credible; or (ii) To the extent that company data is not available, relevant, or statistically credible, be established utilizing other relevant, statistically credible experience. (4) Provide margins for uncertainty including adverse deviation and estimation error, such that the greater the uncertainty the larger the margin and resulting reserve. b. A company using a principle-based valuation for one or more policies or contracts subject to this section as specified in the valuation manual shall: (1) Establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the valuation manual. (2) Provide to the commissioner and the board of directors an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation. Such controls shall be designed to assure that all material risks inherent in the liabilities and associated assets subject to such valuation are included in the valuation, and that valuations are made in accordance with the valuation manual. The certification shall be based on the controls in place as of the end of the preceding calendar year. (3) Develop, and file with the commissioner upon request, a principle-based valuation report that complies with standards prescribed in the valuation manual. c. A principle-based valuation may include a prescribed formulaic reserve component. L.2014, c.81, s.64.

N.J. Stat. § 17B:19-13 Submission of certain data.

65. A company shall submit mortality, morbidity, policyholder behavior, or expense experience and other data as prescribed in the valuation manual. L.2014, c.81, s.65.

N.J. Stat. § 17B:19-14 "Confidential information."

66. a. For purposes of this section "confidential information" means: (1) A memorandum in support of an opinion submitted under section 2 of P.L.1995, c.339 (C.17B:19-10) and any other documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or any other person in connection with such a memorandum; (2) All documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or any other person in the course of an examination made under subsection f. of section 63 of P.L.2014, c.81 (C.17B:19-11); provided, however, that if an examination report or other material prepared in connection with an examination made under N.J.S.17B:21-1 is not held as private and confidential information under N.J.S.17B:21-1, an examination report or other material prepared in connection with an examination made under subsection f. of section 63 of P.L.2014, c.81 (C.17B:19-11) shall not be confidential information to the same extent as if such examination report or other material had been prepared under N.J.S.17B:21-1; (3) Any reports, documents, materials and other information developed by a company in support of, or in connection with, an annual certification by the company under subsection b. of section 64 of P.L.2014, c.81 (C.17B:19-12) evaluating the effectiveness of the company's internal controls with respect to a principle-based valuation and any other documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or any other person in connection with such reports, documents, materials and other information; (4) Any principle-based valuation report developed under paragraph (3) of subsection b. of section 64 of P.L.2014, c.81 (C.17B:19-12) and any other documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or any other person in connection with that report; and (5) Any documents, materials, data and other information submitted by a company under section 65 of P.L.2014, c.81 (C.17B:19-13), collectively, "experience data," and any other documents, materials, data and other information, including, but not limited to, all working papers, and copies thereof, created or produced in connection with such experience data, in each case that include any potentially company-identifying or personally identifiable information, that is provided to or obtained by the commissioner, together with any "experience data," the "experience materials," and any other documents, materials, data and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the commissioner or any other person in connection with such experience materials. b. (1) Except as provided in this section, a company's confidential information is confidential by law and privileged, and shall not be subject to P.L.1963, c.73 (C.47:1A-1 et seq.), shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action; provided, however, that the commissioner is authorized to use the confidential information in the furtherance of any regulatory or legal action brought against the company as a part of the commissioner's official duties. (2) Neither the commissioner nor any person who received confidential information while acting under the authority of the commissioner shall be permitted or required to testify in any private civil action concerning any confidential information. (3) In order to assist in the performance of the commissioner's duties, the commissioner may share confidential information: (a) with other state, federal and international regulatory agencies and with the National Association of Insurance Commissioners (NAIC) and its affiliates and subsidiaries; and (b) in the case of confidential information specified in paragraphs (1) and (2) of subsection a. of this section only, with the Actuarial Board for Counseling and Discipline or its successor upon request stating that the confidential information is required for the purpose of professional disciplinary proceedings; and (c) with state, federal and international law enforcement officials; in the case of (a) and (b), provided that such recipient agrees, and has the legal authority to agree, to maintain the confidentiality and privileged status of such documents, materials, data and other information in the same manner and to the same extent as required for the commissioner. (4) The commissioner may receive documents, materials, data and other information, including otherwise confidential and privileged documents, materials, data or information, from the NAIC and its affiliates and subsidiaries, from regulatory or law enforcement officials of other foreign or domestic jurisdictions and from the Actuarial Board for Counseling and Discipline or its successor and shall maintain as confidential or privileged any document, material, data or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or other information. (5) The commissioner may enter into agreements governing sharing and use of information consistent with this section. (6) No waiver of any applicable privilege or claim of confidentiality in the confidential information shall occur as a result of disclosure to the commissioner under this section or as a result of sharing as authorized in paragraph (3) of this subsection b. (7) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this subsection shall be available and enforced in any proceeding in, and in any court of, this State. (8) For purposes of this section "regulatory agency," "law enforcement agency" and the "NAIC" shall include, but shall not be limited to, their employees, agents, consultants and contractors. c. Notwithstanding subsection b. of this section, any confidential information specified in paragraphs (1) and (4) of subsection a. of this section: (1) May be subject to subpoena for the purpose of defending an action seeking damages from the appointed actuary submitting the related memorandum in support of an opinion submitted under section 2 of P.L.1995, c.339 (C.17B:19-10) or principle-based valuation report developed under subsection b. of section 64 of P.L.2014, c.81 (C.17B:19-12) by reason of an action required by sections 58, 60, 63, 64, 65 and 66 of P.L.2014, c.81 (C.17B:19-1.1, C.17B:19-2.1, C.17B:19-11, C.17B:19-12, C.17B:19-13 and C.17B:19-14) or by regulations promulgated hereunder; (2) May otherwise be released by the commissioner with the written consent of the company; and (3) Once any portion of a memorandum in support of an opinion submitted under section 2 of P.L.1995, c.339 (C.17B:19-10) or a principle-based valuation report developed under subsection b. of section 64 of P.L.2014, c.81 (C.17B:19-12) is cited by the company in its marketing or is publicly volunteered to or before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of such memorandum or report shall no longer be confidential. L.2014, c.81, s.66.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026