A.M. Best Special Report: Universal Life Secondary Guarantees Generate Increasing Risk Profile
May 15, 2012 by N/A
Best’s News Service – May 14, 2012 09:14 AM
OLDWICK, N.J. – A.M. Best Co. views positively the National Association of Insurance Commissioners’ (NAIC) draft framework for regulatory guidelines to evaluate reserves for universal life products with secondary guarantees (ULSG). The NAIC took the first step toward resolving the AG 38 issue on February 21, 2012 when a joint working group approved taking a bifurcated approach in setting up different evaluation standards for “closed blocks of business”—policies that were written before a specified date—and for policies deemed to be new business or those written after the decided upon date.
Concerns remain, however, over several risk factors that may negatively impact the earnings and capitalization of U.S. life companies writing these products over the near to medium term. While recognizing that the NAIC draft framework also impacts the relatively new term-UL products, this report focuses primarily on ULSG products, which have been marketed by UL carriers for more than a decade.
Access a copy of this special report at http://www3.ambest.com/bestweek/purchase.asp?record_code=200197&AltSrc=26. BestWeek subscribers can download a PDF copy of all special reports as well as the associated spreadsheet data. Non-subscribers can access an excerpt of each special report and purchase individual reports and spreadsheet data. BN-NJ-05-14-2012 0913 ET #