[January 31, 2013]

A.M. Best Updates Life/Health Supplemental Rating Questionnaire

A.M. Best Co. has updated its 2012 statement year U.S. "Life/Health Supplemental Rating Questionnaire" (SRQ) in several key areas. While minor revisions have been made to a number of exhibits, the most material changes to this year's SRQ include: new exhibits for new business annualized premium by product and distribution channel, operating leverage detail and a request for the components of C-3 Phase 2 capital requirements for variable annuities with guaranteed benefits.

The previous exhibit (Question 2) requesting detail on licensed producers by distribution channel has been redesigned to focus on new business annualized premium by both product line and distribution channel. A new exhibit (Question 6) for operating leverage requests details on the various operating company borrowings as defined in A.M. Best's Insurance Criteria Report entitled, "A.M. Best's Perspective on Operating Leverage," which is posted on the A.M. Best website. A noted in the instructions, provide only amounts that are specific to the operating company in question. In addition, information is being requested regarding the use of parental guarantees and letters of credit for reserve financing.

A new schedule (Question 7b) has been added to the Annuity Operations section to capture components of the C-3 Phase 2 capital requirement for variable annuities with guaranteed benefits. This schedule replaces Question 8d from prior SRQs. The new schedule shows the basis for determining the total asset requirement (stochastic vs. standard scenario), the impact of applying the current prescribed smoothing formula and the resulting capital after netting reserves, including the basis for determining AG43 reserves (stochastic vs. standard scenario). The schedule further allows companies to show the allocation of the required capital between interest rate risk and market risk, consistent with current regulatory capital requirements.

A copy of the new and revised life/health questions can be accessed at http://www3.ambest.com/ratings/default.asp

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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