HB258 Alabama 2021 Session

Summary

Primary Sponsor

Kerry Rich

Republican

Session

Regular Session 2021

Title

Insurance Department, Commissioner, Standard Valuation Law, small company alternative valuation, condition for revised, Sec. 27-36A-20 am'd.

Summary

HB258 updates and tightens the small-company alternative valuation rules under Alabama's Standard Valuation Law for life insurers.

What This Bill Does

It revises when a small company can use the alternative valuation by setting new premium, capital, and actuarial conditions. Eligible companies must file an annual eligibility statement and regulators can require standard valuation if risks exist. It also grants exemption from certain principle-based reserve governance and reporting requirements for those using the alternative valuation. The rules apply to reserves for ordinary life, annuities, and related contracts, with different treatment for policies issued before versus after the valuation manual's operative date.

Who It Affects

• Alabama-domiciled life insurance companies that have less than $300 million in ordinary life premiums, are part of a group with combined ordinary life premiums under $600 million (if applicable), and meet specified capital and actuarial requirements.
• Policyholders of those insurers, who could see changes in reported reserves and financial statements due to the insurer using the small-company valuation.

Key Provisions

• Amends Section 27-36A-20 to revise the eligibility criteria for the small company alternative valuation.
• Eligibility requires: (1) ordinary life premium < $300,000,000; (2) if in a group, group combined ordinary life premium < $600,000,000; (3) total adjusted capital ≥ 450% of authorized control level risk capital; (4) unqualified actuarial opinion on reserves; (5) certification that any A universal life policy with secondary guarantees issued after the valuation manual date is non-material.
• For post-valuation-manual policies, reserves use the manual's mortality and interest rates for net premium reserves; pre-manual policies use pre-operative-date assumptions; comply with Section 27-36A-4(a) instead of 27-36A-4(b).
• Insurers must file a yearly certification with the commissioner by July 1; the commissioner may reject the certification if risks require principle-based valuation.
• Insurers using the alternative valuation are exempt from certain principle-based reserves governance, internal controls certification, and valuation reports.
• Effective immediately after passage and approval.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Insurance Department