SB136 Alabama 2021 Session

Summary

Primary Sponsor

Shay ShelnuttSenator

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

SB136 allows certain small life insurers in Alabama to use a simplified reserve valuation under the Standard Valuation Law, with specific eligibility criteria and exemptions from some governance requirements.

What This Bill Does

The bill amends Section 27-36A-20 to let Alabama-domiciled life insurers use a small-company alternative valuation if they meet defined thresholds. It sets criteria including premium size, group premium, and capital adequacy, plus actuarial certifications. It requires annual pre-year filings certifying conditions and permits the Insurance Commissioner to reject the alternative if risks require standard valuation. If the alternative valuation is used, the insurer is exempt from certain principle-based reserves governance and reporting requirements. For reserve calculations, it clarifies how premiums are measured and specifies how post- vs pre-operation-manual dates affect the rates used, with immediate effective date after the Governor's approval.

Who It Affects

• Alabama-domiciled life insurers that meet the thresholds (small ordinary life premium, adequate capital, and actuarial certifications) and may opt into the alternative valuation.
• Insurers that are part of a group of life insurers, if the group's combined ordinary life premium meets the threshold.
• Appointed actuaries and qualified actuaries employed by these insurers, as their opinions and certifications determine eligibility and compliance.
• The Alabama Department of Insurance, which reviews filings and can require standard valuation if risks are identified.

Key Provisions

• Allows a small-company alternative valuation under Section 27-36A-20 for insurers meeting five conditions: (1) ordinary life premium < $300,000,000; (2) group combined ordinary life premium < $600,000,000; (3) total adjusted capital ≥ 450% of authorized control level risk capital; (4) appointed actuary provides an unqualified opinion; (5) certified that any post-operative-date universal life with secondary guarantees is non-material as defined.
• For purposes of thresholds, ordinary life premium is measured as direct premium plus reinsurance from an unaffiliated company, as reported in the prior calendar year's annual statement.
• Requires an Alabama-domiciled company to file a certification with the commissioner by July 1 each year; the commissioner may reject by September 1 if risks require a principle-based valuation.
• If the alternative valuation is used, the company is exempt from certain principle-based reserves requirements, including governance, internal controls, and valuation reporting.
• Reserving rules: for policies issued before the valuation manual's operative date, reserves are calculated as if issued before that date; for policies issued after, use the manual's mortality and interest rates for net premium reserves; the company must comply with 27-36A-4(a) rather than 4(b).
• Effective date: the act becomes effective immediately after the Governor signs it.

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