SB166 Alabama 2022 Session

Summary

Primary Sponsor

Shay ShelnuttSenator

Republican

Session

Regular Session 2022

Title

Insurance Dept., life and annuity policies, standard nonforfeiture law for individual deferred annuities, group capital calculation and stress test, providing for holding companies, duties to Commission and lead state commissioner, small company alternative valuation provision, exemptions, exemption premium based on valuation manual of NAIC, Commissioner of Insurance may regulate by rule, Secs. 27-15-28.2, 27-29-1, 27-29-3, 27-29-4, 27-29-7, 27-36A-20 am'd.

Summary

SB166 lowers the minimum nonforfeiture interest rate for individual deferred annuities, exempts contingent deferred annuities from that rule (with rules to set benefits), and adds group capital, liquidity stress testing, and small insurer valuation updates for Alabama's insurance framework.

What This Bill Does

It reduces the minimum interest rate used for nonforfeiture calculations on individual deferred annuities from 1% to 0.15%. It also exempts contingent deferred annuities from the standard nonforfeiture law and allows the Insurance Commissioner to set their nonforfeiture benefits by rule. The bill creates group capital calculations and a liquidity stress test framework for insurance holding company systems, requiring ultimate controlling persons to file results with the lead state commissioner and protecting confidential information. It then revises valuation rules for small life insurers, outlining conditions for exemptions from certain valuation requirements and adjusting how reserves are calculated for those small companies.

Who It Affects

• Insurance holding company systems and their insurers in Alabama, which would face group capital calculations, group capital ratios, liquidity stress tests, and reporting requirements to the lead state commissioner with confidentiality protections.
• Small life insurers that may qualify for the small company alternative valuation exemptions, and their policyholders, as the new rules modify when and how reserves are valued and which policies are exempt from standard valuation requirements.

Key Provisions

• Minimum nonforfeiture interest rate for individual deferred annuities reduced to 15 basis points (0.15%).
• Contingent deferred annuities are exempt from the standard nonforfeiture law; the commissioner may adopt by rule nonforfeiture benefits for contingent deferred annuities.
• Introduction of a group capital calculation and a group capital ratio for insurance holding company systems, with a liquidity stress test required for certain systems and filing of results to the lead state insurance commissioner.
• Confidential handling of group capital and liquidity stress test information, with restrictions on disclosure and rules for sharing with NAIC and third-party consultants under formal agreements.
• Revisions to the Alabama Insurance Holding Company System Regulatory Act to implement group capital calculations and liquidity stress testing, including definitions and reporting requirements.
• Revisions to the Standard Valuation Law (27-36A-20) and small company alternative valuation provisions, including criteria for exemption from certain valuation requirements and how exemptions are calculated and renewed.

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