ASB Adopts Revised Version of ASOP No. 27
The ASB recently adopted a revised version of ASOP No. 27, Selection of Economic Assumptions for Measuring Pension Obligations. The second exposure draft of ASOP No. 27 was issued in January 2012 and received fifteen comment letters. As a result, various changes were made to the final standard in response to those comments including revising the section on Adverse Deviation or Other Valuation Issues to note that an actuary may determine that it is appropriate to adjust the economic assumptions when valuing plan provisions that are difficult to measure, as discussed in ASOP No. 4; and revising the Assumptions Used section to require that each significant assumption be disclosed. This standard will be effective for any actuarial work product with a measurement date on or after September 30, 2014.
ASB Approves Exposure Draft of Proposed ASOP No. 35 Revision
The ASB approved an exposure draft of a revision of ASOP No. 35, Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension Obligations. In September 2010, the ASB issued a revised ASOP No. 35, which was revised again in May 2011 for deviation language. With the September 2010 release of ASOP No. 35, the ASB noted that there were sections of ASOP No. 35 that would need to be reviewed for consistency with ASOP No. 27 once that standard was revised. Now that ASOP No. 27 is revised, the ASB is moving forward with changes to ASOP No. 35. Some key changes to the proposed revision of ASOP No. 35 include better clarifying the language regarding the disclosure of rationale behind selected assumptions; making the guidelines for a reasonable assumption consistent with the guidelines contained in ASOP No. 27; and including language to acknowledge that a range of reasonable assumptions is possible. The comment deadline is January 31, 2014.
ASB Approves Exposure Draft of a Revision of ASOP No. 38
The ASB recently approved a revision of ASOP No. 38 for exposure, now titled Catastrophe Modeling (for All Practice Areas). The proposed revision will apply to actuaries in all practice areas performing professional services when selecting or using catastrophe models, whether or not they are proprietary in nature. Comments are being sought on various areas of the ASOP including, whether it's clear that the proposed revised ASOP applies to all practice areas; whether the inclusion of other perils such as "terrorist acts and pandemics" in the definition of "Catastrophe Model," is appropriate; and whether the proposed revised ASOP is flexible enough to allow for new developments in practice. The comment deadline for the exposure draft, which can be viewed under the tab "Exposure Drafts," is December 30, 2013.
ASB Approves Principle-Based Reserves Exposure Draft
The ASB approved the exposure draft, Principle-Based Reserves for Life Products. The proposed standard applies to actuaries when performing professional services on behalf of life insurers, including fraternal benefit societies, in connection with the calculation or review of reserves for individual life insurance policies, where such reserves are represented as being in compliance with the provisions of the Standard Valuation Law and the Valuation Manual governing principle-based reserves. The comment deadline for the exposure draft is December 16, 2013 and can be viewed under the tab “Exposure Drafts.”
ASB Adopts Revised Introduction and Numbers It ASOP No. 1
The ASB adopted a revised version of the Introductory Actuarial Standard of Practice. The Introduction was revised to clarify the meaning of such terms as “must” and “should”; to include a definition of “deviation”; and to make other revisions to the language that were not substantial but did help clarify meaning in various sections. Also, to reinforce that the Introduction contains guidance that must be followed, it has been numbered as ASOP No. 1. Subsequently, the existing ASOP No. 1, Nonguaranteed Charges or Benefits for Life Insurance Policies and Annuity Contracts, is renumbered as ASOP No. 2, since the existing ASOP No. 2, Recommendations for Actuarial Communications Related to Statements of Financial Accounting Standards Nos. 87 and 88, was repealed in March 2011. The effective date for the revised Introduction is June 1, 2013. The ASOP can be viewed under the tab “Current Actuarial Standards of Practice.”
ASB to Meet December 9–10 in Washington
The next regularly scheduled meeting of the ASB will be held December 9–10, 2013, at the Academy offices in Washington, D.C.