Texas Insurance Code

§ 425.074 — REQUIREMENTS OF A PRINCIPLE-BASED VALUATION

IN § 425.074Title 4. REGULATION OF SOLVENCY · Part B. RESERVES AND INVESTMENTS · Ch. 425. RESERVES AND INVESTMENTS FOR LIFE INSURANCE · Art. B. STANDARD VALUATION LAW

Statute text

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(a)A company shall establish reserves using a principle-based valuation that meets the conditions for policies or contracts provided by the valuation manual. At a minimum, the valuation shall:

(1)quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the terms of the contracts;

(2)with respect to policies and contracts with significant tail risk, reflect conditions appropriately adverse to quantify the tail risk;

(3)incorporate assumptions, risk analysis methods, and financial models and management techniques that are consistent with those used in the company's overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods;

(4)incorporate assumptions:

(A)prescribed by the valuation manual; or

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Legislative history

Added by Acts 2015, 84th Leg., R.S., Ch. 313 (S.B. 1654), Sec. 15, eff. September 1, 2015.