September 7, 1983

SUBJECT: INSURANCE

CIRCULAR LETTER NO. 15 (1983)

WITHDRAWN

TO: ALL AUTHORIZED LIFE INSURANCE COMPANIES AND FRATERNAL BENEFIT SOCIETIES

ATTENTION: CHIEF ACTUARY OR CONSULTING ACTUARY AND CHIEF FINANCIAL OFFICER

SUBJECT: MAXIMUM RESERVE VALUATION AND LIFE POLICY NONFORFEITURE INTEREST RATES UNDER SECTIONS 205, 206 AND 208-a OF THE NEW YORK STATE INSURANCE LAWS, AS AMENDED IN 1982 AND 1983

Attached hereto is an outline, providing maximum reserve valuation and life policy nonforfeiture interest rates for new issues, new purchases or changes in fund (as defined) for years 1982 and 1983 (and other years where shown), under Sections 205, 206 and 208-a of the New York State Insurance Laws, as amended in 1982 and 1983.

Very truly yours,

[SIGNATURE]

James P. Corcoran

Superintendent of Insurance

Attachment

MAXIMUM VALUATION AND NONFORFEITURE INTEREST RATES UNDER SECTIONS 205, 206 AND 208-a OF NEW YORK STATE INSURANCE LAWS AS AMENDED IN 1982 AND 1983

The maximum valuation and nonforfeiture interest rates, prescribed by Sections 205 and 208-a of New York Insurance Laws for future years, will vary from year to year depending on Moody's corporate bond yield averages.

The maximum valuation interest rates for issues of 1982 and 1983 (and other years where shown) are outlined below. The maximum nonforfeiture interest rates for Ordinary Life Insurance are shown in B below.

A. Ordinary Life Insurance (Valuation)

B. Ordinary Life Insurance (Nonforfeiture)

C. Single Premium Immediate Annuities, and annuity benefits involving life contingencies arising from other contracts with cash settlement options.

D. Other Annuities and Guaranteed Interest Contracts, with Cash Settlement Options and with Future Interest Rate Guarantees, valued on the "Issue Year" basis.

E. Other Annuities and Guaranteed Interest Contracts, with Cash Settlement Options but without Future Interest Rate Guarantees, valued on the "Issue Year" basis.

F. Other Annuities and Guaranteed Interest Contracts, without Cash Settlement Options, valued on the "Issue Year" basis.

G. Other Annuities and Guaranteed Interest Contracts, with Cash Settlement options and with Future Interest Rate Guarantees, valued on the "Change in Fund" basis.

H. Other Annuities and Guaranteed Interest Contracts, with Cash Settlement Options but without Future Interest Rate Guarantees, valued on the "Change in Fund" basis.

Section 205, as amended by Chapter 749 of the Laws of 1983, permits the dynamic interest rates (under the 1982 amendments) to be used for issues of January 1, 1982 and later, irrespective of a company's election or non-election under paragraph (k) of Subsection 7-d of Section 208-a. Thus, the new dynamic interest rates may be used either with 1958 CSO or with 1980 CSO issues of January 1, 1982 and later, for valuation purposes.

Said paragraph (k) was amended by Chapter 81 of the Laws of 1983 to permit a company to elect to comply with the new provisions of Section 208-a on a plan-by-plan basis, with the proviso that the entire portfolio must be converted to the new provisions on or before January 1 of the third calendar year following the calendar year of compliance for the first plan so converted, but not, in any event, later than January 1, 1989.

Plan types, as used in the above tables, are defined as follows:

Plan Type A: The policyholder may withdraw funds only (1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without such adjustment but in installments over five years or more, or (3) as an immediate life annuity.

Plan Type B: The policyholder may not withdraw funds before the expiration of the interest rate guarantee or, if withdrawals are permitted before the expiration of such guarantee, may withdraw funds only (1) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) without such adjustment but in installments over five years or more. At the end of the interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than five years.

Plan Type C: The Policyholder may withdraw funds before the expiration of the interest rate guarantee in a single sum or installments over less than five years either (1) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (2) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.

The most popular plan type, in the group annuity area, is plan type B; while, the most popular plan type, in the individual annuity area, is plan type C.

Other annuities and guaranteed interest contracts, without cash settlement options, may be valued only on an "Issue Year" basis.

The maximum valuation interest rates, for annuities and guaranteed interest contracts are based on Moody's Corporate Bond Yield Averages for a one or three year period ending in June of the year of issue, purchase or change in fund. Consequently, we are not able to compute rates applicable to 1984 at this time.