Weekly Tip: MVA Actuarial Pointers for Indexes

 

Weekly Tips

MVA Actuarial Pointers for Indexes

6/29/2016

As the July 18th effective date for the amended Uniform Standards for Market Value Adjustment (“MVA”) Features provided through either the separate account or the general account approaches, the Compact would like to provide a few reminders, from our actuaries to yours.

First, the Scope provision of the Additional Standards for Market Value Adjustment Features Provided Through the General Account and the companion Additional Standards for Market Value Adjustment Features Provided Through A Separate Account defines “index” as “a publicly available interest rate index, where the source of the index is external to the company.” That said, filers must remember the following points:

  • The index must be an established index with specific criteria that define the composition of the index.
  • The index must be external to the company.
  • The index and criteria that define the composition of the index must be available to the public. The contractholder must be able to access the index values used in the MVA formula without cost.
  • The description of the index in the form and actuarial memorandum must be specific enough to allow a contractholder to find the index values that will be used in the MVA formula.

Additionally, IIPRC actuaries strongly suggest that company filers provide a link to the index values in the Filing Description, or as user-added Supporting Documentation, for easier validation during the review process. Some suggested sites for index references include Constant Maturity Treasury values, Barclays, and Moody’s, which are all available free of charge.

We hope that this Weekly Tip is helpful as you begin your product design for any upcoming MVA features, or as you review your MVA product design before submitting to the Compact for approval. If you have any questions pertaining to these requirements or to the MVA Uniform Standards, please contact the IIPRC Office.