Annual Statement - Exhibit of Life - Future Issues with Preliminary Coverage

This may best be illustrated by an example:

A policy is signed on 8/31/2021 with an issue date of 2/1/2022. The contract states that after it is signed, preliminary term coverage begins and persists until the issue date. The first premium is collected at 2/1/2022. The fiscal year-end is 12/31/2021.

Based on the definitions in the NAIC Annual Statement Instructions, I believe this would NOT be counted in exhibit of life insurance (no premium paid therefore not an issued count); however, I would expect them to be in Exhibit 5 Section A because there are liabilities on the life contract.

Is a population inconsistency like this expected between the two exhibits, or is this interpretation too literal and we would expect both the reserve in Exhibit 5 and the Count/Amount in Exhibit of Life Insurance?

Bump, anyone have any thoughts? :slight_smile:

I don’t really understand the product you’re describing but as a control, it always seems prudent to compare the in-force for the entire valuation to the in-force shown on Page 25. They don’t need to match, but any differences could/should be identified.

Examiners/States/Appointed Actuaries would be very interested in making sure that reserves held are good and sufficient. Since you have a reserve showing up in Exhibit 5, I think you have that point covered.

Page 25 doesn’t directly impact the financial status of an insurance company, my personal opinion (remember to value it based on how much you paid for it and from where is came) is that you can show it either way. If you have your Exh 5 = Page 25 reconciliation completed and as long as page 25 isn’t materially misleading, it’s a non-issue. Page 25 is interesting and fun, but it has no impact on the financial solvency of an insurance company.