Bill Text: TX SB1379 | 2013-2014 | 83rd Legislature | Engrossed


Bill Title: Relating to the standard valuation for life insurance, accident and health insurance, and annuities.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Engrossed - Dead) 2013-05-24 - House appoints conferees-reported [SB1379 Detail]

Download: Texas-2013-SB1379-Engrossed.html
 
 
  By: Hancock S.B. No. 1379
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the standard valuation for life insurance, accident and
  health insurance, and annuities.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 425.052, Insurance Code, is amended by
  amending Subsection (a) and adding Subsection (c) to read as
  follows:
         (a)  In this subchapter:
               (1)  "Accident and health insurance" means contracts
  that incorporate morbidity risk and provide protection against
  economic loss resulting from accident, sickness, or medical
  conditions and as may be specified in the valuation manual.
               (2)  "Appointed actuary" means a qualified actuary who
  is appointed in accordance with the valuation manual to prepare the
  actuarial opinion required by Section 425.054.
               (3)  "Company" means an entity that:
                     (A)  has written, issued, or reinsured life
  insurance contracts, accident and health insurance contracts, or
  deposit-type contracts in this state and has at least one such
  policy in force or on claim; or
                     (B)  has written, issued, or reinsured life
  insurance contracts, accident and health insurance contracts, or
  deposit-type contracts in any state and is required to hold a
  certificate of authority to write life insurance, accident and
  health insurance, or deposit-type contracts in this state.
               (4)  "Deposit-type contract" means a contract that does
  not incorporate mortality or morbidity risk and as may be specified
  in the valuation manual.
               (5)  "Life insurance" means contracts that incorporate
  mortality risk, including annuity and pure endowment contracts, and
  as may be specified in the valuation manual.
               (6)  "Policyholder behavior" means any action a
  policyholder, a contract holder, or any other person with the right
  to elect options, such as a certificate holder, may take under a
  policy or contract subject to this subchapter, including lapse,
  withdrawal, transfer, deposit, premium payment, loan,
  annuitization, or benefit elections prescribed by the policy or
  contract but excluding events of mortality or morbidity that result
  in benefits prescribed in their essential aspects by the terms of
  the policy or contract.
               (7)  "Principle-based valuation" means the valuation
  described by Section 425.074.
               (8)  "Qualified actuary" means an individual who is
  qualified to sign the applicable statement of actuarial opinion in
  accordance with the American Academy of Actuaries' qualification
  standards for actuaries signing such statements and who meets the
  requirements specified in the valuation manual.
               (9)  "Reserves"[, "reserves"] means reserve
  liabilities.
               (10)  "Tail risk" means a risk that occurs either where
  the frequency of low probability events is higher than expected
  under a normal probability distribution or where there are observed
  events of very significant size or magnitude.
               (11)  "Valuation manual" means the manual of valuation
  instructions adopted by the commissioner by rule.
         (c)  The definitions under Subsection (a) of "accident and
  health insurance," "appointed actuary," "company," "deposit-type
  contract," "life insurance," "policyholder behavior,"
  "principle-based valuation," "qualified actuary," and "tail risk"
  apply only on and after the operative date of the valuation manual.
         SECTION 2.  The heading to Section 425.053, Insurance Code,
  is amended to read as follows:
         Sec. 425.053.  ANNUAL VALUATION OF RESERVES FOR POLICIES AND
  CONTRACTS ISSUED BEFORE OPERATIVE DATE OF VALUATION MANUAL.
         SECTION 3.  Section 425.053, Insurance Code, is amended by
  amending Subsections (a) and (c) and adding Subsections (d) and (e)
  to read as follows:
         (a)  The department shall annually value or cause to be
  [have] valued the reserves for all outstanding life insurance
  policies and annuity and pure endowment contracts of each life
  insurance company engaged in business in this state issued before
  the operative date of the valuation manual.  [The department may
  certify the amount of those reserves, specifying the mortality
  table or tables, rate or rates of interest, and methods, including
  the net level premium method or another method, used in computing
  those reserves.]
         (c)  Instead of valuing the reserves as required by
  Subsection (a) for a foreign or alien company, the department may
  accept any valuation made by or for the insurance supervisory
  official of another state or jurisdiction if[:
               [(1)]  the valuation complies with the minimum standard
  provided by this subchapter[; and
               [(2)     the official accepts as sufficient and valid for
  all legal purposes a certificate of valuation made by the
  department that states the valuation was made in a specified manner
  according to which the aggregate reserves would be at least as large
  as they would be if computed in the manner prescribed by the law of
  that state or jurisdiction].
         (d)  Except as otherwise provided by this subchapter,
  policies and contracts issued on or after the operative date of the
  valuation manual are governed by Section 425.0535.
         (e)  The minimum standards for the valuation of policies and
  contracts issued before the operative date of the valuation manual
  are as provided by Sections 425.058 through 425.071 and Section
  425.072(b), as applicable.  Sections 425.072(a), 425.073, and
  425.074 do not apply to a policy or contract described by this
  subsection.
         SECTION 4.  Subchapter B, Chapter 425, Insurance Code, is
  amended by adding Section 425.0535 to read as follows:
         Sec. 425.0535.  ANNUAL VALUATION OF RESERVES FOR POLICIES
  AND CONTRACTS ISSUED ON OR AFTER OPERATIVE DATE OF VALUATION
  MANUAL. (a)  The commissioner shall annually value, or cause to be
  valued, the reserves for all outstanding life insurance contracts,
  annuity and pure endowment contracts, accident and health
  contracts, and deposit-type contracts of each company issued on or
  after the operative date of the valuation manual as provided by this
  section.
         (b)  In lieu of the valuation of the reserves required of a
  foreign or alien company, the commissioner may accept a valuation
  made, or caused to be made, by the insurance supervisory official of
  another state if the valuation complies with the minimum standard
  provided by this subchapter.
         (c)  Sections 425.072(a), 425.073, and 425.074 apply to all
  policies and contracts issued on or after the operative date of the
  valuation manual.
         SECTION 5.  The heading to Section 425.054, Insurance Code,
  is amended to read as follows:
         Sec. 425.054.  ACTUARIAL OPINION OF RESERVES BEFORE
  OPERATIVE DATE OF VALUATION MANUAL [REQUIRED].
         SECTION 6.  Section 425.054, Insurance Code, is amended by
  amending Subsection (a) and adding Subsections (a-1), (j), (k),
  (l), (m), (n), (o), (p), and (q) to read as follows:
         (a)  This section applies only to an actuarial opinion of
  reserves before the operative date of the valuation manual.  
  Actuarial opinions of reserves on or after the operative date of the
  valuation manual are governed by Section 425.0545.
         (a-1)  For purposes of this section, "qualified actuary"
  means:
               (1)  a qualified actuary, as that term is defined by
  Section 802.002; or
               (2)  a person who, before September 1, 1993, satisfied
  the requirements of the former State Board of Insurance to submit an
  opinion under former Section 2A(a)(1), Article 3.28.
         (j)  Except as provided by Subsections (l), (n), (o), and
  (p), any document or other information in the possession or control
  of the department that is a memorandum in support of the opinion or
  other material provided by the company to the commissioner in
  connection with a memorandum is confidential and not subject to:
               (1)  disclosure under Chapter 552, Government Code;
               (2)  subpoena;
               (3)  discovery; or
               (4)  admissibility as evidence in a private civil
  action.
         (k)  The commissioner or any person who receives a document
  or other information described by Subsection (j) while acting under
  the authority of the commissioner may not testify and may not be
  compelled to testify in a private civil action concerning the
  document or other information.
         (l)  The commissioner may:
               (1)  share documents or other information, including
  the confidential documents or information described by Subsection
  (j), with another state, federal, or international regulatory
  agency, with the National Association of Insurance Commissioners
  and its affiliates and subsidiaries, and with state, federal, and
  international law enforcement authorities, provided that the
  recipient agrees to maintain the confidentiality of the document or
  information;
               (2)  receive documents or other information, including
  confidential documents or information, from the National
  Association of Insurance Commissioners and its affiliates and
  subsidiaries, and from regulatory and law enforcement officials of
  other foreign or domestic jurisdictions, provided that the
  commissioner shall maintain as confidential any document or
  information received with notice or understanding that it is
  confidential under the laws of the jurisdiction that is the source
  of the document or information; and
               (3)  enter into agreements governing sharing and use of
  documents and other information consistent with this section.
         (m)  Disclosing information or providing a document to the
  commissioner under this section, or sharing information as
  authorized under this section, does not result in a waiver of any
  applicable privilege or claim of confidentiality that may apply to
  the document or information.
         (n)  A memorandum in support of the opinion, and any other
  material provided by the company to the commissioner in connection
  with the memorandum, may be subject to subpoena for the purpose of
  defending an action seeking damages from the actuary submitting the
  memorandum by reason of an action required by this section or rules
  adopted under this section.
         (o)  The memorandum or other material provided by the company
  to the commissioner in connection with the memorandum may otherwise
  be released by the commissioner with the written consent of the
  company, or to the American Academy of Actuaries on receipt of a
  request stating that the memorandum or other material is required
  for the purpose of professional disciplinary proceedings and
  setting forth procedures satisfactory to the commissioner for
  preserving the confidentiality of the memorandum or other material.
         (p)  The memorandum ceases to be confidential if:
               (1)  any portion of the memorandum is cited by the
  company in its marketing;
               (2)  the memorandum is cited by the company before a
  government agency other than a state insurance department; or
               (3)  the memorandum is released by the company to the
  news media.
         (q)  This section does not prohibit the commissioner from
  using information acquired under this section in the furtherance of
  a legal or regulatory action relating to the administration of this
  code.
         SECTION 7.  Subchapter B, Chapter 425, Insurance Code, is
  amended by adding Section 425.0545 to read as follows:
         Sec. 425.0545.  ACTUARIAL OPINION OF RESERVES AFTER
  OPERATIVE DATE OF VALUATION MANUAL. (a)  A company that has
  outstanding life insurance contracts, accident and health
  insurance contracts, or deposit-type contracts in this state and is
  subject to regulation by the department shall annually submit the
  opinion of the appointed actuary as to whether the reserves and
  related actuarial items held in support of the policies and
  contracts are computed appropriately, are based on assumptions that
  satisfy contractual provisions, are consistent with prior reported
  amounts, and are in compliance with applicable laws of this state.  
  An opinion under this section must comply with provisions of the
  valuation manual, including in regard to any items necessary to its
  scope.
         (b)  Unless exempted by the valuation manual, a company
  described by Subsection (a) shall include with the opinion required
  by that subsection an opinion of the same appointed actuary
  concerning whether the reserves and related actuarial items held in
  support of the policies and contracts specified in the valuation
  manual, when considered in light of the assets held by the company
  with respect to the reserves and related actuarial items, including
  investment earnings on the assets and considerations anticipated to
  be received and retained under the policies and contracts, make
  adequate provision for the company's obligations under the policies
  and contracts, including benefits under and expenses associated
  with the policies and contracts.
         (c)  Each opinion required by this section must:
               (1)  be in the form and contain the substance that is
  specified by the valuation manual and is acceptable to the
  commissioner;
               (2)  be submitted with the annual statement reflecting
  the valuation of reserves for each year ending on or after the
  operative date of the valuation manual;
               (3)  apply to all policies and contracts subject to
  this section, plus other actuarial liabilities specified by the
  valuation manual; and
               (4)  be based on standards adopted from time to time by
  the Actuarial Standards Board or its successor, and on any
  additional standards prescribed by the valuation manual.
         (d)  In the case of an opinion required to be submitted by a
  foreign or alien company, the commissioner may accept the opinion
  filed by the company with the insurance supervisory official of
  another state if the commissioner determines that the opinion
  reasonably meets the requirements applicable to a company domiciled
  in this state.
         SECTION 8.  Subsection (a), Section 425.055, Insurance Code,
  is amended to read as follows:
         (a)  A memorandum [that, in form and substance, complies with
  the commissioner's rules] shall be prepared to support each
  actuarial opinion required by Section 425.054 or 425.0545.  The
  form and substance of each supporting memorandum must comply with
  the commissioner's rules and, for actuarial opinions subject to
  Section 425.0545, the valuation manual.
         SECTION 9.  Subsection (a), Section 425.056, Insurance Code,
  is amended to read as follows:
         (a)  Except in cases of fraud or wilful misconduct or as
  provided by Subsection (b), a person who certifies an opinion under
  Section 425.054 or 425.0545 is not liable for damages to a person,
  other than the life insurance company covered by the opinion, for an
  act, error, omission, decision, or other conduct with respect to
  the person's opinion.
         SECTION 10.  Section 425.057, Insurance Code, is amended to
  read as follows:
         Sec. 425.057.  DISCIPLINARY ACTION:  COMPANY OR PERSON
  CERTIFYING OPINION. A company or person that certifies an opinion
  under Section 425.054 or 425.0545 and that violates Section
  425.054, 425.0545, or 425.055 or rules adopted under those sections
  is subject to disciplinary action under Chapter 82.
         SECTION 11.  The heading to Section 425.058, Insurance Code,
  is amended to read as follows:
         Sec. 425.058.  COMPUTATION [VALUATION] OF MINIMUM STANDARD
  [POLICY OR CONTRACT]:  GENERAL RULE.
         SECTION 12.  The heading to Section 425.059, Insurance Code,
  is amended to read as follows:
         Sec. 425.059.  COMPUTATION [VALUATION] OF MINIMUM STANDARD
  FOR CERTAIN ANNUITIES AND PURE ENDOWMENT CONTRACTS.
         SECTION 13.  The heading to Section 425.064, Insurance Code,
  is amended to read as follows:
         Sec. 425.064.  COMMISSIONERS RESERVE VALUATION METHOD FOR
  LIFE INSURANCE AND ENDOWMENT BENEFITS.
         SECTION 14.  The heading to Section 425.065, Insurance Code,
  is amended to read as follows:
         Sec. 425.065.  COMMISSIONERS ANNUITY RESERVE VALUATION
  METHOD FOR ANNUITY AND PURE ENDOWMENT BENEFITS.
         SECTION 15.  Subchapter B, Chapter 425, Insurance Code, is
  amended by adding Sections 425.072, 425.073, 425.074, 425.075,
  425.076, and 425.077 to read as follows:
         Sec. 425.072.  MINIMUM STANDARD FOR ACCIDENT AND HEALTH
  INSURANCE CONTRACTS. (a)  The standard prescribed by the valuation
  manual for accident and health insurance contracts issued on or
  after the operative date of the valuation manual is the minimum
  standard of valuation required under Section 425.0535.
         (b)  For disability, accident and sickness, and accident and
  health insurance contracts issued before the operative date of the
  valuation manual, the minimum standard of valuation is the standard
  in existence before the operative date of the valuation manual.
         Sec. 425.073.  VALUATION MANUAL FOR CERTAIN POLICIES.  
  (a)  Except as otherwise provided by this section, for policies
  issued on or after the operative date of the valuation manual, the
  standard prescribed by the valuation manual is the minimum standard
  of valuation required under Section 425.0535.
         (b)  The commissioner by rule shall adopt a valuation manual
  and determine the operative date of the valuation manual.  A
  valuation manual adopted by the commissioner under this section
  must be substantially similar to the valuation manual approved by
  the National Association of Insurance Commissioners.  The operative
  date must be January 1 of the first calendar year immediately
  following a year in which, on or before July 1, the commissioner
  determines that:
               (1)  the valuation manual has been adopted by the
  National Association of Insurance Commissioners by an affirmative
  vote of at least 42 members, or three-fourths of the members voting,
  whichever is greater;
               (2)  the National Association of Insurance
  Commissioners Standard Valuation Model Law, as amended by the
  National Association of Insurance Commissioners in 2009, or
  legislation including substantially similar terms and provisions,
  has been enacted by states representing greater than 75 percent of
  the direct premiums written as reported in the following annual
  statements submitted for 2008:
                     (A)  life insurance and accident and health annual
  statements;
                     (B)  health annual statements; or
                     (C)  fraternal annual statements; and
               (3)  the National Association of Insurance
  Commissioners Standard Valuation Model Law, as amended by the
  National Association of Insurance Commissioners in 2009, or
  legislation including substantially similar terms and provisions,
  has been enacted by at least 42 of the following 55 jurisdictions:
                     (A)  the 50 United States;
                     (B)  American Samoa;
                     (C)  the United States Virgin Islands;
                     (D)  the District of Columbia;
                     (E)  Guam; and
                     (F)  Puerto Rico.
         (c)  After a valuation manual has been adopted by the
  commissioner by rule, any changes to the valuation manual must be
  adopted by rule and must be consistent with changes adopted by the
  National Association of Insurance Commissioners.  Unless a change
  in the valuation specifies a later effective date, the effective
  date for changes to the valuation manual may not be earlier than
  January 1 of the year immediately following the date on which the
  commissioner determines that the changes to the valuation manual
  have been adopted by the National Association of Insurance
  Commissioners by an affirmative vote representing:
               (1)  at least three-fourths of the members of the
  National Association of Insurance Commissioners voting, but not
  less than a majority of the total membership; and
               (2)  members of the National Association of Insurance
  Commissioners representing jurisdictions totaling greater than 75
  percent of the direct premiums written as reported in the most
  recently available annual statements as provided by Subsection
  (b)(2).
         (d)  The valuation manual must specify:
               (1)  the minimum valuation standards for and
  definitions of the policies or contracts subject to Section
  425.0535, including:
                     (A)  the commissioner's reserve valuation method
  for life insurance contracts subject to Section 425.0535;
                     (B)  the  commissioner's annuity reserve
  valuation method for annuity contracts subject to Section 425.0535;
  and
                     (C)  the minimum reserves for all other policies
  or contracts subject to Section 425.0535;
               (2)  the policies or contracts that are subject to the
  requirements of a principle-based valuation under Section 425.074
  and the minimum valuation standards consistent with those
  requirements, including:
                     (A)  the requirements for the format of reports to
  the commissioner under Section 425.074(b)(3), which must include
  the information necessary to determine if a valuation is
  appropriate and in compliance with this subchapter;
                     (B)  the assumptions prescribed for risks over
  which the company does not have significant control or influence;
  and
                     (C)  the procedures for corporate governance and
  oversight of the actuarial function, and a process for appropriate
  waiver or modification of the procedures;
               (3)  the policies that are not subject to a
  principle-based valuation under Section 425.074;
               (4)  the data and form of data required under Section
  425.074, to whom the data must be submitted, and other desired
  requirements, including requirements concerning data analyses and
  reporting of analyses; and
               (5)  other requirements, including requirements
  relating to reserve methods, models for measuring risk, generation
  of economic scenarios, assumptions, margins, use of company
  experience, disclosure, certification, reports, actuarial opinions
  and memorandums, transition rules, and internal controls.
         (e)  With respect to policies that are not subject to a
  principle-based valuation under Section 425.074 as described by
  Subsection (d)(3), the minimum valuation standard specified in the
  valuation manual must:
               (1)  be consistent with the minimum valuation standard
  before the operative date of the valuation manual; or
               (2)  develop reserves that 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.
         (f)  In the absence of a specific valuation requirement or if
  a specific valuation requirement in the valuation manual does not
  in the commissioner's opinion comply with this subchapter, the
  company shall, with respect to the requirement, comply with minimum
  valuation standards prescribed by the commissioner by rule.
         (g)  The commissioner may employ or contract with a qualified
  actuary, at the expense of the company, to perform an actuarial
  examination of the company and provide an opinion concerning the
  appropriateness of any reserve assumption or method used by the
  company, or to review and provide an opinion on a company's
  compliance with any requirement of this subchapter.  The
  commissioner may rely on the opinion, regarding provisions
  contained within this subchapter, of a qualified actuary engaged by
  the insurance supervisory official of another state.
         (h)  The commissioner may require a company to change an
  assumption or method as necessary in the commissioner's opinion to
  comply with a requirement of the valuation manual or this
  subchapter.
         (i)  The commissioner may take other disciplinary action as
  permitted under Chapter 82.
         Sec. 425.074.  PRINCIPLE-BASED VALUATION REQUIRED. (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
                     (B)  established:
                           (i)  using the company's available
  experience, to the extent that data is relevant and statistically
  credible; or
                           (ii)  to the extent that the company data is
  not available, relevant, or statistically credible, using other
  relevant, statistically credible experience; and
               (5)  provide margins for uncertainty including adverse
  deviation and estimation error, such that the greater the
  uncertainty the larger the margin and resulting reserve.
         (b)  A company using a principle-based valuation for one or
  more policies or contracts subject to this section and as specified
  by the valuation manual shall:
               (1)  establish procedures for corporate governance and
  oversight of the actuarial valuation function consistent with
  procedures specified by the valuation manual;
               (2)  provide to the commissioner and the company's
  board of directors an annual certification of the effectiveness of
  the internal controls with respect to the principle-based
  valuation; and
               (3)  develop, and file with the commissioner on
  request, a principle-based valuation report that complies with
  standards prescribed in the valuation manual.
         (c)  A company's internal controls with respect to the
  principle-based valuation must be designed to ensure that all
  material risks inherent in the liabilities and associated assets
  subject to the valuation are included in the valuation, and that
  valuations are made in accordance with the valuation manual. The
  certification described by Subsection (b)(2) must be based on the
  controls in place as of the end of the preceding calendar year.
         (d)  A principle-based valuation may include a prescribed
  formulaic reserve component.
         Sec. 425.075.  EXPERIENCE REPORTING FOR POLICIES IN FORCE ON
  OR AFTER OPERATIVE DATE OF VALUATION MANUAL. A company shall submit
  mortality, morbidity, policyholder behavior, or expense experience
  and other data as prescribed in the valuation manual.
         Sec. 425.076.  CONFIDENTIALITY. (a)  This section applies
  to:
               (1)  a memorandum in support of an opinion submitted
  under Section 425.0545;
               (2)  a principle-based valuation report developed
  under Section 425.074(b)(3);
               (3)  any documents or other information, produced or
  obtained by or disclosed to the commissioner or any other person:
                     (A)  in connection with the memorandum or
  principle-based valuation report;
                     (B)  in the course of an examination made under
  Section 425.073(g), except that if an examination report or other
  material prepared in connection with an examination made under
  Subchapter B, Chapter 401, is not held as privileged and
  confidential under Chapter 401, an examination report or other
  material prepared in connection with an examination made under
  Section 425.073(g) is not confidential to the same extent as if the
  examination report or other material had been prepared under
  Subchapter B, Chapter 401;
                     (C)  in support of, or in connection with, an
  annual certification by the company under Section 425.074(b)(2)
  evaluating the effectiveness of the company's internal controls
  with respect to a principle-based valuation; or
                     (D)  in the development of a principle-based
  valuation report developed under Section 425.074(b)(3); and
               (4)  any documents or other information submitted by
  the company under Section 425.074, or documents or information
  created, produced, or obtained by the commissioner in connection
  with the submissions, including experience data to the extent that
  the data contain information that could potentially identify a
  company or individual.
         (b)  Except as provided by this section, a memorandum and any
  documents or other information described by Subsection (a) are:
               (1)  confidential and not subject to disclosure under
  Chapter 552, Government Code;
               (2)  privileged from subpoena; and
               (3)  privileged from discovery and inadmissible as
  evidence in a private civil action.
         (c)  This section does not prohibit the commissioner from
  using information acquired under this section in the furtherance of
  a legal or regulatory action relating to the administration of this
  code.
         (d)  The commissioner or any person who receives a document
  or other information described by Subsection (a) while acting under
  the authority of the commissioner may not testify and may not be
  compelled to testify in a private civil action concerning the
  content of the document or other information.
         (e)  Subject to Subsection (f), the commissioner may share
  information described by Subsection (a) with:
               (1)  another state, federal, or international
  regulatory agency;
               (2)  the National Association of Insurance
  Commissioners and its affiliates and subsidiaries;
               (3)  in the case of information described by Subsection
  (a)(1) or (2), the Actuarial Board for Counseling and Discipline or
  its successor on receipt of a request stating that the information
  is required for the purpose of professional disciplinary
  proceedings; and
               (4)  state, federal, and international law enforcement
  officials.
         (f)  With respect to Subsections (e)(1), (2), and (3), the
  commissioner may not share documents or other information described
  by Subsection (a) unless the recipient agrees and has the legal
  authority to agree to maintain the confidentiality and privileged
  status of the documents or information in the same manner and to the
  same extent as is required for the commissioner.
         (g)  The commissioner may receive documents and other
  information, including otherwise confidential and privileged
  documents or information, from the National Association of
  Insurance Commissioners and its affiliates and subsidiaries, from
  regulatory or law enforcement officials of other foreign or
  domestic jurisdictions, and from the Actuarial Board for Counseling
  and Discipline or its successor, and shall maintain as confidential
  or privileged any document or other information received with
  notice or the understanding that it is confidential or privileged
  under the laws of the jurisdiction that is the source of the
  document or other information.
         (h)  The commissioner may enter agreements governing sharing
  and use of information consistent with this section.
         (i)  Disclosing information or providing a document to the
  commissioner under this section, or sharing information as
  authorized under this section, does not result in a waiver of any
  applicable privilege or claim of confidentiality that may apply to
  the document or information.
         (j)  A privilege established under the law of any state or
  jurisdiction that is substantially similar to the privilege
  established under this section is enforceable in any proceeding in,
  and in any court of, this state.
         (k)  In this section, a reference to a regulatory agency, law
  enforcement agency, or the National Association of Insurance
  Commissioners includes an employee, agent, consultant, or
  contractor of the agency or association, as applicable.
         (l)  Notwithstanding this section, any confidential
  information specified in Subsection (a) may be:
               (1)  subject to subpoena for the purpose of defending
  an action seeking damages from the appointed actuary submitting the
  related memorandum in support of an opinion submitted under Section
  425.054 or 425.0545 or a principle-based valuation report developed
  under Section 425.074(b)(3) by reason of an action required by this
  subchapter or by rules adopted under this subchapter; and
               (2)  released by the commissioner with the written
  consent of the company.
         (m)  A memorandum in support of an opinion submitted under
  Section 425.0545 or a principle-based valuation report developed
  under Section 425.074(b)(3) ceases to be confidential if:
               (1)  any portion of the memorandum or report is cited by
  the company in its marketing;
               (2)  the company publicly volunteers the memorandum or
  report to a government agency other than a state insurance
  department; or
               (3)  the memorandum or report is released by the
  company to the news media.
         Sec. 425.077.  SINGLE STATE EXEMPTION. (a)  The
  commissioner may exempt specific product forms or product lines of
  a domestic company that is licensed and doing business only in this
  state from the requirements of Section 425.073 if:
               (1)  the commissioner has issued an exemption in
  writing to the company and has not subsequently revoked the
  exemption in writing; and
               (2)  the company computes reserves using assumptions
  and methods used before the operative date of the valuation manual
  in addition to any requirements established by the commissioner and
  adopted by rule.
         (b)  Sections 425.058 through 425.071 and Section 425.072(b)
  apply to a company granted an exemption under this section.
         SECTION 16.  The commissioner of insurance shall determine
  whether the National Association of Insurance Commissioners and a
  sufficient number of states and other jurisdictions have adopted a
  valuation manual as required by Subsection (b), Section 425.073,
  Insurance Code, as added by this Act.  As soon as practicable after
  the commissioner of insurance determines that the National
  Association of Insurance Commissioners and a sufficient number of
  states and other jurisdictions have adopted the valuation manual as
  required by that section, the commissioner of insurance shall adopt
  rules necessary to implement this Act.
         SECTION 17.  This Act takes effect January 1, 2014.
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