(a) Single state company. A single state company is a domestic company that is licensed and doing business only in this state. A domestic company is doing business only in this state if the company does not have direct or assumed risks for policies issued outside of this state.

(b) Single state exemption. The commissioner may grant a single state company a single state exemption from the NAIC Valuation Manual principle-based valuation requirements for specific product forms or product lines. This exemption is a single state exemption.

(1) To request approval for a single state exemption, a company must submit a written request to TDI and include detailed information regarding the request for the exemption. The request should identify the product forms or product lines proposed for the single state exemption. An exemption is not considered approved until written approval is issued by the commissioner or his designee.

(2) A single state company granted a single state exemption must compute reserves using the assumptions and methods that it used before January 1, 2017. Single state company business exempted by the commissioner with a single state exemption must be reserved with assumptions and methods required by the NAIC Valuation Manual other than the principle-based valuation requirements.

(3) A single state company granted a single state exemption must comply with all other requirements of the NAIC Valuation Manual, including the actuarial opinion and memorandum requirements of the NAIC Valuation Manual.

(4) The commissioner may revoke a single state exemption by revoking the exemption in writing if the reserving methods and assumptions do not adequately reflect the company's risks or if the company no longer qualifies for the exemption under Insurance Code §425.077. A single state exemption may also be revoked if the commissioner determines that the NAIC Valuation Manual principle-based reserving would be more appropriate for protection of Texas policyholders and industry.

(c) Adequacy analysis requirement exemption. A single state company may be granted an exemption by the commissioner from the asset adequacy analysis requirement for the actuarial opinion in the NAIC Valuation Manual. This exemption is an asset adequacy analysis exemption.

(1) A single state company must request an asset adequacy analysis exemption in writing to the commissioner and provide support as to why an asset adequacy analysis is not needed for its business. An exemption is not considered approved until written approval is issued by the commissioner or his designee.

(2) A single state company granted an asset adequacy analysis exemption must comply with other requirements for the actuarial opinion in the NAIC Valuation Manual.

(3) The commissioner may revoke an asset adequacy analysis exemption by revoking the exemption in writing if the asset adequacy analysis is needed to assess risks or if it is needed for the protection of Texas policyholders and industry. The commissioner may also revoke an asset adequacy analysis exemption if the company no longer qualifies as a single state company.

Source Note: The provisions of this §3.9902 adopted to be effective January 18, 2017, 42 TexReg 65