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CA Department of Insurance

Bulletin 95-9

STATE OF CALIFORNIA
DEPARTMENT OF INSURANCE
425 South Market Street
Sixth Floor
San Francisco, California 94105

Bulletin No. 95-9

Date:
          September 1, 1995
To:
              All Admitted Life and Disability Insurers and Other Interested Persons
SUBJECT:    Rates of Interest for Minimum Reserves and Nonforfeiture Values - 1996 Life Insurance; 1995 Annuities

This replaces Bulletin No. 94-7.

Attached is Table 1 showing the rates of interest to be used fordetermining minimum reserves and nonforfeiture values according to Sections 10163.2(i) and 10489.4 of the California Insurance Code applicable to life insurance policies issued in 1996 and annuity contracts issued or undergoing a change in fund in 1995. Also shown in Table 1 are the interest rates applicable to life insurance policies issued in 1982 through 1996 and to annuity contracts issued or funded in 1981 through 1995. The Moody's Corporate Bond Yield Averages used in these calculations are those for the period ending June 30 for each calendar year shown. These were:

Average over period ending June 30
Calendar
Year
Of a 12-Month
Period
Of a 36-Month
Period
1979   9.49%   8.92%
1980 11.51 9.89
1981   13.71   11.57
1982 15.70 13.64
1983   13.39   14.26
1984 13.22 14.10
1985   13.01   13.21
1986 10.75 12.33
1987   9.40   11.05
1988 10.32 10.15
1989   10.09   9.93
1990 9.52 9.97
1991   9.63   9.74
1992 8.88 9.34
1993   8.13   8.88
1994 7.52 8.18
1995 8.42 8.03

Appendix A is a brief background outline of the basis for the calculation of the interest rates shown in Table 1.

CHUCK QUACKENBUSH
Insurance Commissioner


TABLE 1

STATUTORY CALENDAR YEAR INTEREST RATES BASED ON NAIC STANDARD VALUATION AND NONFORFEITURE LAWS

A. Life Insurance Guarantee Duration (Years) Calendar Valuation Nonforfeiture Year Interest Rate

Interest Rate (100%) (125%)
10 or less
82   6.75   8.50
83-86 7.25 9.00
87   6.50   8.25
88-93 6.00 7.50
94   5.50   7.00
95-96 5.50 7.00
More than 10, not more than 20
82   6.25   7.75
83-86 6.75 8.50
87-93   6.00   7.50
94 5.25 6.50
95-96   5.25   6.50
More than 20
82   5.50   7.00
83-86 6.00 7.50
87-92   5.50   7.00
93-94 5.00 6.25
95-96   4.50   5.75

B. Single premium immediate annuities, and annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options.

Calendar
Year
Valuation
Interest Rate
Calendar
Year
Valuation
Interest Rate
81   11.50   88-89   8.75
82 13.25 90-91 8.25
83-84   11.25   92   7.75
85 11.00 93 7.00
86   9.25   94   6.50
87 8.00 95 7.25

C. Other Annuities and Guaranteed Interest Contracts

Contracts Valued On An Issue Year Basis
Cash Future Guarantee Valuation Interest Rate
Settlement Interest Duration Calendar For Plan Type
Options? Guarantee? (Years) Year A B C
Yes Yes 5 or less
            81   11.50   9.50   8.25
82 13.25 10.50 9.25
            83   11.25   9.25   8.25
84 11.25 9.25 8.00
            85   11.00   9.00   8.00
86 9.25 7.75 6.75
            87   8.00   6.75   6.25
88 8.75 7.50 6.75
            89   8.75   7.25   6.50
90-91 8.25 7.00 6.25
            92   7.75   6.50   6.00y
93 7.00 6.00 5.50
more than 5 but not more than 10
            81   11.00   9.50   8.25
82 12.50 10.50 9.25
            83   10.75   9.25   8.25
84 10.75 9.25 8.00
            85   10.50   9.00   8.00
86 8.75 7.75 6.75
            87   7.75   6.75   6.25
88 8.50 7.50 6.75
            89   8.25   7.25   6.50
90-91 8.00 7.00 6.25
            92   7.50   6.50   6.00
93 6.75 6.00 5.50
more than 10 but not more than 20
            81   7.75   6.75   6.25
82 8.50 7.25 6.75
            83-84   8.25   7.00   6.75
85 8.25 7.00 6.50
            86   7.50   6.50   6.00
87 7.00 6.00 5.75
            88-89   7.25   6.25   6.00
90-91 7.00 6.25 5.75
            92   6.75   6.00   5.75
93 6.25 5.50 5.25
more than 20
            81   6.25   5.50   5.50
82 6.75 6.00 6.00
            83-84   6.75   5.75   5.75
85 6.50 5.75 5.75
            86   6.00   5.50   5.50
87 5.75 5.25 5.25
            88-89   6.00   5.25   5.25
90-91 5.75 5.25 5.25
            92   5.75   5.00   5.00
93 5.25 4.75 4.75
Yes No 5 or less
            81   12.00   10.00   9.00
82 13.75 11.25 10.00
            83   11.75   9.75   8.75
84 11.75 9.75 8.50
            85   11.50   9.50   8.50
86 9.50 8.00 7.25
            87   8.50   7.25   6.50
88 9.25 7.75 7.00
            89   9.00   7.50   7.00
90 8.50 7.25 6.50
            91   8.75   7.25   6.75
92 8.00 6.75 6.25
            93   7.25   6.25   5.75
more than 5 but not more than 10
            81   11.50   10.00   9.00
82 13.25 11.25 10.00
            83   11.25   9.75   8.75
84 11.25 9.75 8.50
            85   11.00   9.50   8.50
86 9.25 8.00 7.25
            87   8.00   7.25   6.50
88 8.75 7.75 7.00
            89   8.75   7.50   7.00
90 8.25 7.25 6.50
            91   8.25   7.25   6.75
92 7.75 6.75 6.25
            93   7.00   6.25   5.75
more than 10 but not more than 20
            81   8.00   7.00   6.75
82 8.75 7.50 7.25
            83-84   8.75   7.50   7.00
85 8.50 7.50 7.00
            86   7.75   6.75   6.50
87 7.25 6.50 6.00
            88-91   7.50   6.50   6.25
92 7.00 6.25 6.00
            93   6.50   5.75   5.50
more than 20
            81   6.75   6.00   6.00
82 7.25 6.25 6.25
            83-84   7.00   6.25   6.25
85 7.00 6.25 6.25
            86   6.50   5.75   5.75
87 6.00 5.50 5.50
            88   6.25   5.75   5.75
89-91 6.25 5.50 5.50
            92   6.00   5.25   5.25
93 5.50 5.00 5.00
Yes Yes or No 5 or less
            81   11.50   NOT
82 13.25 APPLICABLE
            83-84   11.25   FOR ANY
85 11.00 GUARANTEE
            86   9.25   DURATION
87 8.00 FOR PLAN
            88-89   8.75   TYPES
90-91 8.25 B AND C
            92   7.75        
93 7.00
more than 5 but not more than 10
            81   11.00        
82 12.50
            83-84   10.75        
85 10.50
            86   8.75        
87 7.75
            88   8.50        
89 8.25
            90-91   8.00        
92 7.50
            93   6.75        
more than 10 but not more than 20
            81   10.00        
82 11.25
            83-84   9.75        
85 9.50
            86   8.00        
87 7.25
            88   7.75        
89 7.50
            90-91   7.25        
92 6.75
            93   6.25        
more than 20
            81   7.75        
82 8.75
            83   7.75        
84-85 7.50
            86   6.50        
87 6.00
            88-89   6.25        
90-91 6.00
            92   5.75        
93 5.25
Contracts Valued On A Change In Fund Basis
            81   13.25   12.00   9.00
82 15.00 13.75 10.00
            83   12.75   11.75   8.75
84 12.75 11.75 8.50
            85   12.50   11.50   8.50
86 10.25 9.50 7.25
            87   9.00   8.50   6.50
88 10.00 9.25 7.00
            89   9.75   9.00   7.00
90 9.25 8.50 6.50
            91   9.25   8.75   6.75
92 8.50 8.00 6.25
            93   7.75   7.25   5.75
more than 5 but not more than 10
            81   12.75   12.00   9.00
82 14.50 13.75 10.00
            83   12.25   11.75   8.75
84 12.25 11.75 8.50
            85   12.00   11.50   8.50
86 10.00 9.50 7.25
            87   8.75   8.50   6.50
88 9.50 9.25 7.00
            89   9.50   9.00   7.00
90 8.75 8.50 6.50
            91   9.00   8.75   6.75
92 8.25 8.00 6.25
            93   7.50   7.25   5.75
more than 10 but not more than 20
            81   11.50   11.00   8.25
82 13.25 12.50 9.25
            83   11.25   10.75   8.25
84 11.25 10.75 8.00
            85   11.00   10.50   8.00
86 9.25 8.75 6.75
            87   8.00   7.75   6.25
88 8.75 8.50 6.75
            89   8.75   8.25   6.50
90-91 8.25 8.00 6.25
            92   7.75   7.50   6.00
93 7.00 6.75 5.50
more than 20
            81   9.50   9.50   7.25
82 10.50 10.50 8.00
            83   9.25   9.25   7.25
84 9.25 9.25 7.00
            85
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