Actuarial Guideline 49 interprets and sets limits on certain aspects of the Illustration Regulation for Indexed UL contracts. AG 49 was undertaken by LATF primarily to bring consistency and historical support for interest rates used for illustrations. The crafting of AG 49 represents an impressive collaboration and compromise involving various industry, consumer and regulatory interests.

The sections of AG 49 pertaining to Illustrated Scale and Disciplined Current Scale carry a September 1, 2015 effective date. The sections of AG 49 pertaining to Policy Loans and Additional Basic Illustration Standards carry a March 1, 2016 effective date.

AG 49 also includes guidance on ledgers for alternative scales and historical performance disclosures in the basic illustration.

Section 4 of AG 49 calls for the calculation of the arithmetic average of 40 years’ worth of 25-year geometric averages, applying various calculations to the S&P 500 index. We have calculated these values and believe the following to represent the resulting illustrated scale.

Those of you familiar with our efforts including development of the Historic Variability Calculator know that we believe that forward-looking stochastic analysis coupled with effective on-going policy management are important to managing expectations for flexible premium life.

We know that our vision is not able to be realized within the confines of the current version of the Illustration Regulation. We are very much looking forward to working with regulators as they craft a revised illustration regulation that will better enable our companies and their representatives to effectively illustrate and manage flexible life contracts.