84R17119 LED-F
 
  By: Sheets H.B. No. 1379
 
  Substitute the following for H.B. No. 1379:
 
  By:  Muñoz, Jr. C.S.H.B. No. 1379
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the standard valuation for life insurance, accident and
  health insurance, and annuities and the nonforfeiture requirements
  of certain life insurance policies; amending provisions that may be
  subject to a criminal penalty.
         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 425.0545.
               (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.
         (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 ISSUED 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 issued before the operative date of the valuation manual.
         (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 (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 privileged 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 and privileged 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; and
               (2)  receive documents or other information, including
  confidential and privileged 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 or privileged any
  document or information received with notice or understanding that
  it is confidential or privileged under the laws of the jurisdiction
  that is the source of the document or information.
         (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 Actuarial Board for Counseling and Discipline or
  its successor 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 and
  privileged status of the memorandum or other material.
         (p)  The memorandum ceases to be confidential and privileged
  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.  Section 425.055(a), 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 for memorandums subject to Section
  425.054, or the valuation manual for memorandums subject to Section
  425.0545.
         SECTION 9.  Section 425.056(a), 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 in
  addition to any requirements established by the commissioner and
  adopted by rule.
         Sec. 425.073.  VALUATION MANUAL FOR POLICIES ISSUED ON OR
  AFTER THE OPERATIVE DATE OF THE VALUATION MANUAL.  (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 Model Valuation 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 Model Valuation 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 substantially similar to 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 Subsections
  (b)(2)(A)-(C).
         (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
  425.075, to whom the data must be submitted, and other desired
  requirements, including requirements concerning data analyses and
  reporting of analyses;
               (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; and
               (6)  an exemption that allows certain small companies
  to value reserves based on an exception from certain requirements
  of this section and Section 425.074; however, the premium
  thresholds for determining whether the exemption applies shall be
  as follows:
                     (A)  less than $300 million of ordinary life
  premium; and 
                     (B)  less than $600 million of combined ordinary
  life premiums for a group of life insurers if the company is a
  member of that group.
         (e)  For purposes of Subsections (d)(6)(A) and (B), an
  ordinary life premium is measured as a direct premium plus
  reinsurance assumed from an unaffiliated company, as reported in
  the prior calendar year statement.
         (f)  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.
         (g)  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.
         (h)  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.
         (i)  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.
         (j)  The commissioner may take other disciplinary action as
  permitted under Chapter 82.
         Sec. 425.074.  REQUIREMENTS OF A PRINCIPLE-BASED VALUATION.
  (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)  In this section,
  "confidential information" means:
               (1)  a memorandum in support of an opinion submitted
  under Section 425.0545 and any other documents, materials, and
  other information, including, but not limited to, all working
  papers, and copies thereof, created, produced, or obtained by or
  disclosed to the commissioner or any other person in connection
  with such memorandum;
               (2)  all documents, materials, and other information,
  including, but not limited to, all working papers, and copies
  thereof, created, produced, or obtained by or disclosed to the
  commissioner or any other person in the course of an examination
  made under Section 425.073(h); provided, however, that if an
  examination report or other material prepared in connection with an
  examination made under Subchapter B, Chapter 401, is not held as
  private and confidential information under Subchapter B, Chapter
  401, an examination report or other material prepared in connection
  with an examination made under Section 425.073(h) shall not be
  "confidential information" to the same extent as if such
  examination report or other material had been prepared under
  Subchapter B, Chapter 401;
               (3)  any reports, documents, materials, and other
  information developed by a company 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 and
  any other documents, materials, and other information, including,
  but not limited to, all working papers, and copies thereof,
  created, produced, or obtained by or disclosed to the commissioner
  or any other person in connection with such reports, documents,
  materials, and other information;
               (4)  any principle-based valuation report developed
  under Section 425.074(b)(3) and any other documents, materials, and
  other information, including, but not limited to, all working
  papers, and copies thereof, created, produced, or obtained by or
  disclosed to the commissioner or any other person in connection
  with such report; and
               (5)  any documents, materials, data, and other
  information submitted by a company under Section 425.075
  (collectively, "experience data") and any other documents,
  materials, data, and other information, including, but not limited
  to, all working papers, and copies thereof, created or produced in
  connection with such experience data, in each case that include any
  potentially company-identifying or personally identifiable
  information, that is provided to or obtained by the commissioner
  (together with any "experience data," the "experience materials")
  and any other documents, materials, data, and other information,
  including, but not limited to, all working papers, and copies
  thereof, created, produced, or obtained by or disclosed to the
  commissioner or any other person in connection with such experience
  materials.
         (b)  Except as provided in this section, a company's
  confidential information is confidential by law and privileged, and
  shall not be subject to Chapter 552, Government Code, shall not be
  subject to subpoena, and shall not be subject to discovery or
  admissible in evidence in any private civil action; provided,
  however, that the commissioner is authorized to use the
  confidential information in the furtherance of any regulatory or
  legal action brought against the company as a part of the
  commissioner's official duties.
         (c)  Neither the commissioner nor any person who received
  confidential information while acting under the authority of the
  commissioner shall be permitted or required to testify in any
  private civil action concerning any confidential information.
         (d)  In order to assist in the performance of the
  commissioner's duties, the commissioner may share confidential
  information (1) with other state, federal, and international
  regulatory agencies and with the National Association of Insurance
  Commissioners and its affiliates and subsidiaries and (2) in the
  case of confidential information specified in Subsections (a)(1)
  and (a)(4) only, with the Actuarial Board for Counseling and
  Discipline or its successor upon request stating that the
  confidential information is required for the purpose of
  professional disciplinary proceedings and with state, federal, and
  international law enforcement officials; in the case of (1) and
  (2), provided that such recipient agrees, and has the legal
  authority to agree, to maintain the confidentiality and privileged
  status of such documents, materials, data, and other information in
  the same manner and to the same extent as required for the
  commissioner.
         (e)  The commissioner may receive documents, materials,
  data, and other information, including otherwise confidential or
  privileged documents, materials, data, 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, material,
  data, 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, material,
  data, or other information.
         (f)  The commissioner may enter into agreements governing
  sharing and use of information consistent with Subsections (b)
  through (k).
         (g)  No waiver of any applicable privilege or claim of
  confidentiality in the confidential information shall occur as a
  result of disclosure to the commissioner under this section or as a
  result of sharing as authorized in Subsection (d).
         (h)  A privilege established under the law of any state or
  jurisdiction that is substantially similar to the privilege
  established under Subsections (b) through (k) shall be available
  and enforced in any proceeding in, and in any court of, this state.
         (i)  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.
         (j)  Notwithstanding this section, any confidential
  information specified in Subsections (a)(1) and (a)(4) 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
  425.0545 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.
         (k)  Once any portion of 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) is cited by
  the company in its marketing or is publicly volunteered to or before
  a governmental agency other than a state insurance department or is
  released by the company to the news media, all portions of such
  memorandum or report shall no longer be confidential and
  privileged.
         Sec. 425.077.  SINGLE STATE EXEMPTION. 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.
         SECTION 16.  Subchapter A, Chapter 1105, Insurance Code, is
  amended by adding Section 1105.0015 to read as follows:
         Sec. 1105.0015.  DEFINITION.  In this chapter, "operative
  date of the valuation manual" means the date, if any, on which the
  valuation manual described by Subchapter B, Chapter 425 (Standard
  Valuation Law), becomes operative as provided by that subchapter.
         SECTION 17.  Section 1105.055, Insurance Code, is amended by
  amending Subsections (h) and (i) and adding Subsections (j), (k),
  (l), and (m) to read as follows:
         (h)  For a policy issued before the operative date of the
  valuation manual, any [Any] ordinary mortality table adopted after
  1980 by the National Association of Insurance Commissioners that is
  approved by rules adopted by the commissioner for use in
  determining the minimum nonforfeiture standard may be substituted
  for:
               (1)  the Commissioners 1980 Standard Ordinary
  Mortality Table with or without Ten-Year Select Mortality Factors;
  or
               (2)  the Commissioners 1980 Extended Term Insurance
  Table.
         (i)  For a policy issued before the operative date of the
  valuation manual, any [Any] industrial mortality table adopted
  after 1980 by the National Association of Insurance Commissioners
  that is approved by rules adopted by the commissioner for use in
  determining the minimum nonforfeiture standard may be substituted
  for:
               (1)  the Commissioners 1961 Standard Industrial
  Mortality Table; or
               (2)  the Commissioners 1961 Industrial Extended Term
  Insurance Table.
         (j)  Except as provided by Subsection (k), for a policy
  described by Subsection (h) issued on or after the operative date of
  the valuation manual, the valuation manual must provide the
  commissioners standard ordinary mortality table for use in
  determining the minimum nonforfeiture standard that may be
  substituted for:
               (1)  the Commissioners 1980 Standard Ordinary
  Mortality Table with or without Ten-Year Select Mortality Factors;
  or
               (2)  the Commissioners 1980 Extended Term Insurance
  Table.
         (k)  If the commissioner by rule adopts a commissioners
  standard ordinary mortality table adopted by the National
  Association of Insurance Commissioners for use in determining the
  minimum nonforfeiture standard for policies issued on or after the
  operative date of the valuation manual, the minimum nonforfeiture
  standard determined in accordance with that table supersedes the
  standard provided by the valuation manual.
         (l)  Except as provided by Subsection (m), for a policy
  described by Subsection (i) issued on or after the operative date of
  the valuation manual, the valuation manual must include the
  commissioners standard industrial mortality table for use in
  determining the minimum nonforfeiture standard that may be
  substituted for:
               (1)  the 1961 Standard Industrial Mortality Table; or
               (2)  the Commissioners 1961 Industrial Extended Term
  Insurance Table.
         (m)  If the commissioner by rule adopts a commissioners
  standard industrial mortality table adopted by the National
  Association of Insurance Commissioners for use in determining the
  minimum nonforfeiture standard for policies issued on or after the
  operative date of the valuation manual, the minimum nonforfeiture
  standard determined in accordance with that table supersedes the
  standard provided by the valuation manual.
         SECTION 18.  Section 1105.056, Insurance Code, is amended to
  read as follows:
         Sec. 1105.056.  NONFORFEITURE INTEREST RATE. (a) For a
  policy issued before the operative date of the valuation manual,
  the [The] annual nonforfeiture interest rate for a policy issued in
  a particular calendar year is equal to 125 percent of the calendar
  year statutory valuation interest rate for that policy as defined
  by Subchapter B, Chapter 425, rounded to the nearest one-fourth of
  one percent, except that the rate may not be less than four percent.
         (b)  For a policy issued on or after the operative date of the
  valuation manual, the annual nonforfeiture interest rate for any
  policy issued in a particular calendar year is provided by the
  valuation manual.
         SECTION 19.  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 Section 425.073(b), 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 20.  This Act takes effect September 1, 2015.