AB420,28 21Section 28. 612.71 of the statutes is repealed.
AB420,29 22Section 29. 620.04 (1) of the statutes is renumbered 620.04 (1) (intro.) and
23amended to read:
AB420,9,2524 620.04 (1) Additional restrictions. (intro.) If the commissioner finds that by
25reason of investment conditions generally or of the financial condition or current

1investment practice of an individual insurer, the interests of insureds, creditors, or
2the public are or may be endangered, the commissioner may do any of the following:
AB420,10,5 3(a) For insurers that are not restricted under s. 620.03, impose reasonable and
4temporary restrictions upon the investments of an individual insurer, including
5prohibition or divestment of a particular investment.
AB420,30 6Section 30. 620.04 (1) (b) of the statutes is created to read:
AB420,10,97 620.04 (1) (b) For insurers that are subject to s. 620.03, impose reasonable
8restrictions upon the investments of an individual insurer, including prohibition or
9divestment of a particular investment.
AB420,31 10Section 31. 623.06 (1) of the statutes is created to read:
AB420,10,1111 623.06 (1) In this section:
AB420,10,1512 (a) "Accident and health insurance contract" means a contract that
13incorporates morbidity risk and provides protection against economic loss resulting
14from accident, sickness, or medical conditions and as may be specified in the
15valuation manual.
AB420,10,1816 (b) "Appointed actuary" means a qualified actuary who is appointed in
17accordance with the valuation manual to prepare the actuarial opinion required in
18sub. (1r).
AB420,10,2019 (c) "Deposit-type contract" means a contract that does not incorporate
20mortality or morbidity risks and as may be specified in the valuation manual.
AB420,10,2321 (d) "Law enforcement agency," "National Association of Insurance
22Commissioners," or "regulatory agency" includes the employees, agents,
23consultants, and contractors of each such entity.
AB420,11,224 (e) "Life insurance," "life insurance contract," "life insurance policy," or "plan
25of life insurance" means a contract that incorporates mortality risk, including

1annuity and pure endowment contracts, and as may be specified in the valuation
2manual.
AB420,11,43 (f) "Operative date of the valuation manual" means the date determined under
4sub. (9) (b).
AB420,11,75 (g) "Principle-based valuation" means a reserve valuation that uses one or
6more methods, or one or more assumptions, determined by the insurer and that is
7required to comply with sub. (10) as specified in the valuation manual.
AB420,11,128 (h) "Qualified actuary" means an individual who is qualified to sign the
9applicable statement of actuarial opinion in accordance with the American academy
10of actuaries qualification standards for actuaries signing such statements and who
11meets the requirements specified in the valuation manual, if the valuation manual
12is in effect, and any other requirements that the commissioner may by rule specify.
AB420,11,1513 (i) "Tail risk" means a risk that occurs either when the frequency of low
14probability events is higher than expected under a normal probability distribution
15or when there are observed events of very significant size or magnitude.
AB420,11,1816 (j) "Valuation manual" means the manual of valuation instructions as adopted
17by the National Association of Insurance Commissioners under sub. (9) or as
18subsequently amended.
AB420,32 19Section 32. 623.06 (1) (f) of the statutes, as created by 2015 Wisconsin Act ....
20(this act), is repealed and recreated to read:
AB420,11,2221 623.06 (1) (f) "Operative date of the valuation manual" means the effective date
22of this paragraph .... [LRB inserts date], as determined under sub. (9) (b).
AB420,33 23Section 33. 623.06 (1c) of the statutes is repealed.
AB420,34 24Section 34. 623.06 (1f) of the statutes is renumbered 623.06 (1f) (a) and
25amended to read:
AB420,12,20
1623.06 (1f) (a) The For policies and contracts issued before the operative date
2of the valuation manual, the
commissioner shall annually value, or cause to be
3valued, the reserve liabilities (hereinafter called reserves) for all outstanding life
4insurance policies and annuity and pure endowment contracts of every life insurance
5company doing business in this state, except that in the case of an alien company,
6such valuation shall be limited to its United States business,
and may certify the
7amount of any such reserves, specifying the mortality table or tables, rate or rates
8of interest and methods (net level premium method or other) used in the calculation
9of such reserves. In calculating such reserves, the commissioner may use group
10methods and approximate averages for fractions of a year or otherwise. In lieu of the
11valuation of the reserves herein required of any foreign or alien company, the
12commissioner may accept any valuation made, or caused to be made, by the
13insurance supervisory official of any state or other jurisdiction when if such
14valuation complies with the minimum standard herein provided and if the official
15of such state or jurisdiction accepts as sufficient and valid for all legal purposes the
16certificate of valuation of the commissioner when such certificate states the
17valuation to have been made in a specified manner according to which the aggregate
18reserves would be at least as large as if they had been computed in the manner
19prescribed by the law of that state or jurisdiction. Subsections (2) to (7) apply to all
20policies and contracts issued before the operative date of the valuation manual.
AB420,35 21Section 35. 623.06 (1f) (b) of the statutes is created to read:
AB420,13,722 623.06 (1f) (b) For policies and contracts issued on or after the operative date
23of the valuation manual, the commissioner shall annually value, or cause to be
24valued, the reserve liabilities (hereinafter called reserves) for all outstanding life
25insurance contracts, annuity and pure endowment contracts, accident and health

1insurance contracts, and deposit-type contracts of every insurer doing business in
2this state. In lieu of the valuation of the reserves required of a foreign or alien
3company, the commissioner may accept a valuation made, or caused to be made, by
4the insurance supervisory official of any state or other jurisdiction if the valuation
5complies with the minimum standard provided in this section. Subsections (9) and
6(10) apply to all policies and contracts issued on or after the operative date of the
7valuation manual.
AB420,36 8Section 36. 623.06 (1m) (intro.) of the statutes is created to read:
AB420,13,109 623.06 (1m) (intro.) Before the operative date of the valuation manual, all of
10the following apply:
AB420,37 11Section 37. 623.06 (1r) of the statutes is created to read:
AB420,13,1312 623.06 (1r) Beginning on the operative date of the valuation manual, all of the
13following apply:
AB420,13,2214 (a) Every insurance company that has outstanding life insurance contracts,
15accident and health insurance contracts, or deposit-type contracts in this state and
16that is subject to regulation by the commissioner shall submit to the commissioner,
17as prescribed in par. (c), the opinion of the appointed actuary as to whether the
18reserves and related actuarial items held in support of those outstanding contracts
19are computed appropriately, are based on assumptions that satisfy contractual
20provisions, are consistent with prior reported amounts, and comply with applicable
21laws of this state. The valuation manual shall prescribe the specifics of this opinion,
22including any items that are necessary to its scope.
AB420,14,1023 (b) Every insurance company that has outstanding life insurance contracts,
24accident and health insurance contracts, or deposit-type contracts in this state and
25that is subject to regulation by the commissioner, except as exempted in the

1valuation manual, shall also annually include in the opinion required under par. (a)
2an opinion of the same appointed actuary as to whether the reserves and related
3actuarial items held in support of the policies and contracts specified in the valuation
4manual, when considered in light of the assets held by the company with respect to
5the reserves and related actuarial items, including the investment earnings on the
6assets and the considerations anticipated to be received and retained under the
7policies and contracts, make adequate provision for the company's obligations under
8the policies and contracts, including the benefits under and expenses associated with
9the policies and contracts. The opinion required under this paragraph shall be
10governed by the following:
AB420,14,1311 1. A memorandum, in form and substance as specified in the valuation manual
12and acceptable to the commissioner, shall be prepared to support each actuarial
13opinion.
AB420,14,2114 2. If the insurance company fails to provide a supporting memorandum at the
15request of the commissioner within a period specified in the valuation manual, or the
16commissioner determines that the supporting memorandum provided by the
17insurance company fails to meet the standards prescribed by the valuation manual
18or is otherwise unacceptable to the commissioner, the commissioner may engage a
19qualified actuary at the expense of the company to review the opinion and the basis
20for the opinion and prepare the supporting memorandum required by the
21commissioner.
AB420,14,2322 (c) All opinions required under this subsection shall be governed by the
23following:
AB420,14,2524 1. The opinion shall be in form and substance as specified in the valuation
25manual and acceptable to the commissioner.
AB420,15,3
12. The opinion shall be submitted with the annual statement reflecting the
2valuation of such reserve liabilities for each year ending after the operative date of
3the valuation manual.
AB420,15,54 3. The opinion shall apply to all policies and contracts described in pars. (a) and
5(b), plus other actuarial liabilities as may be specified in the valuation manual.
AB420,15,86 4. The opinion shall be based on standards adopted from time to time by the
7actuarial standards board or its successor and on any additional standards
8prescribed in the valuation manual.
AB420,15,139 5. With respect to an opinion required to be submitted by a foreign or alien
10company, the commissioner may accept the opinion filed by that company with the
11insurance supervisory official of another state if the commissioner determines that
12the opinion reasonably meets the requirements applicable to a company domiciled
13in this state.
AB420,15,1714 6. Except in cases of fraud or willful misconduct, the appointed actuary shall
15not be liable for damages to any person, other than the insurance company and the
16commissioner, for any act, error, omission, decision, or conduct with respect to the
17appointed actuary's opinion.
AB420,38 18Section 38. 623.06 (2) (intro.) of the statutes is amended to read:
AB420,16,519 623.06 (2) (intro.) Except as provided in subs. (2a) and (2m), the minimum
20standard for the valuation of all such policies and contracts specified by the
21commissioner under sub. (1m) (a) 1.
issued prior to the effective date of this section
22[see sub. (8) (13) and s. 632.43 (9)] shall be that provided by the laws in effect
23immediately prior to such date. Except as provided in subs. (2a) and (2m), the
24minimum standard for the valuation of all such policies and contracts issued on or
25after the effective date of this section shall be the commissioners reserve valuation

1methods defined in subs. (3) to (4m) and (7), with 3.5 percent interest, or in the case
2of policies and contracts, other than annuity and pure endowment contracts, issued
3on or after June 19, 1974, and prior to November 8, 1977, 4 percent interest, and for
4policies issued on or after November 8, 1977, 4.5 percent interest and the following
5tables:
AB420,39 6Section 39. 623.06 (8) of the statutes is renumbered 623.06 (13) (a) and
7amended to read:
AB420,16,98 623.06 (13) (a) This Except for subs. (1), (1f) (b), (1r), and (8m) to (12), this
9section shall become effective on the same date as does s. 632.43.
AB420,16,11 10(c) The provisions of this section shall supersede all provisions of law
11inconsistent or in conflict therewith.
AB420,40 12Section 40. 623.06 (8m) of the statutes is created to read:
AB420,16,1913 623.06 (8m) For accident and health insurance contracts issued on or after the
14effective date of this subsection .... [LRB inserts date], but before the operative date
15of the valuation manual, the minimum standard of valuation is the standard adopted
16by the commissioner by rule. For accident and health insurance contracts issued on
17or after the operative date of the valuation manual, the standard prescribed in the
18valuation manual shall be the minimum standard of valuation required under sub.
19(1f) (b).
AB420,41 20Section 41. 623.06 (9) of the statutes is created to read:
AB420,16,2421 623.06 (9) (a) For policies and contracts issued on or after the operative date
22of the valuation manual, the standard prescribed in the valuation manual is the
23minimum standard of valuation required under sub. (1f) (b), except as provided in
24pars. (e) and (g).
AB420,17,2
1(b) The operative date of the valuation manual is January 1 of the first calendar
2year beginning after the first July 1 as of which all of the following have occurred:
AB420,17,53 1. The valuation manual has been adopted by the National Association of
4Insurance Commissioners by an affirmative vote of at least 42 members or
5three-fourths of the members voting, whichever is greater.
AB420,17,106 2. The standard valuation law, as amended by the National Association of
7Insurance Commissioners in 2009, or legislation including substantially similar
8terms and provisions, has been enacted by states representing more than 75 percent
9of the direct premiums written as reported in all of the following annual statements
10submitted for 2008:
AB420,17,1111 a. Life, accident, and health annual statements.
AB420,17,1212 b. Health annual statements.
AB420,17,1313 c. Fraternal annual statements.
AB420,17,1714 3. The standard valuation law, as amended by the National Association of
15Insurance Commissioners in 2009, or legislation including substantially similar
16terms and provisions, has been enacted by at least 42 of the following 55
17jurisdictions:
AB420,17,1818 a. The 50 states of the United States.
AB420,17,1919 b. American Samoa.
AB420,17,2020 c. The American Virgin Islands.
AB420,17,2121 d. The District of Columbia.
AB420,17,2222 e. Guam.
AB420,17,2323 f. Puerto Rico.
AB420,18,224 (c) Unless a change in the valuation manual specifies a later effective date,
25changes to the valuation manual shall be effective on the first January 1 after the

1date when such changes have been adopted by the National Association of Insurance
2Commissioners by an affirmative vote representing all of the following:
AB420,18,53 1. At least three-fourths of the members of the National Association of
4Insurance Commissioners voting, but not less than a majority of the total
5membership.
AB420,18,96 2. Members of the National Association of Insurance Commissioners
7representing the jurisdictions specified in par. (b) 3. with more than 75 percent of the
8direct premiums written as reported in all of the following annual statements most
9recently available before the vote under subd. 1.:
AB420,18,1010 a. Life, accident, and health annual statements.
AB420,18,1111 b. Health annual statements.
AB420,18,1212 c. Fraternal annual statements.
AB420,18,1313 (d) The valuation manual must specify all of the following:
AB420,18,1614 1. Minimum valuation standards for and definitions of the policies and
15contracts subject to sub. (1f) (b). The minimum valuation standards shall be all of
16the following:
AB420,18,1817 a. The commissioners reserve valuation method for life insurance contracts,
18other than annuity contracts, subject to sub. (1f) (b).
AB420,18,2019 b. The commissioners annuity reserve valuation method for annuity contracts
20subject to sub. (1f) (b).
AB420,18,2121 c. Minimum reserves for all other policies and contracts subject to sub. (1f) (b).
AB420,18,2422 2. Which policies or contracts, or types of policies or contracts, are subject to the
23requirements of a principle-based valuation in sub. (10) (a) and the minimum
24valuation standards consistent with those requirements.
AB420,19,2
13. For policies and contracts subject to a principle-based valuation under sub.
2(10), all of the following:
AB420,19,53 a. Requirements for the format of reports to the commissioner under sub. (10)
4(b) 3., which reports shall include information necessary to determine if the
5valuation is appropriate and in compliance with this section.
AB420,19,76 b. Requirements regarding the treatment of risks over which the insurance
7company does not have significant control or influence.
AB420,19,98 c. Procedures for corporate governance and oversight of the actuarial function
9and a process for appropriate waiver or modification of such procedures.
AB420,19,1210 4. The minimum valuation standard for policies not subject to a
11principle-based valuation under sub. (10), which minimum valuation standard shall
12be the greater of the following:
AB420,19,1413 a. Reserves that are consistent with the minimum standard of valuation before
14the operative date of the valuation manual.
AB420,19,1915 b. Reserves that quantify the benefits, guarantees, and funding associated with
16the contracts and their risks at a level of conservatism that reflects conditions that
17include unfavorable events that have a reasonable probability of occurring. This
18does not preclude, for policies with significant tail risk, reflecting in the reserve
19conditions appropriately adverse to quantify that tail risk.
AB420,19,2320 5. Other requirements, including those relating to reserve methods, models for
21measuring risk, generation of economic scenarios, assumptions, margins, use of
22insurance company experience, risk measurement, disclosure, certifications,
23reports, actuarial opinions and memoranda, transition rules, and internal controls.
AB420,20,3
16. The data and form of the data required under sub. (11) and to whom the data
2must be submitted. The valuation manual may specify other related requirements,
3including data analyses and reporting of analyses.
AB420,20,84 (e) In the absence of a specific valuation requirement, or if a specific valuation
5requirement in the valuation manual is not, in the opinion of the commissioner, in
6compliance with this section, the insurance company shall, with respect to such
7requirements, comply with minimum valuation standards prescribed by the
8commissioner by rule.
AB420,20,169 (f) The commissioner may engage a qualified actuary, at the expense of the
10insurance company, to perform an actuarial examination of the company and opine
11on the appropriateness of any reserve assumption or method used by the company,
12or to review and opine on a company's compliance with any requirement in this
13section. The commissioner may rely on the opinion, regarding provisions in this
14section, of a qualified actuary engaged by the commissioner of another state or
15district or territory of the United States. As used in this paragraph, the term
16"engage" includes both "employ" and "contract with."
AB420,20,2217 (g) The commissioner may require an insurance company to make any change
18to an assumption or method that, in the opinion of the commissioner, is necessary to
19comply with the requirements of the valuation manual or this section. An insurance
20company shall adjust the reserves as required by the commissioner. The
21commissioner may take any disciplinary action permitted under ss. 601.41 (4) and
22601.64.
AB420,20,2523 (h) 1. The commissioner may exempt specific product forms or product lines of
24a domestic company that is licensed and doing business only in Wisconsin from the
25requirements of this subsection if all of the following are satisfied:
AB420,21,2
1a. The commissioner has issued an exemption in writing to the company and
2has not subsequently revoked the exemption in writing.
AB420,21,53 b. The company computes reserves using assumptions and methods used
4before the operative date of the valuation manual in addition to any requirements
5established by the commissioner and promulgated by rule.
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