By: Hancock, Eltife, Menéndez	S.B. No. 1654
	(In the Senate - Filed March 13, 2015; March 23, 2015, read
	first time and referred to Committee on Business and Commerce;
	April 9, 2015, reported adversely, with favorable Committee
	Substitute by the following vote:  Yeas 9, Nays 0; April 9, 2015,
	sent to printer.)
Click here to see the committee vote
	COMMITTEE SUBSTITUTE FOR S.B. No. 1654	By:  Creighton

	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.
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