<html> <head> <title>Rule 20:06:30:04 Formula for determining reserve interest rate adjustment.</title> <META NAME="Keywords" Content="Administrative Rules 20:06:30:04"> <META NAME="Description" Content="Administrative Rules 20:06:30:04 Formula for determining reserve interest rate adjustment."> <meta http-equiv=Content-Type content="text/html; charset=windows-1252"> <meta name=Generator content="Microsoft Word 14 (filtered)"> <style> <!-- /* Font Definitions */ @font-face {font-family:Calibri; panose-1:2 15 5 2 2 2 4 3 2 4;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {margin-top:0in; margin-right:0in; margin-bottom:0in; margin-left:-.7pt; margin-bottom:.0001pt; text-align:justify; font-size:12.0pt; font-family:"Times New Roman","serif";} /* Page Definitions */ @page WordSection1 {size:8.5in 11.0in; margin:49.7pt 63.35pt 49.7pt 1.0in;} div.WordSection1 {page:WordSection1;} --> </style> </head> <body lang=EN-US> <div class=WordSection1> <p class=MsoNormal style='margin-left:0in'><a name="_GoBack"></a>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>20:06:30:04.&nbsp;&nbsp;Formula for determining reserve interest rate adjustment.</b> The associated formula for determining the reserve interest rate adjustment must reflect the ceding company's investment earnings and incorporate all realized and unrealized gains and losses reflected in the statutory statement. The following is an acceptable formula:</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Rate =&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2 (I + CG)&nbsp; </p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;X + Y - I - CG</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Where:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; is the net investment income in Exhibit 2, line 16, column 7, </p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; page 10 of the Annual Statement for the year ended December 31, 1994;</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;CG&nbsp;&nbsp;&nbsp;&nbsp; is capital gains less capital losses in Exhibit 4, line 10, column 4,</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; page 11 of the Annual Statement for the year ended December 31, 1994;</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; X&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; is the current year cash and invested assets, page 2, line 10A, </p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; column 1, plus investment income due and accrued, page 2, line 16, </p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; column 1, less borrowed money, page 3, line 22, column 1, all in</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the Annual Statement for the year ended December 31, 1994; and</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp; Y&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; is the same as X but for the prior year.</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Source:</b> 22 SDR 52, effective October 25, 1995; 42 SDR 52, effective October 13, 2015.</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>General Authority:</b> SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-14-17">58-14-17.</A></p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Law Implemented:</b> SDCL <A HREF="/statutes/DisplayStatute.aspx?Type=Statute&Statute=58-14-17">58-14-17.</A></p> <p class=MsoNormal style='margin-left:0in'>&nbsp;</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Reference:</b> <b>Life, Accident &amp; Health Annual Statement for the Year Ended December 31, 1994</b>, pages 2, 3, 10 and 11. National Association of Insurance Commissioners. Copies may be obtained from the South Dakota Division of Insurance, 124 South Euclid Avenue, 2<sup>nd</sup> Floor, Pierre, SD 57501-2000, (605) 773-3563. Cost: $.75 a page.</p> <p class=MsoNormal style='margin-left:0in'>&nbsp;</p> </div> </body> </html>