AG-49a Transition Resource

AG 49a is expected to go into affect December 14, 2020 and most Insurance Companies are prepared to be ready prior to that date (the must comply by that date).  Attached is a Transition Resource that will help you understand some the transition guidelines from most of the Insurance Companies we offer.

Click HERE to Register for The Webinar on November 12, 2020.

What is AG 49a?

AG 49a is further ruling/regulation on the previously passed AG 49 rules.  The original rules set a standard for Maximum Illustrated Rate during accumulation as well as Maximum Loan Arbitrage that was allowable on an Illustration.

Important Changes from AG 49a

1. New Illustrations CANNOT show the effect of Multipliers on the Index Crediting
2. New Illustrations CANNOT show non-guaranteed Bonus strategies.
3. New Illustrations CANNOT show more that a 50 basis point arbitrage between Loan Rate and Interest Crediting

How will this Impact Me?

The products themselves are not changing so the features you enjoy will not be changing.  This does mean that your illustrations going forward will not show the same Accumulation and Income as they show today.  This will include in-force illustrations!

How Should I Respond?

We have always encouraged showing illustrations at a reasonable rate of return and for those who do not show full rate illustrations you will have less impact compared to your peers.  If you showed illustrations supporting high interest crediting, high multipliers, and/or high income distribution then you will not be able to reproduce those numbers beyond December 14, 2020.  We suggest, if you have not already, that you begin making your clients aware of the illustration regulations so you aren’t caught at renewal time trying to explain a significant change.  Again this will not affect the annual statement, but it will affect the in-force illustration.

Areas of Highest Risk

1. Premium Finance
2. Target Funded Solves
3. Minimum Funded Solves
4. Large Income producing solves
5. Solves utilizing performance to carry to a specific date or age.

We will continue to provide accurate quotes with the quoting tools available to us.  Since the transition is near, please pay attention to the attached Transition Guidelines to help guide your actions as you submit the case.