Specifications include, but are not limited to: 2.1.1 For each application reviewed, the Contractor is required to prepare a review letter which discusses or comments on: • The reasonableness of the methodology and conclusion of the actuarial work. • The proposed capital and surplus in relation to coverage, retention and premium volume. • Projected premiums, including considerations applicable to market, industry and rating. • The structure of the overall plan focusing on, but not limited to: o Ownership and control. o Reliance on financial strength of parent and parental financial strengthening o Relevant aspects of the proposed insurance program (i.e.: validity for type, form, risk transfer). o Flow of funds, including investment policy/strategy. • The adequacy of reinsurance, or the amount and type of reinsurance needed. (Comments on this section should reflect issues raised in other areas.) • The pro-forma financial statements illustrating both the expected and one or more adverse case scenarios and the reasonableness of assumptions in relation to other areas. • Any prospective risks identified related to your understanding of the proposed business plan, funding and other information reviewed. • Recommendations for approval or disapproval, or an indication of areas that require further detail or discussion. Discussions should be held directly with the applicant, as necessary, to resolve any issues prior to issuing the final recommendation and letter. The applicant should be given an opportunity to amend the application accordingly. Contractor may be requested to give the Department confidence levels or other comments regarding the application. 2.1.2. In addition to the foregoing, for each application relating to a special purpose financial insurance company, the Contractor is required to include comments in the Contractor's review letter on: • The structure of any special purpose financial insurance company securitization or the issuance of any special purpose financial insurance company securities. • The source and form of the special purpose financial insurance company's capital and surplus. • The proposed investment policy of the special purpose financial insurance company It is expected that each review of an application submitted by a special purpose financial insurance company shall take no more than 30 days. It is expected that each review of an application submitted by any other form of captive shall take no more than 15 days. 2.1.3 For each actuarial report and statement of actuarial opinion reviewed relating to an examination, the Contractor is required to prepare a review report. Specific timelines and due date of the review report will be worked out with examination team, but in general it is expected that each review of actuarial reports shall take no more than thirty (30) days. The review report will discuss or comment on the following: • Certain data items and issues that should be addressed by the examination staff during the examination. • The reasonableness of the methodology, assumptions, and conclusion of the actuarial work (including both economic and statutory reserves for SPFIs). • Whether or not the statement of actuarial opinion appears to be in compliance with the Standards of Practice of the American Academy of Actuaries, the Casualty Actuarial Society, or the Society of Actuaries, as applicable, and such additional standards as the Commissioner deems appropriate. • Identification of any prospective risks related to your understanding of the Company and information reviewed.
