The Actuarial Opinion and Memorandum

The Actuarial Opinion

Insurance companies must file an actuarial opinion as part of their annual statutory financial statements. This opinion, issued by the Appointed Actuary, states whether the company's reserves and related items are computed in accordance with accepted actuarial standards, are based on reasonable assumptions, and meet the requirements of insurance law. The opinion can be qualified, unqualified, or adverse, depending on the actuary's assessment. For life insurers, the opinion addresses policy reserves and asset adequacy. For property/casualty insurers, it covers loss and loss adjustment expense reserves. The opinion is a public document filed with state regulators.

The Actuarial Memorandum

Supporting the opinion is the actuarial memorandum (or report), which documents the methods, assumptions, data, and analyses underlying the opinion. The memorandum is typically confidential and available only to regulators. It should be sufficiently detailed that another qualified actuary could evaluate the reasonableness of the work. For life insurance, the memorandum includes asset adequacy analysis results, describing the scenarios tested and the sufficiency of assets to support liabilities under each scenario. For P&C insurance, the memorandum presents the reserving analysis, including multiple methods, data reconciliations, and the reasoning behind the selected reserve level.