ASOP 3
(CONTINUING CARE RETIREMENT COMMUNITIES AND AT HOME PROGRAMS)
SECTION 4
(COMMUNICATIONS AND DISCLOSURES)

Section 4
Communications and Disclosures

ASOP 3 | §4.1 | REQUIRED DISCLOSURES IN AN ACTUARIAL REPORT

When issuing an actuarial report to which this standard applies, the actuary should refer to ASOP Nos. 23 and 41. In addition, the actuary should disclose the following in such actuarial reports, if applicable:

a. historical and current financial data used to produce the actuarial balance sheet, cohort pricing analysis, and cash flow projections, in accordance with sections 3.3, 3.4, and 3.5;

b. summary of historical contractual resident or member data and population statistics for contractual residents or members as of the valuation date, in accordance with sections 3.3, 3.4, and 3.5;

c. assumptions and methodology used in performing the population projections, in accordance with sections 3.3, 3.4, and 3.5;

d. assumed expense levels consistent with the targeted number of contractual residents or members when a material change in the population is expected, in accordance with section 3.4;

e. assumptions and methodology used to estimate each actuarial present value, in accordance with section 3.6;

f. assumptions and methodology used to value and depreciate the physical property, in accordance with sections 3.6.3 and 3.6.4;

g. mortality, morbidity, withdrawal, and occupancy rate assumptions (including trend assumptions, if any), and methodology used in selecting such assumptions, in accordance with sections 3.7.1;

h. trend rates for revenues and expenses, and the relationship between the two, in accordance with section 3.7.2;

i. investment rate and discount rate, in accordance with section 3.7.3;

j. assumptions and methodology used to allocate general revenue and expenses, in accordance with section 3.7.4;

k. any known significant circumstances that may affect the organization’s ability to remain a going concern, in accordance with section 3.7.5;

l. assumptions and methodology used for any significant margin for uncertainty, or a similar adjustment or provision, included in the actuarial valuation, including any significant assumptions affecting the valuation regarding surplus available to provide for adverse fluctuations, in accordance with section 3.7.6;

m. any material changes in assumptions or methods from the most recent prior analysis, in accordance with section 3.7.6;

n. the results of any sensitivity tests performed, in accordance with section 3.7.6; and

o. any assistance assumed to be derived from dedicated benevolence funds or financial assistance subsidies, in accordance with section 3.8.

ASOP 3 | §4.2 | ASSIGNMENTS INVOLVING AN OPINION ON SATISFACTORY ACTUARIAL BALANCE

The actuarial report should disclose the actuarial balance sheet, the cohort pricing analysis, and the cash and investment balances at the beginning and end of each projection year, which were prepared to test the three conditions, in accordance with sections 3.3, 3.4, and 3.5 and state whether or not each condition is met.

If one or more of the three conditions is not met, the actuary should disclose the implications of the deficiency and, if known, a description of management’s plans to address the deficiency for each unmet condition.

If the actuary is unable to form the needed opinion regarding whether the organization is in satisfactory actuarial balance, or if the opinion is adverse (due to failing one or more of the conditions) or otherwise qualified, then the actuary should disclose why the actuary is unable to form an unqualified favorable opinion.

ASOP 3 | §4.3 | ADDITIONAL DISCLOSURES IN AN ACTUARIAL REPORT

The actuary also should include disclosures in accordance with ASOP No. 41 in an actuarial report for the following circumstances:

a. if any material assumption or method was prescribed by applicable law;

b. if the actuary states reliance on other sources and thereby disclaims responsibility for any material assumption or method selected by a party other than the actuary; and

c. if in the actuary’s professional judgment, the actuary has deviated materially from the guidance of this ASOP.