Alabama § 27-30-17 - Contracts - Annual Valuation - Benefits, Aid, or Services Other Than Cash.

§ 27-30-17. Contracts - Annual Valuation - Benefits, Aid, or Services Other Than Cash.

(a) The commissioner shall each year cause all outstanding contracts or policies of every mutual aid association to be carefully valued as of December 31 of the preceding year at 40 percent of the retail value of the benefits, aid, or services provided under the terms of its contracts or policies or at the average wholesale cost of the funeral supplies, benefits, aid, and services so provided for, whichever amount is the greater, as shown by the number of contracts or policies in force according to the books and records of the association, and shall at the time compute the net value of all such outstanding contracts or policies of every such association in the following manner:

(1) On all outstanding contracts or policies issued prior to September 16, 1953, the commissioner shall compute the net value thereof by the two following separate methods:

a. Method No. 1: On the basis of $1.50 for each $100.00 at risk; or

b. Method No. 2: On the basis of the “combined experience” or “actuaries table,” or “the American experience table” rate of mortality (Illinois standard of valuation), with interest at the rate of four percent per annum.

On each December 31, the net value of all such outstanding contracts or policies issued prior to September 16, 1953, shall be the net value as computed by said method No. 1, plus as many times one tenth of the difference, if any there be, between the net value as computed by method No. 1 and the net value as computed by said method No. 2, as the number of full years elapsed since September 16, 1953; and said net value on each December 31 shall continue to be so computed until such time as said net value so computed shall be equal to the net value on such contracts or policies as computed exclusively by method No. 2, after which time the net value of all such outstanding contracts or policies shall be the net value as computed by method No. 2, exclusively; and

(2) On all outstanding contracts or policies issued on and after September 16, 1953, the commissioner shall compute the net value thereof on the basis set out in the method No. 2 in subdivision (1) of this subsection, and the net value of all such outstanding contracts or policies shall on each December 31 thereafter be the net value as so computed.

(b) The net value of all the outstanding contracts or policies of every such association as of each December 31, ascertained and computed in accordance with the provisions of subsection (a) of this section, shall be deemed its liability on account of the benefits, aid, or services payable other than in cash of such outstanding contracts or policies, other than accrued claims, to provide for which; and for the protection of its contract or policyholders, each such association shall hold net assets of an amount equal to such net value, which reserve assets may consist of cash, and such investments as are authorized under Section 27-30-20.