7 | | Case ar 0-cv-09198-JVS -RNB Document 372-5 Filed 01/07/13 Page 2of3 Page ID

* ei Fre} = _ te mb a et rit al ees . i —e, it ft om nil-bn—k p fon a aay He an dw fo PO se EE, hee Foor A ete — : eas nd at pA eee oe ae a nt z me Lo :

LIFE INSURANCE COMPANY OF THE SOUTHWEST

. ® + 1

Life Insurance Company of the Southwest

INustration Actuary Certification To Accompany Policy Form Submissions

Regarding: | -8387(0606) ~ indexed Flexible premium Adjustable Benefit Life Insurance. a _ -8404(0606) ~ Additional Protection Benefit Rider. . $459(0606) — Balance Sheet Benefit Rider. .

|, Craig A. Smith, am a Vice President and the Chief Actuary of the National Life insurance Company (of — which the Life insurance Company of the. Southwest ls a ‘subsidiary).and am a member of the American. Academy of Actuaries In good standing. | was appointed on August 2, 2004 by the Board of Directors of

the Life Insurance Company of.the Southwest to be the illustration actuary for this plan of insurance for all” states. | meet the Academy requirements for making this certification and the requirements of applicable

-state regulations. —

_ When illustrating under the Declared Rate Crediting Option, scales used In Illustrating non-guaranteed elements on the policy forms described above meet the requirements of the Regulation. The disciplined current scales for these plans are in conformity with the Actuarial Standard of Practice for Compliance with the NAIC Life Insurance lilustration Model Regulation (ASOP 24) promulgated. by. the Actuarial

Standards Board.

When lilustrating under the Indexed Rate Crediting Option, the scales used in illustrating non-guaranteed elements for the policy forms described above (including state specific variations and applicable riders) are identical to those used when illustrating under the Declared Rate Crediting Option except for. the interest crediting rate. The interest crediting rate used in the illustration is based on a geometric average that would have resulted from application of a given participation rate and cap rate to historical S&P 500

returns...

The Regulation governs illustrations under the Indexed Rate Crediting Option (by not including these ‘illustrations among those specifically excluded). To the extent It Is applicable, ASOP 24. provides guidance to the illustration Actuary as to certification of compliance with the Life Insurance illustrations Model Regulation. However, the Regulatlon and ASOP 24 were developed before Equity Indexed Universal Life products emerged in:the marketplace. It is not possible to provide meaningful illustrations ‘of such products that are fully In accordance with the Regulation. With regard to the ASOP, where a question arises with regard {to the applicabllity.of a standard of practice, or where no applicable standard exists, an actuary Is directed to use professional judgment, taking ‘into account generally accepted — actuarlal principles, and practices. ‘Consistent with this charge, It is the opinion of the undersigned that, when provided in conjunction with ‘appropriate disclosure, these Hustrations comply with the splrit and intent of the.stated goals of the Regulation to ensure that illustrations do not mislead purchasers of life insurance and to make illustrations more understandable. a it

LIFE ADMINISTRATIVE OFFICE: ONE NATIONAL LIFE DRIVE * MONTPELIER, VERMONT 05604-0001 = . | Dimnne Memes SAA Meee Kaan Faas Plat 2 ac Tevac MROATWAAdt DOI 00001 5

sae ose We i mt ti me *

aed

Jn making this

Non-guaranteed elements illustrated for new policies are consistent with those illustrated for similar in — force policies.

lilustrated non-guaranteed elements for new and in force policies subject to this regulation are consistent with the non-guaranteed elements amounts actually credited or charged to the same or similar forms. | - a oo _ ® ¢ The expenses used in the calculation of the disciplined current scale for all policy forms subject to the lustration regulation were fully allocated. _

methods, and such tests of actuarial calculations as | considered necessary.

Date jolie (2006 :

- Craig A. Smith, FSA, MAAA

illustration Actuary for Life Insurance Company of the Southwest

certification, | have reviewed expense allocations, actuarial assumptions and actuarial

Case 2:10-cv-09198-JVS -RNB Document 372-5 Filed 01/07/13 Page 3of3 Page ID wi ee ee ee ee ee ee EEE FG ne re ee oe ~~ )

Reena Re ee Me ne

DO! 000016

. ; | ; ¥ - . 7 — ae meaddatiataesanatiamanaatietaaanneee eae TR Ten Te Te Ten Tae Os nn OORT ETOYS . Ar er OAL AHHH AAS Pr nee LLLASLALmLnLngyetnge ree : rere tren aerate eget refer eRrsmmagatnuatten i saam rye prsadire nuit Rhiniynstnpetinrestry weeyRramnt Hitter rr ae Wt dtr