[lmi-commits] [lmi] master 3a06237 08/25: Deduplicate

[Greg Chicares]

branch: master
commit 3a062378bf9826d5a735be53b3ba6e3ba46337a7
Author: Gregory W. Chicares <gchicares@sbcglobal.net>
Commit: Gregory W. Chicares <gchicares@sbcglobal.net>

    Deduplicate
    
    Removed a large comment block that duplicated part of '7702.html'.
---
 interest_rates.cpp | 138 -----------------------------------------------------
 1 file changed, 138 deletions(-)

diff --git a/interest_rates.cpp b/interest_rates.cpp
index f8c5581..aea0421 100644
--- a/interest_rates.cpp
+++ b/interest_rates.cpp
@@ -802,144 +802,6 @@ void InterestRates::DynamicMlySepAcctRate
 
 void InterestRates::Initialize7702Rates()
 {
-
-// §7702 prescribes the interest basis for all §7702 and §7702A
-// calculations as the interest rate actually guaranteed in the
-// contract, or a statutory rate if greater. The statutory rate is
-// iglp() and igsp() for GLP and GSP, and iglp() for all §7702A
-// calculations except that the necessary premium for guideline
-// contracts is defined in terms of the guideline limit.
-
-// The §7702 net rate is determined in two steps. First, the
-// guaranteed interest rate is determined from the contract, and the
-// statutory rate is used instead if it is greater. This operation is
-// performed separately for all periods with different guaranteed
-// rates [DEFRA Blue Book, page 648]. For example, using the original
-// 1984 statutory rates (4% for GLP and 6% for GSP), if the guaranteed
-// rate is 4.5% for five years and 3.5% thereafter, then the GLP
-// interest rate is 4.5% for five years and 4.0% thereafter, while the
-// GSP rate is always 6.0%. For products such as pure variable UL that
-// offer no explicit guarantee, the statutory rate is used. For
-// variable products that offer a general account option, the
-// guaranteed gross rate must be no less than the general account
-// guaranteed rate.
-
-// Even short-term guarantees at issue must be reflected in the GSP,
-// the CVAT NSP, and the §7702A NSP, seven-pay premium, and DCV. They
-// may be ignored as de minimis in calculating the §7702 GLP [DEFRA
-// Blue Book, page 649], but only as long as they last no longer than
-// one year. Only guarantees that either last longer than one year or
-// are present on the issue date are taken into account: a guarantee
-// subsequently added for a future period lasting no longer than one
-// year is a dividend, not an adjustment event. Here, "issue" excludes
-// cases where the contract is merely deemed by statute to be reissued
-// [for example, by §7702A(c)(3)(A)(i)].
-
-// Second, any current asset based charges specified in the contract
-// are deducted if we wish. The interest rate remains what it is; the
-// net rate that results from subtracting asset-based charges is
-// merely a computational convenience that simplifies the formulas.
-// In fact, the full interest rate (never less than statutory) is
-// credited, and then asset based charges are subtracted from the
-// account value. Therefore, this adjustment affects only the §7702
-// guideline premiums and the §7702 DCV, because those quantities
-// reflect expenses. It must not be taken into account when
-// calculating the §7702 CVAT NSP or CVAT corridor factors, or the
-// §7702A NSP or seven-pay premium, because those quantities do not
-// reflect expenses.
-
-// Asset based charges can be deducted only if they are specified in
-// the contract itself: charges imposed by separate accounts cannot be
-// deducted unless they are specified in the life insurance contract
-// proper, since any charge not so specified is deemed to be zero
-// [§7702(c)(3)(D)(i)]. They also must not exceed the charges
-// reasonably expected to be actually imposed [§7702(c)(3)(B)(ii)].
-// If the schedule page announces a charge of "up to 100 basis points"
-// and we actually charge 50 bp and expect to keep charging that, then
-// we can use 50 bp; but if we ever charge less than 50 bp, an
-// adjustment event results.
-
-// It is critical that the result be rounded up if at all, and never
-// rounded down or truncated. The GPT is a bright-line test, and
-// truncation at, say, eight decimal places may have an effect of more
-// than a dollar per thousand [which would not be a "reasonable"
-// approximation: DEFRA Blue Book, page 653] at a later duration.
-// Special attention must be paid to the exact method the
-// administration system uses (e.g. beginning of period versus end of
-// period), to be sure that the resulting charge is what will actually
-// be imposed. A §7702(f)(8) waiver granted in one actual case that
-// was pennies over the limit cost tens of thousands of dollars in
-// filing and attorney's fees.
-
-// Thus, an account-value load that is deducted from the account value
-// at the beginning of each month, before interest is credited, may be
-// reflected in GPT calculations. We could calculate it as a monthly
-// load in order to follow the precise contract mechanics, but that
-// would require a significant modification of Eckley's formulas,
-// which do not contemplate a load on AV. Instead, we net the account
-// value load against the §7702 interest rate; as explained above,
-// this is a mere computational convenience that does not change the
-// actual interest rate.
-
-// On the other hand, it is not clear that a conventional mortality
-// and expense charge (M&E) can be reflected, because it is part of
-// the daily unit value calculation. The effect of this M&E on monthly
-// interest is a function of the ratio of successive unit values, and
-// the actual charge approaches zero when the unit values decrease
-// quickly. If it were clearly deducted at the beginning of each day,
-// before crediting interest, then we might take it into account by
-// adding daily commutation functions to the Formulas section. This
-// implementation ignores such charges.
-
-// Multiple guaranteed rates may result, for instance in the case of a
-// variable contract with a general account option and a distinct
-// guarantee for loaned funds. The highest such rate is used, because
-// that produces the most conservative guideline premium limits.
-
-// A higher rate guaranteed in a side letter must be reflected as
-// described above, as though it were written in the contract. For
-// products that guarantee a rate tied to an index, the §7702 interest
-// rates in the first guarantee period must be at least as high as the
-// rate determined by the index when the contract is issued. Such
-// guarantees must be taken into account even if they arise indirectly
-// or contingently, for instance in the case of an unloaned credited
-// rate that is guaranteed to be no less than 50 bp below an indexed
-// loan rate. No product we've implemented provides any such interest
-// guarantee except in connection with a variable loan rate. This
-// implementation therefore ignores initial guarantees.
-
-// For calculating mortality charges, most UL products discount the
-// NAAR for one month's interest at a rate specified in the contract.
-// §7702 and §7702A calculations must use the §7702 rate instead
-// whenever that is higher than the contractual rate. This affects all
-// premium rates and also the CVAT DCV and corridor factors. Whenever
-// this rate is converted to a monthly equivalent, the result must be
-// rounded up if at all. If the contract specifies no such discount
-// and none is actually applied, then a discount rate of zero may be
-// used.
-
-// The interest rate guaranteed by the contract is the greater at each
-// duration of the guaranteed loan credited rate or the rate otherwise
-// guaranteed. If a fixed rate is elected, then the guaranteed loan
-// credited rate, if not stated explicitly, is the fixed rate charged
-// on loans minus the guaranteed loan spread if any. If the contract
-// guarantees neither the loan credited rate nor the loan spread, then
-// a fixed loan rate has no §7702 or §7702A effect.
-
-// There is a concern if a variable loan rate (VLR) is elected.
-// Section 3.D of the VLR model regulation provides that "the maximum
-// rate...must be determined at regular intervals at least once every
-// twelve (12) months, but not more frequently than once in any
-// three-month period." There is no rate guarantee after the first
-// anniversary, because the VLR rate may change by that time. However,
-// since the maximum VLR is fixed for at least three months at issue,
-// there is a short-term guarantee that must be reflected as explained
-// above if the rate actually credited on loans is too high. The
-// complications that ensue may be avoided by actually crediting a
-// loan rate no higher than §7702 otherwise requires during the first
-// loan rate determination period, or simply by forbidding loans
-// during that period.
-
 // TODO ?? TAXATION !! Calculate both:
 //    std::vector<double> MlyGlpRate_;
 //    std::vector<double> MlyGspRate_;