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Product Fund Identifiers and Associating Underlying Funds

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					Recommended Industry Standard




Product Fund Identifiers
    and Associating
   Underlying Funds




        February 1, 2005
              V.2
                                                  TABLE OF CONTENTS

Working Group Participants........................................................................................................1

Executive Summary ....................................................................................................................2

Background.................................................................................................................................3

Business Needs ...........................................................................................................................4

Industry Standard Scope..............................................................................................................4

Industry Standard Criteria ...........................................................................................................5

Nomenclature..............................................................................................................................5

Industry Standard ........................................................................................................................9

Implementation Criteria ..............................................................................................................9

Implementation Impact Assessments.........................................................................................11

Appendix A...............................................................................................................................16

Appendix B...............................................................................................................................20

Appendix C...............................................................................................................................30




The following draft document is the work product of the NAVA Data Conformity Working
Group formed in August 2004. If you have comments on this draft or would like to participate
on the working group, please contact NAVA at (703) 707-8830 x. 15 or dtucker@navanet.org.
                                  WORKING GROUP PARTICIPANTS
                 Carol Albright, WG Co-chair   Allstate Financial
                 Larry Gilbert, WG Co-chair    Independent Financial Marketing Group, Inc.
                 Rick Heil                     ACORD
                 Val Moeller                   AEGON Insurance Group
                 Kimberly Hunter               AIG/SunAmerica/VALIC
                 Laila Beane                   Allstate Financial
                 Scott Haggerty                American Skandia, a Prudential Financial Co.
                 Jeremy Alexander              Beacon Research
                 Jim Ferrell                   Blue Frog Solutions
                 Brad Levine                   Blue Frog Solutions
                 Rob Marone                    Blue Frog Solutions
                 Joe Frutuoso                  CSC Financial Services Group
                 Randi Gordon                  Depository Trust & Clearing Corporation
                 Craig Gurien                  Depository Trust & Clearing Corporation
                 Jamie Taylor                  Depository Trust & Clearing Corporation
                 Lana Macumber                 Depository Trust & Clearing Corporation
                 Charles Welsh                 DST Systems, Inc.
                 Lisa Plotnick                 Financial Research Corporation
                 Robert Quan                   Financial Research Corporation
                 Ittai Kan                     Finetre Corporation
                 Dave Hunsinger                Finetre Corporation
                 Jennifer Yerly                Genworth Financial
                 Steve Kilbon                  Hartford Life
                 Tammy Oberst                  Hartford Life
                 Joann Scott                   Hartford Life
                 Pamela Howe                   ING U.S. Financial Services
                 Stephen Enoch                 Legg Mason
                 Mike Gonce                    Legg Mason
                 Francis Chung                 Lincoln Financial Group
                 Melissa Egnor                 Lincoln Financial Group
                 Damon Storms                  Lipper, a Reuters Company
                 Stephanie Doling              Lipper, a Reuters Company
                 Beth Sordillo Murphy          Manulife Financial
                 Carmel Cunningham             Merrill Lynch Insurance Group
                 Tracy Higgins                 Merrill Lynch Insurance Group
                 Stephen Lynch                 Merrill Lynch Insurance Group
                 Stan Huffman                  Morgan Keegan & Co.
                 James Boyle                   Morgan Stanley Investment Management
                 Michael Breen                 Morningstar, Inc.
                 Kristin Zerkle                Nationwide Financial
                 Jennifer Brigner              Nationwide Financial
                 Dara Ehrhardt                 Nationwide Financial
                 Deborah Tucker                NAVA
                 Tod Perry                     NewRiver
                 Frank Norton                  Pacific Life
                 Danielle Gordon               Pershing LLC
                 Stephen Terry                 Raymond James Financial/PCA
                 Angell Orio                   Ryan Beck & Co
                 Lisa Corvese                  Standard & Poor’s
                 Amy Shaw                      Standard & Poor’s
                 Andy Pettit                   Standard & Poor’s
                 Kevin Ng                      Strategic Insight
                 Jonathan LaRose               Sun Life Financial
                 Joe Procacini                 Sun Life Financial
                 Lydia Flecha                  Thomson BETA Systems
                 Ray Amani                     Thomson Financial
                 Gerry Murtagh                 Tillinghast
                 Ed Casey                      UBS Financial Services
                 Lynn Gadue                    VERTEX
                 Rich Lee                      Wachovia Securities
                 Jeffrey Zonis                 Wachovia Securities
                 Alec O'Connor                 Wells Fargo Investments
                 Jeanann F. Smith              Wells Fargo Investments
                 Lisa Clark                    WM Financial Services


Product Fund Identifier Industry Standard                                       NAVA Data Conformity Working Group
                                                         1
                                       EXECUTIVE SUMMARY

There are significant inconsistencies across the insurance industry in the implementation,
handling and identification of product funds within annuity products. These inconsistencies
impact the efficiency of electronic processing as well as cripple client suitability analysis for
these products; both pre-sale and post contract issue.

Electronic processing is hampered by inconsistent approaches to assigning and utilizing product
fund identifiers. When pre-sale identifiers differ from post contract identifiers for the same
product fund, electronic confirmation of proper contract set up and investment is not achievable.

The inability to associate these product fund identifiers to underlying funds further complicates
matters. Without the capability of clearly associating annuity product funds to underlying funds,
proper analysis of a clients overall portfolio becomes a very intensive manual effort. Without
the capability to make the association electronically, analytic tools exclude the annuity portion of
an overall portfolio from consideration.

Lastly, even the nomenclature used to address product funds has become inconsistent between
carriers, distribution channels, service providers and industry reporting entities.

This proposed industry standard addresses these inconsistencies and outlines the approach for
associating annuity product funds to underlying funds. As a foundation, this industry standard
builds from the suggested usage the industry moved toward in June 2000. Once the business
needs and scope items are discussed and nomenclature is clarified, the industry standard is
presented.

Impact on various facets of the industry has been summarized based on communications with
representatives from those areas. Impact and responsibilities of insurance carriers and multiple
distribution channels have also been addressed. Several specific implementation examples have
been provided for clarification as well as examples of migrating from a current state to the
industry standard.

Lastly, specific compliance levels are identified to indicate the degree in which a carrier adheres
to this industry standard. These compliance levels have very objective criteria and indicate the
thoroughness in addressing consistent assignment and utilization of product fund identifiers and
being able to associate each to an underlying fund.

Adoption of this industry standard will address the current inconsistencies surrounding annuity
product funds and provide the ability to associate them to underlying funds.




Product Fund Identifier Industry Standard                         NAVA Data Conformity Working Group
                                                  2
                                            BACKGROUND

In the earlier phases of true electronic processing of annuities, the need for electronic identifiers
for both annuity products and the investment options within those products was realized. For
consistency across the industry, insurance carriers migrated toward obtaining CUSIPs for their
products as a first step.

In June of 2000 an industry work group developed and distributed a suggested usage for product
fund identifiers. Referred to as the CUSIP 5+5 (discussed later in the Nomenclature section),
this de-facto “standard” allowed carriers to:

    a) Provide product fund identifiers for product funds available as investment options within
       a product. The distribution channels could then use these in order entry systems for
       submitting electronic orders to insurance carriers.
    b) Accept these product fund identifiers for processing electronic orders in a consistent
       fashion; and
    c) Allow the carriers to identify contract specific implementation pricing for product funds
       when passing positions back to the distribution channel.

The intent was also to allow the distribution channels to confirm contract investments by
comparing product fund identifiers submitted on electronic applications to the product fund
identifiers passed back on post-issue position files for contracts that were established.

The shortcomings of the de-facto standard however, were twofold. First, there were no
implementation rules or guidance provided. This resulted in multiple implementation schemes
and interpretations. One carrier may provide one identifier for a specific product fund regardless
of the type of contract it was implemented with. A second carrier may provide multiple
identifiers for a specific product fund depending on whether it was implemented with a qualified
contract or a non-qualified contract. There were more variations.

Secondly, there was no relationship defined to an actual underlying fund, if one existed. This
being the case, relating either front-end product fund identifiers (pre-issue) or back end product
fund identifiers (post-issue) to actual underlying funds for customer account evaluation was not
achievable.

The need to relate product funds to underlying funds has continued to grow. Pre-sale suitability
evaluations, product recommendations, confirming contract setup, post-sale tracking and
trending, as well as client servicing all dictate a need for this ability.

This industry standard addresses those shortcomings.




Product Fund Identifier Industry Standard                          NAVA Data Conformity Working Group
                                                  3
                                            BUSINESS NEEDS

The business needs are simple to state, less simple to implement. Succinctly put (and carefully
worded using the nomenclature discussed later) they are:

    •   Migrate to a consistent implementation for product fund identifiers.
    •   Integrate the capability to establish relationships between product funds and underlying
        funds.

Proper implementation would allow:

    •   Detailed pre-sale suitability analysis (product fund identifiers could be used to clearly
        identify applicable underlying funds which could then be further broken down and
        analyzed)

    •   Electronic confirmation of contract setup (sub account identifiers would have product
        funds identifiers explicitly embedded within)

    •   Tracking contract compliance with account / client investment objectives (sub account
        identifiers would have product funds identifiers explicitly embedded within and product
        fund identifiers could be used to clearly identify applicable underlying funds which could
        then be further broken down and analyzed)

    •   Tracking and trending contract specific performance (the sub account concept allows for
        this directly.)


                                   INDUSTRY STANDARD SCOPE

This recommended industry standard addresses the electronic identifiers for all product
investment options that are associated with Underlying Funds as well as those that are not
associated with Underlying Funds (Note: Terms used in this section are defined in the
nomenclature section).

For purposes of discussing scope, an investment option is either a Product Fund or a carrier
managed Investment “Model” or “Portfolio.” The identifier for each investment option is in
scope.

Product Funds may be internally or externally managed; fixed or variable in nature. The variable
Product Funds may be associated with externally managed Underlying Funds. The fixed Product
Funds may or may not. The identifier for each Product Fund is in scope. Identification of
associated Underlying Funds for applicable Product Funds (a means of cross reference) is in
scope.

Each Investment Model (sometimes referred to as a Portfolio) is controlled by the carrier and
may represent a “grouping of funds,” or it may actually be a “fund of funds.” In a “grouping of
funds” type of model, each fund is allocated individually on the contract, has its own prices, and

Product Fund Identifier Industry Standard                         NAVA Data Conformity Working Group
                                                  4
is reported separately on post-sale files and transactions. For this type of Investment Model,
there is no linkage between the new business identifier for the model and the post-issue funds
being reported. The identifier for this Investment Model is in scope (the Carrier Fund Identifier
would apply for identifying the Model) however the identification of all associated Underlying
Funds that may be involved with this Investment Model is not in scope (reported sub accounts
will not be explicitly tied to the Carrier Fund Identifier used for the Model).

If a model is a “fund of funds”, the model is treated as a single investment on the contract, has its
own pricing, and is reported as a single investment on post-sale files and transactions. For this
type of Investment Model there is a direct linkage between the new business identifier for the
model and the post issue investment being reported. A model that is a “fund of funds” is
registered as a single CUSIP and is managed as an independent fund. This type of Investment
Model is within the scope of this standard for pre- and post sale identifiers.


                                INDUSTRY STANDARD CRITERIA

In considering solutions, overall objectives or criteria were identified for an industry standard.
These are:

    •   Must consider what will work for distributors, carriers, vendors, fund managers and
        industry reporting entities (e.g. Morningstar, S&P, VARDS, etc.)
    •   Must apply to fixed and variable annuities and work equally well for life products.
    •   Must integrate with and be supported by existing industry standards
    •   Must consider impact to firms utilizing automated order entry and post-issue processing
        solutions and consider the impact on how products and product funds appear in such
        systems
    •   Must consider the impact on existing reporting mechanisms
    •   Must consider impact on retrofitting old data
    •   Must consider current de-facto standard implementations as a potential starting point for
        carriers
    •   Must include “rock solid” definitions and clear examples of usage

Agreeably, there needs to be commitment by all to implement a single solution.


                                            NOMENCLATURE

During the discovery phase of this effort, one aspect became very clear, very fast. Industry
terminology was a definite barrier to verbalizing a solution. Articulating a single industry
standard that would be consistently understood would not be possible unless the diverse
meanings of terms that seemed interchangeable was clarified.

This section attempts to do this by starting with the definitions of the original CUSIP 5+5
standard and relating them to terms used in this industry standard going forward.



Product Fund Identifier Industry Standard                         NAVA Data Conformity Working Group
                                                  5
As mentioned earlier, the insurance carriers first step in addressing electronic identifiers for
products and product funds was to migrate toward CUSIPs for their products. The next two
needs that were expressed were identifying investment funds within the products, and pricing
schemes that may apply to each of these funds.

The approach taken for identifying investment funds within a product was to utilize a 5-position
identifier in conjunction with the product CUSIP. There was no algorithm for how this 5-
position identifier was to be generated. It could be system generated; it could be numeric; it
could be alphanumeric; it could be a full 5 positions or it could be only one. Its usage was
determined by each insurance carrier independently based on the needs and practices of that
carrier and did not necessarily uniquely reference an underlying fund across all products for that
carrier. The only understanding was that the same identifier could not be used twice within the
same CUSIP. Although this left implementation open to interpretation, the use of this 5-position
identifier in conjunction with the CUSIP could be reliably used to determine which investment
option was being selected.

All by itself, that 5-position identifier is referred to herein as the Carrier Fund Identifier.

Next, to address the pricing and other variants of the investment, an additional 5-position
identifier was added. The intent from the beginning was that this second 5-position identifier
would be concatenated with BOTH the CUSIP and the Carrier Fund Identifier to indicate a
contract specific pricing scheme for a product fund (based on benefits and programs selected on
the contract). Again, there was no business standard or algorithm for how this 5-position
identifier was to be generated. It could be system generated; it could be numeric; it could be
alphanumeric; it could be a full 5 positions or it could be only one.

All by itself, this second 5-position identifier is referred to herein as the Carrier Pricing
Identifier.

Now let’s take these terms and tie them to terms that are a little more commonly used (and then
define those terms as well). From the CUSIP 5+5 standard, the product CUSIP identifies a
Product. At the next level, the product CUSIP plus the Carrier Fund Identifier will identify a
Product Fund. And at the last level, the product CUSIP plus the Carrier Fund Identifier plus the
Carrier Pricing Identifier will identify a contract specific Sub-Account. The missing link, the
second business need articulated, is the relationship to the Underlying Fund.

The following is a verbal definition of these terms.

Product – The registered annuity or life policy, identified by a 9-digit, product CUSIP.

Product Funds – the investment "buckets" available within a product as controlled by the
insurance carrier. These “buckets” include both fixed and variable investment vehicles and may
be internally and externally managed. In other words, Product Funds include Underlying Funds
(which are externally managed) and internally managed fixed and variable buckets.

{Note: For discussions herein, carrier controlled investment “Models” or portfolios are also
treated as a Product Fund. The insurance carrier controls make up of the investments in that
model or portfolio.}
Product Fund Identifier Industry Standard                           NAVA Data Conformity Working Group
                                                   6
Sub-Accounts – the policy (or contract) specific implementation of Product Funds. The sub
account level accommodates variations including, but not limited to pricing (such as product,
rider/benefit, durational mortality & expense charges or fee structures, dividend arrangements or
other variants to a product fund price), administrative and reporting requirements (such as
variations by qualified and non-qualified plans).

Underlying Funds – The registered fund (typically with the SEC) that is associated with the
Product Fund. These are for externally managed variable funds. This registered fund may be a
mutual fund that is purchasable “on the street” in which case the fund managers register the fund.
In the case where a carrier has established a sub advisor arrangement, the carrier may register the
fund. In either case, the Underlying Fund registration allows it to stand alone, uniquely
identifiable by registration and unadjusted for insurance charges.




Product Fund Identifier Industry Standard                       NAVA Data Conformity Working Group
                                                7
The following is a graphical representation of these terms that illustrates the data available at
each of the three phases of a contracts life cycle. It also indicates how the data at each phase
relates to Underlying Funds if applicable.

         “PRE-ISSUE”                            CONTRACT
                                                                    “POST-ISSUE”
                                                  ISSUE
         Product - CUSIP                                           Product - CUSIP
                                                  CARRIER
         Product Features Available             PROCESSING,        Product Features Selected

                                                 CONTRACT          Sub Accounts - CUSIP + 5 + 5
         Product Funds - CUSIP + 5                 ISSUE,          Investments selected with this
         Investment “line up” available with                       contract which now includes
         this product.                            PRICING,         pricing based on contract specific
                                                                   implementation
         Should relate to an Underlying             and
         Fund if applicable                                        Should always relate to Product
         (cross reference to CUSIP +5)         INVESTMENT to       Fund (CUSIP + 5) directly
                                                  Underlying
                                                   Fund(s)         Should relate to an Underlying
                                                                   Fund if applicable
                                                                   (cross reference to CUSIP +5)


                                               Underlying Fund
                                                  (CUSIP)



These terms can also be summarized in a mathematical layout as well:

Product = CUSIP

****
Product Funds = Investment “buckets” available within a Product
Carrier Fund Identifier = 5 position carrier assigned id for a Product Fund in a Product
Product Fund Identifier = Product + Carrier Fund Identifier
Product Fund Identifier = CUSIP + 5

****
Carrier Pricing Identifier = 5 position carrier assigned id for pricing
Sub Account Identifier = Product + Carrier Fund Identifier + Carrier Pricing Identifier
Sub Account Identifier = Product Fund Identifier + Carrier Pricing Identifier
Sub Account Identifier = CUSIP + 5 + 5

Required Cross Reference:
Product Fund Identifiers to Underlying Funds




Product Fund Identifier Industry Standard                                        NAVA Data Conformity Working Group
                                                               8
Lastly, these terms have been put into the following template for use in explaining how data
would be displayed in various scenarios. These templates will be used in Appendix A to
demonstrate compliance levels and in Appendix B to demonstrate business scenarios.


TEMPLATE            SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                             =>   Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund         Carrier Price
Components                            Identifier (5)       Identifier (+5)

Sample Data          12345K123              F1234              P1234                54321E321


                                        INDUSTRY STANDARD

This industry standard relies on supplementing the CUSIP 5+5 suggested usage for product fund
identification that was put in place in June of 2000.

The details of this industry standard are:

        •   Adhere to the CUSIP “5+5” format to build on current industry efforts.
        •   Clarify implementation of the CUSIP “5+5” format by providing distinct definitions
            of usage, expectations and requirements of each the components.
        •   Ensure front end (i.e. presale) CUSIP+5 exactly match the back end (post-issue)
            CUSIP+5 provided by the carrier.
        •   Supplement the CUSIP “5+5” standard by including a cross-reference requirement at
            the product fund level to the associated underlying fund CUSIP number (if
            applicable).

Implementing each of these steps will accommodate the known business needs previously
identified. This industry standard should be implemented for all products that must support new
or additional investment money, support electronic transfers between sub accounts, or support
reporting of contract values.


                                  IMPLEMENTATION CRITERIA

Implementation criteria falls into one of two categories: business rules or formatting rules.

Business Rules

1. Product CUSIP plus a 5-character carrier fund identifier (CUSIP+5) uniquely identifies a
Product Fund within a product independent of any contract pricing considerations.

Product Fund Identifier Industry Standard                                NAVA Data Conformity Working Group
                                                       9
2. The CUSIP+5 is cross-referenced to an underlying fund as applicable (again, independent of
any contract specific pricing)

3. There should not be separate Product Fund Identifiers based on qualification types. Any
pricing differences due to qualification types would be addressed at the CUSIP 5+5 level (Carrier
Pricing Identifier)

4. All pricing issues are addressed at the CUSIP 5+5 level

5. Although the industry as a whole will not be starting from this point, the carrier fund identifier
should be unique across products. Once the industry has migrated to this point, the carrier fund
identifier will be directly related to an underlying fund as applicable. {NOTE: At this point,
carrier applications and marketing material could be addressed for consistency in presenting
carrier fund identifiers to the general public.}


Formatting Rules

Each component is addressed separately.

The CUSIP bureau controls the format for all CUSIP numbers. A CUSIP is a 9 position value
such that an annuity product named “Fictional Annuity Product” may have a CUSIP of
008148884.

The Carrier Fund Identifier is 5 positions. Firms that have Carrier Fund Identifiers less than 5
bytes long should left justify their identifier and space fill to the fifth position. Firms that wish to
expand their Carrier Fund Identifier to 5 bytes are responsible for communicating their fund
codes to each of their trading partners prior to implementing these fund codes. Firms should not
right justify the fund code within this segment and pad it with leading spaces.

For example, if the Fictional Growth Fund has a Carrier Fund Identifier of 00042 it would be
presented as such. If instead the Fictional Growth Fund has a Carrier Fund Identifier of 42, the
Identifier should be passed left justified, and have trailing spaces. In this case, the identifier
would be represented as 42bbb (where ‘b’ = SPACE).

(Note: Right justifying the identifier or utilizing leading spaces, such as “bbb42”, is not
acceptable. )

The Carrier Price Identifier is 5 positions. Again, this identifier should be left justified and space
filled. Some acceptable examples of relaying Carrier Price Identifiers would be 00001 or 1bbbb
or 01bbb (where ‘b’ = SPACE).

(Note: Insurance carriers that do not alter pricing based on options selected do not need to pass
Carrier Price Identifiers.).




Product Fund Identifier Industry Standard                           NAVA Data Conformity Working Group
                                                  10
                         IMPLEMENTATION IMPACT ASSESSMENTS

Carrier Impact and Responsibilities

The impact on and responsibilities of the insurance carriers to migrate toward this industry
standard was assessed by carriers within the work group and tabulated from three different
perspectives.

First, insurance carriers going through DTCC IPS would have the following items to address:

    •   Determine if existing Carrier Fund Identifiers and Carrier Price Identifiers follow
        industry standards.
    •   Perform analysis to map internally assigned fund identifiers to Carrier Fund Identifier.
    •   Cross-reference all Carrier Fund Identifiers to the associated Underlying Fund CUSIP.
        Exceptions include funds that do not have Underlying Funds such as fixed buckets.
        Carriers should already be using the Underlying Fund CUSIP assigned by Fund Manager
        for purposes of price notifications and trading.
    •   Build tables and processing to store and maintain the relationship between Internal Fund
        Identifiers, Carrier Fund Identifiers and Underlying Fund CUSIPS. This table will be
        used to populate the Sub Account Identifier and Underlying Fund CUSIP on outgoing
        transmissions.
    •   Modify existing B2B programs to pass compliant Sub Account Identifiers and
        Underlying Funds on Positions, Pricing and Financial Activity Reporting files. Carriers
        that vary commission payments based on the Sub Account will also need to modify the
        DTCC Commission file.
    •   Notify trading partners of any changes to existing Carrier Fund Identifiers prior to
        implementation.

Second, insurance carriers NOT going through DTCC but using proprietary feeds for values
would have the following items to address:

    •   Wherever possible carriers should use the same methodology to pass fund information
        regardless of the target format.
    •   Carriers should approach non-DTCC trading partners regarding utilization of the industry
        standard and implement wherever possible.

Lastly, insurance carriers using product profile have the following items to address:

    •   Existing profiles should be updated to include the new methodology for Product Fund
        Identifiers and the relationships to Underlying Funds
    •   For XML format PPfA this would mean altering implementation guides to accommodate
        this industry standard.
    •   For the fixed format product profile this would mean including the appropriate
        Underlying Fund CUSIP on the fund record to accommodate this standard.




Product Fund Identifier Industry Standard                       NAVA Data Conformity Working Group
                                                11
Distribution Channel Impact and Responsibilities

The impact on and responsibilities of the distribution channels to migrate toward this industry
standard was assessed by distributors within the work group and tabulated from various
perspectives.

Distributors should ensure that they would be able to capture and store the Underlying Fund
CUSIP in their current fund tables. Each Distributor will need to assess the impact on current
processes and systems and determine the best means to harvest, store and utilize the Product
Fund Identifiers and associated Underlying Funds.

For a distribution channel going through DTCC for contract values (POV), harvesting and
storing the relationship to Underlying Funds may be as straight forward as adding another data
field in a table and altering their POV processing to populate the field from the inbound feeds.

For a distribution channel NOT going through DTCC but using proprietary feeds for values,
alterations to file layouts must be agreed upon before data structures or code changes can be
pursued.

For a distribution channel using either Product Profile layout, again, harvesting and storing the
relationship to Underlying Funds may be as straight forward as adding another data field in a
table and altering their Product Profile processing to populate the field from the inbound feeds.

For distribution channels using third party Order Entry Systems, or using internally developed
Order Entry Systems, analysis is required to determine the best approach for utilizing the data
provided. With the implementation of this standard there will be sufficient data passed to
electronically confirm contract set up as well as electronically confirm the proper execution of
sub account transfers.

For all distribution channels a review of how to utilize the cross-referenced Underlying Fund
data to supplement current suitability reviews in a pre-sale mode should be conducted. In
addition, the means to utilize this same information to track or trend investments in a post-sale
mode should be explored.


Service Organizations Impact and Responsibilities

ACORD
The Product Fund Identifier requirements fit easily into the existing structure of the ACORD
model. One addition is likely required to support the Carrier Pricing Identifier (valuation base
series is being considered). The ACORD Annuity Working Group (which is also sponsored by
NAVA) will work with the ACORD community to determine if a change is necessary, and, if so,
ensure this change is formed, submitted, well-validated in the ACORD community, and included
in the April, 2005 voting for the Spring cycle release.

A preliminary assessment of impact on the ACORD model is included in Appendix C.


Product Fund Identifier Industry Standard                        NAVA Data Conformity Working Group
                                                12
DTCC
DTCC has agreed to add a mutual fund CUSIP field to the underlying fund records of all
applicable products to support this initiative. The field will be added as part of the 2005 mid-
year enhancement release scheduled for production on June 3, 2005. A test period will of two to
three weeks will precede the production implementation.

The following IPS products were identified:
   • POV - Positions and Values
   • FAR - Financial Activity Reporting
   • COM - Commission Settlement
   • APP/SUB - Initial Application and Subsequent Premiums - may not be needed - will be
       decided on Dec 7 IPS Advisory Group call. AAP - Annuity Asset Pricing


Finetre
Finetre receives PPfAs from carriers. These PPfAs generate order-entry wizards on the
AnnuityNet platform. The reps or their assistants enter applications or subsequent premium
transactions through AnnuityNet and an electronic application in DTCC APP/SUB format is
generated and sent to the carrier either via the DTCC or directly.

Finetre follows standard usage and concatenates the annuity Product CUSIP
(PolicyProduct.CUSIP) and the Carrier Fund Identifier (InvestProduct.ProductCode) for use in
the appropriate Fund Code fields of the DTCC APP/SUB. So, Finetre already supports the
proposed standardized code usage.

Finetre also receives position information via the DTCC POV. The fund information received in
the POV is displayed, but the fund codes are not currently used.


FRC
FRC agrees that a universal Product Fund Identifier would be beneficial to the annuity industry
as a whole. It is our belief that this initiative will greatly automate and streamline the delivery
and receipt of reported data. FRC's systems will be able to accommodate any changes that take
place as long as they are initially cross-referenced to our existing identifiers.


Pershing
Pershing utilizes the product codes and underlying fund identifiers throughout our annuity
processing system to post balance information on-line and on the monthly statement, calculate
performance, order entry and pricing. Currently, Pershing’s system is set up to accommodate the
proposal for standardizing code usage.

Annuity information is available electronically for our Introducing Broker Dealers to download.
Modifications may have to be made to these files, which require at least 90 days notification to
our customers before implementation.



Product Fund Identifier Industry Standard                         NAVA Data Conformity Working Group
                                                 13
Additionally prior to the proposed code standardization, Pershing made programming changes to
accept annuity data from Insurance Companies not utilizing the proposed formats. Therefore,
Pershing will need to back out these changes once the Insurance Companies can send the
information via the standard. Scheduling will be dependent on the Insurance Companies and
Pershing, but will probably take no more than 3 months to complete.


Reporting Organizations Impact and Responsibilities

Lipper
The carrier cross-reference for product funds could be used in sending daily, monthly, and
quarterly performance data to Lipper. The first transmission sent would need to include a cross-
reference to the old identifiers that were previously sent to Lipper along with the new
corresponding cross-reference identifiers, product name, product fund names, and sub account
names (see nomenclature).

As these identifiers are added to our database, clients could then request to receive these industry
standard cross-reference identifiers as they are implemented in various Lipper feeds and products
where file size / field size constraints aren’t an issue.

Once the industry standard cross-reference is completely defined, implementation within Lipper
could be in the timeframe of two to three months for receipt of performance data from carriers.
This would include implementation in some of the feeds and products where size constraints
aren’t an issue for Lipper or clients.


Morningstar
The carrier cross-reference for product funds to underlying funds would be utilized throughout
Morningstar's entire system. The one-time mapping of existing identifiers to the new cross-
reference would enable Morningstar to pass the new industry standard identifiers to all its clients,
replacing or supplementing the proprietary Morningstar identifiers currently in use. This could
be done for all carriers that have achieved compliance level 2 as described in the industry
standard. Morningstar would begin incrementally integrating the standard cross-reference
identifiers as soon as they are available.


Standard & Poor’s
Standard & Poor's very much support the aims of standardizing Product Fund Identifiers, which
offers great scope for efficiency & data consistency amongst all industry participants, & which is
consistent with our work with other organizations around the world, particularly regarding
CUSIP's & ISIN's.

Specifically they will help automate daily price and monthly total net asset supply from Product
Providers into the S&P Variable Annuity/Life database. We would recommend that the initial
transmission of this data include the Product CUSIP + Carrier Fund Identifier (Product Funds) +
Carrier Price Identifier (Sub-Account Pricing scheme) + Underlying or Mutual Fund CUSIP,
along with all relevant names beginning at the company level, down to the underlying fund level.

Product Fund Identifier Industry Standard                        NAVA Data Conformity Working Group
                                                14
The Product Fund Identifiers will also be added to our product range, including both raw data
feeds and analytic software applications. This will create a unique linkage so that our clients can
electronically identify the funds of interest, rather than the current manual process.

We currently have over 1,265 policies on our database and 41,000 sub-accounts & initial
estimate's are that it would take 3 months to effect & populate the necessary database changes.
Finally, in view of S&P's long-standing role in operating the CUSIP Service Bureau for the
American Bankers Association we would be very pleased to discuss ways in which we may
assist this project, for example with the issue & maintenance of identifiers, or with promoting &
gaining market acceptance & use of the identifiers.


Tillinghast
Tillinghast would utilize the carrier cross-reference for product funds to underlying funds. An
initial listing of existing identifiers to the new cross-reference would enable Tillinghast to utilize
the new industry standard identifiers going forward. This could be done for all carriers that have
achieved compliance level 2 as described in the industry standard. Tillinghast would begin
integrating the standard cross-reference identifiers for all level 2 compliant carriers as soon as
they are available.


VARDS
Before issuers can submit their monthly AUVs and quarterly Assets in the new CUSIP+5+5
format, the issuer will need to identify the new codes with the contract, fund and pricing level.
VARDS will need to make sure that the pricing level reported using the new codes is consistent
with the current reporting.

Initially VARDS will set up a translation table to convert the new codes into the VARDS ticker
symbols. Eventually, the new codes will be replaced in the VARDS system when the symbol
field is expanded to handle the 19-character code.

Currently, VARDS relays their codes to the issuers as new funds get added to the VARDS
database. After this format is adopted, VARDS will need to receive the new codes from the
issuers before a subaccount can be added to the database. It will be imperative that issuers
adopting this format supply these codes in a timely manner. Also, when codes change due to
mergers or name changes, the Issuers will need to report the new codes for existing funds so they
can be changed in the VARDS system. Neither AUVs nor Assets can be processed for codes not
listed in the VARDS database.




Product Fund Identifier Industry Standard                          NAVA Data Conformity Working Group
                                                  15
                                               APPENDIX A
                                             Compliance Levels

The degree in which a carrier complies with this standard directly impacts the type of electronic
processing that a business partner (distributor or distribution channel) can expect to successfully
accomplish. As an indicator for both the distribution channels, vendors, reporting entities and
the carriers alike, four levels of compliance were identified.

The fourth level is actually a level of no compliance. At this level, a distributor cannot rely on
carrier data being consistent on product funds between any two separate avenues of obtaining
that data (for example, POV and Product Profile identifiers may not match). Neither reporting
entities nor distribution channels can obtain an accurate association between product fund
identifiers and Underlying Funds electronically.

Level 4 (non compliance)
Level 4 compliance (non compliance) may be characterized by any of the following:
   1. Pre-issue Carrier Fund Identifiers do not uniquely identify an investment option within a
       product (in other words, two different identifiers may actually indicate the same
       investment option)
   2. Pre-issue Carrier Fund Identifiers are used for order processing however Sub Account
       Identifiers are in no way associated with Carrier Fund Identifiers ( in other words, a
       product fund may be identified by “123” for order processing but when the contract
       values are sent out, identifiers that can not be tied back to the product fund are used, such
       as “X23A” in this case.) This is the “front-end-doesn’t-match-the-back-end” issue.
   3. The pre-issue identifiers cannot be associated with an Underlying Fund where applicable.
   4. The post-issue identifiers cannot be associated with an Underlying Fund where
       applicable.
   5. Any of the Carrier Fund Identifiers are greater than 5 characters.
   6. Any scenario that results in not achieving level 1,2 or 3 places an entity at level 4

Level 4 Example - Multiple Carrier Fund Identifiers being used within a single product (non
compliant)

CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F1234 = “AIM GROWTH (Qualified)”
Carrier Fund Identifier (Ex. 2) = F2345 = “AIM GROWTH (Non-Qualified)”

                    SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                        =>    Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1 (Q)            12345K123              F1234         P1234                  54321E321
Ex. 2 (NQ)           12345K123              F2345         P1234                  54321E321

Product Fund Identifier Industry Standard                             NAVA Data Conformity Working Group
                                                     16
In this example the carrier is using different carrier fund identifiers within a single product to
differentiate between the product fund being used in a qualified contract (Ex. 1) versus the same
product fund being used in a non-qualified contract (Ex. 2). Both carrier fund identifiers are
associated with a single Underlying Fund (in this case, the “AIM GROWTH” fund). This is a
non-compliant implementation resulting in duplication of efforts in providing product fund data
on product profiles as well as a point of confusion for order entry systems that desire a unique set
of product funds for a specified product.


Level 3 (distribution sees electronic consistency)
The third level is the lowest level of compliance but realizes two significant points. First, this
level includes the cross reference to Underlying Funds, as applicable. Secondly, at this level the
CUSIP (5+5) is implemented and a distributor (or distribution channel) can rely on Product Fund
Identifiers being consistent between any two separate avenues of obtaining that data (for
example, POV and Product Profile identifiers will always match).

Level 3 compliance indicates that Product Fund Identifiers have been implemented correctly for
electronic business and all distribution channels see consistency between the “front end” and the
“back end”. (Note: it does not indicate the carrier is internally consistent – that’s the next level.)

Level 3 compliance may be characterized by the following:
   1. Product Fund Identifiers (CUSIP + 5) relate directly to Underlying Funds
   2. Product Fund Identifiers are presented by product (product CUSIP) on product profile
       files to distribution channels
   3. Product Fund Identifiers are utilized for electronic order processing and contract set up
       by the carrier
   4. Product Fund Identifiers are contained in the Sub Account Identifiers that are utilized for
       reporting contract positions and values post contract set up.
   5. Pre-issue Product Fund Identifiers exactly match post-issue Product Fund Identifiers for a
       given fund with a product
   6. All contract specific pricing differences are accommodated in the Sub Account Identifiers
   7. Sub Account Identifiers (which uniquely identify pricing implementations based on
       contract selections) are utilized for reporting contract positions and values post contract
       set up.

Level 3 Example - Multiple Carrier Fund Ids being used across products

Product 1
CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F1234 = “AIM GROWTH” => 54321E321
Carrier Fund Identifier (Ex. 2) = F0123 = “TRP INCOME” => 43210E123

Product 2
CUSIP = 12345K321 = “REAL DEAL VA”
Carrier Fund Identifier (Ex. 3) = F2345 = “AIM GROWTH” => 54321E321
Carrier Fund Identifier (Ex. 4) = F0123 = “TRP INTL GROWTH” => 43210E321

Product Fund Identifier Industry Standard                          NAVA Data Conformity Working Group
                                                  17
                    SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                        =>    Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  54321E321
Ex. 2                12345K123              F0123         P1234                  43210E123
Ex. 3                12345K321              F2345         P4321                  54321E321
Ex. 4                12345K321              F0123         P4321                  43210E321

This implementation meets the intent of having a unique identifier within a product. The carrier
fund identifier in conjunction with the product CUSIP can be uniquely associated with an
underlying fund. In this implementation (level 3) however, it does take both identifiers to
establish a unique association with an underlying fund. The data row marked “Ex. 2” and the
one marked “Ex. 4” shows that the carrier fund identifier alone (F0123) is not unique as it points
to two separate underlying funds. In addition, the data row marked “Ex. 1” and “Ex. 4”
demonstrates that different carrier fund identifiers (F1234 and F2345 in this case) may point to
the same underlying fund.

In combination however, the CUSIP in conjunction with the Carrier Fund Identifier (hence, the
Product Fund Identifier) does establish a unique association with an underlying fund.


Level 2 (distribution sees electronic consistency, carrier is consistent internally only)
Level 2 compliance achieves one additional point beyond that of level 3 – the carrier is internally
consistent with carrier fund identifiers across all products.

Now, in addition to the cross reference to Underlying Funds, as applicable and the CUSIP (5+5)
implementation, a distributor (or distribution channel) can rely on Carrier Fund Identifiers (not
just Product Fund Identifiers) being consistent and having Carrier Fund Identifiers uniquely
identify an Underlying Fund, if applicable.

Level 2 compliance indicates that Carrier Fund Identifiers have been implemented consistently
across all products for the carrier and all distribution channels see consistency between the “front
end” and the “back end”.

Level 2 compliance may be characterized by the following:
   1. Carrier Fund Identifiers relate directly to Underlying Funds
   2. Carrier Fund Identifiers are unique across all products
   3. Carrier Fund Identifiers are presented by product (product CUSIP) on product profile
       files to distribution channels
   4. Carrier Fund Identifiers are utilized for electronic order processing and contract set up by
       the carrier


Product Fund Identifier Industry Standard                             NAVA Data Conformity Working Group
                                                     18
    5. Carrier Fund Identifiers are contained in the Sub Account Identifiers utilized for reporting
       contract positions and values post contract set up.
    6. Pre-issue Carrier Fund Identifiers exactly match post-issue Carrier Fund Identifiers for a
       given fund with a product
    7. All contract specific pricing differences are accommodated in the Carrier Pricing
       Identifiers
    8. Carrier Fund Identifiers in conjunction with the Carrier Pricing Identifiers uniquely
       identify all Sub Account possibilities for each product.
    9. Sub Account Identifiers (which uniquely identify pricing implementations based on
       contract selections) are utilized for reporting contract positions and values post contract
       set up.

Level 2 Example - Unique Carrier Fund Ids being used across products (Level 1 or 2
Compliance)

Product 1
CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F1234 = “AIM GROWTH” => 54321E321
Product 2
CUSIP = 12345K321 = “REAL DEAL VA”
Carrier Fund Identifier (Ex. 2) = F1234 = “AIM GROWTH” => 54321E321

                    SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                        =>    Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  54321E321
Ex. 2                12345K321              F1234         P4321                  54321E321

This implementation demonstrates the highest level of compliance with the industry standard. In
this implementation, the carrier fund identifier alone can be uniquely associated with an
underlying fund for all products within the insurance carriers control. Product CUSIP is not
required to establish a unique association with an underlying fund in this implementation. Note
that for this implementation, since the Carrier Fund Identifier alone establishes uniqueness, the
product CUSIP plus the Carrier Fund Identifier (hence, the Product Fund Identifier) also
establishes and an association to a single underlying fund.

Level 1 (general public sees consistency, distribution sees consistency, carrier is consistent
internally and externally)
The highest level of compliance simply extends level 2 to include all carrier issued material or
media that is exposed to the general public. This means that all paper applications or carrier web
sites would include the same consistent Carrier Fund Identifiers when itemizing investment
options within their products.

Product Fund Identifier Industry Standard                             NAVA Data Conformity Working Group
                                                     19
                                             APPENDIX B
                                        Implementation Examples

To assist in the implementation of this industry standard, the following scenarios will be
discussed and the associated data illustrated in a standard template.

    1.  When a CUSIP of an underlying fund changes
    2.  When a carrier adjusts carrier fund identifiers to comply with industry standards
    3.  When a carrier makes changes to a carrier managed investment model
    4.  When a carrier changes the carrier fund identifier (migrates toward the industry standard)
    5.  When an underlying fund changes managers (with no change in name or CUSIP)
    6.  When an underlying fund is closed
    7.  When a carrier adds a new product fund to a product
    8.  When a carrier adds a new service feature to a product that impacts implementation
        pricing
    9. When two underlying funds are merged (both in one carrier product)
    10. When an underlying fund is merged with another fund (one in the carrier product and one
        external to the carrier product)
    11. When a managing entity for an underlying fund changes which results in a fund name
        change (and changes the CUSIP of the underlying fund)
    12. When an underlying fund name changes that does NOT result in a change in CUSIP
    13. Service Fees (12b1) added to an existing Underlying Fund.
    14. Demonstrate Compliance Level 1 and 2 usage of fixed funds, both types of investment
        models, and a single Underlying Fund implemented across products for a single carrier.




Product Fund Identifier Industry Standard                         NAVA Data Conformity Working Group
                                                  20
Example 1. CUSIP of an Underlying Fund Changes

Before:
Product 1
CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F1234 = “AIM GROWTH” => 54321E321
Product 2
CUSIP = 23456K234 = “MEGA DEAL VA”
Carrier Fund Identifier (Ex. 2) = F1234 = “AIM GROWTH” => 54321E321

                    SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                        =>    Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  54321E321
Ex. 2                23456K234              F1234         P3455                  54321E321

After:
Product 1
CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F1234 = “AIM GROWTH” => 54321E654
Product 2
CUSIP = 23456K234 = “MEGA DEAL VA”
Carrier Fund Identifier (Ex. 2) = F1234 = “AIM GROWTH” => 54321E654

                    SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                        =>    Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  54321E654
Ex. 2                23456K234              F1234         P3455                  54321E654

The same Underlying Fund is available within two different products. If the Fund Manager
changes the Underlying Fund CUSIP, the change must be applied across all products.
Note: It’s unknown when an Underlying Fund CUSIP would ever be changed. More likely, the
old fund would be “closed” and a new fund with a new Underlying Fund CUSIP deployed.



Product Fund Identifier Industry Standard                             NAVA Data Conformity Working Group
                                                     21
Example 2. Carrier adjusts Carrier Fund Identifier to comply with industry standards

Before:
Product 1
CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F4567 = “AIM GROWTH” => 54321E321
Product 2
CUSIP = 23456K234 = “MEGA DEAL VA”
Carrier Fund Identifier (Ex. 2) = F1234 = “AIM GROWTH” => 54321E321

                    SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                        =>    Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F4567         P1234                  54321E321
Ex. 2                23456K234              F1234         P1234                  54321E321

After:
Product 1
CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F1234 = “AIM GROWTH” => 54321E321
Product 2
CUSIP = 23456K234 = “MEGA DEAL VA”
Carrier Fund Identifier (Ex. 2) = F1234 = “AIM GROWTH” => 54321E321

                    SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                        =>    Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  54321E654
Ex. 2                23456K234              F1234         P1234                  54321E654

The “Before” Template reflects different Carrier Fund Identifiers assigned to the same
Underlying Fund which is not in alignment with the good standards practice. The “After”
template shows the carrier has modified the Carrier Fund Identifier to be unique across products.
In this scenario the carrier will “shut off” the old Carrier Fund Identifier (of F4567) within the
product identified by CUSIP of 12345K123 and “turn on” a new Carrier Fund Identifier (of
F1234) in that same product.

Product Fund Identifier Industry Standard                             NAVA Data Conformity Working Group
                                                     22
Example 3. Carrier makes changes to a carrier managed investment model

Before & After:

                    SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                        =>    Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              M1234                                    N/A


This example just clarifies that carrier managed investment models, although identified as a
Product Fund, do not contain a carrier price identifier nor do they relate directly to a single
underlying fund. Investment Models that are maintained and managed by the insurance carriers
will contain multiple underlying funds and may contain internally managed fixed buckets as
well. They are not within the scope of this industry standard. Changes to the investment
makeup of an investment model would need to be communicated to the distribution channels via
some other means.


Example 4. Carrier changes the carrier fund identifier (migrates toward the industry
standard)

This scenario is the same as Example 2, previously discussed. The carrier would shut off the
“non-compliant” identifier and “turn on” the one to be used going forward.


Example 5. Underlying Fund changes Managers (with no change in name or CUSIP)

No system impacts. Before and after templates would remain the same.


Example 6. Underlying Fund is closed.

The identifiers all remain the same. End dates (Sale Expiration Date and No New Money Dates)
will be added depending on whether the fund close is hard or soft.




Product Fund Identifier Industry Standard                             NAVA Data Conformity Working Group
                                                     23
Example 7. New product fund added to a single carrier product

After
Product 1
CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F1234 = “AIM GROWTH” => 98765E321

                    SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                        =>    Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  98765E321
Ex. 2                12345K123              F1234         P2345                  98765E321
Ex. 3                12345K123              F1234         P3456                  98765E321

All rows reflect a new underlying fund being added to a single product. Each example reflects
different carrier price identifiers to account for the M&E associated with each death benefit.




Product Fund Identifier Industry Standard                             NAVA Data Conformity Working Group
                                                     24
Example 8. New Service Features to a product that impacts implementation pricing.

Before:
Product 1
CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F1234 = “AIM GROWTH” => 98765E321

                    SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                        =>    Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  98765E321
Ex. 2                12345K123              F1234         P2345                  98765E321


After:
                    SUB ACCOUNT IDENTIFIER
                    PRODUCT FUND                                        =>    Underlying Fund
                    IDENTIFIER
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  98765E321
Ex. 2                12345K123              F1234         P2345                  98765E321
Ex. 3                12345K123              F1234         P3456                  98765E321
Ex. 4                12345K123              F1234         P4567                  98765E321

Note that the addition of a new service feature impacts only the Carrier Price Identifier. It does
not impact the Product Fund Identifier so the cross-reference to the underlying fund is
unchanged.




Product Fund Identifier Industry Standard                             NAVA Data Conformity Working Group
                                                     25
Example 9. Two Underlying Funds are merged (both in one carrier product)

Before:
Product 1
CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F1234 = “AIM GROWTH” => 98765E321
Carrier Fund Identifier (Ex. 3) = F4567 = “AIM GROWTH & INCOME” => 12345E987


                    SUB ACCOUNT IDENTIFIER
                    PRODUCT IDENTIFIER                                  =>    Underlying Fund
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  98765E321
Ex. 2                12345K123              F1234         P2345                  98765E321
Ex. 3                12345K123              F4567         P1234                  12345E987
Ex. 4                12345K123              F4567         P2345                  12345E987

In this case, the rows marked Ex. 1 and Ex. 2 reflect “AIM GROWTH” and the rows marked
Ex. 3 and Ex. 4 reflect “AIM GROWTH & INCOME”.

After:
                    SUB ACCOUNT IDENTIFIER
                    PRODUCT IDENTIFIER                                  =>    Underlying Fund
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  98765E321
Ex. 2                12345K123              F1234         P2345                  98765E321

“AIM GROWTH & INCOME” no longer exists external to carrier administration systems.
Assets held in “AIM GROWTH & INCOME” would have been transferred to “AIM
GROWTH”. The Underlying Fund CUSIP for the remaining fund is not changed.




Product Fund Identifier Industry Standard                             NAVA Data Conformity Working Group
                                                     26
Example 10. Underlying Fund is merged with another fund (one in the carrier product
and one external to the carrier product).

Assuming the fund that will remain after the merger is not currently available to existing
products; the merger would be handled as a name change with a new Underlying Fund CUSIP.
Most likely, the carrier would continue to use existing Carrier Fund Identifier but change the
Underlying Fund it is associated with.

Before:
Product 1
CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F1234 = “AIM GROWTH” => 98765E321

                    SUB ACCOUNT IDENTIFIER
                    PRODUCT IDENTIFIER                                  =>    Underlying Fund
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  98765E321
Ex. 2                12345K123              F1234         P2345                  98765E321

After:
Product 1
CUSIP = 12345K123 = “EXTRA VA PRODUCT”
Carrier Fund Identifier (Ex. 1) = F1234 = “AIM GROWTH” => 76543E987

                    SUB ACCOUNT IDENTIFIER
                    PRODUCT IDENTIFIER                                  =>    Underlying Fund
                    PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex. 1                12345K123              F1234         P1234                  76543E987
Ex. 2                12345K123              F1234         P2345                  76543E987


Example 11. Managing entity for an Underlying Fund changes which results in a fund
name change (and changes the CUSIP of the underlying fund).

This scenario is addressed in the same manner as Example 10.




Product Fund Identifier Industry Standard                             NAVA Data Conformity Working Group
                                                     27
Example 12. Underlying Fund Name Change that does NOT result in a change in CUSIP.

No system impacts. Before and after templates would remain the same.


Example 13. Service Fees (12b1) added to an existing Underlying Fund.

Generally, the Underlying Fund without service fees is handled like a soft close. Existing assets
remain and additions are allowed, however, the fund is not available for new business. New
Carrier Fund Identifiers and Underlying Funds CUSIPS are assigned to the fund with service
fees.

This scenario would therefore look like a closing of one fund accompanied by the addition of a
new fund.


Example 14. Demonstrate Compliance Level 1 and 2 usage of fixed funds, both types of
investment models, and a single Underlying Fund implemented across products for a single
carrier.

Company Name: Fictional Insurance Company
Product 1
CUSIP = 123456789 = “ANTY ONE”
Product 2
CUSIP = 112233445 = “ANTY TWO”

The following investment options are available to the Fictional Insurance Company, (shown with
the carrier fund identifier and the CUSIP of the associated underlying fund, if applicable)

Variable:
Carrier Fund Identifier = 10001 = “Sunset Growth Fund” => 54321A123
Carrier Fund Identifier = 20001 = “International Equity Fund – C-Share” => 65432Z999
Carrier Fund Identifier = 20002 = “International Equity Fund – L-Share” => 76543Z989

Model (“fund of funds”)
Carrier Fund Identifier = 30001 = “ABC Specialized Capital Appreciation Fund” => 87654Z666
Model (“group of funds”)
Carrier Fund Identifier = A = “Model A” => {not applicable}

Fixed:
Carrier Fund Identifier = 99901 = “1 Year Fixed Fund” => {not applicable}
Carrier Fund Identifier = 99902 = “1 Year Special DCA Fund” => {not applicable}

The following product conditions exist:
° Product ANTY ONE uses all funds except the L-Share fund.
° Product ANTY TWO uses all funds but the C-Share fund.


Product Fund Identifier Industry Standard                       NAVA Data Conformity Working Group
                                               28
°   Products ANTY ONE and ANTY TWO have different mortality & expense and fee
    structures.
°   Each product uses a different new money and renewal interest rate schedule for the available
    fixed investment options.


Product 1
                    SUB ACCOUNT IDENTIFIER
ANTY ONE            PRODUCT IDENTIFIER                                  =>    Underlying Fund
Example             PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

Ex.1                 123456789        10001           00001                      54321A123
Ex.2                 123456789        10001           00002                      54321A123
                     123456789        20001           00100                      65432Z999
Ex.3                 123456789        30001           00009                      87654Z666
Ex.4                 123456789        30001           00010                      87654Z666
                     123456789        A               {n/a}                         {n/a}
                     123456789        99901           {n/a}                         {n/a}
                     123456789        99902           {n/a}                         {n/a}

Product 2
                    SUB ACCOUNT IDENTIFIER
ANTY TWO            PRODUCT IDENTIFIER                                  =>    Underlying Fund
Example             PRODUCT

CUSIP 5+5           CUSIP             Carrier Fund    Carrier Price
Components                            Identifier      Identifier

                     112233445        10001           00001                      54321A123
                     112233445        10001           00002                      54321A123
Ex.1                 112233445        20002           432                        76543Z989
Ex.2                 112233445        20002           ABDZ                       76543Z989
                     112233445        30001           00009                      87654Z666
                     112233445        30001           00010                      87654Z666
                     112233445        A               {n/a}                         {n/a}
                     112233445        99901           {n/a}                         {n/a}
                     112233445        99902           {n/a}                         {n/a}

Note: The rows marked Ex.1 and Ex.2 are just demonstrating there may be different pricing
schemes for a fund within a product. The rows marked Ex.3 and Ex.4 demonstrate the same
thing for a Model that is a “fund of funds”. There are no Carrier Price Identifiers nor associated
Underlying Funds associated with the fixed funds or the Model that is a “group of funds”.


Product Fund Identifier Industry Standard                             NAVA Data Conformity Working Group
                                                     29
                                          APPENDIX C
                                      ACORD Impact Assessment

There are a variety of ACORD “messages” which are used to provide information on annuity
and life insurance products, contracts and related contract activity. This Appendix will address
how Product Fund Identifier components may be modeled to send the product characteristics in
an ACORD Product Profile message, as well as to send individual contract information and
activity in a Holding message. These objects and properties are used with both life insurance
and annuity products (Product Profile for Annuities (PPfA) and Product Profile for Life (PPfL)),
so the requirement to support both product lines is satisfied.

The PRODUCT-RELATED properties pertinent to the Product Fund Identifier within the ACORD
model are explained below. Recommended modeling is:

        Product Fund Identifier component:            ACORD Product Profile (PPfA/PPfL) node:

        Product CUSIP                                 PolicyProduct.CusipNum

        Carrier Fund Identifier (1st “+5”)            InvestProduct.ProductCode

        Carrier Pricing Identifier (2nd “+5)          Out of scope; not defined/needed in PPfA*

        Underlying Fund (Fund CUSIP)                  InvestProduct.CusipNum

* An important consideration regarding the current usage of the PPfA is that, to date, it has been
intended to support modeling requirements for new business and subsequent premiums. As
such, in order to model the PPfA for new business usage, the Carrier Pricing Identifier is not
required to be included in the product profile. The premise of this assumption is that Carrier
Pricing Identifier is assigned by the carrier after receiving the new business information provided
by the consumer and/or representative. If the list of valid values for the Carrier Pricing Identifier
is required to be modeled in a Product Profile, additional analysis must be completed to
determine how best to include this information in or as a child of InvestProductInfo such that the
list of Carrier Pricing Identifiers and the associated uses/assignment rules can be supported.

The CONTRACT-RELATED properties pertinent to the Product Fund Identifier within the ACORD
model are as follows.

Recommended modeling (to be confirmed/validated by the ACORD Annuity Product and other
interested Working Groups January 19th, 2005):

        Product Fund Identifier component:            ACORD XML node:

        Product CUSIP                                 Holding.Policy.CusipNum

        Carrier Fund Identifier (1st “+5”)            *.SubAccount.ProductCode

        Carrier Pricing Identifier(2nd “+5”)          *.Annuity.ValuationBaseSeries**
                                                      *.Life.ValuationBaseSeries**
Product Fund Identifier Industry Standard                         NAVA Data Conformity Working Group
                                                 30
        Underlying Fund                                   *.SubAccount.CusipNum

** The ValuationBaseSeries property is currently available at the contract level (via the Annuity
and Life objects) to indicate the variation of fund pricing specific to a contract. Conversation is
underway to determine if the Carrier Pricing Indicator can or might vary by fund within a
contract, or if it is always the same across one contract/policy/certificate. If it is determined that
the value may differ across funds (i.e. different types or classes of funds have different pricing
indicators within one contract), the NAVA/ACORD Annuity Working Group will charter
changes to the ACORD model to enable this Product Fund Identifier requirement.

Informational background modeling detail:

PRODUCT-RELATED         Properties:

OLife
        InvestProduct

        PolicyProduct
               InvestProductInfo

•   The InvestProduct object defines each investment (fund) that is available to any product the
    carrier offers, including characteristics common across all products. All investment funds are
    included for all products included in the message (file). Information such as the fund name
    and the type of fund are described once on InvestProduct for all usage of a fund within a
    message. The combination of InvestProduct.CarrierCode and InvestProduct.ProductCode,
    the “entity recognition” for InvestProduct, references a unique investment/fund. Specifically,
    a unique InvestProduct node within the message/file:
    o CarrierCode references the Party node where the manufacturer of the investment is
        described. This enables the sender of the message to indicate who the fund manager or
        manufacturer is, separately from the fund name or fund description. At present, however,
        often the usage of CarrierCode with InvestProduct references the carrier itself, since fund
        manufacturer information is not required and often not used. As such, the fund manager
        name may be, but does not have to be, included in the Name.
    o ProductCode, generally, has been used to reference the fund number on the carrier’s
        administrative system relevant to the message being sent (product characteristics for new
        business usage, for example). Like all Codes within the ACORD model, ProductCode is
        meaningful only to the sender and is a permanent identifier to recognize that data.

        For example, a file may contain three InvestProduct nodes:

        CusipNum         ProductCode        CarrierCode   FullName                    RateType
        123456           607                001           Manager1 Bond Fund          Variable
        654321           809                001           Manager 1 Growth Fund       Variable
                         001                5600          1 Year Fixed Fund           Fixed



Product Fund Identifier Industry Standard                          NAVA Data Conformity Working Group
                                                    31
•   PolicyProduct is a “top level” object at the same level as InvestProduct. This object and all
    its “child” objects define the characteristics of a product, including the Product CUSIP,
    manufacturer (writing company), available riders and service programs, funds and other
    product specifics.

        For example, there may be two products described in the file:
        CarrierCode PlanName                       ProductCode CusipNum
        5600          Terrific Variable Annuity II 987654321A 987654321
        5600          Stellar Variable Annuity     123456789A 123456789

        InvestProductInfo is a “child” of PolicyProduct and defines the funds available to one
        specific product, for one or more uses such as initial premium, subsequent premium,
        withdrawals, standing allocations, etc. InvestProductInfo may also define product-
        specific characteristics of the investment. The CarrierCode and ProductCode on this
        object reference the investment defined at the (higher) InvestProduct level.

        For example, if the “Terrific” product uses the Fixed and Bond funds, the Terrific
        product’s InvestProductInfo will include CarrierCode 001 and ProductCode 607 as well
        as 5600 and 001. If the “Stellar” uses all three funds, all three combinations would be
        included.

CONTRACT-RELATED Properties:

OLife
        Holding
              Policy (includes the CusipNum of the product)
                      Annuity (includes the ValuationBaseSeries)
                      Life (includes the ValuationBaseSeries)

                 Investment
                        SubAccount (includes CarrierCode and ProductCode of the fund)

•   Holding.Policy is used to provide information about the policy (or contract or certificate) in
    general. Information such as the product and the manufacturer (insurance company) are on
    this object.
    o Annuity and Life are “child” objects of Holiding.Policy. There is one occurrence based
        on the type of contract.

•   SubAccount is a “child” of Holding.Investment (represented below with a *). This object
    and its “child” objects are used to provide detail on the investments/funds used on a contract
    (or certificate or policy), to provide “standing allocation” instructions, or to describe financial
    activity that impacted an investment fund.




Product Fund Identifier Industry Standard                          NAVA Data Conformity Working Group
                                                  32

				
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