Set Up IMR Reporting

You must set up the Client Level tax rates and NAIC Grouped Amortization rates used during the interest maintenance reserve process before you generate these reports.

Client Level tax rates

You can supply a client tax rate using the Edit Client Insurance Information panel. If a tax rate is supplied for a client, Interest Maintenance Reserve processing applies the client level tax rate to the gains/losses to determine reserve values. If the tax rate is not supplied, the calculation of reserve values is performed without any tax implications.

NAIC Grouped Amortization Rates

The applicable grouped amortization rates, as determined by the NAIC, are provided by Eagle, and are applied to the gains/losses to determine the reserve for the year. Updated rates are only needed where the NAIC has made changes. If there are no changes, Eagle uses existing, still valid rates in the IMR calculations.

See the following figure for a sample grouped amortization rates schedule.

Linkage of Convertible Bonds

Convertible Bonds must be linked to their underlying security via the SMF security record of the bond. The linkage is critical for the expected maturity date calculations performed during the IMR process for convertible bonds. The conversion rate and convertible until date fields are stored in the SECURITYDBO.UNDERLYING_SECURITY table.

Implementation Considerations

When first implementing the IMR on an existing portfolio, you must upload to the ISTAR database the prior year's reserve values for each 'Year of Amortization' that appears on the schedule. This step is not required if a portfolio has no activity in years prior that was reported on the IMR.

If beginning IMR processing during the course of a year, you must upload all prior months' transactions, to reflect whether or not they appear on the schedule, before you perform the refresh process.

Considerations during implementation include:

• If converting entities onto Eagle, once conversion activity is booked, the NAIC Designations on the conversion activity may need to be updated to allow for proper IMR treatment of future sales.
• If the designation as of conversion date differs from the designation as of the date of purchase, the historical designation should be updated to reflect the initial designation. A historical designation should be added for a date equal to the trade date of the activity. This is used at the time of disposal to determine the holding period designation delta.
• If the designation of the security was ever a 6 for bonds or 4, 5 or 6 for preferred stock prior to conversion onto Eagle, the Max NAIC Designation (ISTAR.LOT_POSITION.BV_INCOME_EXP_IND) should be updated to reflect this designation. Alternately, historical designations should be added for any securities that ever had one of these designations. These historical designations are used when populating the Max NAIC Designation on the first conversion record in the ISTAR warehouse, and are ultimately used at the time of disposal when determining maximum designation used to determine IMR eligibility.