A#

5888

P&S #:

5458

DATE:

August 25, 2004

TO:

ALL PARTICIPANTS

ATTENTION:

MANAGERS; OPERATIONS DEPT FOR ANNUITIES & LIFE INSURANCE, BROKERAGE OPERATIONS, INFORMATION SYSTEMS

FROM: NSCC Insurance Services
SUBJECT: IPS End of the Year Enhancement Release 2004

Overview:

In order to support industry requests, the Insurance Processing Service (IPS) has scheduled an enhancement release for December 2004.  IPS Enhancement Releases include User Group Enhancement Requests submitted by participants, as well as maintenance items National Securities Clearing Corporation (“NSCC”) deems necessary to improve the overall operational performance of the system.

The enhancements in this release will affect the following functionalities:

POV - Positions and Values, which is made up of 3 types:

PVF – Positions & Values Full Refresh File – new fields and new codes
PNF – Positions New Business File – new fields and new codes
PFF – Positions Focused File – new codes only

POV enhancements are mandatory only if you use the 13-08 record (Contract Annuitization Record).  Otherwise, these are optional changes.

FAR – Financial Activity Reporting – new codes only

FAR code additions are optional.  No mandatory FAR changes are included in this release.

APP – Initial Annuity Application and Premium – new record, new fields, and new codes

There is one conditional mandatory change (see 3-C).  The rest are optional.

The enhancements to this product were reviewed and approved by the IPS Advisory Group.

Schedule (All Eastern Times):

(Date and Times are subject to change)

Participants may begin testing the changes via the test region starting November 19th, 2004.   However, production files must be submitted in the old format until December 8th.

Specification Documents:

Documentation is available at the IPS website, http://insurance.dtcc.com.  Click on Participant Section and then Enhancements.  To view the actual enhancement requests, click on Enhancements Approved for Future Release. To view Draft Layouts and Specification Document, click on Current Draft Layouts and Specification Documents (most current release).

The following documentation will be listed.  All changes to the record layouts will be highlighted in yellow. 

Release Specifications:

The following information indicates the exact changes made to the record layouts.  These changes are based on the approved recommendation made by the originator of the enhancement request. 

The actual enhancement request can be found at our website under “IPS Enhancements Approved for Future Release” in the User Group section of our website.  Do not use the enhancement documents for programming.  The draft record layouts and detailed specification document should be used for this purpose.  The original enhancement request forms are provided to understand the business purpose of the change.

1.      FAR – Increase 43-05 loop limit (IPS00138)

Transaction ID Record (43-05) currently allows 99 occurrences per Contract Record (43-01).  This will increase to 999 occurrences.  The increase will eliminate limitations for firms that want to use FAR for the following:

2.      POV & FAR – Annuity Payout Information (IPS00139)

Fields and Codes are being added to both POV and FAR to accommodate situations where a deferred or immediate annuity contract becomes annuitized, as well as providing information on hypothetical payouts of annuity contracts.  Standard Usage is available to better understand how to process this information. 

Positions and Values Changes

  1. Expand PVF/PNF 13-08 looping structure to 5 occurrences per 13-01 record.  It is currently set up for only 1 occurrence.  Multiple occurrences may be needed to handle fixed and variable portions of the payouts.
  1. Add fields to bytes that are currently filler on 13-08 record.  Draft record layouts will show exact positions of the new fields and edit rules.
  1. Add new POV code values to existing code list fields:

13/01


3022– Contract Status
(AA) Active Annuitized; a deferred contract that has been annuitized and is in an active status
(OD) One Deceased; a payout contract with survivorship or certain period benefits where an annuitant has died but payments continue (active)

13/02


3102– Value Qualifier
(CV) Commuted Value
(AM) Annuitized Amount (the amount from the deferred contract that was used to fund the annuity)
(CB) Cost Basis (the amount of the funding of a deferred or immediate contract that has already been taxed)

13/06

3402 – Date Qualifier
(964) – Current Payout (the date of the most recent payout to the client)
(965) – First Payout (the date of the initial payout to the client; different from the annuitization date)
(970) – Hypothetical Payout (the date used for hypothetical future payouts shown in the 13/08 records)
(443) – Joint Death (the date of death for the Joint Annuitant/Insured; Death Date would be used for the Primary Annuitant/Insured)

13/08

3702 – Payment Amount Qualifier
(WH) – Withheld Amount
(HP) – Hypothetical Payout Amount
3703 – Annuity Payment Frequency
(CD) – Contract Year to Date

Financial Activity Reporting (FAR) Changes:

  1. Add codes to FAR to be in synch with changes made to POV and APP.

    5026 – FAR Contract Status – new codes
    (AA) Active Annuitized; a deferred contract that has been annuitized and is in an active status
    (OD) One Deceased; a payout contract with survivorship or certain period benefits where an annuitant has died but payments continue (active)

5028 – FAR Date Qualifier – new codes
(964) – Current Payout (the date of the most recent payout to the client)
(965) – First Payout (the date of the initial payout to the client; different from the annuitization date)
(443) – Joint Death (the date of death for the Joint Annuitant/Insured; Death Date would be used for the Primary Annuitant/Insured)

5057 – FAR Transaction Identifier – new codes
(432) – Periodic Annuity Payment
(234) – Periodic Annuity Payment (Reversal)

3.      APP –  Annuity Payout Information (IPS00141)

Fields and Codes are being added to the APP to provide annuity payout information on an immediate annuity application.  Standard Usage is available to better understand how to process this information. 

  1. New Service Feature Identifier Code (#4212): Deferred Payout (DPO)
  2. New record – Service Feature Payout Record (optional – 1 per service feature) – Record will be the 33-37 record.  Draft record layouts will show exact positions of the new fields and edit rules. Record fields to be added include:
  1. New Field on Service Feature Payment Details Record (33-36):

Payment Method Percent Qualifier – code → P1 (Percent), DO (Dollars)

This field will be required if field 4251 (Payment Method Amount) is filled.

  1. Rename field 4252 from Payment Method Amount Qualifier to Gross/Net Indicator

4.      FAR – Add New Transaction ID Code – Cost of Insurance (IPS00142)

Add two new codes to Item 5057, Transaction Identifier, to pass Cost of Insurance and the corresponding reversal code. 

125 – Cost of Insurance
521 – Cost of Insurance (Reversal)

Cost of Insurance is the amount that is calculated for variable universal life products and results in periodic (usually monthly) internal surrendering of units to pay for the mortality costs.

5.      POV – Add New Contract Value Qualifier Code – Cost of Insurance (IPS00143)

Add new code to Item 3102, Contract Value Qualifier, to pass Target Premium. 

PT – Target Premium

Target Premium is the dollar amount that must be paid by the policy owner to keep the policy inforce.    Note: This is not the same as "Expected Annual Premium" (code EP), which is analogous to what carriers describe as stipulated premium, the amount the policyholder said he would pay.

For additional information on this enhancement release, please call Craig Gurien at 212-855-5649.  You may also contact your Account Relationship Manager for more information.

Craig Gurien
Product Manager
Insurance Services