CARVM basically denotes statutory cash reserves for annuities. CARVM is calculated according to several different methods. The cash reserve of the annuity must be greater or equal to the value calculated by the CARVM. The CARVM is equal to the greatest net present value of all future guaranteed benefits.
CARVM calculations do not only include expenses or lapses in policies. However, they do include any nonforfeiture benefits that exceed premiums that are required in the future. These reserves must be maintained by each annuity carrier according to state law.