40-4003b. Same; establishment of closed block for policyholder dividends.
40-4003b
40-4003b. Same; establishment of closed block for policyholderdividends.The commissioner mayrequire that the conversion plan of a mutual lifeinsurer provide for the establishment, for policyholderdividend purposes only, of a closed block. In the event thatthe commissioner requires such a closed block,the closed block will consist of all of the participatingindividual policies of life insurance of the mutual lifeinsurer in force on the effective date of the plan ofconversion for which the insurer has an experience-baseddividend scale payable in the year in which the plan isadopted. Assets of the insurer shall be allocated to any suchclosed block in an amount that produces cash flows, togetherwith anticipated revenues from the closed block business,expected to be reasonably sufficient: (1) To support the closedblock business, including payment of claims and those expensesand taxes specified in the plan, and (2) to provide forcontinuation of dividend scales in effect on the adoption dateif the experience underlying the scales continues and forappropriate adjustments in the scales if the experiencechanges. The plan may provide for conditions under which theconverted insurer may cease to maintain the closed block andits allocated assets. Regardless of such a cessation, theobligation under the policies constituting the closed blockbusiness remain the obligations of the converted insurer.Dividends on those policies shall be apportioned by the boardof directors of the converted insurer in accordance with theterms of the policies.
History: L. 1997, ch. 107, § 4; July 1.