§ 58-7-16. Funding agreements authorized.
§ 58‑7‑16. Funding agreements authorized.
(a) As used in thissection, "funding agreement" means an agreement that authorizes alicensed life insurer to accept funds and that provides for an accumulation offunds for the purpose of making one or more payments at future dates in amountsthat are not based on mortality or morbidity contingencies. A "fundingagreement" is not an "annuity" as defined in G.S. 58‑7‑15;and is not a "security" as defined in G.S. 78A‑2.
(b) Any insurer that islicensed to write life insurance or annuities in this State may deliver, orissue for delivery, funding agreements in this State.
(c) Funding agreementsmay be issued to persons authorized by a state or foreign country to engage inan insurance business or to their affiliates, including affiliates of theissuer. Issuance to an affiliate of an issuer is not subject to the provisionsof Article 19 of this Chapter. Funding agreements may be issued to personsother than those licensed to write life insurance and annuities or theiraffiliates in order to fund one or more of the following:
(1) Benefits under anyemployee benefit plan as defined in the federal Employee Retirement IncomeSecurity Act of 1974, 29 U.S.C. § 1001 et seq., maintained in the United Statesor in a foreign country.
(2) The activities of anorganization exempt from taxation under section 501(c) of the Internal RevenueCode or of any similar organization in a foreign country.
(3) A program of thegovernment of the United States, the government of a state, foreign country, orpolitical subdivision, agency, or instrumentality thereof.
(4) An agreementproviding for one or more payments in satisfaction of a claim or liability.
(5) A program of aninstitution that has assets in excess of twenty‑five million dollars ($25,000,000).
(d) Amounts shall notbe guaranteed or credited under a funding agreement except upon reasonableassumptions as to investment income and expenses and on a basis equitable toall holders of funding agreements of a given class.
(e) Amounts paid to theinsurer and proceeds applied under optional modes of settlement under fundingagreements may be allocated by the insurer to one or more separate accountspursuant to G.S. 58‑7‑95.
(f) The Commissionerhas sole authority to regulate the issuance and sale of funding agreements onbehalf of insurers. In addition to the authority in G.S. 58‑2‑40,the Commissioner may adopt rules relating to:
(1) Standards to befollowed in the approval of forms of funding agreements.
(2) Reserves to bemaintained by and valuation rules for insurers issuing funding agreements.
(3) Accounting andreporting of funds credited under funding agreements.
(4) Disclosure ofinformation to be given to holders and prospective holders of fundingagreements.
(5) Qualification andcompensation of persons selling funding agreements on behalf of insurers.
In determining minimumvaluation reserves to be maintained by and valuation rules for insurers issuingfunding agreements, the Commissioner may use any relevant actuarial guideline,regulation, interpretation, or paper published by the Society of Actuaries orthe American Academy of Actuaries that the Commissioner considers reasonable. (1993 (Reg. Sess., 1994), c.600, s. 1; 1998‑212, s. 26B(e); 2001‑334, s. 17.2.)