31A-5-217.5 - Variable contract law.
31A-5-217.5. Variable contract law.
(1) This section applies to a separate account that is used to support one or more of thefollowing:
(a) a variable life insurance policy that satisfies the requirements of Section 817, InternalRevenue Code;
(b) a variable annuity policy, including a modified guaranteed annuity; or
(c) benefits under a plan governed by the Employee Retirement Income Security Act of1974.
(2) If there is a conflict between this section and another section of this title as it relates toa separate account described in Subsection (1), this section prevails.
(3) (a) Subject to the other provisions of this Subsection (3), a domestic life insurer may:
(i) establish one or more separate accounts; and
(ii) allocate to those separate accounts amounts, which include:
(A) proceeds applied under optional modes of settlement or under dividend options, toprovide for life insurance or annuities; and
(B) benefits incidental to life insurance or annuities, payable in fixed, variable, or bothfixed and variable amounts.
(b) An insurer shall credit to or charge against a separate account the income, gains, andlosses, realized or unrealized, from assets allocated to the separate account, without regard toother income, gains, or losses of the insurer.
(c) Except as may be provided with respect to reserves for guaranteed benefits and fundsreferred to in Subsection (3)(d):
(i) an insurer may invest or reinvest amounts allocated to a separate account andaccumulations on those amounts without regard to the requirements or limitations prescribed bythe laws of this state governing the investments of a life insurer; and
(ii) an insurer may not take into account the investments in a separate account inapplying the investment limitations that otherwise apply to the investments of the insurer.
(d) Except with the approval of the commissioner and under any condition thecommissioner prescribes as to investments and other matters, which shall recognize theguaranteed nature of the benefits provided, an insurer may not maintain in a separate accountreserves for:
(i) benefits guaranteed as to dollar amount and duration; and
(ii) funds guaranteed as to principal amount or stated rate of interest.
(e) (i) Except as provided in Subsection (3)(e)(ii) and unless otherwise approved by thecommissioner, assets allocated to a separate account shall be valued:
(A) at their market value on the date of valuation; or
(B) if there is no readily available market, then as provided under the terms of thecontract, rules, or other written agreement that applies to the separate account.
(ii) Unless otherwise approved by the commissioner, the portion of the assets of aseparate account that are equal to the insurer's reserve liability with regard to the guaranteedbenefits and funds referred to in Subsection (3)(d) shall be valued in accordance with the rulesthat otherwise apply to the company's assets.
(f)(i) An insurer owns the amounts it allocates to a separate account in the exercise of thepower granted by this section, and the insurer may not be, nor hold itself out to be, a trustee withrespect to those amounts.
(ii) To the extent provided under the applicable insurance policy, an insurer may notcharge the portion of the assets of a separate account that is equal to the reserves and otherinsurance liabilities with respect to the separate account with liabilities arising out of any otherbusiness the insurer may conduct.
(g) (i) A sale, exchange, or other transfer of assets may not be made by an insurerbetween any of its separate accounts or between any other investment account and one or more ofits separate accounts unless:
(A) in case of a transfer into a separate account, the transfer is made solely to establishthe account or to support the operation of the insurance policies with respect to the separateaccount to which the transfer is made; and
(B) the transfer, whether into or from a separate account, is made by:
(I) a transfer of cash; or
(II) if the transfer of securities is approved by the commissioner, a transfer of securitieshaving a readily determinable market value.
(ii) The commissioner may approve a transfer not described in Subsection (2)(g)(i)among the accounts described in Subsection (2)(g)(i) if, in the commissioner's opinion, thetransfer would not be inequitable.
(h) To the extent an insurer considers it necessary to comply with an applicable federal orstate law, the insurer with respect to a separate account, including a separate account which is amanagement investment company or a unit investment trust, may provide for a person having aninterest in the separate account to have appropriate voting and other rights and special proceduresfor the conduct of the business of the separate account, including:
(i) special rights and procedures relating to investment policy;
(ii) investment advisory services;
(iii) selection of independent public accountants; and
(iv) the selection of a committee, the members of which need not be otherwise affiliatedwith the insurer, to manage the business of the separate account.
Amended by Chapter 10, 2010 General Session
Amended by Chapter 324, 2010 General Session