Iowa Admin. Code r. 191-33.6 - Separate accounts
The following requirements apply to the establishment and administration of variable life insurance separate accounts by any domestic insurer:
(1)
Establishment and
administration of separate accounts. Any domestic insurer issuing
variable life insurance shall establish one or more separate accounts pursuant
to Iowa Code section
508A.1.
a. If no law or other regulation provides for
the custody of separate account assets and if such insurer is not the custodian
of such separate account assets, all contracts for custody of such assets shall
be in writing and the commissioner shall have authority to review and approve
of both the terms of any such contract and the proposed custodian prior to the
transfer of custody.
b. Such
insurer shall not without prior written approval of the commissioner employ in
any material connection with the handling of separate account assets any person
who:
(1) Within the last ten years has been
convicted of any felony or a misdemeanor arising out of such person 's conduct
involving embezzlement, fraudulent conversion, or misappropriation of funds or
securities or involving violation of Section 1341, 1342, or 1343 of Title 18,
United States Code; or
(2) Within
the last ten years has been found by any state regulatory authority to have
violated or has acknowledged violation of any provision of any state insurance
law involving fraud, deceit, or knowing misrepresentation; or
(3) Within the last ten years has been found
by federal or state regulatory authorities to have violated or has acknowledged
violation of any provision of federal or state securities laws involving fraud,
deceit, or knowing misrepresentation.
c. All persons with access to the cash,
securities, or other assets of the separate account shall be under bond in the
amount of not less than the greater of the amount required pursuant to Section
17(g) of the Investment Company Act of 1940 or such other amount as the
commissioner may deem appropriate.
d. The assets of such separate accounts shall
be valued at least as often as variable benefits are determined but in any
event at least monthly.
(2)
Amounts in the separate
account . The insurer shall maintain in each separate account assets
with a value at least equal to the greater of the valuation reserves for the
variable portion of the variable life insurance policies or the benefit base
for such policies.
(3)
Investments by the separate account .
a. No sale, exchange, or other transfer of
assets may be made by an insurer or any of its affiliates between any of its
separate accounts or between any other investment account and one or more of
its separate accounts unless:
(1) In case of a
transfer into a separate account , such transfer is made solely to establish the
account or to support the operation of the policies with respect to the
separate account to which the transfer is made; and
(2) Such transfer, whether into or from a
separate account , is made by a transfer of cash; but other assets may be
transferred if approved by the commissioner in advance.
b. The separate account shall have sufficient
net investment income and readily marketable assets to meet anticipated
withdrawals under policies funded by the account.
(4)
Limitations on
ownership.
a. A separate account
shall not purchase or otherwise acquire the securities of any issuer, other
than securities issued or guaranteed as to principal and interest by the United
States, if immediately after the purchase or acquisition the value of such
investment, together with prior investments of such account in such security
valued as required by this chapter, would exceed 10 percent of the value of the
assets of the separate account . The commissioner may waive this limitation in
writing if the commissioner believes such waiver will not render the operation
of the separate account hazardous to the public or the policyholders in this
state.
b. No separate account shall
purchase or otherwise acquire the voting securities of any issuer if as a
result of such acquisition the insurer and its separate accounts in the
aggregate, will own more than 10 percent of the total issued and outstanding
voting securities of such issuer. The commissioner may waive this limitation in
writing if the commissioner believes the waiver will not render the operation
of the separate account hazardous to the public or the policyholders in this
state or jeopardize the independent operation of the issuer of such
securities.
c. The percentage
limitation specified in subrule 33.6(4), paragraph"a," shall
not be construed to preclude the investment of the assets of separate accounts
in shares of investment companies registered pursuant to the Investment Company
Act of 1940 or other pools of investment assets if the investments and
investment policies of such investment companies or asset pools comply
substantially with the provisions of subrule 33.6(3) and other applicable
portions of this chapter.
(5)
Valuation of separate account
assets. Investments of the separate account shall be valued at their
market value on the date of valuation, or at amortized cost if it approximates
market value.
(6)
Separate
account investment policy. The investment policy of a separate account
operated by a domestic insurer filed under subrule 33.3(2),
paragraph"c," shall not be changed without first filing such
change with the commissioner .
a. Any change
filed pursuant to this rule shall be effective 60 days after the date it was
filed with the commissioner , unless the commissioner notifies the insurer
before the end of such 60-day period of the commissioner 's disapproval of the
proposed change. At any time the commissioner may, after notice and public
hearing, disapprove any change that has become effective pursuant to this
subrule.
b. The commissioner may
disapprove the change if the commissioner determines that the change would be
detrimental to the interests of the policyholders participating in such
separate account .
(7)
Charges against separate account . The insurer must disclose in
writing, prior to or contemporaneously with delivery of the policy, all charges
that may be made against the separate account , including, but not limited to,
the following:
a. Taxes or reserves for taxes
attributable to investment gains and income of the separate account ;
b. Actual cost of reasonable brokerage fees
and similar direct acquisition and sale costs incurred in the purchase or sale
of separate account assets;
c.
Actuarially determined costs of insurance (tabular costs) and the release of
separate account liabilities;
d.
Charges for administrative expenses and investment management expenses,
including internal costs attributable to the investment management of assets of
the separate account ;
e. A charge,
at rate specified in the policy, for mortality and expense
guarantees;
f. Any amounts in
excess of those required to be held in the separate accounts;
g. Charges for incidental insurance
benefits.
(8)
Standards of conduct. Every insurer seeking approval to enter
into the variable life insurance business in this state shall adopt by formal
action of its board of directors a statement specifying the standards of
conduct of the insurer, its officers, directors, employees, and affiliates with
respect to the purchase or sale of investments of separate accounts. Such
standards of conduct shall be binding on the insurer and those to whom it
refers. A code or codes of ethics meeting the requirements of Section 17(j)
under the Investment Company Act of 1940 and applicable rules and regulations
thereunder shall satisfy the provisions of this subrule.
(9)
Conflicts of interest.
Rules under any provision of the insurance laws of this state or any regulation
applicable to the officers and directors of insurance companies with respect to
conflicts of interest shall also apply to members of any separate account 's
committee or other similar body.
(10)
Investment advisory services to
a separate account . An insurer shall not enter into a contract under
which any person undertakes, for a fee, to regularly furnish investment advice
to such insurer with respect to its separate accounts maintained for variable
life insurance policies unless:
a. The person
providing such advice is registered as an investment advisor under the
Investment Advisors Act of 1940; or
b. The person providing such advice is an
investment manager under the Employee Retirement Income Security Act of 1974
with respect to the assets of each employee benefit plan allocated to the
separate account ; or
c. The insurer
has filed with the commissioner and continues to file annually the following
information and statements concerning the proposed advisor:
(1) The name and form of organization, state
of organization, and its principal place of business;
(2) The names and addresses of its partners,
officers, directors, and persons performing similar functions or, if such an
investment advisor be an individual, of such individual;
(3) A written standard of conduct complying
in substance with the requirements of subrule 33.6(8) which has been adopted by
the investment advisor and is applicable to the investment advisor, its
officers, directors, and affiliates;
(4) A statement provided by the proposed
advisor as to whether the advisor or any person associated therewith:
Has been convicted within ten years of any felony or
misdemeanor arising out of such
Has been permanently or temporarily enjoined by order,
judgment, or decree of any court of competent jurisdiction from acting as an
investment advisor, underwriter, broker, or dealer, or as an affiliated
Has been found by federal or state regulatory authorities to have willfully violated or have acknowledged willful violation of any provision of federal or state securities laws or state insurance laws or of any rule or regulation under any such laws; or
Has been censured, denied an investment advisor registration, had a registration as an investment advisor revoked or suspended, or been barred or suspended from being associated with an investment advisor by order of federal or state regulatory authorities; and
d. Such investment advisory contract shall be
in writing and provide that it may be terminated by the insurer without penalty
to the insurer or the separate account upon no more than 60 days' written
notice to the investment advisor.
The
Notes
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