N.D. Admin Code 45-04-02-04 - Separate accounts for variable annuity contracts

Current through Supplement No. 383, January, 2022

A domestic company issuing variable annuity contracts shall establish one or more separate accounts pursuant to North Dakota Century Code sections 26.1-33-13 and 26.1-34-11, subject to the following provisions:

1. Except as may be provided with respect to reserves for guaranteed benefits and funds referred to in subsection 2, amounts allocated to any separate account and accumulations thereon may be invested and reinvested without regard to any requirements or limitations prescribed by the laws of this state governing the investments of life insurance companies and the investments in such separate account or accounts shall not be taken into account in applying the investment limitations otherwise applicable to the investments of the company.
2. Reserves for benefits guaranteed as to dollar amount and duration and funds guaranteed as to principal amount or stated rate of interest may be maintained in a separate account if a portion of the assets of such separate account at least equal to such reserve liability is invested in accordance with the laws and regulations of this state governing the investments of life insurance companies. Such portion of the assets shall not be taken into account in applying the investment limitations otherwise applicable to the investments of the company.
3. No company shall purchase or otherwise acquire the securities of any issuer, other than securities issued or guaranteed as to principal or interest by the United States, if immediately after such purchase or acquisition the market value of such investment, together with prior investments of such separate account in such security taken at market value, would exceed ten percent of the market value of the total assets of said separate account. However, the commissioner may waive such limitation if, in the commissioner's opinion, such waiver will not render the operation of such separate account hazardous to the policyholders or the public in this state.
4. Unless otherwise permitted by law or approved by the commissioner, no company shall purchase or otherwise acquire for its separate accounts the voting securities of any issuer if as a result of such acquisition the insurance company and its separate accounts, in the aggregate, would own more than ten percent of the total issued and outstanding voting securities of such issuer; provided, that the foregoing shall not apply with respect to securities held in separate accounts the voting rights in which are exercisable only in accordance with instructions from persons having interests in such accounts.
5. The limitations provided in subsections 3 and 4 shall not apply to the investment with respect to a separate account in the securities of an investment company registered under the Investment Company Act of 1940, as amended [ 15 U.S.C. 80a-1 through 80a-52 ], provided the investments of such investment company comply in substance with subsections 3 and 4. In determining the percentage of voting securities of any issuer owned by the company and its separate accounts for purposes of subsection 4, the voting securities of such issuer owned indirectly through investment in an investment company shall be added to any such voting securities owned directly by the company and its separate accounts.
6. Unless otherwise approved by the commissioner, assets allocated to a separate account shall be valued at their market value on the date of valuation, or if there is no readily available market, then as provided under the terms of the contract or the rules of other written agreement applicable to such separate account; provided, that unless otherwise approved by the commissioner, the portion, if any, of the assets of such separate account equal to the company's reserve liability with regard to the benefits and funds referred to in subsection 2 shall be valued in accordance with the rules otherwise applicable to the company's assets.
7. If provided, and to the extent so provided under the applicable contracts, that portion of the assets of any such separate account equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the company may conduct.
8. Notwithstanding any other provisions of law, a company may:
a. With respect to any separate account registered with the securities and exchange commission as a unit investment trust, exercise voting rights, in connection with any securities of a regulated Investment Company Act of 1940, as amended [ 15 U.S.C. 80a-1 through 80a-52 ], and held in such separate account, in accordance with instructions from persons having interests in such account ratably as determined by the company; or
b. With respect to any separate account registered with the securities and exchange commission as a management investment company, establish for such account a committee, board, or other body, the members of which may or may not be otherwise affiliated with such company and may be elected to such membership by the vote of persons having interests in such account ratably as determined by the company. Such committee, board, or other body may have the power, exercisable alone or in conjunction with others, to manage such separate account and the investment of assets. A company, committee, board, or other body may establish such other provisions in respect to any such separate account as may be deemed appropriate to facilitate compliance with requirements of any federal or state law now or hereafter in effect; provided, that the commissioner approves such provisions as not being hazardous to the policyholders or the public in this state.
9. No sale, exchange, or other transfer of assets may be made by a company between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, 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 contracts with respect to the separate account to which the transfer is made, and unless such transfer, whether into or from a separate account, is made (a) by a transfer of cash, or (b) by a transfer of securities having a valuation which could be readily determined in the market place; provided, that such transfer of securities is approved by the commissioner. The commissioner may authorize other transfers among such accounts, if, in the commissioner's opinion, such transfers would not be inequitable.
10. The company shall maintain in each such separate account assets with a value at least equal to the reserves and other contract liabilities with respect to such account, except as may otherwise be approved by the commissioner.
11. The laws and regulations of this state applicable to officers and directors of insurance companies with respect to conflicts of interest shall apply to members of the committee, board, or other body of any separate account. No officer or director of such company and no member of the committee, board, or other body of a separate account shall receive directly or indirectly any commission or other compensation with respect to the purchase or sale of assets of such separate account.

General Authority: NDCC 26.1-33-17, 26.1-34-11

Law Implemented: NDCC 26.1-33-13, 26.1-34-11

Notes

N.D. Admin Code 45-04-02-04

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