20-2633. Separate account; annuities

A. A domestic company that issues variable annuities shall establish one or more separate accounts pursuant to section 20-651.

B. Except pursuant to subsection C of this section:

1. The company may invest and reinvest amounts that are allocated to a separate account and accumulations on the allocated amounts without regard to any requirements or limitations that are prescribed by the laws of this state governing the investments of life insurance companies.

2. The company shall not consider the investments in the separate account or accounts in applying the investment limitations that otherwise apply to the investments of the company.

C. The company may retain its reserves for benefits that are guaranteed as to the dollar amount and duration and for funds that are guaranteed as to the principal amount or stated rate of interest in a separate account if a portion of the assets of the separate account in an amount that is at least equal to the reserve liability is invested according to the laws of this state governing the investments of life insurance companies. The company shall not consider the portion of the assets in applying the investment limitations that otherwise apply to the investments of the company.

D. With respect to seventy-five per cent of the market value of the total assets in a separate account, a company shall not, unless otherwise approved by the director on a showing that the approval will not be hazardous to the public or policyholders in this state, purchase or otherwise acquire the securities of any issuer, other than securities that are issued or guaranteed as to principal or interest by the United States, if immediately after the purchase or acquisition the market value of the investment, together with prior investments of the separate account in the security taken at market, would exceed ten per cent of the market value of the assets of the separate account.

E. Unless otherwise permitted by law or approved by the director, a company shall not purchase or otherwise acquire for its separate accounts the voting securities of any issuer if as a result of the acquisition the insurance company and its separate accounts, in the aggregate, will own more than ten per cent of the total issued and outstanding voting securities of the issuer. This limitation does not apply to securities that are held in separate accounts, the voting rights in which are exercisable only according to instructions from those persons who have an interest in the accounts.

F. The limitations under subsections D and E of this section do not apply to the investment with respect to a separate account in the securities of an investment company that is registered under the investment company act of 1940 (15 United States Code sections 80a-1 through 80a-64) if the investments of the investment company substantially comply with subsections D and E of this section.

G. Unless the director otherwise approves, assets that are allocated to a separate account shall be valued at their market value on the date of valuation. If there is no readily available market, the assets shall be valued under the terms of the contract or the rules or other written agreement that applies to the separate account. Unless the director otherwise approves, the portion, if any, of the assets of the separate account that is equal to the company's reserve liability with regard to the benefits and funds under subsection C of this section shall be valued according to the rules that otherwise apply to the company's assets.

H. Except as provided under the applicable contracts, that portion of the assets of any separate account that is equal to the reserves and other contract liabilities with respect to the account shall not be charged with liabilities arising out of any other business the company may conduct.

I. Notwithstanding any law to the contrary, a company may either:

1. With respect to a separate account that is 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 registered under the investment company act of 1940 and held in the separate accounts according to instructions from those persons who have an interest in the accounts ratably as determined by the company.

2. With respect to a separate account that is registered with the securities and exchange commission as a management investment company, establish for the account a committee, a board or any other body. The members of the committee, board or other body may or may not be affiliated with the company and may be elected to the membership by the vote of those persons who have an interest in the accounts ratably as determined by the company. This committee, board or other body, alone or in conjunction with others, may manage the separate account and the investment of its assets. Subject to approval of the director on a showing that the approval will not be hazardous to the public or policyholders of this state any company, committee, board or other body may make such other provisions in respect to any such separate account as may be deemed appropriate to facilitate compliance with the requirements of any federal or state law.

J. A company may not sell, exchange or otherwise transfer assets between any of its separate accounts or between any other investment account and one or more of its separate accounts unless either:

1. The director approves the sale, transfer or exchange based on a showing that the sale, transfer or exchange is equitable to current policyholders.

2. Both of the following occur:

(a) If the transfer is into a separate account, the 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.

(b) If the transfer is into or from a separate account, the transfer is made either:

(i) By a transfer of cash.

(ii) By a transfer of securities having a valuation that can be readily determined in the marketplace, if the director approves the transfer of the securities.

K. Except as otherwise approved by the director, the company shall maintain in each separate account assets with a value in an amount that is at least equal to the reserves and other contract liabilities with respect to the account.

L. Any law that relates to conflicts of interest and that applies to the officers and directors of insurance companies also applies to the members of any separate accounts committee, board or other body that is established pursuant to subsection I of this section. An officer or director of the company or a member of the committee, board or body of a separate account shall not receive, directly or indirectly, any commission or other compensation with respect to the purchase or sale of any assets of the separate account.