SUBPART C. SEPARATE ACCOUNTS

§781. Separate accounts and contracts issued in connection therewith

A. Any domestic life insurance company may establish one or more separate accounts, and may allocate to such separate account or accounts any amounts paid to or retained by the company which are to be applied under the terms of an individual or group contract to provide for life insurance, annuities, and other benefits incidental thereto, payable in fixed or in variable dollar amounts or in both.

B. To the extent such company deems it necessary to comply with the Investment Company Act of 1940, the Securities Exchange Act of 1934, and other applicable federal laws, as such acts are and may be amended, such company may, with respect to any separate account or any portion thereof, including without limitation any separate account which is a management investment company or a unit investment trust, provide for the benefit of persons having beneficial interest therein special voting and other rights and special procedures for the conduct of the business and affairs of such separate account or portion thereof, including without limitation special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with such company, to manage the business and affairs of such separate account or portion thereof.

C. The amounts allocated to each such account and accumulations thereon may be invested and reinvested in any class of investments which are authorized by Subsections A through and including G of R.S. 22:584, except that the quantitative limitations contained in such Subsections A through G of R.S. 22:584 shall not apply to investments of amounts allocated to each such separate account; provided however, notwithstanding any of the restrictions or limitations contained in said Subsections A through G of R.S. 22:584 all of such amounts allocated to a separate account and accumulations thereon may be invested in the shares of an open-end investment company or companies registered under the Federal Investment Company Act of 1940; provided further, that to the extent that the company's reserve liability with regard to (1) benefits guaranteed as to dollar amount and duration and (2) funds guaranteed as to principal amount or stated rate of interest is maintained in any such separate account, a portion of the assets of such separate account at least equal to such reserve liability shall be invested in accordance with the quantitative and qualitative requirements of Subpart B of Part III of this Chapter, R.S. 22:581 et seq., governing the investments of life insurance companies. The investments in such separate account or accounts shall not be taken into account in applying the investment limitations applicable to other investments of the company.

D. The income, if any, and gains and losses, realized or unrealized, on each account shall be credited to or charged against the amounts allocated to the account in accordance with the contract, without regard to other income, gains or losses of the company.

E. That portion of the assets of any separate account equal to the reserves and other contract liabilities with respect to such account, if and to the extent so provided in the applicable contracts, shall not be chargeable with liabilities arising out of any other insurance business the company may conduct. Any portion of the assets in excess of such reserves and other contract liabilities shall be chargeable with liabilities arising out of any other insurance business the company may conduct.

F.(1) Amounts allocated to a separate account in the exercise of the power granted by this Section shall be owned by the company, and the company shall not be, or hold itself out to be, a trustee with respect to such amounts.

(2) Notwithstanding the provisions of Paragraph (1) of this Subsection, all assets of a separate account shall be deemed subject to a security interest granted by the company in favor of the holders of that separate account, to secure any and all of the company's obligations to such account holders. This security interest shall be deemed for any and all purposes to constitute a security interest arising by operation of law. This security interest need not be reflected in writing or comply with the provisions of R.S. 10:8-101 et seq., R.S. 10:9-101 et seq., Civil Code Art. 3158, or R.S. 9:4321 et seq. The company's continued possession or control of such assets, as well as its continued ability to withdraw or substitute assets of such separate account at will, shall not be deemed to adversely affect the validity of the security interest provided hereunder. If delinquency proceedings are brought by or against the company, the security interest hereby granted shall continue to be recognized for all purposes, including but limited to liquidation of the company under the provisions of R.S. 22:2042(E).

G. 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 in accordance with uniform, nondiscriminatory standards applicable to the separate account assets or in accordance with the terms of the applicable contract; provided that, unless otherwise approved by the commissioner, the portion of the assets of such separate account at least equal to the company's reserve liability with regard to the guaranteed benefits and funds referred to in Subsection C of this Section, if any, shall be valued in accordance with the rules otherwise applicable to the company's assets.

H. If the contract provides for payment of benefits in variable amounts, it shall contain a statement of the essential features of the procedure to be followed by the company in determining the dollar amount of such variable benefits. Any such contract, including a group contract, and any certificates issued thereunder, shall state that such dollar amount may decrease or increase and shall contain on its first page a statement that the benefits thereunder are on a variable basis. The insurance commissioner, where appropriate, may require an annuity contract to provide a determinable cash value. The company issuing a contract on a variable basis shall furnish each contract holder with annual reports of the financial condition of the separate account, in such form as the insurance commissioner shall prescribe.

I. No domestic life insurance company, and no other life insurance company admitted to transact business in this state, shall be authorized to deliver within this state any contract providing benefits in variable amounts until said company has satisfied the commissioner that its condition or methods of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this state. In determining the qualifications of a company requesting authority to deliver such contracts within this state, the commissioner shall consider, among other things:

(1) The history and financial condition of the company;

(2) The character, responsibility and general fitness of the officers and directors of the company; and

(3)(a) In the case of a company other than a domestic company, whether the statutes and regulations of the jurisdiction of its incorporation provide a degree of protection to policyholders and the public which is substantially equal to that provided by this section and the rules and regulations issued thereunder.

(b) An authorized life insurance company, whether domestic, foreign, or alien, which issues contracts providing benefits in variable amounts and which is a subsidiary of, or affiliated through common management or ownership with, another life insurance company authorized to do business in this state may be deemed to have met the provisions of this subsection if either it or the parent or affiliated company meets the requirements hereof.

J. The insurance commissioner shall have the sole and exclusive authority to regulate the issuance and sale of such contracts and to issue such reasonable rules and regulations as may be necessary to carry out the purposes and provisions of R.S. 22:781 and 914; and such contracts, the companies which issue them and the agents or other persons who sell them shall not be subject to the provisions of Part X of Title 51 of the Louisiana Revised Statutes of 1950 nor to the jurisdiction of the commissioner of financial institutions.

Added by Acts 1966, No. 332, §§1, 2. Amended by Acts 1968, No. 61, §1; Acts 1976, No. 288, §1; Acts 1993, No. 785, §1; Redesignated from R.S. 22:1500(A)-(J) by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2009, No. 503, §1.