(a) A contract
shall not be delivered or issued for delivery in this state unless the issuing
insurance company is licensed to do life insurance business in this state
pursuant to section 38a-41 of the Connecticut General Statutes and is
financially qualified under the provisions of subsection (b) of this section.
In addition, a domestic insurance company shall not deliver or issue for
delivery, either in this state or outside this state, a contract belonging to a
specific class of contracts unless the insurance company has satisfied the
requirements of subsection (c) of this section with respect to that
class.
(b) An insurance company is
financially qualified under this section if its most recent statutory financial
statements reflect at least $1 billion in admitted assets or $100 million in
capital and surplus, and its risk-based capital results do not trigger a
regulatory action level event as set forth in section
38a-72-4
of the Regulations of Connecticut State Agencies. In lieu of the requirements
in the preceding sentence, the insurance company may be required to satisfy
such other financial qualification requirements set forth by the insurance
commissioner as necessary or appropriate in a particular case to protect the
insurance company's policyholders or the public.
(c) A domestic insurance company satisfies
the requirements of this section with respect to a class of contracts if the
insurance company has filed a plan of operation pertaining to the class of
contracts, together with copies of the forms of contract in the class, with the
insurance commissioner and the filing of the plan of operation has been
approved or has not been disapproved within the sixty-day period following the
date of filing, in which event the plan of operation shall be deemed approved.
The plan of operation for a class of contracts shall describe the financial
implications for the insurance company of the issuance of contracts in the
class, and shall include at least the following:
(1) A statement that the plan of operation
will be administered in accordance with the requirements prescribed by the
insurance commissioner pursuant to sections
38a-459-1
to
38a-459-9,
inclusive, of the Regulations of Connecticut State Agencies, along with a
statement that the insurance company shall comply with the plan of operation in
its administration of the contract;
(2) A statement describing the methods and
procedures used to value statutory liabilities for purposes of section
38a-459-8
of the Regulations of Connecticut State Agencies;
(3) A description of the criteria used by the
insurance company in approving the investment manager for the segregated
portfolio of assets associated with a contract in the class, if the investment
manager is an entity other than the insurance company or its wholly owned
subsidiary;
(4) A description of
the insurance company's requirement for reports concerning the assets in each
segregated portfolio and transactions involving the assets, and a description
of how the insurance company can use the information in a report to determine
that the segregated portfolio is being managed in accordance with its
investment guidelines. The insurance company shall require that the report be
prepared no less frequently than quarterly, and include a complete statement of
segregated portfolio holdings and their fair market value;
(5) A statement of the anticipated financial
results for one or more sample contracts from the class of contracts, showing
at a minimum the projected contract value records, the applicable fixed rate or
rates of return, and the projected market value records, describing how the
investments in the segregated portfolio reflect provision for benefits insured
by the contract and how the contract value and market values and the rates of
return may be affected by changes in the investment returns of the segregated
portfolio and reasonably anticipated deposits to and withdrawals from the
segregated portfolio by the contract holder, as well as any advances made by
the insurance company to the contract holder. The sample contracts shall be
chosen to reasonably represent the range of results that could be expected from
possible combinations of contract provisions of all contracts within the class.
The statement shall include at least three hypothetical return scenarios
(level, increasing, and decreasing) and for each of these scenarios, at least
three withdrawal scenarios (zero, moderate, and high) shall be modeled. The
insurance commissioner may require additional scenarios to fully understand the
risks under the class of contracts. The period covered by the statement shall
be the greater of five years or the minimum period the insurance company has to
underwrite the risk;
(6) A
statement that all contracts in the class of contracts satisfy the requirements
regarding unilateral contract terminations of section
38a-459-7
of the Regulations of Connecticut State Agencies, together with a description
of all termination events, discontinuation triggers and options, notice
requirements, corrective action procedures, all other contract safeguards, and
the procedures to be followed when a unilateral contract termination event
occurs;
(7) A description of the
allowable investment parameters (e.g., objectives, derivative strategies, asset
classes, quality, duration, and diversification requirements applied to the
assets held within the segregated portfolio) to be reflected in the investment
guidelines applicable to each contract issued in the class to which the
submitted plan of operation applies; and a description of the procedures that
shall be followed by the insurance company in evaluating the appropriateness of
any specific investment guidelines submitted by the contract holder. If the
insurance company chooses to operate a contract in accordance with investment
guidelines not meeting the criteria established pursuant to this subdivision,
the non-conforming set of investment guidelines shall be filed with the
insurance commissioner in accordance with the filing requirements of this
subsection;
(8) A description of
the criteria used by the insurance company in approving issuance of a contract
to a pooled fund representing multiple employer-sponsored plans and in
approving the investment manager for the segregated portfolio of assets
associated with such pooled fund contract;
(9) A description of the risk-mitigation
techniques used by the insurance company in connection with contracts issued to
pooled funds representing multiple employer-sponsored plans;
(10) An unqualified opinion by a qualified
actuary with expertise in such matters as to the adequacy of the consideration
charged by the insurance company for the risks it has assumed with respect to
the contracts in the class to which the plan of operation applies. A statement
that the actuarial opinion and memorandum required pursuant to section
38a-459-8
of the Regulations of Connecticut State Agencies, with respect to the class of
contracts to which the plan of operation applies, includes:
(A) If a payment has been made by the
insurance company in the prior reporting period under a contract in the class,
the amount of aggregate risk charges, i.e., the consideration charged by the
insurance company for the risks it has assumed under the contract (net of
administrative expenses, i.e., the amount of insurance company overhead or
expense that is directly or indirectly allocable to a contract) for contracts
in the class, and the aggregate amount of any losses incurred; and
(B) An inventory of all material unilateral
contract termination events in the class that have not been cured within the
time period specified and that have occurred during the prior reporting period
but where the insurance company decided not to terminate the
contract;
(11) A
description of the withdrawal hierarchy, if any.
(d) The insurance commissioner may request
that an insurance company supplement the information that the insurance company
filed with the commissioner pursuant to subsection (c) of this section. The
insurance company shall promptly file such supplemental information with the
commissioner and such information shall be sufficiently detailed to minimize
the need for any additional requests for information by the commissioner.
