Current through Rules and Regulations filed through March 20, 2024
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 in this State shall establish one or more separate accounts pursuant
to Section 33-11-36 of the Georgia Insurance Code, subject to the following:
(a) If no law or other regulation provides
for the custody of separate account assets and if the insurer itself is not the
custodian of such separate account assets, all contracts for such custody shall
be in writing and the Commissioner shall have the authority to review and
approve both the terms of any such contract and the proposed custodian prior to
the transfer of custody
(b) Such
insurer shall not without the 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 (10) 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 Sections 1341, 1342, or 1343 of
Title 18, United States Code; or
2.
within the last ten (10) 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 (10)
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 an amount not less than the following
amounts for each separate account:
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(d)
The assets of such separate accounts established for variable life insurance
policies 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. Amounts
in a separate account shall be maintained in accordance with the following:
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. Investments by a separate account shall be
made as follows:
(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. The following limitations shall apply to the ownership of the
assets of a separate account:
(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 such purchase or acquisition the value of
such investment, together with prior investments of such account in such
security valued as required by this Regulation, would exceed ten percent (10%)
of the value of the assets of the separate account. The Commissioner may waive
this limitation in writing if he 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 ten percent (10%) of the total issued and
outstanding voting securities of such issuer. The Commissioner may waive this
limitation in writing if he believes such 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 subsection (a) of this Section 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 assets pools comply substantially with the
provisions of Section (3) of this Rule and other applicable portions of this
Regulation.
(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.
(a) The investment policy of a separate
account operated by a domestic insurer filed under Section (2)(c) of Rule
120-2-32-.04 shall not be changed
without the approval of the Commissioner of Insurance.
1. Any change filed pursuant to this Section
shall be effective sixty (60) days after the date it was filed with the
Commissioner, unless the Commissioner notifies the insurer before the end of
such sixty-day period of his 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 Section.
2. The Commissioner may disapprove the change
if he determines that the change would be detrimental to the interest of the
policyholders participating in such separate account.
(7) Charges Against Separate
Account.
(a) 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:
1. taxes or reserves for taxes
attributable to investment gains and income of the separate account;
2. actual cost of reasonable brokerage fees
and similar direct acquisition and sale costs incurred in the purchase or sale
of separate account assets;
3.
actuarially determined costs of insurance (tabular costs) and the release of
separate account liabilities;
4.
charges for administrative expenses and investment management expenses,
including internal costs attributable to the investment management of assets of
the separate account;
5. a charge,
at a rate specified in the policy, for mortality and expense
guarantees;
6. any amounts in
excess of those required to be held in the separate accounts;
7. 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 written 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 17j under the Investment Company Act
of 1940 and applicable rules and regulations thereunder shall satisfy the
provisions of this Section.
(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 accounts committee or other similar body.
(10) Investment Advisory Services to a
Separate Account. The following requirements shall be applicable to investment
advisory services contracted for by an insurer with respect to its separate
accounts:
(a) 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:
1. the person providing such advice is
registered as an investment advisor under the Investment Advisers Act of 1940;
or
2. 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
3. the
insurer has filed with the Commissioner and continues to file annually the
following information and statements concerning the proposed advisor:
(i) the name and form of organization, state
of organization, and its principal place of business;
(ii) 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;
(iii) a written Standard of Conduct complying
in substance with the requirements of Section (8) of this Rule which has been
adopted by the investment advisor and is applicable to the investment advisor,
its officers, directors and affiliates;
(iv) a statement provided by the proposed
advisor as to whether the advisor or any person associated therewith:
(I) has been convicted within ten (10) years
of any felony or misdemeanor arising out of such person's conduct as an
employee, salesman, officer or director of an insurance company, a bank, an
insurance agent, a securities broker, or an investment advisor; involving
embezzlement, fraudulent conversion, or misappropriation of funds or
securities, or involving the violation of Sections 1341, 1342, or 1343 of Title
18 of the United States Code;
(II)
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 person or as an employee of
any investment company, bank, or insurance company, or from engaging in or
continuing any conduct or practice in connection with any such
activity;
(III) has been found by
federal or state regulatory authorities to have willfully violated or has
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
(IV) 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
4. 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 sixty (60) days' written notice to the investment
advisor.
(b) The
Commissioner may, after notice and opportunity for hearing, by order require
such investment advisory contract to be terminated if he deems continued
operation thereunder to be hazardous to the public or the insurer's
policyholders.
Note - As in original. There is no (6)(b) or
(7)(b).
O.C.G.A. Secs.
33-2-9,
33-11-36.
