Current through September 17, 2024
The following requirements apply to the establishment and
administration of variable life insurance separate accounts by any domestic
insurer:
006.01 Establishment and
Administration of Separate Accounts
Any domestic insurer issuing variable life insurance shall
establish one or more separate accounts pursuant to Neb.Rev.Stat. §
44-402.01.
006.01A If no law or other regulation
provides for the custody of separate account assets and if such insurer is not
the custodian of such separate account assets, all contracts for custody of
such assets shall be in writing and the Director shall have authority to review
and approve both of the terms of any such contract and the proposed custodian
prior to the transfer of custody.
006.01B Such insurer shall not without the
prior written approval of the Director employ in any material connection with
the handling of separate account assets any person who:
006.01B(1) within the last ten 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
006.01B(2)
within the last ten 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
006.01B(3) within the last ten
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.
006.01C All persons
with access to the cash, securities, or other assets of the separate account
shall be under bond in an amount of not less than $500, 000.00.
006.01D The assets of such separate accounts
shall be valued at least as often as variable benefits are determined but in
any event at least monthly.
006.02 Amounts in the Separate Account
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.
006.03
Investments by the Separate Account
006.03A 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:
006.03A(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
006.03A(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 Director in advance.
006.03B The separate account shall have
sufficient net investment income and readily marketable assets to meet
anticipated withdrawals under policies funded by the
account.
006.04
Limitations on Ownership
006.04A 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 these regulations, would exceed 10% of the value
of the assets of the separate account. The Director 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.
006.04B 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 10% of the total issued and outstanding voter
securities of such issuer. The Director 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.
006.04C The percentage limitation specified
in Subsection
006.04A 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 investment and
investment policies of such investment companies or asset pools comply
substantially with the provisions of Subsection 006.03 and other applicable
portions of this regulation.
006.05 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.
006.06
Separate Account Investment Policy
The investment policy of a separate account operated by a
domestic insurer filed under Subsection
003.02C shall not
be changed without first filing such change with the Insurance Director.
006.06A Any change filed pursuant to this
Subsection shall be effective sixty days after the date it was filed with the
Director, unless the Director notifies the insurer before the end of such
sixty-day (60) period of his disapproval of the
proposed change. At any time the Director may, after notice and public hearing,
disapprove any change that has become effective pursuant to this
Subsection.
006.06B The Director
may disapprove the change if he determines that the change would be detrimental
to the interests of the policyholders participating in such separate
account.
006.07 Charges
Against Separate Account
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:
006.07A taxes or reserves
for taxes attributable to investment gains and income of the separate
account;
006.07B actual cost of
reasonable brokerage fees and similar direct acquisition and sale costs
incurred in the purchase or sale of separate account assets;
006.07C actuarially determined costs of
insurance (tabular costs) and the release of separate account
liabilities;
006.07D charges for
administrative expenses and investment management expenses, including internal
costs attributable to the investment management of assets of the separate
account;
006.07E a charge, at a
rate specified in the policy, for mortality and expense guarantees;
006.07F any amounts in excess of those
required to be held in the separate accounts;
006.07G charges for incidental insurance
benefits.
006.08
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.
006.09 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 account's committee or other similar body.
006.10 Investment Advisory Services to a
Separate Account
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:
006.10A the
person providing such advise is registered as an investment adviser under the
Investment Advisers Act of 1940; or
006.10B 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
006.10C the
insurer has filed with the Director and continues to file annually the
following information and statements concerning the proposed adviser:
006.10C(1) the name and form of organization,
state of organization, and its principal place of business;
006.10C(2) the names and addresses of its
partners, officers, directors, and persons performing similar functions or, if
such an investment adviser be an individual, of such individual;
006.10C(3) a written Standard of Conduct
complying in substance with the requirements of Subsection
006.01B of this
Article which has been adopted by the investment adviser and is applicable to
the investment adviser, its officers, directors, and affiliates;
006.10C(4) a statement provided by the
proposed adviser as to whether the adviser or any person associated therewith:
006.10C(4)(a) has been convicted within ten
years of any felony or misdemeanor arising out of such person's conduct as an
employee, salesman, officer or director or an insurance company, a banker, an
insurance agent, a securities broker, or an investment adviser involving
embezzlement, fraudulent conversion, or misappropriation of funds or
securities, or involving the violation of Sections 1341, 1342, or 1343 of Tide
18 of the United States Code;
006.10C(4)(b) has been permanently or
temporarily enjoined by order, judgment, or decree of any court of competent
jurisdiction from acting as an investment adviser, 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;
006.10C(4)(c) has been found by federal or
state regulatory authorities to have willfully violated or have 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
006.10C(4)(d) has been censured, denied an
investment adviser registration, had a registration as an investment adviser
revoked or suspended, or been barred or suspended from being associated with an
investment adviser by order of federal or state regulatory authorities;
and
006.10D
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 days written notice to the investment adviser.
The Director 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 insurance
company's policyholders.
