New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter IV - Financial Condition Of Insurer and Reports to Superintendent
Subchapter B - Life Insurers
Part 91 - Allocation Of Income (receipts) And Expenses
Section 91.5 - Investment year method of distributing net investment income

Universal Citation: 11 NY Comp Codes Rules and Regs ยง 91.5

Current through Register Vol. 46, No. 39, September 25, 2024

(a) Distribution of net investment income shall be made in accordance with section 91.4(c)(2) of this Part or by use of an investment year method in accordance with the following rules, which are designed to assure that a life insurer's use of an investment year method is in accordance with Insurance Law requirements that holders of insurance policies and annuity contracts be treated equitably (§§ 4216, 4224, 4231, 4235, 4238, 4239) and which are subject to subdivision (b) of this section.

(1) In the application of the investment year method, suitable adjustment may be made for net investment income from assets that have characteristics to justify allocation by some other method, such as real estate, stocks, short-term notes and bills, and cash and bank deposits.

(2) Such method is used for the distribution of net investment income to each major annual statement line of business.

(3) Such method or one of the methods described in section 91.4(c)(2) of this Part is used for the distribution of net investment income to each secondary annual statement line of business.

(4) The distribution of net investment income within annual statement lines of business is made on an equitable basis, and to the extent feasible by the same method as used for distribution of net investment income to such lines of business.

(5) Capital gains and losses are distributed by the same method.

(6) Such method treats as a single period all years of investment prior to the year of investment as to which the method first became effective.

(7) Such method treats as separate periods of investment either each year of investment commencing with the year as to which the method first became effective, or groups of consecutive investment years having a limited range of differing investment returns, provided, however, that an insurer may transfer one or more years of investment on a first-in, first-out basis to the single period referred to in paragraph (6) of this subdivision after demonstration to the satisfaction of the superintendent that such transfer would be equitable.

(8) In computing investment yield rates for each of the periods referred to in paragraphs (6) and (7) of this subdivision, such method takes into account the incidence, by year of investment, of receipt of premiums and considerations and of payout of benefits and expenses, and also takes into account the assets referred to in paragraph (1) of this subdivision that are not subject to the investment year method and funds made available for reinvestment.

(b) A licensed life insurer proposing to adopt an investment year method in the distribution of net investment income, or to revise such a method already in effect, shall on or before November 1 of the first year for which such method or revision is to be used file with the superintendent a full description of its plan, together with its certification that the plan conforms to the foregoing rules. If the company's method includes deviations from the foregoing rules, or contemplates the use of a method other than the investment year method for assets not listed in paragraph (a)(1) of this section, such deviations or use require the approval of the superintendent as being equitable and as being necessary for reasons of feasibility before the method can be adopted.

(c) A life insurer having adopted the investment year method for distributions of net investment income shall not revert to either of the methods referred to in section 91.4(c)(2) of this Part, except upon a gradual basis in accordance with a plan approved by its board of directors of which notice has been given to the superintendent and approved by him at least six months prior to the date upon which such plan becomes effective.

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