Current through Register Vol. 46, No. 39, September 25, 2024
(a) To establish a
market-value separate account pursuant to this Part, the insurance company
shall file for approval with the superintendent a plan of operations for the
separate account, accompanied by the contract or form of contract, or a
description thereof, providing for allocation of amounts to the separate
account, and an undertaking to file actuarial opinions and memoranda in
conformity with the requirements of this Part.
(b) The plan of operations shall include but
not be limited to:
(1) a statement of the
investment policy for the separate account, including requirements for
diversification, maturity, type and quality of assets and, if applicable, for
matching guaranteed contract liabilities;
(2) a description of how the market-value of
the separate account assets is to be determined, including (but not limited to)
a statement of procedures and rules for valuing securities and other separate
account assets which are not publicly traded;
(3) a description of how the guaranteed
contract liabilities are to be valued, including with respect to fixed or
guaranteed minimum benefits, a description of the methodology for calculating
spot rates and the rates proposed to be used to discount guaranteed contract
liabilities if higher than the applicable spot rates, provided that the rate or
rates used shall not exceed the maximum rates allowed to be used to calculate
the minimum value of guaranteed contract liabilities described in section
97.5(k) of this
Part, and must conservatively reflect expected investment returns (taking into
account foreign exchange risks);
(4) a statement of how the separate accounts
operations are designed to provide for payment of contract benefits as they
become due, including (but not limited to) a description of the method for
estimating the amount and timing of benefit payments, the arrangements
necessary to provide liquidity to cover contingencies, and the method to be
used to comply with the asset maintenance requirement;
(5) a demonstration that the consideration
charged for account contracts is appropriate in view of the risks to the
insurance company with respect to such account contracts;
(6) a description of the charges to be made
against the separate account assets, and a description of the manner in which
the risk charge, if any, payable from separate account assets will be
determined;
(7) a description of
how any surrender charges under the account contracts are to be
computed;
(8) if hedging techniques
or dynamic hedging techniques are to be utilized in managing separate account
assets a description of such techniques and an explanation of how they are
intended to reduce risk of loss;
(9) if the amount of the asset maintenance
requirement depends on the separate account or a subportfolio thereof being
duration matched, a description of the method used and assumptions made to
determine the durations of separate account assets and guaranteed contract
liabilities;
(10) if the amount of
the asset maintenance requirement depends on the separate account or a
subportfolio thereof being cash-flow matched, a description of the method used
to determine the cash inflows to be received from separate account assets and
the cash outflows needed to meet guaranteed contract liabilities (including,
where applicable, a description of any provisions contained in the account
contracts which are designed to transfer substantially all of the investment
risk to the contractholder);
(11)
if the insurance company proposes to create a duration matched or cash-flow
matched subportfolio, a justification for creating such a subportfolio, a
description of the method by which the specified guaranteed contract
liabilities to be duration or cash-flow matched will be determined and a
description of how the duration matched or cash-flow matched subportfolio will
be managed separately so as to continue to maintain duration or cash-flow
matching;
(12) if a part of the
asset maintenance requirement is to be met by maintaining a reserve liability
in the general account, a description of:
(i)
the circumstances under which increases and decreases in such reserve liability
will be made;
(ii) the
circumstances under which transfers will be made between the separate account
and the general account; and
(iii)
any arrangements needed to provide sufficient liquidity in the general account
to enable the insurance company to make transfers to the separate account when
due;
(13) a statement as
to whether or not the account contracts will provide that the separate account
assets shall not be chargeable with liabilities arising out of any other
business of the insurance company; and
(14) if any person is empowered under section
4240 of the
Insurance Law to authorize, approve or review the acquisition and disposition
of investments for the account, a statement of the safeguards adopted by the
insurance company to assure that the actions to be taken by such person are
appropriate.
(c) The
contract form submission shall be accompanied by the material referred to in
subdivision (a) of this section and shall identify the product as one whose
reserving and asset maintenance are subject to this Part and shall identify the
type of product and whether it is subject to section
97.5(g)(1) or (2)
of this Part.
(d) Notwithstanding
the descriptions in the plan of operations, the insurance company may change
the rate used pursuant to section
97.5(k) of this
Part to discount guaranteed contract liabilities and other items applicable to
the separate account, such as if the investment portfolio is different from
that anticipated by the plan of operations, provided that the rate or rates
used shall not exceed the maximum rates allowed to be used to calculate the
minimum value of guaranteed contract liabilities described in section
97.5(k) of this
Part, and must conservatively reflect expected investment returns (taking into
account any foreign-exchange risks). Any such change must be disclosed and
justified in the actuary's opinion and memorandum submitted pursuant to section
97.6 of this Part.
(e) A plan of operations filed pursuant to
this section may provide that the separate account will fund guaranteed
contract liabilities denominated in the currency of a foreign country with
separate account assets denominated in such currency, provided that at the time
of issuance of the account contracts the country is rated in one of the two
highest rating categories by an independent nationally recognized United States
rating agency acceptable to the superintendent.
(f) The superintendent may require an insurer
to file additional information as part of the plan of operations if the
superintendent determines that the plan of operations is not
sufficient.
