Current through September 21, 2024
The following requirements apply to the establishment and
administration of variable life insurance separate accounts by a domestic
insurer:
(a)
Establishment and
Administration of Separate Accounts. A domestic insurer issuing variable
life insurance shall establish one or more separate accounts pursuant to W.S.
§
26-16-502.
(i) If no law or other regulation provides
for the custody of separate account assets and if the insurer is not the
custodian of the separate account assets, all contracts for custody of these
assets shall be in writing and the commissioner shall have authority to review
and approve of both the terms of the contract and the proposed custodian prior
to the transfer of custody.
(ii)
The insurer shall not without prior written approval of the commissioner employ
in any material connection with the handling of separate account assets any
person who:
(A) 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
(B) 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
(C) 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.
(iii) All persons with access to the cash,
securities, or other assets of the separate account shall be under bond in the
amount of not less than ten percent (10%) of the insurer's previous year's
gross premiums or other amount the commissioner prescribes.
(iv) The assets of separate accounts shall be
valued at least as often as variable benefits are determined but in any event
at least monthly.
(b)
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 these policies.
(c)
Investments by the Separate
Account.
(i) 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:
(A) In case of transfer into a separate
account, the 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
(B) The
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.
(ii) The
separate account shall have sufficient net investment income and readily
marketable assets to meet anticipated withdrawals under policies funded by the
account.
(d)
Limitations on Ownership.
(i) A
separate account shall not purchase or otherwise acquire the securities of an
issuer, other than securities issued or guaranteed as to principal and interest
by the United States, if immediately after the purchase or acquisition the
value of the investment, together with prior investments of the account in the
security valued as required by these regulations, would exceed ten percent
(10%) of the value of the assets of the separate account. The commissioner may
waive this limitation in writing if the commissioner believes the waiver will
not render the operation of the separate account hazardous to the public or the
policyholders in this state.
(ii)
No separate account shall purchase or otherwise acquire the voting securities
of any issuer if as a result of the 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 the issuer. The commissioner may
waive this limitation in writing if believes the 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 these
securities.
(iii) The percentage
limitation specified in Paragraph (i) of this subsection 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 asset pools comply substantially with the
provisions of Subsection (c) of this section and other applicable portions of
this regulation.
(e)
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.
(f) Separate Account Investment Policy. The
investment policy of a separate account operated by a domestic insurer filed
under Section 3(b)(iii) shall not be changed without first filing the change
with the insurance commissioner.
(i) 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 the sixty-day period of the Commissioner's
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.
(ii) The
commissioner may disapprove the change if he or she determines that the change
would be detrimental to the interests of the policyholders participating in the
separate accounts.
(g)
Charges Against Separate Account. The insurer shall 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:
(i) Taxes or reserves for
taxes attributable to investment gains and income of the separate
account;
(ii) Actual cost of
reasonable brokerage fees and similar direct acquisition and sale costs
incurred in the purchase or sale of separate account assets;
(iii) Actuarially determined costs of
insurance (tabular costs) and the release of separate account
liabilities;
(iv) Charges for
administrative expenses and investment management expenses, including internal
costs attributable to the investment management of assets of the separate
account;
(v) A charge, at a rate
specified in the policy, for mortality and expense guarantees;
(vi) Any amounts in excess of those required
to be held in the separate accounts; and
(vii) Charges for incidental insurance
benefits.
(h)
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. The
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 17(j)
under the Investment Company Act of 1940 and its applicable rules and
regulations shall satisfy the provisions of this section.
(i)
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.
(j)
Investment Advisory Services to a
Separate Account.
(i) 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:
(A) The person providing advice is registered
as an investment adviser under the Investment Advice Act of 1940; or
(B) The person providing 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
(C) 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 the
investment advisory is an individual, of the individual;
(III) A written standard of conduct complying
in substance with the requirements of Subsection (h) of this section 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:
(1.) Has been convicted within ten (10) years
of a felony or misdemeanor arising out of the person's conduct as an employee,
salesman, officer or director of an insurance company, a banker, an insurance
producer, 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 United States
Code;
(2.) Has been permanently or
temporarily enjoined by an order, judgment or decree of a court of competent
jurisdiction from acting as an investment advisor, underwriter, broker or
dealer, or as an affiliated person or as an employee of an investment company,
bank or insurance company, or from engaging in or continuing any conduct or
practice in connection with any such activity;
(3.) 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 these laws; or
(4.) 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
(D) The 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.
(ii) The commissioner may, after
notice and opportunity for hearing, by order require the investment advisory
contract to be terminated if the commissioner deems continued operation under
the contract to be hazardous to the public or the insurer's
policyholders.
